Timor-Leste and Australia reached an agreement on the demarcation of the Timor Sea on March 6, 2018 resolving the long-standing sea disputes between them. As such, this study considers how to apply the principles of this successful case as a way to solve the disputes of sovereign rights in the South China Sea. The findings are as follows: (1) the need to ascertain who owns the sovereignty of the disputed islands and where disputed maritime areas are; (2) the willingness of Australia to compromise on major issues; (3) the adoption of Confidence-Building Measures; (4) setting aside sovereignty issues and adopting joint development of hydrocarbon deposits. The research suggests that joint development of hydrocarbon deposits could begin in a small maritime area with only two claimants and if successful could create a favorable environment to expand cooperation with more claimants.