Note: This is the copy of the Treaty referred to in the definition of Treaty in subsection 5(1) of this Act.
Section 5
AUSTRALIA and THE REPUBLIC OF INDONESIA
TAKING INTO ACCOUNT the United Nations Convention on the Law of the Sea done at Montego Bay on 10 December 1982 and, in particular, Article 83 which requires States with opposite coasts, in a spirit of understanding and cooperation, to make every effort to enter into provisional arrangements of a practical nature which do not jeopardize or hamper the reaching of final agreement on the delimitation of the continental shelf;
DESIRING to enable the exploration for and exploitation of the petroleum resources of the continental shelf of the area between the Indonesian Province of East Timor and northern Australia yet to be the subject of permanent continental shelf delimitation between the Contracting States;
CONSCIOUS of the need to encourage and promote development of the petroleum resources of the area;
DESIRING that exploration for and exploitation of these resources proceed without delay;
AFFIRMING existing agreements on the delimitation of the continental shelf between their two countries;
DETERMINED to cooperate further for the mutual benefit of their peoples in the development of the resources of the area of the continental shelf yet to be the subject of permanent continental shelf delimitation between their two countries;
FULLY COMMITTED to maintaining, renewing and further strengthening the mutual respect, friendship and cooperation between their two countries through existing agreements and arrangements, as well as their policies of promoting constructive neighbourly cooperation;
MINDFUL of the interests which their countries share as immediate neighbours, and in a spirit of cooperation, friendship and goodwill;
CONVINCED that this Treaty will contribute to the strengthening of the relations between their two countries; and
BELIEVING that the establishment of joint arrangements to permit the exploration for and exploitation of petroleum resources in the area will further augment the range of contact and cooperation between the Governments of the two countries and benefit the development of contacts between their peoples;
HAVE AGREED as follows:
PART I
ZONE OF COOPERATION
Article 1
Definitions
For the purposes of this Treaty,
(a) “contract” or “production sharing contract” means a contract between the Joint Authority and corporations, concluded on the basis of the Model Production Sharing Contract, entered into under Article 8 of this Treaty and in accordance with Part III of the Petroleum Mining Code;
(b) “contract area” means the area constituted by the blocks specified in the contract that have not been relinquished or surrendered;
(c) “contractor” means a corporation or corporations which enter into a contract with the Joint Authority and which is registered as a contractor under Article 38 of the Petroleum Mining Code;
(d) “Contractors’ Income Tax” means tax imposed by the Indonesian Laws No. 7 of 1983 on Income Tax and No. 6 of 1983 on General Tax Provisions and Procedures as amended from time to time;
(e) “criminal law” means any law in force in the Contracting States, whether substantive or procedural, that makes provision for or in relation to offences or for or in relation to the investigation or prosecution of offences or the punishment of offenders, including the carrying out of a penalty imposed by a court. For this purpose “investigation” includes entry to a structure in Area A, the exercise of powers of search and questioning and the apprehension of a suspected offender;
(f) “good oilfield practice” means all those things that are generally accepted as good and safe in the carrying on of petroleum operations;
(g) “Model Production Sharing Contract” means the model contract as appears in Annex C, on the basis of which production sharing contracts for Area A should be concluded, as may be modified from time to time by the Ministerial Council in accordance with paragraph 1 (c) of Article 6 of this Treaty;
(h) “petroleum” means
(a) any naturally occurring hydrocarbon, whether in a gaseous, liquid or solid state;
(b) any naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or solid state; or
(c) any petroleum as defined by sub‑paragraph (a) or (b) of this paragraph that has been returned to a reservoir in the contract area;
(i) “Petroleum Mining Code” means the “Petroleum Mining Code for Area A of the Zone of Cooperation” to govern operational activities relating to exploration for and exploitation of the petroleum resources in Area A of the Zone of Cooperation contained in Annex B, as amended from time to time by the Ministerial Council in accordance with paragraph 1 (b) of Article 6 of this Treaty;
(j) “petroleum operations” means activities undertaken to produce petroleum and includes exploration, development, field processing, production and pipeline operations, and marketing authorized or contemplated under a production sharing contract;
(k) “Resource Rent Tax” means tax imposed by the Petroleum Resource Rent Tax Act 1987 of Australia as amended from time to time;
(l) “structure” means an installation or structure used to carry out petroleum operations;
(m) “Taxation Code” means the “Taxation Code for the Avoidance of Double Taxation in Respect of Activities Connected with Area A of the Zone of Cooperation”, contained in Annex D;
(n) “taxation law” means the federal law of Australia or the law of the Republic of Indonesia, from time to time in force, in respect of taxes to which this Treaty applies but shall not include a tax agreement between the Contracting States and a tax agreement of either Contracting State with a third country;
(o) “Treaty” means this Treaty including Annexes A, B, C and D;
(p) “Zone of Cooperation” refers to the area so designated and described in Annex A and illustrated in the maps forming part of that Annex, which consists of the whole of the area embraced by Areas A, B and C designated in that Annex.
2. For the purposes of Article 10 of this Treaty and the Taxation Code, resident of a Contracting State means:
(a) in the case of Australia, a person who is liable to tax in Australia by reason of being a resident of Australia under the tax law of Australia; and
(b) in the case of the Republic of Indonesia, a person who is liable to tax in the Republic of Indonesia by reason of being a resident of the Republic of Indonesia under the tax law of the Republic of Indonesia,
but does not include any person who is liable to tax in that Contracting State in respect only of income from sources in that Contracting State.
3. Where by reason of the provisions of paragraph 2 of this Article, an individual is a resident of both Contracting States, then the status of the person shall be determined as follows:
(a) the person shall be deemed to be a resident solely of the Contracting State in which a permanent home is available to the person;
(b) if a permanent home is available to the person in both Contracting States, or in neither of them, the person shall be deemed to be a resident solely of the Contracting State in which the person has an habitual abode;
(c) if the person has an habitual abode in both Contracting States, or if the person does not have an habitual abode in either of them, the person shall be deemed to be a resident solely of the Contracting State with which the person’s personal and economic relations are the closer.
4. Where by reason of the provisions of paragraph 2 of this Article a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident solely of the Contracting State in which its place of effective management is situated.
Article 2
The Zone
A Zone of Cooperation is hereby designated in an area between the Indonesian Province of East Timor and northern Australia, which comprises Areas A, B and C.
Within the Zone of Cooperation activities in relation to the exploration for and exploitation of petroleum resources shall be conducted on the following basis:
(a) In Area A, there shall be joint control by the Contracting States of the exploration for and exploitation of petroleum resources, aimed at achieving optimum commercial utilization thereof and equal sharing between the two Contracting States of the benefits of the exploitation of petroleum resources, as provided for in this Treaty;
(b) In Area B, Australia shall make certain notifications and share with the Republic of Indonesia Resource Rent Tax collections arising from petroleum production on the basis of Article 4 of this Treaty; and
(c) In Area C, the Republic of Indonesia shall make certain notifications and share with Australia Contractors’ Income Tax collections arising from petroleum production on the basis of Article 4 of this Treaty.
Nothing contained in this Treaty and no acts or activities taking place while this Treaty is in force shall be interpreted as prejudicing the position of either Contracting State on a permanent continental shelf delimitation in the Zone of Cooperation nor shall anything contained in it be considered as affecting the respective sovereign rights claimed by each Contracting State in the Zone of Cooperation.
Notwithstanding the conclusion of this Treaty, the Contracting States shall continue their efforts to reach agreement on a permanent continental shelf delimitation in the Zone of Cooperation.
PART II
EXPLORATION AND EXPLOITATION
IN THE ZONE OF COOPERATION
Article 3
Area A
In relation to the exploration for and exploitation of petroleum resources in Area A, the rights and responsibilities of the two Contracting States shall be exercised by the Ministerial Council and the Joint Authority in accordance with this Treaty. Petroleum operations in Area A shall be carried out through production sharing contracts.
The Joint Authority shall enter into each production sharing contract with limited liability corporations specifically established for the sole purpose of the contract. This provision shall also apply to the successors or assignees of such corporations.
Article 4
Area B and Area C
In relation to the exploration for and exploitation of petroleum resources in Area B Australia shall:
(a) notify the Republic of Indonesia of the grant, renewal, surrender, expiry and cancellation of titles made by Australia being exploration permits, retention leases and production licences; and
(b) pay to the Republic of Indonesia ten (10) per cent of gross Resource Rent Tax collected by Australia from corporations producing petroleum from Area B equivalent to sixteen (16) per cent of net Resource Rent Tax collected, calculated on the basis that general company tax is payable at the maximum rate.
In relation to exploration for and exploitation of petroleum resources in Area C the Republic of Indonesia shall:
(a) notify Australia of the grant, renewal, surrender, expiry and cancellation of petroleum exploration and production agreements made by the Republic of Indonesia; and
(b) pay to Australia ten (10) per cent of Contractors’ Income Tax collected by the Republic of Indonesia from corporations producing petroleum from Area C.
In the event that Australia changes the basis upon which the Resource Rent Tax or general company tax is calculated or that the Republic of Indonesia changes the basis upon which Contractors’ Income Tax is calculated, the Contracting States shall review the percentages set out in paragraphs 1 (b) and 2 (b) of this Article and agree on new percentages, ensuring that the relative shares paid by each contracting State to the other in respect of revenue collected from corporations producing petroleum in Area B and Area C remain the same.
In the event of any change occurring in the relevant taxation regimes of either Contracting State, the Contracting States shall review the formulation set out in paragraphs 1 (b) and 2 (b) of this Article and agree on a new formulation, ensuring that the releative shares paid by each Contracting State to the other in respect of revenue collected from corporations producing petroleum in Area B and Area C remain the same.
With regard to Area B and Area C, the Contracting States shall enter into necessary administrative arrangements to give effect to the sharing arrangements in the two Areas as provided in paragraph 1 (b) and paragraph 2 (b) of this Article at the time that production from either Area commences. In particular, the arrangements shall provide for the manner in which such a share shall be paid from one Contracting State to the other Contracting State. A Contracting State when making a payment to the other Contracting State shall provide information on the basis on which the relevant payment was calculated.
The Contracting States shall take necessary measures to ensure the timely and optimum utilization of the petroleum resources in Area B and Area C.
PART III
THE MINISTERIAL COUNCIL
Article 5
The Ministerial Council
A Ministerial Council for the Zone of Cooperation is hereby established.
The Ministerial Council shall consist of those Ministers who may from time to time be designated for that purpose by the Contracting States provided that, at any one time, there shall be an equal number of Ministers designated by each Contracting State.
The Ministerial Council shall meet annually or as often as may be required.
The Ministerial Council shall normally meet alternately in Australia or in the Republic of Indonesia. Its meetings shall be chaired alternately by a Minister nominated by each Contracting State.
Decisions of the Ministerial Council shall be arrived at by consensus. The Ministerial Council may establish procedures for taking decisions out of session.
Article 6
Functions of the Ministerial Council
The Ministerial Council shall have overall responsibility for all matters relating to the exploration for and exploitation of the petroleum resources in Area A of the Zone of Cooperation and such other functions relating to the exploration for and exploitation of petroleum resources as the Contracting States may entrust to it. The functions of the Ministerial Council shall include:
(a) giving directions to the Joint Authority on the discharge of its functions;
(b) of its own volition or on recommendation by the Joint Authority, in a manner not inconsistent with the objectives of this Treaty, amending the Petroleum Mining Code to facilitate petroleum operations in Area A;
(c) of its own volition or on recommendation by the Joint Authority, in a manner not inconsistent with the objectives of this Treaty, modifying the Model Production Sharing Contract to facilitate petroleum operations in Area A;
(d) approving production sharing contracts which the Joint Authority may propose to enter into with corporations;
(e) approving the termination of production sharing contracts entered into between the Joint Authority and corporations;
(f) approving the variation of the following provisions of a production sharing contract, with the agreement of the contractor:
(i) the Joint Authority’s or the contractor’s production share;
(ii) the operating cost recovery provisions;
(iii) the term of the contract; and
(iv) the contract area relinquishment provisions;
(g) approving the variation of the annual contract service fee;
(h) giving approval to the Joint Authority to market any or all petroleum production in circumstances determined by the Ministerial Council;
(i) approving the transfer of rights and responsibilities by contractors to other corporations that will then become contractors;
(j) approving the distribution to Australia and the Republic of Indonesia of revenues dervied from production sharing contracts in Area A;
(k) through consultation, settling disputes in the Joint Authority;
(l) approving financial estimates of income and expenditure of the Joint Authority;
(m) approving rules, regulations and procedures for the effective functioning of the Joint Authority including staff regulations;
(n) reviewing the operation of this Treaty and making recommendations to the Contracting States that the Council may consider necessary for the amendment of this Treaty;
(o) appointment of the Executive Directors of the Joint Authority;
(p) at the request of a member of the Ministerial Council inspecting and auditing the Joint Authority’s books and accounts;
(q) approving the result of inspections and audits of contractors’ books and accounts conducted by the Joint Authority;
(r) considering and adopting the annual report of the Joint Authority; and
(s) reviewing the distribution among the Republic of Indonesia, Australia and third countries, of expenditure on petroleum operations related to Area A.
2. The Ministerial Council in exercising its functions shall ensure the achievement of the optimum commercial utilization of the petroleum resources of Area A consistent with good oilfield and sound environmental practice.
3. The Ministerial Council shall authorize the Joint Authority to take all necessary steps to enable the commencement of exploration for and exploitation of the petroleum resources of Area A as soon as possible after the entry into force of this Treaty.
PART IV
THE JOINT AUTHORITY
Article 7
The Joint Authority
A Joint Authority is hereby established.
The Joint Authority shall have juridical personality and such legal capacities under the law of both Contracting States as are necessary for the exercise of its powers and the performance of its functions. In particular, the Joint Authority shall have the capacity to contract, to acquire and dispose of movable and immovable property and to institute and be party to legal proceedings.
The Joint Authority shall be responsible to the Ministerial Council.
Decisions of the Executive Directors of the Joint Authority shall be arrived at by consensus. Where consensus cannot be reached, the matter shall be referred to the Ministerial Council.
Unless otherwise decided by the Ministerial Council, the Joint Authority shall have its head office in the Republic of Indonesia and an office in Australia, each of which shall be headed by an Executive Director.
The Joint Authority shall commence to function on entry into force of this Treaty.
Article 8
Functions of the Joint Authority
The Joint Authority, subject to directions from the Ministerial Council, shall be responsible for the management of activities relating to exploration for and exploitation of the petroleum resources in Area A in accordance with this Treaty, and in particular the Petroleum Mining Code and with production sharing contracts. These management functions shall be:
(a) dividing Area A into contract areas, issuing prospecting approvals and commissioning environmental investigations prior to contract areas being advertised, advertising of contract areas, assessing applications, and making recommendations to the Ministerial Council on applications for production sharing contracts;
(b) entering into production sharing contracts with corporations, subject to Ministerial Council approval, and supervising the activities of the contractor pursuant to the requirements of the Petroleum Mining Code, including regulations and directions thereunder, and the terms and conditions set out in the contract;
(c) recommending to the Ministerial Council the termination of production sharing contracts where contractors do not meet the terms and conditions of those contracts;
(d) terminating production sharing contracts by agreement with contractors;
(e) recommending to the Ministerial Council the approval of transfer of rights and responsibilities by contractors to other corporations that will then become contractors;
(f) collecting and, with approval of the Ministerial Council, distributing between the two Contracting States the proceeds of the Joint Authority’s share of petroleum production from contracts;
(g) preparation of annual estimates of income and expenditure of the Joint Authority for submission to the Ministerial Council. Any expenditure shall only be made in accordance with estimates approved by the Ministerial Council or otherwise in accordance with regulations and procedures approved by the Council;
(h) controlling movements into, within and out of Area A of vessels, aircraft, structures and other equipment employed in exploration for and exploitation of petroleum resources; and, subject to Article 23, authorizing the entry of employees of contractors and their subcontractors and other persons into Area A;
(i) establishment of safety zones and restricted zones, consistent with international law, to ensure the safety of navigation and petroleum operations;
(j) issuing regulations and giving directions under the Petroleum Mining Code on all matters related to the supervision of and control of petroleum operations including on health, safety, environmental protection and assessments and work practices, pursuant to the Petroleum Mining Code;
(k) making recommendations to the Ministerial Council to amend the Petroleum Mining Code and to modify the Model Production Sharing Contract consistent with the objectives of this Treaty;
(l) requesting action by the appropriate Australian and Indonesian authorities consistent with this Treaty
(i) for search and rescue operations in Area A; and
(ii) in the event of terrorist threat to the vessels and structures engaged in petroleum operations in Area A;
(m) requesting assistance with pollution prevention measures, equipment and procedures from appropriate Australian or Indonesian authorities or other bodies or persons;
(n) preparation of annual reports for submission to the Ministerial Council;
(o) with the approval of the Ministerial Council, the variation of the following provisions of a production sharing contract with the agreement of the contractor:
(i) the Joint Authority’s or the contractor’s production share;
(ii) the operating cost recovery provisions;
(iii) the term of the contract; and
(iv) the contract area relinquishment provisions;
(p) with the approval of the Ministerial Council, the variation of the annual contract service fee;
(q) variation, with the agreement of the contractor, of provisions in the production sharing contract other than those in paragraphs (o) and (p) of this Article;
(r) with the approval of the Ministerial Council, the marketing of any or all petroleum production in circumstances determined by the Ministerial Council;
(s) inspecting and auditing contractors’ books and accounts relating to the production sharing contract for any calendar year;
(t) monitoring and reporting to the Ministerial Council the distribution among the Republic of Indonesia, Australia and third countries, of expenditure on petroleum operations related to Area A; and
(u) such other functions as may be conferred on it by the Ministerial Council.
Article 9
Structure of the Joint Authority
The Joint Authority shall consist of:
(a) Executive Directors appointed by the Ministerial Council comprising an equal number of persons nominated by each Contracting State;
(b) the following three Directorates responsible to the Executive Directors:
(i) a Technical Directorate responsible for operations involving exploration for and exploitation of petroleum resources including operations in respect of functions referred to in paragraph (1) of Article 8;
(ii) a Financial Directorate responsible for collecting fees and proceeds from the sale of the Joint Authority’s share of production; and
(iii) a Legal Directorate responsible for providing advice on any legal issues relating to production sharing contracts and on the operation of law applying in Area A; and
(c) a Corporate Services Directorate, to provide administrative support to the Executive Directors and the three other Directorates and to service the meetings of the Ministerial Council.
2. The personnel of the Joint Authority shall be appointed by the Executive Directors under terms and conditions that have regard to the proper functioning of the Joint Authority and the nature of the exploration for and exploitation of petroleum resources being undertaken from time to time in Area A from amongst individuals nominated by each Contracting State. Of the four Directors heading the Directorates, the Executive Directors shall appoint two from each Contracting State. If an Indonesian nominee is appointed to head the Technical Directorate, then an Australian nominee shall be appointed to head the Financial Directorate, and vice versa.
3. Unless otherwise decided by the Ministerial Council, the Technical Directorate shall be in the Joint Authority office located in Australia.
4. The Executive Directors and the four Directors shall constitute the Executive Board.
5. The Executive Directors and personnel of the Joint Authority shall have no financial interest in any activity relating to exploration for and exploitation of petroleum resources in Area A.
Article 10
Taxation of the Joint Authority and its Officers
The Joint Authority shall be exempt from the following existing taxes:
(a) in Australia, the income tax imposed under the federal law of Australia;
(b) in Indonesia, the income tax (Pajak‑Penghasilan) imposed under the law of the Republic of Indonesia,
as well as any identical or substantially similar taxes which are imposed after the date of signature of this Treaty in addition to, or in place of, the existing taxes.
The Executive Directors and other officers of the Joint Authority:
(a) shall be exempt from taxation of salaries, allowances and other emoluments paid to them by the Joint Authority in connection with their service with the Joint Authority other than taxation under the law of the Contracting State in which they are deemed under the provisions of Article 1 of this Treaty to be resident for taxation purposes; and
(b) shall, at the time of first taking up a post with the Joint Authority located in the Contracting State in which they are not resident under the provisions of Article 1 of this Treaty, be exempt from customs duties and other such charges (except payments for services) in respect of imports of furniture and other households and personal effects in their ownership or possession or already ordered by them and intended for their personal use or for their establishment; such goods shall be imported within six months of an officer’s first entry but in exceptional circumstances an extension of time shall be granted by the Government of the Contracting State; goods which have been acquired or imported by officers and to which exemptions under this sub‑paragraph apply shall not be given away, sold, lent, hired out, or otherwise disposed of except under conditions agreed in advance with the Government of the Contracting State in which the officer is located.
The Ministerial Council may recommend to the Contracting States that additional privileges be conferred on the Joint Authority or its officers, if that is necessary to promote the effective functioning of the Joint Authority. Such privileges shall be conferred only following the agreement of the two Contracting States.
Article 11
Financing
The Joint Authority shall be financed from fees collected under Part VI of the Petroleum Mining Code, provided that the Contracting States shall advance such funds as they jointly determine to be necessary to enable the Joint Authority to commence operations.
In the event that the Joint Authority cannot meet an obligation under an arbitral award arising from a dispute under a production sharing contract, the Contracting States shall contribute the necessary funds in equal shares to enable the Joint Authority to meet that obligation.
PART V
COOPERATION ON CERTAIN MATTERS IN RELATION TO
AREA A
Article 12
Surveillance
For the purposes of this Treaty, both Contracting States shall have the right to carry out surveillance activities in Area A.
The Contracting States shall cooperate on and coordinate any surveillance activities carried out in accordance with paragraph 1 of this Article.
The Contracting States shall exchange information derived from any surveillance activities carried out in accordance with paragraph 1 of this Article.
Article 13
Security Measures
The Contracting States shall exchange information on likely threats to, or security incidents relating to, exploration for and exploitation of petroleum resources in Area A.
The Contracting States shall make arrangements for responding to security incidents in Area A.
Article 14
Search and Rescue
The Contracting States shall cooperate on arrangements for search and rescue in Area A taking into account generally accepted international rules, regulations and procedures established through competent international organizations.
Article 15
Air Traffic Services
The Contracting States shall cooperate on the provision of air traffic services in Area A taking into account generally accepted international rules, regulations and procedures established through competent international organizations.
Article 16
Hydrographic and Seismic Surveys
Both Contracting States shall have the right to carry out hydrographic surveys to facilitate petroleum operations in Area A. Both Contracting States shall cooperate on:
(a) the conduct of such surveys, including the provision of necessary on‑shore facilities; and
(b) exchanging hydrographic information relevant to petroleum operations in Area A.
For the purposes of this Treaty, the Contracting States shall cooperate in facilitating the conduct of seismic surveys in Area A, including in the provision of necessary on‑shore facilities.
Article 17
Marine Scientific Research
Without prejudice to the rights under international law in relation to marine scientific research in Area A claimed by the two Contracting States, a Contracting State which receives a request for consent to conduct marine scientific research into the non‑living resources of the continental shelf in Area A shall consult with the other Contracting State on whether the research project is related to the exploration for and exploitation of petroleum resources in Area A. If the Contracting States decide that the research is so related they shall seek the views of the Joint Authority on the research project and, in the light of such views, mutually decide on the regulation, authorization and conduct of the research including the duty to provide data, samples and results of such research to both Contracting States and the Joint Authority and participation by both Contracting States in the research project.
Article 18
Protection of the Marine Environment
The Contracting States shall cooperate to prevent and minimize pollution of the marine environment arising from the exploration for and exploitation of petroleum in Area A. In particular:
(a) the Contracting States shall provide such assistance to the Joint Authority as may be requested pursuant to paragraph (m) of Article 8 of this Treaty; and
(b) where pollution of the marine environment occurring in Area A spreads beyond Area A, the Contracting States shall cooperate in taking action to prevent, mitigate and eliminate such pollution.
Pursuant to paragraph (j) of Article 8 of this Treaty the Joint Authority shall issue regulations to protect the marine environment in Area A. It shall establish a contingency plan for combating pollution from petroleum operations in that Area.
Article 19
Liability of Contractors for Pollution of the Marine Environment
Contractors shall be liable for damage or expenses incurred as a result of pollution of the marine environment arising out of petroleum operations in Area A in accordance with contractual arrangements with the Joint Authority and the law of the State in which a claim in respect of such damage or expenses is brought.
Article 20
Unitization between Area A and Areas outside Area A
If any single accumulation of petroleum extends across any of the boundary lines of Area A of the Zone of Cooperation as designated and described in Article 1 and Annex A of this Treaty, and the part of such accumulation that is situated on one side of a line is exploitable, wholly or in part, from the other side of the line, the Contracting States shall seek to reach agreement on the manner in which the accumulation shall be most effectively exploited and on the equitable sharing of the benefits arising from such exploitation.
Article 21
Construction of Facilities
In the event that exploration for and exploitation of petroleum resources in Area A necessitates the construction of facilities and provision of services outside Area A, the Contracting States shall provide every assistance to contractors and the Joint Authority to enable the construction and operation of those facilities, and the provision of those services. Construction and operation of such facilities and provision of such services shall be subject to the law and regulations of the relevant Contracting State and any terms and conditions set by the Contracting States.
PART VI
APPLICABLE LAWS
Article 22
Law Applicable to Production Sharing Contracts
The law applicable to a production sharing contract shall be specified in that contract.
Article 23
Application of Customs, Migration and Quarantine Laws
Each Contracting State may, subject to paragraphs 3 and 5 of this Article, apply customs, migration and quarantine laws to persons, equipment and goods entering its territory from, or leaving its territory for, Area A. The Contracting States may adopt arrangements to facilitate such entry and departure.
Contractors shall ensure, unless otherwise authorized by the Contracting States, that persons, equipment and goods do not enter structures in Area A without first entering Australia or the Republic of Indonesia, and that their employees and the employees of their subcontractors are authorized by the Joint Authority to enter Area A.
One Contracting State may request consultations with the other Contracting State in relation to the entry of particular persons, equipment and goods to structures in Area A aimed at controlling the movement of such persons, equipment or goods.
Nothing in this Article prejudices the right of either Contracting State to apply customs, migration and quarantine controls to persons, equipment and goods entering Area A without the authority of either Contracting State. The Contracting States may adopt arrangements to coordinate the exercise of such rights.
(a) Goods and equipment entering Area A for purposes related to petroleum operations shall not be subject to customs duties.
(b) Goods and equipment leaving or in transit through a Contracting State for the purpose of entering Area A for purposes related to petroleum operations shall not be subject to customs duties.
(c) Goods and equipment leaving Area A for the purpose of being permanently transferred to a part of a Contracting State may be subject to customs duties of that Contracting State.
Article 24
Employment
The Contracting States shall take appropriate measures to ensure that preference is given in employment in Area A to nationals or permanent residents of Australia and the Republic of Indonesia, and to their employment in equivalent numbers over the term of a production sharing contract, but, with due regard to efficient operations and to good oilfield practice.
The terms and conditions under which persons are employed on structures in Area A shall be governed by employment contracts or collective agreements. The terms and conditions shall include provisions on insurance and compensation in relation to employment injuries, including death or disability benefits, and may provide for use of an existing compensation system established under the law of either Contracting State. The terms and conditions shall also include provisions in relation to remuneration, periods of duty or overtime, leave and termination. The terms and conditions shall be no less favourable than those which would apply from time to time to comparable categories of employment in both Australia and the Republic of Indonesia.
Paragraph 2 of this Article shall also apply to persons employed on seismic, drill, supply and service vessels regularly engaged in activities related to petroleum operations in Area A, regardless of the nationality of the vessel.
In relation to the provision of facilities and opportunities, there shall be no discrimination on the basis of nationality amongst persons to which paragraphs 2 and 3 of this Article apply.
Disputes arising between employers and employees shall be settled by negotiation in the first instance. Disputes which cannot be settled by negotiation shall be settled either by recourse to a tripartite dispute settlement committee, comprising representatives of employers, employees and persons nominated by the Contracting States, or by recourse to a conciliation and arbitration system available in either Contracting State.
Employer and employee associations recognised under the law of either Contracting State may respectively represent employers and employees in the negotiation of contracts or collective agreements and in conciliation and arbitration proceedings.
An employment contract or collective agreement shall provide that it shall be subject to the law of one or other Contracting State and shall identify, consistent with paragraph 5 of this Article, the applicable dispute settlement mechanism. Any arbitration decision shall be enforceable under the law of the Contracting State under which it is made.
Article 25
Health and Safety for Workers
The Joint Authority shall develop, and contractors shall apply, occupational health and safety standards and procedures for persons employed on structures in Area A that are no less effective than those standards and procedures that would apply in relation to persons employed on similar structures in both Australia and the Republic of Indonesia. The Joint Authority may adopt, consistent with this Article, standards and procedures taking into account an existing system established under the law of either Contracting State.
Article 26
Petroleum Industry Vessels
Except as otherwise provided in this Treaty, vessels engaged in petroleum operations shall be subject to the law of the Contracting State whose nationality they possess and, unless they are a vessel with the nationality of the other Contracting State, the law of the Contracting State out of whose ports they operate, in relation to safety and operating standards, and crewing regulations. Such vessels that enter Area A and do not operate out of either Contracting State shall be subject to relevant international safety and operating standards under the law of both Contracting States.
Article 27
Criminal Jurisdiction
Subject to paragraph 3 of this Article a national or permanent resident of a Contracting State shall be subject to the criminal law of that State in respect of acts or omissions occurring in Area A connected with or arising out of exploration for and exploitation of petroleum resources, provided that a permanent resident of a Contracting State who is a national of the other Contracting State shall be subject to the criminal law of the latter State.
(a) Subject to paragraph 3 of this Article, a national of a third State, not being a permanent resident of either Contracting State, shall be subject to the criminal law of both Contracting States in respect of acts or omissions occurring in Area A connected with or arising out of the exploration for and exploitation of petroleum resources. Such a person shall not be subject to criminal proceedings under the law of one Contracting State if he or she has already been tried and discharged or acquitted by a competent tribunal or already undergone punishment for the same act or omission under the law of the other Contracting State or where the competent authorities of one Contracting State, in accordance with its law, have decided in the public interest to refrain from prosecuting the person for that act or omission.
(b) In cases referred to in sub‑paragraph (a) of this paragraph, the Contracting States shall, as and when necessary, consult each other to determine which criminal law is to to be applied, taking into account the nationality of the victim and the interests of the Contracting State most affected by the alleged offence.
The criminal law of the flag State shall apply in relation to acts or omissions on board vessels including seismic or drill vessels in, or aircraft in flight over, Area A.
(a) The Contracting States shall provide assistance to and cooperate with each other, including through agreements or arrangements as appropriate, for the purposes of enforcement of criminal law under this Article, including the obtaining of evidence and information.
(b) Each Contracting State recognizes the interest of the other Contracting State where a victim of an alleged offence is a national of that other State and shall keep that other State informed to the extent permitted by its law of action being taken with regard to the alleged offence.
The Contracting States may make arrangements permitting officials of one Contracting State to assist in the enforcement of the criminal law of the other Contracting State. Where such assistance involves the detention of a person who under paragraph 1 of this Article is subject to the jurisdiction of the other Contracting State that detention may only continue until it is practicable to hand the person over to the relevant officials of that other Contracting State.
Article 28
Civil Actions
Claims for damages or restitution of expenses as a result of activities in Area A may be brought in the Contracting State which has or whose nationals or permanent residents have suffered the damage or incurred the expense. The court in which the action is brought shall apply the law and regulations of that State.
Article 29
Application of Taxation Law
or the purposes of the taxation law related directly or indirectly to:
(a) the exploration for or the exploitation of petroleum in Area A; or
(b) acts, matters, circumstances and things touching, concerning, arising out of or connected with any such exploration or exploitation,
Area A shall be deemed to be, and be treated by, each Contracting State as part of that Contracting State.
In the application of the taxation law:
(a) in Area A;
(b) to interest paid by a contractor; or
(c) to royalties paid by a contractor,
each Contracting State shall grant relief from double taxation in accordance with the Taxation Code.
A Contracting State shall not impose a tax not covered by the provisions of the Taxation Code in respect of or applicable to:
(a) the exploration for or exploitation of petroleum in Area A; or
(b) any petroleum exploration or exploitation related activity carried on in Area A,
unless the other Contracting State consents to the imposition of that tax.
PART VIII
SETTLEMENT OF DISPUTES
Article 30
Settlement of Disputes
Any dispute arising between the Contracting States concerning the interpretation or application of this Treaty shall be resolved by consultation or negotiation between the Contracting States.
Each production sharing contract entered into by the Joint Authority shall contain provisions to the effect that any dispute concerning the interpretation or application of such contract shall be submitted to a specified form of binding commercial arbitration. The Contracting States shall facilitate the enforcement in their respective courts of arbitral awards made pursuant to such arbitration.
PART VIII
FINAL CLAUSES
Article 31
Amendment
This Treaty may be amended at any time by agreement between the Contracting States.
The Petroleum Mining Code, in accordance with paragraph 1 (b) of Article 6 of this Treaty and the Model Production Sharing Contract, in accordance with paragraph 1 (c) of Article 6 of this Treaty, may also be amended or modified by decision of the Ministerial Council. Such amendments or modifications shall have the same status as the Petroleum Mining Code and the Model Production Sharing Contract.
Article 32
Entry into Force
This Treaty shall enter into force thirty (30) days after the date on which the Contracting States have notified each other in writing that their respective requirements for entry into force of this Treaty have been complied with.
Article 33
Term of this Treaty
This Treaty shall remain in force for forty (40) years from the date of entry into force of this Treaty.
Unless the two Contracting States agree otherwise, this Treaty shall continue in force after the initial forty (40) year term for successive terms of twenty (20) years, unless by the end of each term, including the initial term of forty years, the two Contracting States have concluded an agreement on a permanent continential shelf delimitation in the area covered by the Zone of Cooperation.
Where the Contracting States have not concluded an agreement on a permanent continental shelf delimitation in the area covered by the Zone of Cooperation five years prior to the end of any of the terms referred to in paragraphs 1 or 2 of this Article, representatives of the two Contracting States shall meet with a view to reaching agreement on such permanent continental shelf delimitation.
This Article shall be without prejudice to the continued operation of Article 34 of this Treaty.
Article 34
Rights of Contractors
In the event that
(a) this Treaty ceases to be in force following conclusion of an agreement between the Contracting States on permanent continental shelf delimitation in the area of the Zone of Cooperation; and
(b) there are in existence immediately prior to the date on which this Treaty ceases to be in force, production sharing contracts with the Joint Authority,
production sharing contracts shall continue to apply to each Contracting State or some other person nominated by the Contracting State concerned, in place of the Joint Authority, in so far as the contract is to be performed within the territorial jurisdiction of each Contracting State, having regard to the agreement on delimitation. Each Contracting State shall apply to contractors performing contracts within its territorial jurisdiction a regime no more onerous than that set out in this Treaty and the relevant production sharing contract.
The two Contracting States shall at the time of the conclusion of the permanent delimitation agreement make arrangements to give effect to paragraph 1 of this Article.
IN WITNESS WHEREOF the undersigned, being duly authorized thereto by their respective Governments, have signed this Treaty.
DONE over the Zone of Cooperation on this eleventh day of December, one thousand nine hundered and eighty nine, in two originals in the English language.