"Both countries negotiated in good faith in order to achieve a treaty that Timor Leste, Australia and the [Conciliation] Commission believe is fair, balanced and consistent with worldwide law", the statement said.
It is hoped the deal, signed at the United Nations in NY, will end the bitter dispute over oil and gas reserves in the Timor Sea.
That same year, Australia and the United Nations Transitional Administration in East Timor (UNTAET) negotiated the 2002 Timor Sea Treaty - a variant split 90-10 in favour of Timor, which applied to fields in the Joint Petroleum Development Area.
The two sides and the Sunrise joint venture have not yet agreed on a way to develop Greater Sunrise.
It will come into force once it has received parliamentary approval in both countries.
The UN secretary general, Antonio Guterres, a former prime minister of Portugal who had campaigned for Timor-Leste's independence, spoke at the event. Australia and East Timor have been at loggerheads for the past decade over the Timor Sea.
"To see this ceremony is like the complement of that day, and to be here today is an enormous privilege and fills my heart with joy".
After signing the treaty during a United Nations ceremony, Australian Foreign Minister Julie Bishop told reporters that East Timor stood to gain "substantial benefits" from the deal.
USA committee might have issues with the Broadcom/Qualcomm deal
The government's move though could now spoil Broadcom's efforts to take over the American company. Broadcom's bid to acquire Qualcomm for $117 billion may be stymied by U.S. security concerns.
The statement called the treaty "a testament to the efficacy and importance of resolving disputes peacefully and in accordance with global law".
"Australia believes the global rules-based order is fundamental to our collective security and prosperity", Bishop said.
Timor-Leste will also receive a higher share of the revenue from the gas fields, taking between 70 and 80% depending on whether the gas is piped first to Timor-Leste or Australia, Reuters reported.
Timor-Leste's Minister Agio Pereira said: "Thanks to the strong commitment of the leadership of both countries to this conciliation process, we have arrived at an agreement on maritime boundaries that is equitable, and consistent with worldwide law". "Our treaty reflects the value and importance of those rules and institutions and the benefits for states in abiding by those rules", she said.
Pereira, calling the treaty "equatable, forward-looking", said it will institute certainty in global investment and economic development for Timor Leste.
Bishop also addressed accusations from Gusmao that the conciliation committee had shown bias and used inferior technical expertise, putting forward a formal recommendation against convention, which favoured Australia.
"The conciliation shows how global law can enable countries to resolve their disputes peacefully".