Petroleum (Timor Gap Zone of Cooperation) Act 1990 (Cth)
This compilation was prepared on 16 October 2001
taking into account amendments up to Act No. 140 of 2001
The text of any of those amendments not in force
on that date is appended in the Notes section
Prepared by the Office of Legislative Drafting,
Attorney‑General’s Department, Canberra
Contents
This Act may be cited as the
Petroleum (Timor Gap Zone of Cooperation) Act 1990 .
This Act commences on a day to be fixed by Proclamation, being a day not earlier than the day on which the Treaty enters into force for Australia.
The object of this Act is to enable Australia to fulfil its obligations under the Treaty.
The Ministerial Council and the Joint Authority exercise the rights and responsibilities of Australia, in relation to the exploration for and exploitation of petroleum resources in Area A of the Zone of Cooperation, in accordance with the Treaty.
(1) In this Act, unless the contrary intention appears:
Area A of the Zone of Cooperation means the area described as Area A in Annex A of the Treaty.
Joint Authority means the body established by Article 7 of the Treaty.
Ministerial Council means the body established by Article 5 of the Treaty.
Treaty means the Treaty between Australia and the Republic of Indonesia on the Zone of Cooperation in an Area between the Indonesian Province of East Timor and Northern Australia, done over the Zone of Cooperation on 11 December 1989, being the Treaty the text of which is set out in Schedule 1, and includes that Treaty:
(a) as amended from time to time; and
(b) as read with the Notes exchanged between Australia and the United Nations Transitional Administration in East Timor at Dili, on 10 February 2000, the text of which is set out in Schedule 2.
(2) Unless the contrary intention appears, a word or an expression that is defined in the Treaty, when used in this Act, has the same meaning as in the Treaty.
Chapter 2 of the
Criminal Code applies to all offences created by this Act.Note: Chapter 2 of the
Criminal Code sets out the general principles of criminal responsibility.
The Joint Authority is an international organisation to which the
International Organisations (Privileges and Immunities) Act 1963 applies.
A person must not prospect for petroleum in Area A of the Zone of Cooperation except with the approval of the Joint Authority.
Penalty: Imprisonment for 5 years.
A person must not undertake petroleum operations in Area A of the Zone of Cooperation except under and in accordance with a production sharing contract, or with the approval of the Joint Authority.
Penalty: Imprisonment for 5 years.
(1) An inspector appointed by the Joint Authority under Article 34 of the Petroleum Mining Code may, for the purpose of ascertaining whether the Petroleum Mining Code, the regulations and directions issued under Article 37 of the Petroleum Mining Code, and contract terms and conditions applying to petroleum operations in Area A of the Zone of Cooperation have been complied with, at all reasonable times and on production of a certificate of appointment as an inspector:
(a) enter or board any structure, vessel or aircraft that is in Area A and is being used for petroleum operations; and
(b) inspect and test any equipment being used or proposed to be used for petroleum operations in Area A; and
(c) enter or board any structure, vessel, aircraft or building in which the inspector has reason to believe that there are any documents relating to petroleum operations in Area A, and inspect, take extracts from and make copies of any of those documents.
(2) The person in charge of any structure, vessel, aircraft or building referred to in subsection (1) must, at the request of an inspector, provide the inspector with all reasonable facilities and assistance for the effective exercise of powers under this section.
Penalty: $5,000.
(3) A person must not obstruct or hinder an inspector exercising powers under this section.
Penalty: $5,000.
(4) Subsection (3) does not apply if the person has a reasonable excuse.
Note: A defendant bears an evidential burden in relation to the matter in subsection (4), see subsection 13.3(3) of the
Criminal Code .
(1) Subject to this section, the courts of each State and Territory are invested with federal jurisdiction in civil matters:
(a) relating to an act or omission done in Area A of the Zone of Cooperation; and
(b) involving damage suffered or expenses incurred by Australia, by a State or Territory, or by a person who is a national or permanent resident of Australia.
(2) The jurisdiction with which courts are invested by subsection (1) is invested within the limits, other than limits having effect by reference to localities, of their respective jurisdictions (whether those limits are as to subject‑matter or otherwise).
(3) This section does not limit the jurisdiction of the courts of a State or Territory arising otherwise than under this section.
(1) Subject to this section, in exercising jurisdiction conferred by section 10, a court is to apply the laws, whether written or unwritten, in force in the Northern Territory.
(2) The laws referred to in subsection (1) do not include laws that are substantive criminal laws, or laws of criminal investigation, procedure and evidence, within the meaning of Schedule 1 to the
Crimes at Sea Act 2000 , but nothing in this section detracts from the operation of that Act.(3) A law is taken to be in force in the Northern Territory even if it applies only in part of the Northern Territory.
(4) This section does not require a court to apply a law that is inconsistent with a law of the Commonwealth (including this Act).
(5) This section does not limit the operation that any law has apart from this section.
(6) The regulations may provide that a law, or specified provisions of a law, referred to in subsection (1) are not to be applied for the purposes of that subsection, or are to be so applied with specified modifications.
In this Part:
Australian tax means:
(a) tax imposed by the
Fringe Benefits Tax Act 1986 ; or(b) income tax imposed as such by any Act; or
(c) sales tax imposed on imported goods.
(1) Subject to this Part, the provisions of the Treaty and of the Taxation Code, so far as those provisions affect Australian tax, have the force of law according to their tenor.
(2) When applying subsection (1):
(a) during the period of the administration of the United Nations Transitional Administration in East Timor (
UNTAET ):(i) UNTAET is to be treated as the body politic of the territory (the
territory ) administered by it under United Nations Security Council Resolution 1272 (1999) of 25 October 1999 at New York; and(ii) the competent authority in relation to the Taxation Code and the territory is the Transitional Administrator of UNTAET, or a person authorised by the Administrator to be such an authority; and
(iii) a reference to a resident of a Contracting State is a reference to a resident of the territory, when the case requires; and
(b) after the territory ceases to be administered by UNTAET:
(i) the body politic of the territory and the competent authority are the body and the authority identifed in the regulations; and
(ii) a reference to a resident of a Contracting State is to be interpreted in accordance with the regulations.
Note: In 2000 the text of the Resolution was available in the Library of the Department of Foreign Affairs and Trade and accessible on the Internet through the Department’s or the United Nations’ world‑wide web site.
For the purposes of this Part, Medicare levy is taken to be income tax and to be imposed as such and, unless the contrary intention appears, references to income tax are to be construed accordingly.
(1) Subject to subsection (2), the following Acts are incorporated and are to be read as one with this Part:
(a) the
Fringe Benefits Tax Assessment Act 1986 ;(b) the
Income Tax Assessment Act 1936 ;(c) any Act, so far as it relates to the assessment of sales tax imposed on imported goods.
(2) The provisions of this Part have effect in spite of anything inconsistent with those provisions contained in any of the following Acts:
(a) the
Fringe Benefits Tax Assessment Act 1986 (other than section 67 of that Act);(b) the
Income Tax Assessment Act 1936 (other than Part IVA of that Act);(c) any Act, so far as it relates to the assessment of sales tax imposed on imported goods;
(g) an Act imposing Australian tax.
(1) This section applies where, under Article 4, 9, 10 or 11 of the Taxation Code, a taxpayer is entitled to a rebate against income tax of 50% of the gross tax payable in Australia on particular profits, or particular income, derived by the taxpayer in a year of income.
(2) In determining that rebate, the gross tax payable in Australia on those profits or that income is calculated using the formula:
where:
Notional Australian tax means the amount of income tax that would be assessed under theIncome Tax Assessment Act 1936 in respect of the taxpayer’s taxable income of the year of income if:
(a) the taxpayer was not entitled to any rebate of income tax or credit against the taxpayer’s liability for income tax; and
(b) the taxpayer was not liable to pay additional tax under Division 7 of Part III of that Act.
Taxable income means the number of whole dollars in the taxpayer’s taxable income of the year of income.
Rebatable amount means so much of the taxpayer’s taxable income of the year of income as is attributable to those profits or to that income, as the case may be.
(3) A reference in this section to income tax is a reference to income tax imposed as such by any Act.
(1) The Governor‑General may make regulations, not inconsistent with this Act, prescribing all matters necessary or convenient to be prescribed for carrying out or giving effect to this Act.
(2) The regulations may prescribe penalties not exceeding a fine of $500 for offences against regulations made for the purposes of Part 3.
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
1. 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
1. 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.
2. 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.
3. 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.
4. 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
1. 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.
2. 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
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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
1. A Ministerial Council for the Zone of Cooperation is hereby established.
2. 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.
3. The Ministerial Council shall meet annually or as often as may be required.
4. 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.
5. 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
1. 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
1. A Joint Authority is hereby established.
2. 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.
3. The Joint Authority shall be responsible to the Ministerial Council.
4. 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.
5. 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.
6. 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
1. 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
1. 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.
2. 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.
3. 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
1. 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.
2. 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
1. For the purposes of this Treaty, both Contracting States shall have the right to carry out surveillance activities in Area A.
2. The Contracting States shall cooperate on and coordinate any surveillance activities carried out in accordance with paragraph 1 of this Article.
3. 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
1. 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.
2. 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
1. 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.
2. 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
1. 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.
2. 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
1. 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.
2. 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.
3. 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.
4. 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.
5. (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
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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
1. 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.
2. (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.
3. 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.
4. (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.
5. 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
1. 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.
2. 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.
3. 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
1. 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.
2. 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
1. This Treaty may be amended at any time by agreement between the Contracting States.
2. 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
1. This Treaty shall remain in force for forty (40) years from the date of entry into force of this Treaty.
2. 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.
3. 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.
4. This Article shall be without prejudice to the continued operation of Article 34 of this Treaty.
Article 34
Rights of Contractors
1. 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.
2. 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.
FOR AUSTRALIA | FOR THE REPUBLIC OF |
GARETH EVANS | INDONESIA |
MINISTER FOR FOREIGN | ALI ALATAS |
AFFAIRS AND TRADE | MINISTER FOR FOREIGN AFFAIRS |
ANNEX A
DESIGNATION AND DESCRIPTION INCLUDING MAPS AND
COORDINATES OF THE AREAS COMPRISING THE ZONE OF
COOPERATION
Where for the purposes of this Treaty it is necessary to determine the position on the surface of the Earth of a point, line or area, that position shall be determined by reference to the Australian Geodetic Datum, that is to say, by reference to a spheroid having its centre at the centre of the Earth and a major (equatorial) radius of 6 378 160 metres and a flattening of 1/298.25 and by reference to the position of the Johnston Geodetic Station in the Northern Territory of Australia. That station shall be taken to be situated at Latitude 25°56¢54.5515² South and at Longitude 133°12¢30.0771² East and to have a ground level of 571.2 metres above the spheroid referred to above.
The area bounded by the line—
a) commencing at the point of Latitude 9°12¢ 19² South, Longitude 127°33¢32² East;
b) running thence south‑easterly along the geodesic to the point of Latitude 9°22¢53² South, Longitude 127°48¢ 42² East;
c) thence south‑easterly along the geodesic to the point of Latitude 9°28¢00² South, Longitude 127°56¢00² East;
d) thence south‑easterly along the geodesic to the point of Latitude 9°29¢57² South, Longitude 127°58¢47² East;
e) thence south‑easterly along the geodesic to the point of Latitude 10°29¢17² South, Longitude 128°12¢24² East;
f) thence south‑easterly along the geodesic to the point of Latitude 11°42¢10² South, Longitude 128°29¢10² East;
g) thence south‑westerly along the geodesic to the point of Latitude 12°3¢17² South, Longitude 127°45¢00² East;
h) thence south‑westerly along the geodesic to the point of Latitude 12°15¢28² South, Longitude 127°08¢28² East;
i) thence north‑westerly along the geodesic to the point of Latitude 11°20¢08² South, Longitude 126°31¢54² East;
j) thence north‑westerly along the geodesic to the point of Latitude 10°28¢00² South, Longitude 126°00¢00² East;
k) thence north‑easterly along the geodesic to the point of Latitude 10°06¢40² South, Longitude 126°00¢25² East
l) thence north‑easterly along the geodesic to the point of Latitude 9°46¢01² South, Longitude 126°00¢50² East; and
m) thence north‑easterly along the geodesic to the point of commencement.
The area bounded by the line—
a) commencing at the point of Latitude 9°22¢ 53² South, Longitude 127°48¢42² East;
b) running thence south‑westerly along the geodesic to the point of Latitude 10°06¢40² South, Longitude 126°00¢ 25² East;
c) thence south‑westerly along the geodesic to the point of Latitude 10°28¢00² South, Longitude 126°00¢00² East;
d) thence south‑easterly along the geodesic to the point of Latitude 11°20¢08² South, Longitude 126°31¢54² East;
e) thence north‑easterly along the geodesic to the point of Latitude 11°19¢46² South, Longitude 126°47¢04² East;
f) thence north‑easterly along the geodesic to the point of Latitude 11°17¢36² South, Longitude 126°57¢07² East;
g) thence north‑easterly along the geodesic to the point of Latitude 11°17¢30² South, Longitude 126°58¢13² East;
h) thence north‑easterly along the geodesic to the point of Latitude 11°14¢24² South, Longitude 127°31¢33² East;
i) thence north‑easterly along the geodesic to the point of Latitude 10°55¢26² South, Longitude 127°47¢04² East;
j) thence north‑easterly along the geodesic to the point of Latitude 10°53¢42² South, Longitude 127°48¢45² East;
k) thence north‑easterly along the geodesic to the point of Latitude 10°43¢43² South, Longitude 127°59¢16² East;
l) thence north‑easterly along the geodesic to the point of Latitude 10°29¢17² South, Longitude 128°12¢24² East
m) thence north‑westerly along the geodesic to the point of Latitude 9°29¢57² South, Longitude 127°58¢47² East;
n) thence north‑westerly along the geodesic to the point of Latitude 9°28¢00² South, Longitude 127°56¢00² East; and
o) thence north‑westerly along the geodesic to the point of commencement.
The area bounded by the line—
a) commencing at the point of Latitude 10°29¢ 17² South, Longitude 128°12¢24² East;
b) running thence south‑easterly along the geodesic to the point of Latitude 11°42¢10² South, Longitude 128°29¢ 10² South;
c) thence south‑westerly along the geodesic to the point of Latitude 12°03¢17² South, Longitude 127°45¢00² East;
d) thence south‑westerly along the geodesic to the point of Latitude 12°15¢28² South, Longitude 127°08¢28² East;
e) thence north‑westerly along the geodesic to the point of Latitude 11°20¢08² South, Longitude 126°31¢54² East;
f) thence north‑easterly along the geodesic to the point of Latitude 11°19¢46² South, Longitude 126°47¢04² East;
g) thence north‑easterly along the geodesic to the point of Latitude 11°17¢36² South, Longitude 126°57¢07² East;
h) thence north‑easterly along the geodesic to the point of Latitude 11°17¢30² South, Longitude 126°58¢13² East;
i) thence north‑easterly along the geodesic to the point of Latitude 11°14¢24²South, Longitude 127°31¢33² East;
j) thence north‑easterly along the geodesic to the point of Latitude 10°55¢26² South, Longitude 127°47¢04² East;
k) thence north‑easterly along the geodesic to the point of Latitude 10°53¢42² South, Longitude 127°48¢45² East;
l) thence north‑easterly along the geodesic to the point of Latitude 10°43¢43² South, Longitude 127°59¢16² East; and
m) thence north‑easterly along the geodesic to the point of commencement.
ZONE OF COOPERATION
The area bounded by the line—
a) commencing at the point of Latitude 9°12¢19² South, Longitude 127°33¢32² East;
b) running thence south‑easterly along the geodesic to the point of Latitude 9° 22¢ 53² South, Longitude 127° 48 ¢ 42² East;
c) thence south‑westerly along the geodesic to the point of Latitude 10° 06¢ 40² South, Longitude 126° 00¢ 25² East;
d) thence north‑easterly along the geodesic to the point of Latitude 9° 46¢ 01² South, Longitude 126° 00¢ 50² East; and
e) thence north‑easterly along the geodesic to the point of commencement.
ANNEX B
PETROLEUM MINING CODE FOR AREA A
OF THE ZONE OF COOPERATION
PART I
DEFINITIONS
Article 1
Definitions
1. For the purposes of this Petroleum Mining Code:
(a) “block
” means a block constituted in accordance with Article 2 of this Petroleum Mining Code;(b) “calendar year” means a period of twelve (12) months commencing on 1 January and ending on the following 31 December, according to the Gregorian Calendar;
(c) “contract operator” means the contractor appointed and authorized by the contractors to be responsible for petroleum operations and all dealings with the Joint Authority under the contract on behalf of the contractors;
(d) “contract year” means a period of twelve (12) consecutive months according to the Gregorian Calendar counted from the effective date of the contract or from the anniversary of such effective date;
(e) “discovery area” means the blocks declared by the Joint Authority under Article 16 of this Petroleum Mining Code to contain petroleum;
(f) “effective date” means the date a production sharing contract is entered into by and between the Joint Authority and the contractor;
(g) “operating costs” means those costs defined in a production sharing contract which are incurred and are recoverable by the contract operator in the course of undertaking petroleum operations;
(h) “petroleum pool” means a discrete accumulation of petroleum under a single pressure system;
(i) “pipeline” means a pipe or system of pipes and associated equipment necessary for conveying petroleum;
(j) “work program and budget of operating costs” means the details of petroleum operations to be carried out in or related to the contract area and the aggregate cost estimates for those operations;
(k) “Treaty” means the Treaty between Australia and the Republic of Indonesia on the Zone of Cooperation in an Area between the Indonesian Province of East Timor and Northern Australia to which this Petroleum Mining Code is an Annex.
2. The terms used in this Petroleum Mining Code shall, unless otherwise specified, have the same meaning as those in the Treaty.
PART II
AREA A
Article 2
Graticulation of Area A
1. The surface of Area A shall be divided by the Joint Authority into graticular sections defined by meridians of five (5) minutes of longitude (reference the meridian of Greenwich) and by parallels of latitude of five (5) minutes (reference the Equator). A block shall constitute a graticular section as described above and shall include part graticular sections. Each block in Area A shall be allocated a discrete identifying number.
2. The Joint Authority may subdivide each block into graticular sections. Where this is done, the graticular sections shall be defined by meridians of longitude and by parallels of latitude, and each section shall form a block. Each block so defined shall be allocated a discrete identifying number.
3. Contract areas within Area A shall be described in terms of the component blocks.
Article 3
Geodetic Datum
Whenever it is necessary to determine the position of a line in Area A that position shall be determined by reference to a spheroid having its centre at the centre of the earth and a major (equatorial) radius of 6378160 metres and a flattening of 100/29825 and by reference to the position of the Johnston Geodetic Station in the Northern Territory of Australia. That station shall be taken to be situated at 133 degrees, 12 minutes and 30.0771 seconds of East Longitude and at 25 degrees, 56 minutes and 54.5515 seconds of South Latitude and to have a ground level of 571.2 metres above the spheroid referred to above.
PART III
THE CONTRACT
Article 4
Rights Conferred by Contract
1. A production sharing contract entered into by the Joint Authority, with the approval of the Ministerial Council, shall give to the contractor the exclusive right and the responsibility to undertake petroleum operations in a contract area, subject to the provisions of the Treaty, relevant regulations and directions issued by the Joint Authority, and the terms and conditions of the contract.
2. During each calendar year, any petroleum production shall be shared between the Joint Authority and the contractor.
3. The contract shall not confer on the contractor ownership of petroleum in the ground but shall provide for the contractor to take a share of petroleum production as payment from the Joint Authority for the petroleum operations undertaken by the contract operator pursuant to the contract. Ownership of the Joint Authority’s share of petroleum production shall remain with the Joint Authority. Except as provided in paragraph 5 of this Article, the Joint Authority shall authorize the marketing of its share of petroleum production by the contractor who shall market all petroleum produced from the contract area.
4. Title to the contractor’s portion of petroleum production shall pass to the contractor at the point of tanker loading. Subject to paragraph 5 of this Article the contractor shall have the right to lift, dispose of and export its share of petroleum, and retain abroad the proceeds obtained therefrom. Except where the Joint Authority markets petroleum as provided in paragraph 5 of this Article, the contract shall require the contractor to pay to the Joint Authority, at regular periods during each calendar year, an amount of money estimated to be equal to the value of the Joint Authority’s share of petroleum production lifted for those periods. The contract shall specify the length of each period, monthly if workable, the means by which the value of the Joint Authority’s share of petroleum production is estimated for each period, and when each payment shall be made. The estimated value of the Joint Authority’s share of petroleum production for each period shall be based on the work program and budget of operating costs and revisions to it, and the expected value of quantities of petroleum to be produced. The estimated value shall be revised during the calendar year having regard to the actual operating costs and value of sales of petroleum.
5. The Joint Authority, with the approval of the Ministerial Council, may market any or all petroleum production. Where it is the Joint Authority’s share of petroleum production which is to be marketed by the Joint Authority, the method of determining the estimated value of the Joint Authority’s share shall be based on that method described in paragraph 4 of this Article. Where petroleum production marketed by the Joint Authority includes the contractor’s share, the contract shall require the Joint Authority to pay to the contractor, at regular periods during each calendar year, an amount of money estimated to be equal to the value of the contractor’s share of petroleum production so lifted for those periods. The method of determining the estimated value of the Joint Authority’s and the contractor’s shares shall be based on that method described in paragraph 4 of this Article. The contract operator shall be obliged to coordinate the efficient lifting of the petroleum production, including tanker nomination and scheduling.
6. The contract shall also specify that within thirty (30) days after the end of each calendar year, adjustments and cash settlements between the contractor and the Joint Authority shall be made on the basis of the actual quantities, amounts and prices involved, in order to ensure that the Joint Authority receives the correct share of petroleum production for each calendar year.
7. In the case of a contract entered into with a group of corporations, each corporation shall be jointly and severally liable for meeting the conditions of the contract, and for complying with the requirements of this Petroleum Mining Code and the regulations and directions issued by the Joint Authority. Each corporation shall be a signatory to the contract with the Joint Authority.
Article 5
The Contract
1. Without limiting the matters to be dealt with, the contract shall be concluded on the basis of the Model Production Sharing Contract and shall include:
(a) the definition of the responsibilities and rights of the contractor, the contract operator and the Joint Authority;
(b) the term of the contract and block relinquishment provisions;
(c) the work program and expenditure commitments;
(d) the definition of operating costs and the method of recovery of those costs by the contract operator;
(e) the petroleum production share to be allocated to the contractor;
(f) provisions for the termination of the contract;
(g) provisions for exemption from and variation of contract conditions;
(h) provisions for the resolution of disputes between the contractor and the Joint Authority; and
(i) any other provisions that are consistent with the Treaty.
Article 6
Contract Operator
1. Where a number of corporations enters into a contract with the Joint Authority, the corporations shall appoint and authorize one of their number to be the contract operator responsible, on behalf of the group of corporations, for petroleum operations and all dealings with the Joint Authority under the contract.
2. The contract operator shall undertake petroleum operations in an efficient manner which minimizes costs and in a manner in accordance with the provisions of the production sharing contract. Costs incurred by the contract operator in undertaking petroleum operations shall not include any component of profit which accrues to the contract operator solely by virtue of its role as contract operator.
3. All communications on matters related to the contract shall be effected between the contract operator and the Joint Authority. The contract operator shall establish an office in either the Republic of Indonesia or Australia.
Article 7
Term of Contract
1. Subject to the provisions of this Article, and Articles 22 and 48 of this Petroleum Mining Code, the term of a production sharing contract shall be thirty (30) years. In addition, the provisions of the production sharing contract shall include:
(a) an obligation on the Joint Authority to give sympathetic consideration to an extension of the term of the contract beyond the thirtieth (30th) contract year if petroleum production has not ceased by that year; and
(b) automatic extension of the term of the contract to allow continuation of petroleum production to meet natural gas sales contracts the terms of which extend beyond the thirtieth (30th) contract year of the production sharing contract.
2. The production sharing contract may also include a specified term after which the contract may be terminated if a discovery is not made.
PART IV
PETROLEUM EXPLORATION AND EXPLOITATION
Article 8
Advertisement of Blocks
1. The Joint Authority shall invite applications to enter into a contract over specific blocks. The invitation for applications shall specify:
(a) the blocks over which the rights shall be granted;
(b) the bidding system to apply;
(c) the basis on which bids shall be assessed;
(d) details of the contract to be entered into including the rights and responsibilities of the parties to the contract; and
(e) the period within which applications may be made.
2. Details of the invitation for applications shall be published in official Australian and Indonesian Government Gazettes and in such other ways as the Joint Authority decides.
Article 9
Bidding System
1. The Joint Authority shall invite applications to enter into a contract over parts of Area A using a work program bidding system which identifies annual exploration work program and expenditure commitments to be undertaken in the contract area.
2. The Joint Authority shall make available full details of the bidding system to be used at the time applications are invited.
Article 10
Application for Contracts
1. The Joint Authority shall set out in formal guidelines the form in which applications shall be prepared and lodged. As a minimum requirement a draft contract based on the Model Production Sharing Contract shall be completed and lodged, and applications shall set out details of the work program and expenditure commitments, and the financial capability and technical knowledge and ability available to the applicant.
2. Where an application is lodged by a group comprising several corporations, the application shall be accompanied by evidence that an agreement can be reached between those corporations for cooperation in petroleum operations in the contract area.
3. The application shall be accompanied by the fee specified in Article 44 of this Petroleum Mining Code.
Article 11
Consideration of Application
1. The Joint Authority shall set out in formal guidelines the basis on which applications will be considered and the relevant criteria which applicants will be expected to meet. Contracts shall be offered in accordance with the published criteria for that bidding round. The principal criteria shall be the amount and quality of the exploration work bid.
2. The Joint Authority shall be satisfied that an applicant has the necessary financial capability and technical knowledge and ability to carry out petroleum operations in a manner consistent with the terms and conditions of the contract and this Petroleum Mining Code, including the necessary environmental and safety requirements.
Article 12
Grant or Refusal of Contracts
1. The Joint Authority shall seek prior approval from the Ministerial Council to enter into a contract with the preferred applicant or group of applicants.
2. Subject to that approval, the Joint Authority shall notify in writing the successful applicant that it has Ministerial Council approval to enter into a contract with the applicant covering petroleum operations in a specified contract area on terms and conditions set out in the contract. The applicant shall have thirty (30) days within which to accept or refuse the offer in writing. On the applicant accepting the offer, paying the contract service fee, and providing evidence that it has fulfilled any prerequisite conditions such as insurance cover, the Joint Authority shall enter into the contract with the applicant.
3. Unsuccessful applicants shall be advised accordingly.
Article 13
Publication of Contracts
The Joint Authority shall publish in official Australian and Indonesian Government Gazettes summary details of:
(a) contracts entered into; and
(b)termination of contracts.
Article 14
Commencement of Work
The contract operator shall commence petroleum operations within six (6) months from the date the contract is entered into, except for reasons of force majeure.
Article 15
Discovery of Petroleum
1. The contract operator shall notify the Joint Authority in writing within twenty four (24) hours whenever any petroleum is discovered and on request by the Joint Authority shall provide details in writing of the:
(a) chemcial composition and physical properties of the petroleum; and
(b) the nature of the sub‑soil in which the petroleum occurs.
2. The contract operator shall provide the Joint Authority with any other information concerning the discovery on request by the Joint Authority.
3. The contract operator shall also do such things as the Joint Authority requests to determine the chemical composition and physical properties of any petroleum discovered, and to determine the geographical extent of any petroleum pool and the quantity of petroleum in that pool.
Article 16
Declaration of Discovery Area
1. The Joint Authority shall declare the blocks within the contract area covering a petroleum pool as a discovery area, provided that the joint Authority and contract operator agree that the petroleum pool can be produced commercially. These blocks shall form a single contiguous area.
2. At any time after a discovery area has been declared, the Joint Authority may, of its own volition or on request from the contract operator, agree that certain blocks be included in or excluded from the discovery area. Blocks included in the discovery area in this way shall be from within the contractor’s contract area.
Article 17
Approval to Produce Petroleum
The contract operator shall not construct any production structures without the approval of the Joint Authority. The Joint Authority shall not unreasonably withhold approvals.
Article 18
Approval to Construct Pipeline
1. The contract operator shall not construct a pipeline for the purpose of conveying petroleum within or from Area A without the approval of the Joint Authority, nor shall the contract operator operate or remove that pipeline without the approval of the Joint Authority.
2. The Joint Authority may direct a contract operator owning a pipeline to enter into a commercial agreement with another contract operator to enable the second mentioned operator to transport petroleum.
Article 19
Petroleum Production Work
Unless otherwise agreed between the contract operator and the Joint Authority, work on a permanent structure to produce petroleum shall commence within six (6) months of approval to construct the structure.
Article 20
Rates of Production
The Joint Authority may direct and make regulations about the commencement of petroleum production and the specific rates of petroleum production. In giving such directions and making such regulations the Joint Authority shall take account of good oilfield practice.
7.11. Notwithstanding the provisions of subsection 1 of this Section which oblige the contractor to market all petroleum produced from the contract area, the Joint Authority may market any or all petroleum when the Joint Authority secures a net realized price for the petroleum, f.o.b. the contract area, which is greater than the price which can be realized by the contractor. The Joint Authority’s right to market any or all of the petroleum shall continue for such period as it can secure a net realized price, f.o.b. the contract area, greater than that which can be realized by the contractor. The contract operator shall coordinate the efficient lifting of the petroleum production, including tanker nomination and scheduling.
SECTION 8
VALUATION OF PETROLEUM PRODUCTION
8.1. Petroleum production sold to third parties shall be valued as follows:
(a) all petroleum production to which the contractor is entitled under this contract and which is sold to third parties, shall be valued at the net realized price, f.o.b. the contract area;
(b) all petroleum production to which the Joint Authority is entitled under this contract which is sold to third parties shall be valued at the net realized price, f.o.b. the contract area; and
(c) where a contract of sale involves other than a net realized price f.o.b., the Joint Authority shall determine a fair and reasonable net f.o.b. price for the purposes of that sale.
8.2. Petroleum production sold to other than third parties shall be valued by the Joint Authority as follows:
(a) by using the weighted average per unit price, adjusted as necessary for quality, quantity, grade and specific gravity of the petroleum production, received by the contractor and the Joint Authority from sales to third parties during the three (3) months preceding such sale, excluding commissions and brokerages incurred in relation to such third party sales; and
(b) if there are no third party sales as defined in paragraph (a), at prevailing market prices, adjusted to take account of quality, quantity, grade and specific gravity of the petroleum production and taking into consideration any special circumstances with respect to sales of such petroleum production.
8.3. For the purpose of this Section, “third party sales” means sales by the contractor to independent purchasers with whom, at the time the sale is made, the contractor has no direct or indirect contractual relationship or joint interest.
8.4. Commissions or brokerages incurred in connection with sales to third parties, if any, shall not exceed the customary and prevailing rate.
8.5. During any calendar year in which petroleum is produced from the contract area, the contractor shall be liable to make provisional payments to the Joint Authority, equal to the estimated value of petroleum to which the Joint Authority is entitled under Section 7 of this contract. The provisional payments shall be made on a monthly basis unless the Joint Authority and the contractor agree on alternate arrangements. The amount of each provisional payment shall be calculated by the contractor using the estimates of operating costs contained in the work program and budget of operating costs, and the contractor’s estimate of the value of quantities of petroleum sold. During the calendar year the provisional payments may be adjusted having regard to actual operating costs and the actual value of sales of petroleum. Within thirty (30) days after the end of the calendar year, adjustments and cash settlements between the Joint Authority and the contractor shall be made on the basis of the actual amounts of the operating costs and actual value of sales of petroleum made during the calendar year, in order to comply with Section 7. Similarly, where the Joint Authority markets petroleum production pursuant to subsection 11 of Section 7, the Joint Authority shall be liable to make provisional payments to the contractor in a manner consistent with this subsection.
8.6. Petroleum production disposed of other than by sale or destruction shall be valued using the method defined in subsection 2 of this Section.
8.7. The contractor shall notify the Joint Authority of quantities and sales prices of all petroleum production sold or disposed of before the sales or disposals are made.
SECTION 9
PAYMENTS
9.1. The contract operator shall make all payments to the Joint Authority for which it is liable under this contract in United States dollars or some other currency agreed between the contract operator and the Joint Authority. Payments shall be made to a bank designated by the Joint Authority. Where a payment is made in currency other than United States dollars, the exchange rate used to convert the United States dollars liability into that currency shall be the exchange rate set down on the day of payment by a bank designated by the Joint Authority.
9.2. The Joint Authority shall make all payments to the contract operator in United States dollars or some other currency agreed between the contract operator and the Joint Authority. Where a payment is made in currency other than United States dollars, the exchange rate used to convert the United States dollar liability into that currency shall be the exchange rate set down on the day of payment by a bank designated by the Joint Authority.
9.3. Any payments required to be made pursuant to this contract shall be made within ten (10) days following the end of the month in which the obligation to make such payments is incurred.
SECTION 10
TENDERS FOR PETROLEUM OPERATIONS
10.1. The contract operator shall draw invitations to tender for sub‑contracts to the attention of Australian and Indonesian sub‑contractors.
10.2. Subject to subsection 4 of this Section, all tenders for petroleum operations called by the contract operator shall be subject to approval by the Joint Authority.
10.3. The Joint Authority shall provide its approval or non‑approval within thirty (30) days of receipt of the tender details from the contract operator. The tender details to be provided by the contract operator shall include a summary of the tenders received compared against the tender criteria determined by the contract operator and the reasons for the selection of the preferred tender.
10.4. Notwithstanding subsection 2 of this Section, the contract operator may enter into sub‑contracts without the approval of the Joint Authority where:
(a) the tender for petroleum operations is expected to involve expenditure of less than US$ two million (2,000,000);
(b) the tender for petroleum operations is expected to involve expenditure of less than US$ ten million (10,000,000) and those operations form part of a project for the development of petroleum resources, the cost of which is expected to exceed US$ one hundred million (100,000,000); or
(c) the tender selected by the contract operator is the lowest cost tender and has been submitted by an Australian or Indonesian corporation.
10.5. The contract operator shall provide the Joint Athority, for information, with the full financial details of the sub‑contract, irrespective of the amount of the expenditure involved.
SECTION 11
TITLE TO EQUIPMENT
11.1. Equipment purchased by the contract operator pursuant to the work program and budget of operating costs remains the property of the contractor and shall be used in petroleum operations.
SECTION 12
CONSULTATION AND ARBITRATION
12.1. Periodically, the Joint Authority and the contract operator shall meet to discuss the conduct of petroleum operations under this contract and shall make every effort to settle amicably any problems arising therefrom.
12.2. Disputes, if any, arising between the Joint Authority and contractor relating to this contract or the interpretation and performance of this contract which cannot be settled amicably shall be submitted to arbitration.
12.3. Except as may be otherwise agreed by the Parties, arbitration shall be conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce.
12.4. The Joint Authority on the one hand and the contractor on the other hand shall each appoint one arbitrator and so advise the other Party, and these two arbitrators shall appoint a third. If either Party fails to appoint an arbitrator within thirty (30) days after receipt of a written request to do so, such arbitrator shall, at the request of the other Party, if the Parties do not otherwise agree, be appointed by the President of the International Chamber of Commerce. If the first two arbitrators appointed as aforesaid fail to agree on a third within thirty (30) days following the appointment of the second arbitrator, the third arbitrator shall, if the Parties do not otherwise agree, be appointed, at the request of either Party, by the President of the International Chamber of Commerce. If an arbitrator fails or is unable to act, that arbitrator’s successor shall be appointed in the same manner as the arbitrator who is replaced.
12.5. The decision of a majority of the arbitrators shall be final and binding upon the Parties and an award may be enforced in any court having jurisdiction for that purpose. In accordance with paragraph 2 of Article 11 of the Treaty, in the event that the Joint Authority cannot meet an obligation under an arbitral award arising from a dispute under this contract, the Contracting States shall contribute the necessary funds in equal shares to enable the Joint Authority to meet that obligation.
12.6. The place of arbitration shall be (to be agreed by the Parties before the contract is signed). The language of the arbitration shall be
(to be agreed by the Parties before the contract is signed).
SECTION 13
TERMINATION
13.1. This contract shall not be terminated during the first three (3) years from the effective date.
13.2. Subject to subsection 1 of this Section, this contract may be terminated at any time by agreement of the Parties or in accordance with Article 48 of the Petroleum Mining Code.
SECTION 14
BOOKS, ACCOUNTS AND AUDITS
BOOKS AND ACCOUNTS
14.1. In addition to any requirements pursuant to paragraph (b) of subsection 4 of Section 5, the contractor shall keep complete books and accounts recording all operating costs as well as monies received from the sale or disposal of petroleum production.
AUDITS
14.2. The Joint Authority may require independent auditing of the contractor’s books and accounts relating to this contract for any calendar year and may require the independent auditor to perform such auditing procedures as are deemed appropriate by the Joint Authority. The contractor shall forward a copy of the independent accountant’s report to the Joint Authority within sixty (60) days following the completion of the audit. The Joint Authority reserves the right to inspect and audit the contractor’s books and accounts relating to this contract
SECTION 15
OTHER PROVISIONS
NOTICES
15.1. Any notices required or given by either Party to the other shall be served in accordance with Article 35 of the Petroleum Mining Code.
15.2. All notices to be served on the contract operator shall be addressed to:
(contract operator’s address) |
15.3. All notices to be served on the Joint Authority relating to matters for which the head office of the Joint Authority is responsible shall be addressed to:
(address of the Joint Authority’s head office) |
15.4. All notices to be served on the Joint Authority relating to matters for which the Technical Directorate of the Joint Authority is responsible shall be addressed to:
(address of the Joint Authority’s Technical Directorate) |
15.5. Either Party may substitute or change the above such address by giving written notice to the other.
APPLICABLE LAW
15.6. Subject to the provisions of the Treaty, including the Petroleum Mining Code, the law of shall apply to this contract.
SUSPENSION OF OBLIGATIONS
15.7. Any failure or delay on the part of either Party in the performance of its obligations or duties under the contract shall be excused to the extent that such failure or delay is attributable to force majeure.
15.8. If exploration is delayed, curtailed or prevented by force majeure the Joint Authority shall agree to vary the work program and expenditure commitments or exempt the contract operator from part or all of the work program and expenditure commitments during the period of force majeure.
15.9. The Party whose ability to perform its obligations is so affected by force majeure shall immediately notify the other Party in writing, stating the cause, and both Parties shall do all that is reasonably within their power to discharge their obligations.
SECTION 16
EFFECTIVENESS
16.1. This contract shall come into effect on the day it is entered into by and between the Joint Authority and the contractor.
16.2. This contract shall not be amended or modified in any respect, except by the mutual consent in writing of the Parties.
IN WITNESS WHEREOF, the Parties hereto have executed this contract, in triplicate and in the English language, on this day of,
19 .
THE JOINT AUTHORITY
BY | ||
(CONTRACTOR) BY | ||
APPROVED BY THE MINISTERIAL COUNCIL on this day of, 19 | ||
BY | BY | |
Minister of | Minister for | |
on behalf of the GOVERNMENT | on behalf of the GOVERNMENT | |
OF THE REPUBLIC OF | OF AUSTRALIA | |
INDONESIA | ||
ANNEX D
TAXATION CODE FOR THE AVOIDANCE OF DOUBLE
TAXATION
IN RESPECT OF ACTIVITIES CONNECTED WITH
AREA A OF THE ZONE OF COOPERATION
Article 1
General Definitions
1. In this Taxation Code, unless the context otherwise requires:
(a) the term “Australian tax” means tax imposed by Australia, other than any penalty or interest, being tax to which this Taxation Code applies;
(b) the term “company” means any body corporate or any entity which is treated as a company or body corporate for tax purposes;
(c) the term “competent authority” means, in the case of Australia, the Commissioner of Taxation or an authorised representative of the Commissioner and, in the case of the Republic of Indonesia, the Minister of Finance or an authorised representative of the Minister;
(d) the term “Indonesian tax” means tax imposed by the Republic of Indonesia, other than any penalty or interest, being tax to which this Taxation Code applies;
(e) the term “law of a Contracting State” means the law of that Contracting State from time to time in force relating to the taxes to which this Taxation Code applies;
(f) the term “person” includes an individual, a company and any other body of persons; and
(g) the terms “tax” or “taxation” mean Australian tax or Indonesian tax, as the context requires.
2. In the application of this Taxation Code by a Contracting State any term not defined in this Taxation Code or elsewhere in the Treaty shall, unless the context otherwise requires, have the meaning which it has under the law of that Contracting State from time to time in force relating to the taxes to which this Taxation Code applies.
Article 2
Personal Scope
The provisions of this Taxation Code shall apply to persons who are residents of one or both of the Contracting States as well as in respect of persons who are not residents of either of the Contracting States, but only for taxation purposes 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.
Article 3
Taxes Covered
1. The existing taxes to which this Taxation Code shall apply are:
(a) in Australia:
(i) the income tax imposed under the federal law of Australia:
(ii) the fringe benefits tax imposed under the federal law of Australia; and
(iii) the sales tax imposed under the federal law of Australia;
(b) in Indonesia:
(i) the income tax (Pajak‑Penghasilan), including the tax on profits after income tax payable by a contractor, imposed under the law of the Republic of Indonesia, and its implementing regulations;
(ii) the value‑added tax on goods and services and sales tax on luxury goods (Pajak Pertambahan Nilai atas Barang dan Jasa dan Pajak Penjualan atas Barang Mewah) imposed under the law of the Republic of Indonesia, and its implementing regulations.
2. The provisions of this Taxation Code shall also apply to 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 competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws within a reasonable period of time after such changes.
Article 4
Business Profits
1. For the purposes of the taxation law of each Contracting State, the business profits or losses of a person, other than an individual, derived from, or incurred in, Area A in a year shall be reduced by fifty (50) per cent.
2. Business profits derived from Area A in a year by an individual who is a resident of a Contracting State shall be taxable only in that Contracting State.
3. Business profits derived from Area A in a year by an individual who is not a resident of either Contracting State may be taxed in both Contracting States but subject to a rebate entitlement against the tax payable in each Contracting State of fifty (50) per cent of the gross tax payable on those profits in that Contracting State.
4. Business losses, incurred in Area A in a year by an individual who is not a resident of either Contracting State, that are eligible under the law of a Contracting State to be carried forward for deduction against future income shall, for the purposes of that law, be reduced by fifty (50) per cent.
5. For the purposes of paragraphs 1 and 4 of this Article any losses brought forward from prior years in accordance with the law of a Contracting State as a deduction from income shall not be taken into account in determining the profit or loss for the year.
6. For the purposes of this Article:
(a) the term “year” means:
(i) in Australia, any year of income;
(ii) in Indonesia, any taxable year; and
(b) the terms “business profits” and “business lossess” do not include gains or losses of a capital nature to which Article 8 of this Taxation Code applies.
Article 5
Dividends
1. Dividends which are paid by a company which is a resident of a Contracting State wholly or partly out of profits derived from sources in Area A, and which are beneficially owned by a resident of the other Contracting State, may be taxed only in that other Contracting State.
2. The term “dividends” as used in this Article means income from shares or other rights participating in profits and not relating to debt claims, as well as other income which is subjected to the same taxation treatment as income from shares by the law of the Contracting State of which the company making the distribution is a resident.
Article 6
Interest
1. Interest paid by a contractor, being interest to which a resident of a Contracting State is beneficially entitled, may be taxed in that Contracting State.
2. Such interest may also be taxed in the other Contracting State, but the tax so charged shall not exceed ten (10) per cent of the gross amount of the interest.
3. Where such interest is taxed in the other Contracting State in accordance with paragraph 2 of this Article, that interest shall, for the purposes of determining a foreign tax credit entitlement under the taxation law of the Contracting State referred to in paragraph 1 of this Article, be deemed to be income derived from sources in the other Contracting State.
4. Interest paid by a contractor, being interest to which a person who is not a resident of either Contracting State is beneficially entitled, may be taxed in both Contracting States but the taxable amount of any such interest shall be an amount equivalent to fifty (50) per cent of the amount that would be the taxable amount but for this paragraph.
Article 7
Royalties
1. Royalties paid by a Contractor, being royalties to which a resident of a Contracting State is beneficially entitled, may be taxed in that Contracting State.
2. Such royalties may also be taxed in the other Contracting State, but the tax so charged shall not exceed ten (10) per cent of the gross amount of the royalties.
3. Where such royalties are taxed in the other Contracting State in accordance with paragraph 2 of this Article, those royalties shall, for the purposes of determining a foreign tax credit entitlement under the taxation law of the Contracting State referred to in paragraph 1 of this Article, be deemed to be income derived from sources in the other Contracting State.
4. Royalties paid by a Contractor, being royalties to which a person who is not a resident of either Contracting State is beneficially entitled, may be taxed in both Contracting States but the taxable amount of any such royalties shall be an amount equivalent to fifty (50) per cent of the amount that would be the taxable amount but for this paragraph.
Article 8
Alienation of Property
1. Where a gain or loss of a capital nature accrues to or is incurred by an individual who is a resident of a Contracting State, from the alienation of property situated in Area A or shares or comparable interests in a company, the assets of which consist wholly or principally of property situated in Area A, the amount of the gain or loss shall be taxable, or otherwise recognised for taxation purposes, only in that Contracting State.
2. Where a gain or loss of a capital nature accrues to or is incurred by a person, other than an individual who is a resident of a Contracting State, from the alienation of property situated in Area A or shares or comparable interests in a company, the assets of which consist wholly or principally of property situated in Area A, the amount of the gain or loss shall, for the purposes of the law of a Contracting State, be an amount equivalent to fifty (50) per cent of the amount that would be the gain or loss but for this paragraph.
Article 9
Independent Personal Services
1. Income derived by an individual who is a resident of a Contracting State in respect of professional services, or other independent activities of a similar character, performed in Area A shall be taxable only in that Contracting State.
2. Income derived by an individual who is not a resident of either Contracting State in respect of professional services, or other independent activities of a similar character, performed in Area A may be taxed in both Contracting States but subject to a rebate entitlement against the tax payable in each Contracting State of fifty (50) per cent of the gross tax payable in that Contracting State on the income referred to in this paragraph.
Article 10
Dependent Personal Services
1. Salaries, wages and other similar remuneration derived by an individual who is a resident of a Contracting State in respect of employment exercised in Area A shall be taxable only in that Contracting State.
2. Remuneration derived by an individual who is not a resident of either Contracting State in respect of employment exercised in Area A may be taxed in both Contracting States but subject to a rebate entitlement against the tax payable in each Contracting State of fifty (50) per cent of the gross tax payable in that Contracting State on the income referred to in this paragraph.
Article 11
Other Income
1. Items of income of a resident of a Contracting State, derived from sources in Area A, not dealt with in the foregoing Articles of this Taxation Code shall be taxable only in that Contracting State.
2. Items of income of a person who is not a resident of either Contracting State, derived from sources in Area A and not dealt with in the foregoing Articles of this Taxation Code may be taxed in both Contracting States but subject to a rebate entitlement against the tax payable in each Contracting State of fifty (50) per cent of the gross tax payable in that Contracting State on the income referred to in this paragraph.
Article 12
Fringe Benefits
For the purposes of the taxation law of Australia, the taxable value of any fringe benefits provided in a year of tax to employees, who are not residents of either Contracting State, in a year of tax in repsect of employment exercised in Area A shall be reduced by fifty (50) per cent.
Article 13
Goods Imported into Area A
Goods imported into Area A from a place other than either Contracting State shall not be taxable in either Contracting State unless and until such goods are permanently transferred to another part of a Contracting State in which case the goods may be taxed only in the Contracting State last referred to.
Article 14
Mutual Agreement Procedure
1. Where a person considers that the actions of the competent authority of one or both of the Contracting States result or will result for the person in taxation not in accordance with the provisions of this Taxation Code, the person may, irrespective of the remedies provided by the domestic law of the Contracting States, present a case to the competent authority of the Contracting State of which the person is a resident, or to either competent authority in the case of persons who are not residents of either Contracting State. The case must be presented within three (3) years from the first notification of the action resulting in taxation not in accordance with the provisions of this Taxation Code.
2. The competent authority shall endeavour, if the claim appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the provisions of this Taxation Code. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of this Taxation Code.
Article 15
Exchange of Information
1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Taxation Code or of the domestic law of the Contracting States concerning taxes covered by this Taxation Code, insofar as the taxation hereunder is not contrary to this Taxation Code, in particular for the prevention of avoidance or evasion of such taxes. Any information received by the competent authority of a Contracting State shall be treated as secret in the same manner as information obtained under the domestic law of that Contracting State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by this Taxation Code and shall be used only for such purposes.
2. In no case shall the provisions of paragraph 1 of this Article be construed so as to impose on the competent authority of a Contracting State the obligation:
(a) to carry out administrative measures at variance with the law or the administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the law or in the normal course of the administration of that or of the other Contracting State; or
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy.
Note: This is the copy of Australia’s Note, referred to in the definition of
Treaty in subsection 5(1) of this Act.Note No. 2/2000
The Australian Mission in East Timor presents it compliments to the United Nations Transitional Administration in East Timor (UNTAET) and has the honour to refer to UNTAET’s Note to the Mission dated 10 February 2000 which reads as follows:
“The United Nations Transitional Administration in East Timor (UNTAET) presents its compliments to the Australian Mission in East Timor and has the honour to refer to the fact that, pursuant to United Nations Security Council resolution 1272 (1999) of 25 October 1999, and in accordance with paragraph 35 of the Report of the Secretary‑General (S/1999/1024), the United Nations will conclude such international agreements with States and international organisations as may be necessary for the carrying out of the functions of UNTAET in East Timor.
An agreement between UNTAET, acting on behalf of East Timor, and Australia, providing practical arrangements for the continuity of the terms of the “Treaty between Australia and the Republic of Indonesia on the Zone of Cooperation in an Area between the Indonesian Province of East Timor and Northern Australia” (the “Timor Gap Treaty”) in the transitional period, will benefit the people of East Timor and will assist UNTAET in carrying out its functions entrusted to it under Security Council resolution 1272 (1999). The conclusion of this agreement, however, is without prejudice to the position of the future government of an independent East Timor with regard to the Treaty.
UNTAET therefore has the honour to advise the Australian Mission in East Timor that all rights and obligations under the Timor Gap Treaty previously exercised by Indonesia are assumed by UNTAET, acting on behalf of East Timor, until the date of independence of East Timor. UNTAET, acting on behalf of East Timor, and Australia may enter into subsidiary arrangements or agreements relating to the continued operation of the terms of the Treaty. In agreeing to continue the arrangements under the terms of the Treaty, the United Nations does not thereby recognise the validity of the “integration” of East Timor into Indonesia.
If the understanding of Australia is in accordance with the foregoing advice, UNTAET has the honour to propose that this Note and Australia’s confirmatory Note in reply shall constitute an agreement between UNTAET, acting on behalf of East Timor, and Australia which shall be applied as of 25 October 1999”.
The Australian Mission has the honour to advise that the foregoing proposal is acceptable to the Government of Australia and to agree that the UNTAET Note and this reply shall constitute an Agreement between the Government of Australia and UNTAET which shall be applied as of 25 October 1999.
The Australian Mission in East Timor avails itself of this opportunity to renew to the United Nations Transitional Administration in East Timor the assurances of its highest consideration.
[Seal and initials omitted]
DILI
10 February 2000
Note: This is the copy of UNTAET’s Note, referred to in the definition of
Treaty in subsection 5(1) of this Act.
UNTAET
United Nations Transitional Administration in East Timor The United Nations Transitional Administration in East Timor (UNTAET) presents its compliments to the Australian Mission in East Timor and has the honour to refer to the fact that, pursuant to United Nations Security Council resolution 1272 (1999) of 25 October 1999, and in accordance with paragraph 35 of the Report of the Secretary‑General (S/1999/1024), the United Nations will conclude such international agreements with States and international organizations as may be necessary for the carrying out of the functions of UNTAET in East Timor.
An agreement between UNTAET, acting on behalf of East Timor, and Australia, providing practical arrangements for the continuity of the terms of the “Treaty between Australia and the Republic of Indonesia on the Zone of Cooperation in an Area between the Indonesian Province of East Timor and Northern Australia” (the “Timor Gap Treaty”) in the transitional period, will benefit the people of East Timor and will assist UNTAET in carrying out its functions entrusted to it under Security Council resolution 1272 (1999). The conclusion of this agreement, however, is without prejudice to the position of the future government of an independent East Timor with regard to the Treaty.
UNTAET therefore has the honour to advise the Australian Mission in East Timor that all rights and obligations under the Timor Gap Treaty previously exercised by Indonesia are assumed by UNTAET, acting on behalf of East Timor, until the date of independence of East Timor. UNTAET, acting on behalf of East Timor, and Australia may enter into subsidiary arrangements or agreements relating to the continued operation of the terms of the Treaty. In agreeing to continue the arrangements under the terms of the Treaty, the United Nations does not thereby recognize the validity of the “integration” of East Timor into Indonesia.
If the understanding of Australia is in accordance with the foregoing advice, UNTAET has the honour to propose that this Note and Australia’s confirmatory Note in reply shall constitute an agreement between UNTAET, acting on behalf of East Timor, and Australia which shall be applied as of 25 October 1999.
UNTAET avails itself of this opportunity to renew to the Australian Mission in East Timor the assurances of its highest consideration.
10 February 2000
[Seal and initials omitted]
The
For all relevant information pertaining to application, saving or transitional provisions
Act | Number and year | Date of Assent | Date of commencement | Application, saving or transitional provisions |
36, 1990 | 7 June 1990 | 18 Feb 1991 ( | ||
118, 1992 | 30 Sept 1992 | 28 Oct 1992 | — | |
13, 2000 | 31 Mar 2000 | Ss. 1 and 2: Royal Assent Remainder: 31 Mar 2001 | Sch. 2 (item 11) | |
| ||||
| 25, 2000 | 3 Apr 2000 | Schedule 2 (item 25): | — |
25, 2000 | 3 Apr 2000 | Ss. 4‑6 and Schedule 1: 26 Oct 1999 | Ss. 4‑6 | |
140, 2001 | 1 Oct 2001 | 2 Oct 2001 | S. 4 |
(aa) TheCrimes at Sea Act 2000 was amended by Schedule 2 (item 25) only of theTimor Gap Treaty (Transitional Arrangements) Act 2000 , subsection 2(3) of which provides as follows:
(3) Items 18 to 25 of Schedule 2 commence immediately before the commencement of Schedule 1 to the
Crimes at Sea Act 2000 .Schedule 1 to the
Crimes at Sea Act 2000 commenced on 31 March 2001.
(a) ThePetroleum (Timor Gap Zone of Cooperation) Act 1990 was amended by Schedule 1 only of theTimor Gap Treaty (Transitional Arrangements) Act 2000 , subsection 2(2) of which provides as follows:
(2) Sections 3 to 7 and Schedules 1 and 2 (other than items 18 to 25 of Schedule 2) are taken to have commenced at the transition time. [
see Table A]
| |
Provision affected | How affected |
Title........................................... | am. No. 25, 2000 |
S. 1........................................... | am. No. 25, 2000 |
S. 5........................................... | am. No. 25, 2000 |
S. 5A......................................... | ad. No. 140, 2001 |
S. 9........................................... | am. No. 140, 2001 |
S. 11......................................... | am. No. 13, 2000 |
S. 12......................................... | am. No. 118, 1992 |
S. 13......................................... | am. No. 25, 2000 |
S. 15......................................... | am. No. 118, 1992 |
Heading to Schedule................ | rep. No. 25, 2000 |
Heading to Schedule 1............. | ad. No. 25, 2000 |
Schedule 2................................ | ad. No. 25, 2000 |
(1) The amendments made by this Schedule apply to acts and omissions that take place after this Schedule commences.
(2) Although this Schedule repeals the
Crimes at Sea Act 1979 , that Act continues to apply, in relation to acts and omissions that took place before this Schedule commences, as if the repeal had not happened.(3) For the purposes of this item, if an act or omission is alleged to have taken place between two dates, one before and one on or after the day on which this Schedule commences, the act or omission is alleged to have taken place before this Schedule commences.
Timor Gap Treaty (Transitional Arrangements) Act 2000 (No. 25, 2000)
In this Act:
transition time means 1.23 am Australian Central Standard Time on 26 October 1999.Note: This time corresponds to the time in New York when the United Nations Security Council adopted Resolution 1272 (1999), which established UNTAET and gave it responsibility for the administration of East Timor. In 2000 the text of the Resolution was available in the Library of the Department of Foreign Affairs and Trade and accessible on the Internet through the Department’s or the United Nations’ world‑wide web site.
5
Validity of things done by the Ministerial Council and the Joint Authority (1) Any thing done by the Ministerial Council or the Joint Authority, during the period commencing on the transition time and ending on 5.55 pm Australian Central Standard Time on 10 February 2000, is not invalid:
(a) merely because the Republic of Indonesia ceased to be a party to the Treaty, and UNTAET became a party to the Treaty, at the transition time; or
(b) merely because of an invalidity in the membership of the Ministerial Council or the Joint Authority.
(2) In this section:
Joint Authority andMinisterial Council have the meanings given them by subsection 5(1) of thePetroleum (Timor Gap Zone of Cooperation) Act 1990 .
Treaty has the meaning given by subsection 5(1) of thePetroleum (Australia‑Indonesia Zone of Cooperation) Act 1990 (as in force immediately before the transition time).
UNTAET means the United Nations Transitional Administration in East Timor.
6
Protection against retrospective criminal liability A person does not commit an offence if the person would not have committed the offence had the amendments made by the items in Schedules 1 and 2 (other than items 18 to 25 of Schedule 2) commenced on the day on which this Act received the Royal Assent (rather than commencing at the transition time).
Industry, Science and Resources Legislation Amendment (Application of Criminal Code) Act 2001 (No. 140, 2001)
(1) Each amendment made by this Act applies to acts and omissions that take place after the amendment commences.
(2) For the purposes of this section, if an act or omission is alleged to have taken place between 2 dates, one before and one on or after the day on which a particular amendment commences, the act or omission is alleged to have taken place before the amendment commences.
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