Deep Seabed Mining: implications of Seabed Disputes Chamber's advisory opinion.

• Author: Poisel, Tim

Abstract

In February 2011, the Seabed Disputes Chamber unanimously adopted an advisory opinion: Responsibilities and Obligations of Slates Sponsoring Persons and Entities with Respect to Activities in the Area. This opinion is significant as it provides guidance on the governance of activities in the Area and clarifies the obligations of a sponsoring state, and its potential liabilities, in circumstances where damage is caused by the activities of the sponsored entity in the Area. Importantly, the opinion sets the highest standards of due diligence for all sponsoring states, irrespective of whether it is a developed or developing state and its financial capabilities. While not absolutely protecting the Area from the risk of environmental harm, the opinion will ensure that deep seabed mining activities operate within strict limits with the aim of preventing harm to the common heritage of mankind.

I Introduction

On 1 February 2011, the Seabed Disputes Chamber ('Chamber') of the International Tribunal for the Law of the Sea ('ITLOS') delivered its first advisory opinion in Responsibilities and Obligations of States Sponsoring Persons and Entities with Respect to Activities in the Area. (1) The Advisory Opinion represents the first proceedings before the Chamber and the first time that ITLOS has invoked its advisory opinion jurisdiction under art 191 of the United Nations Convention on the Law of the Sea. (2)

The Advisory Opinion is significant because it clarifies the obligations of a sponsoring state, and its potential liabilities, in circumstances where damage is caused by the activities of a sponsored entity in the Area. (3) Despite the fact that exploration activities have been carried out in the Area since at least the mid-19th century, (4) the Advisory Opinion is timely given that the development of new mining technologies and the rising price of minerals may mean that the exploitation of the deep seabed resources will soon be possible and commercially viable.

In addition to the greater likelihood of the deep seabed resources being exploited, the Advisory Opinion is timely and highly relevant and important because of the real risk that harm is likely to be caused to the Area in circumstances where the sponsored state or entity fails to comply with its legal obligations and/or industry best practice. Through the destruction of seabed habitat or the effects of pollution and disposal of waste, it is likely that mining activities will cause harm to marine environments, including affecting protected fish species or marine parks in the vicinity of such activities. The Advisory Opinion confronts the risk of harm by imposing stringent limits on mining activities in the Area with the aim of preventing the risk of harm being caused to the Area. The 'primary reason for this stringency is the recognition by the Chamber of the importance of the Area as a common heritage of mankind.

This article aims to outline the background facts relevant to the Advisory Opinion, the findings of the Chamber and its implications for the effective protection of the marine environment, the exploitation of resources in the Area and the requirement for sponsoring states to adopt appropriate laws and regulations. This is followed by an examination of the adequacy of German legislation relating to deep seabed mining to fulfil a sponsoring state's obligations under international law in light of the findings of the Chamber in the Advisory Opinion.

II Background

The International Seabed Authority (ISM') is responsible for organising and controlling activities in the seabed, ocean floor and subsoil beyond the limits of national jurisdiction (known as 'the Area'), particularly with a view to administering the resources of the Area.

The regime for exploration and exploitation of the seabed in the Area is set out in pt XI of the LOS Convention and the Agreement Relating to the Implementation of Part XI of the United Nations Convention on the Law of the Sea. (5)

Under the LOS Convention art 153 (2), activities in the Area may be carried out by:

(i) ISBA (called 'the Enterprise' in the LOS Convention), on its own behalf or in a joint venture arrangement; or

(ii) State Parties, state enterprises or natural or judicial persons through sponsorship by a State Parry.

This paper only considers the carrying out of activities in the Area in the latter circumstance whereby an entity ('sponsored entity') is sponsored by a State Party ('sponsoring state').

Seeking to rely on the sponsorship provisions of the LOS Convention, on 10 April 2008 two Pacific island developing states, Nauru and Tonga, applied to ISBA for approval to obtain contracts to explore for polymetallic nodules. Nauru is a small island of around 21 square kilometres, and has a population of around 10 085, per capita GDP of US$5462 (having once boasted the second highest per capita GDP as a result of now depleted phosphate reserves) and a very small private sector responsible for fewer than 300 employees. (6) Tonga is an archipelago approximately 747 square kilometres in area, and has a population of a little over 105 000 people and per capita GDP of US$3518. (7)

Like many developing states, Nauru and Tonga do not have the technical and financial capacity to undertake deep seabed mining in the Area alone and, for this reason, may choose to engage entities in the global private sector to participate in these activities. (8) Nauru sought to participate in activities in the Area through the sponsorship of Nauru Ocean Resources Incorporated ('NORI') to explore for polymetallic nodules across an area of 74 830 squire kilometres in the Clarion-Clipperton Zone in the Pacific Ocean. (9) The proposed site for the activities is a 'reserved area' (10) under the LOS Convention. Similarly, Tonga sponsored Tonga Offshore Mining Limited ('TOML') for exploration activities across an area of 74 713 square kilometres in the Clarion-Clipperton Zone.

At the time of lodgment of the application with ISBA, NORI was a Nauruan incorporated subsidiary of Nautilus Minerals Incorporated (Nautilus'). (11) Nautilus has among its largest shareholders two of the world's leading international resource companies (Teck Cominco Limited and Anglo American Limited) and is publicly listed on the Toronto Stock Exchange and the Alternative Investment Market, a submarket of the London Stock Exchange. TOML is a Tongan incorporated subsidiary of Nautilus. (12)

While NORI is now wholly owned by two Nauruan Foundations, whose purpose is to advance education, training, health and environmental rehabilitation in Nauru, (13) it is apparent that 'there remains significant foreign interest in Nauru Ocean Resources Inc, with one of the company's board of directors being a former CEO of Nautilus Minerals Inc'. (14)

On 5 May 2009, Nauru and Tonga requested that ISBA postpone consideration of their applications. The reason for postponement is apparent from Nauru's proposal to ISBA on 1 March 2010 seeking an advisory opinion from the Chamber relating to the responsibilities and potential liabilities of sponsoring states. (15) Nauru had originally sponsored NORI on the assumption that it:

could effectively mitigate with a high degree of certainty) the potential liabilities or costs arising from its sponsorship. This was important, as these liabilities or costs could, in some circumstances, far exceed the financial capabilities of Nauru. (16) Further, Nauru suggested that, if sponsoring states were exposed to potential liabilities for damage caused to the Area by activities of the sponsored entity, Nauru and other developing states may, in effect, be precluded from participating in such activities, contrary to the purposes and principles of pt XI of LOS Convention. (17)

On 6 May 2010, ISBA decided to request an advisory opinion from the Chamber on three specific questions of law:

1. What are the legal responsibilities and obligations of States Patties to the LOS Convention with respect to the sponsorship of activities in the Area in accordance with the LOS Convention, in particular pt XI, and the 1994 Agreement relating to the Implementation of pt XI of the United Nations Convention on the Law of the Sea of 10 December 1982?

2. What is the extent of liability of a State Party for any failure to comply with the provisions of the LOS Convention, in particular pt XI, and the 1994 Agreement, by an entity whom it has sponsored under art 153, para 2(b), of the LOS Convention?

3. What are the necessary and appropriate measures that a sponsoring state must take in order to fulfil its responsibility under the LOS Convention, in particular art 139 and annex III, and the 1994 Agreement? (18)

The Chamber received written submissions from 12 State Parties, ISBA, three organisations (the Interoceanmetal Joint Organisation, International Union for Conservation of Nature and Natural Resources and United Nations Environment Programme) and a joint submission from Stich ring Greenpeace Council (Greenpeace International) and the World Wide Fund for Nature, which the Chamber excluded from the case file. (19) At four public sittings held in September 2010, the Chamber heard a number of oral statements from State Parties, ISBA, the Intergovernmental Oceanographic Commission of the United Nations Educational, Scientific and Cultural Organisation, and the International Union for Conservation of Nature and Natural Resources. (20)

III The Advisory Opinion

Jurisdiction of the Chamber

The Chamber observed that, in order for it to have jurisdiction to provide an advisory opinion under the LOS Convention art 191, three preconditions must first be established. These include: a request from ISBA; the request must concern legal questions; and the legal questions must arise within the scope of the activities of ISBA.

The Chamber decided that it had jurisdiction to provide the Advisory Opinion on the following grounds:

* the decision by ISBA to request the opinion was made...