East Timor has officially dropped its case against Australia before the UN's International Court of Justice (ICJ), after the Government returned sensitive documents relating to a controversial oil and gas treaty.

"The case brought against Australia in respect of a dispute concerning the seizure of data and documents which belongs to Timor-Leste ... was removed from the court's list on June 11," the ICJ said in a statement.

However, a parallel case behind closed doors before the Permanent Court of Arbitration (PCA), which is in the same building as the Hague-based ICJ, is set to continue.

East Timor announced earlier this month it would drop charges in the bitter spy row that saw Australia seize documents in 2013 in an Australian intelligence services raid on the office of a lawyer representing Dili in the case at the PCA.

It then dragged Australia to the ICJ in January last year to get back the secret documents relating to a controversial multi-billion-dollar oil and gas treaty Dili wants torn up.

In a letter to the ICJ requesting the case be scrapped, East Timor said Australia gave back the documents on May 12.

Therefore "Timor-Leste has successfully achieved the purpose of its application to the court," it said, referring to the tiny half-island nation by its preferred name.

At the heart of the David-versus-Goliath dispute is the treaty signed in 2006 between Dili and its southern neighbour, four years after East Timor's independence from Indonesia.

Australia allegedly used an aid programme as cover to bug East Timor's cabinet offices so it could listen to discussions about the treaty.

East Timor has accused Australia of spying to gain a commercial advantage during 2004 negotiations over the Timor Sea gas treaty, which covers a vast gas field between the two nations worth billions of dollars.

Australia said last week it was disappointed by Dili's plan to continue with litigation and vowed to "strongly defend" its case.

AFP