Their bodies have never been found and criticisms have been made of police investigations in the case.
Watson has maintained his innocence and has made several unsuccessful appeals since 2000.
Yesterday, Justice Minister Andrew Little announced Governor-General Dame Patsy Reddy had referred Scott Watson's convictions for murder back to the Court of Appeal.
Here is a timeline of the events since Ben and Olivia were last seen alive:
Friends Ben Smart, 21, and Olivia Hope, 17, travel to Furneaux Lodge in the Marlborough Sounds for a New Years Eve Party. The last time they are seen is about 4am on 1 January, when the pair were dropped off at a yacht on a water-taxi operated by lodge bartender Guy Wallace.
Ben and Olivia plan to sleep on the chartered yacht Tamarack, which Smart had arrived on, but find the berths full. Three other passengers are travelling on the water-taxi, one a single man who offers the pair a place to sleep on what he claims is his yacht.
Wallace lets Ben and Olivia off with the man - this is the last time they are seen alive.
Police investigations begin on 2 January after Ben and Olivia are reported missing by their parents. The case is assigned the name Operation TAM (abbreviated from Tamarack) and there is speculation the pair had been murdered.
Months of extensive searches of the area follow, but no bodies are ever found.
Detective Inspector Rob Pope takes over the police investigation and decides Picton resident Scott Watson is the unknown man aboard the water taxi.
However, Wallace is adamant he dropped Ben and Olivia off at a wooden, two-masted ketch - a description supported by another witness on the water taxi - while Watson owns a single-masted steel sloop called Blade.
1998
Watson is arrested for the murders of Ben and Olivia in June, while there are still hundreds of witnesses yet to be interviewed.
1999
Watson is convicted for the murders of Ben and Olivia in May, after an 11-week trial with 500 witnesses. He is sentenced to life imprisonment with a minimum non-parole period for 17 years.
2000
The defence appeals Watson's conviction and takes the case to the Court of Appeals in April and May of 2000. However, the three Appeal Court judges decide there is no new evidence to recommend a second trial.
In November that year, after the Court of Appeal hearing, one of the witnesses who testified at Watson's trial tells the NZ Herald his evidence in court was "nothing more than an act" and that he was pressured by police to testify.
2003
Watson's lawyers take the case to the Privy Council in November, but no grounds for further appeal are found.
2009
Watson petitions the Governor-General for a royal pardon.
2013
Then Justice Minister Judith Collins advises the current Governor-General, Sir Jerry Mateparae, that Watson's application for a royal pardon should be declined.
2015
Watson is denied parole in June due to two failed drug tests and a psychological report that places him at "a very high risk" of committing violent acts if released from prison.
However, Watson manages to successfully challenge the Department of Corrections in court, after being denied an interview about his case by North & South journalist Mike White.
Watson's planned interview with White goes ahead as planned. He tells White he is still angry at the way he says he was treated by police during the murder investigation.
"He feels he was picked out by the police from all the people who were at Furneaux Lodge that night. He feels he was focused on very early, and the police pursued him despite there being no evidence and made a case against him, and convinced many of the witnesses to give evidence against him and perhaps twist some of the evidence," White tells Morning Report at the time.
2016
In August 2016, Watson goes back before the courts for a judicial review, in the hopes that White can report on his first-ever meeting with Gerald Hope, the father of Olivia.
Corrections opposes White attending the meeting in his capacity as a journalist, on the grounds it is not necessary.
In November, Corrections gives the go-ahead for the meeting between the three. The resulting interview is published in North & South magazine in January 2017.
Also in 2016, Watson is denied parole again - and will not get another bid at freedom for four years.
2017
A second application for a Royal Pardon is filed on Watson's behalf, by Auckland man Brian McDonald, also a convicted killer. The application is centred around the reliability of two blonde hairs, believed to be Olivia's, that were found on a blanket on Watson's boat.
June 2020
Justice Minister Andrew Little announces Governor-General Dame Patsy Reddy has referred Watson's case back to the Court of Appeal. This will be the fourth time Watson has challenged his convictions for the murders of Ben and Olivia.
