THE HAGUE • An international arbitration court agreed yesterday to take up a decade-old maritime dispute between Australia and East Timor over a border cutting through lucrative oil and gas fields in the Timor Sea.

The Permanent Court of Arbitration (PCA) "held that it was competent to continue with the arbitration process" initiated by East Timor against Canberra in April, the court in The Hague said in a statement.

East Timor last month urged the panel - the world's oldest arbitration tribunal - to help end the dispute, saying negotiations have so far failed. Australia in return argued it had no jurisdiction in the battle as Canberra had already signed a treaty with Dili ruling out recourse to the court. Australia has resisted negotiating a permanent border until 2056 at the earliest.

Dili yesterday welcomed the tribunal's decision. "Just as we fought so hard and suffered so much for our independence, Timor-Leste will not rest until we have our sovereign rights over both land and sea," the country's independence resistance hero and former prime minister Xanana Gusmao said in a statement.

Canberra's lawyers had argued it had also initiated talks with Dili through an exchange of letters in 2003 to try to resolve the dispute.

But a PCA conciliation commission ruled the dispute should be settled under the UN Convention on the Law of the Sea, rather than the 2006 treaty, called Certain Maritime Arrangements in the Timor Sea, which covers the vast Greater Sunrise gas field lying between the two nations.

The tribunal said the exchange of letters between Canberra and Dili "did not constitute an agreement... because the exchange was not... legally binding".

East Timor, which gained independence from Indonesian occupation in 2002, is an impoverished nation heavily dependent on oil and gas exports.

Talks between the two countries will now continue over the next year, the tribunal said, but it stressed the meetings will be "largely in a confidential setting".

AGENCE FRANCE-PRESSE, REUTERS