UPDATE 1-East Timor demands Australia return documents at court hearing
* Documents have details on Dili strategy in resources row
* Australia to outline its position at ICJ on Tuesday
* Documents part of wider dispute over oil, gas fields
AMSTERDAM, Jan 20 (Reuters) - East Timor demanded on Monday that Australia return seized documents relating to the two countries' negotiations over oil and gas reserves thought to be worth tens of billions of dollars.
The case brought before the United Nations' top court pits one of Asia's poorest countries against its wealthy giant neighbour, Australia, in a wider dispute involving spy agencies, bugging allegations, snatched documents and potentially huge rewards from developing the Greater Sunrise oil and gas fields.
The two countries disagree over revenue-sharing as well as how best to develop the gas fields, located 150 km (90 miles) southeast of East Timor, also known as Timor Leste, and 450 km (280 miles) northwest of Darwin, Australia.
"Natural resources ... both unite and divide us and remain a serious bone of contention," Joaquim da Fonseca, East Timor's ambassador to Britain, told judges at the International Court of Justice in The Hague at the start of the hearings.
"Those resources are the principal economic asset of the East Timorese people."
The hearings at the ICJ, in a case brought by East Timor against Australia, concern seized documents allegedly showing how Canberra may have used intelligence to outmanoeuvre Dili in talks over the oilfields and also details of East Timor's negotiating strategy in a pending arbitration under the 2002 Timor Sea Treaty between the two countries.
"These are matters of the highest importance to Timor Leste. The documents relate to issues such as Timor Leste's negotiating position and strategy in relation to Australia," East Timor's lawyer Elihu Lauterpacht told the court, adding that it put Dili "at a considerable negotiating and litigating disadvantage".
"The case is a relatively simple one. One state has taken the property of another and should be required to give it back untouched and without delay," Lauterpacht said.
The material was seized during raids by Australia's domestic spy agency on the Canberra offices of a lawyer representing East Timor over Australian bugging claims and an unnamed former spy-turned-whistleblower.
Australia is scheduled to present its legal arguments on Tuesday at the ICJ. But Australia's Attorney-General George Brandis said last month the raids were justified on grounds of national security.
The arbitration case in The Hague was brought by East Timor - which won independence in 2002 from Indonesia - over allegations that the Australian Secret Intelligence Service (ASIS) bugged East Timorese government offices in Dili.
The bugging allegedly took place at a particularly critical time, during negotiations in 2004 over the maritime boundary between Australia and East Timor and the revenue split from the Greater Sunrise gas fields.
Australia's Woodside Petroleum is contracted to develop the Sunrise LNG plant but is stuck in the middle of the dispute.
While Woodside prefers a floating LNG plant, East Timor is pushing for an onshore plant that will provide jobs for locals, leaving the project at a stalemate.