Ambalat revised: The way forward?

Clive Schofield and I Made Andi Arsana, New South Wales, Australia

The initial furor over ownership of the Ambalat offshore area has died down as formal negotiations on the delimitation of a maritime boundary have started and rival navies have been reigned in. What now?

The idea of negotiating a maritime boundary agreement may make unwelcome reading to many Indonesians convinced of the validity of Indonesia's claims, as this means that Indonesia is unlikely to secure the entirety of the disputed "Ambalat offshore area". This is because it is rare indeed that a negotiation results in one participant gaining everything and the other nothing.

Having said that, negotiation is certainly a hugely attractive and likely route to dispute resolution compared to third-party settlement options. Bilateral negotiations have the distinct attraction for the Governments concerned of their retaining control over the destiny of the dispute, quite apart from the time and cost considerations involved in taking a case to the ICJ at The Hague.

In this context it is perhaps worthwhile recalling that the dispute sparked by oil exploration issues. Energy security concerns, as well as nationalist concerns over sovereignty and sovereign rights, therefore remain at the root of the dispute.

Experience from elsewhere around the world, no oil company will invest a huge amount of money in the area where jurisdiction over a particular seabed area is in doubt. No exploration and exploitation will be done without political, legal and fiscal certainties. This can, in turn have significant impacts on the national economy for the States concerned.

In this regard it is certainly encouraging that negotiations have begun in earnest with the first round of which took place in Bali on March 22-23, 2005. However, the talks were conducted in confidence and this has raised concerns among some Indonesian people, that their Government is somehow deliberately keeping them in the dark amid fears of a sell-out. Are people right to be concerned at this apparent lack of transparency?

The answer here must be clearly in the negative as the vast majority of such maritime boundary delimitation negotiations are conducted in confidence. A key reason for this is to allow those involved maximum flexibility to propose creative solutions, free form intrusive media scrutiny. Indeed, most boundary negotiations will specifically state that any proposals entertained in negotiations are without prejudice to either Government's position and, in sum; nothing is agreed until everything is agreed.

Within the maritime negotiations context, however, it is true that the potential presence of oil and gas can act as a relevant factor in negotiating maritime boundaries. Apparently, neither side is likely to secure the entire area under dispute. It is generally hard to determine with accuracy the position, quantity and quality of hydrocarbon reserves without extensive exploration activity. A compromise line is, therefore, risky that the seabed resources at stake may end up on the "wrong" side of the boundary line.

In the Ambalat context, all of these factors apply. If a negotiated delimitation line, mutually acceptable to both parties is concluded, all well and good. Given the divergent positions of the parties, however, such a resolution may prove difficult to achieve, at least in the short term. There is, however, an alternative solution. Indonesia and Malaysia could instead opt for a joint development zone covering all or part of the overlapping claims.

Both States have experience of this type of resolution: Indonesia, in partnership with Australia, was the author of the hugely complex and ground-breaking joint zone governing the Timor Gap area (now partially taken over by Timor Leste post- independence); and Malaysia through two joint development area agreements with Thailand and Vietnam respectively. All of these have proved successful.

Fundamentally, the joint zone option would allow the desired resource exploration and development without undue delay and without the need for a potentially costly and time consuming delimitation exercise. Such arrangements therefore offer a potential alternative avenue to resource development and sharing where the opposing positions of the parties involved become entrenched. These have the advantage of flexibility in terms of area, duration and resource or function applied to. The cooperative nature of such agreements can also have spin-off benefits, acting as a confidence-building measure. In the Indonesia-Malaysia case, a joint zone has the potential to help to rebuild relations apparently soured both by the dispute over Ambalat and issues such as Malaysia's recent forceful crack-down against illegal workers in Malaysia, many of whom are Indonesian.

Finally, joint zones are in line with international law with the Law of the Sea Convention stating in Articles 74 and 83 relating to the delimitation of the exclusive economic zone and continental shelf that: "Pending agreement...the States concerned, in a spirit of understanding and cooperation, shall make every effort to enter into provisional arrangements of a practical nature and, during this transitional period, not to jeopardize or hamper the reaching of a final agreement. Such agreements shall be without prejudice to the final delimitation."

This is not to argue that joint development is applicable in all circumstances, merely because a dispute and overlapping claims to maritime jurisdiction exist. For joint development to function successfully, considerable political will is required. The relationship between its signatories needs to be strong enough to survive multiple changes in government over the years.

Nonetheless, for all the potential pitfalls, emerging State practice appears to favor joint development and such practical problem-solving approaches have the potential to be functional, flexible and equitable. All in all, therefore, the joint development option could represent a win-win scenario for both Indonesia and Malaysia and is worthy of serious consideration.

Clive Schofield is a senior lecturer in the Center for Maritime Policy, University of Wollongong, Australia.

I Made Andi Arsana is a lecturer in the Department of Geodetic Engineering, UGM, currently research student in the University of New South Wales, Australia