Posted on August 21, 2023
This article forms part of WFW’s Deep Seabed Mining Insight Series, which draws on the firm’s unparalleled experience and expertise in deep seabed mining matters to provide insightful, timely and commercially relevant updates on deep seabed mining legal and regulatory issues. Upcoming topics include the role of the International Seabed Authority and its regulatory processes, the role and rights of States sponsoring deep seabed mining contractors, the obligations and rights of deep seabed mining contractors, and deep seabed mining dispute settlement options.
“Despite detailed work to date, there remains divergences between member States – including on political, environmental and legal issues – that may lead a breach of this obligation.”
The International Seabed Authority’s (“Authority”) July 2023 session in Kingston, Jamaica comes at a critical time for deep seabed mining. Following the Republic of Nauru’s (“Nauru”) invocation of the so-called ‘two-year rule’ in 2021, the Authority is required to adopt regulations governing the exploitation phase of deep seabed mining by 9 July 2023. However, despite detailed work to date, there remains divergences between member States – including on political, environmental and legal issues – that may lead to a breach of this obligation. This article examines the legal context of these discussions, the key legal issues facing member States, and potential next steps after July.
Part XI of the United Nations Convention on the Law of the Sea (“UNCLOS”), read together with the 1994 Agreement on the Implementation of Part XI (“1994 Agreement”), establishes a regulatory framework governing deep seabed mining in the area beyond the limits of national jurisdictions (the “Area”). Under this regime, the Authority is required to issue certain rules, regulations and procedures (“RRPs”) that govern the various activities that can take place in the Area (including exploration for and exploitation of resources). Exploration and exploitation activities in the Area can only be commenced pursuant to an approved plan of work in the form of a contract with the Authority.
The Authority adopts RRPs through a process involving its primary and subsidiary organs – the Legal and Technical Commission (“LTC”), the Council, and the Assembly. First, the LTC prepares draft RRPs and recommends their provisional adoption by the Council. Second, the Council considers and provisionally adopts proposed RRPs. Third, the RRPs are approved by the Assembly.
A similar but distinct process applies to applications for plans of work for exploration and exploitation, except without the involvement of the Assembly. If the LTC recommends that the Council approve an application, for it to be disapproved requires a decision by a two-thirds majority of Council members, including a majority across each of the groups of the Council.
The Authority first adopted regulations governing exploration over ten years ago and there are currently 31 exploration contracts in force. However, despite lengthy deliberations commencing in 2011, the Authority is yet to adopt RRPs for exploitation.
LEGAL CONTEXT FOR THE JULY 2023 SESSION
The Authority is required under Paragraph 15, Section 1 of the Annex to the 1994 Agreement (“Paragraph 15”) to adopt all RRPs that are “necessary to facilitate the approval of plans of work for exploration and exploitation”.
In relation to exploitation activities, the Authority may adopt relevant RPPs:
“The Authority is required to adopt all RRPs that are ‘necessary to facilitate the approval of plans of work for exploration and exploitation’.”
- at any time the Council deems they are required for the conduct of activities in the Area;
- when the Council determines that commercial exploitation is imminent; or
- at the request of a State whose national intends to apply for approval of a plan of work for exploitation.
If a member State requests the Council to prepare such RRPs, Paragraph 15 requires the Council to complete its adoption of the relevant RRPs within two years of the date of that request (the so-called “two-year rule”).
On 9 July 2021, Nauru informed the Authority that a Nauruan company intended to apply for a plan of work for exploitation and requested the Council to complete the adoption of the relevant RRPs. This notification started the time period under the two-year rule, setting a deadline of 9 July 2023 for the Authority to complete its adoption of all RRPs for exploitation.
If the Authority fails to adopt the exploitation RRPs by 9 July 2023, Paragraph 15 contains a fallback provision under which the Authority is required to still consider and provisionally approve any pending applications for exploitation (the “Fallback Provision”).
Given that in this scenario there would not be specific RRPs relating to exploitation, the Fallback Provision requires that any applications for a plan of work for exploitation are to be assessed based on UNCLOS (including norms it contains), terms and conditions contained in the Annex to the 1994 Agreement, any RRPs that may have been provisionally adopted, and the principle of non-discrimination among contractors.
LATEST DISCUSSIONS WITHIN THE AUTHORITY
In November 2022, the Authority established an Informal Intersessional Dialogue (“Dialogue”) to discuss possible scenarios relating to Paragraph 15, and in particular the two-year rule. The Dialogue has met twice – on 8 March and 30 May 2023 – and received written comments from member States and other stakeholders.
The Dialogue has highlighted areas of convergence and divergence between member States on how the two-year rule is intended to operate and next steps if an application for a plan of work for exploitation is submitted to the Authority after 9 July 2023 in the absence of exploitation RRPs.
Areas of convergence include:
- that approval of applications for a plan of work for exploitation are not mandatory. The Council may disapprove an application if it does so in good faith having assessed it against the relevant criteria;
- the LTC must be involved in any consideration of an application for exploitation, including under the Fallback Provision; and
- provisional approval of applications for a plan of work for exploitation is not identical to final approval.
However, member States continue to discuss a number of important issues including:
- whether, notwithstanding the Fallback Provision, the Council can legally postpone its consideration of an application for a plan of work for exploitation under its usual decision-making rules;
- the precise role of the LTC under the Fallback Provision;
- whether the Council can issue directions and guidelines to the LTC regarding its consideration of any exploitation applications under the Fallback Provision; and
- what considerations and procedures apply once a plan of work for exploitation has been provisionally approved.
At the Authority’s July session, it is looking increasingly likely that the Council will not adopt RRPs for exploitation as required under the 1994 Agreement. There are a number of working groups still finalising technical issues across various drafts and the LTC is yet to develop environmental thresholds and indicators. Member States’ approaches to the Dialogue process also suggests that some are already assuming that the RRPs for exploitation will not be adopted in July.
Pursuant to the Authority’s exploration regulations, several contractors sponsored by member States, including developing States, have invested in detailed and lengthy exploration activities in the Area. In doing so, contractors have collected the environmental baseline data and geological information and developed and tested equipment and systems, as required by the exploration regulations, to establish the viability of commercial mining operations. Several contractors and their sponsoring States are now looking to move beyond exploration to begin commercial production in the Area.
The key question after July will be if and when a contractor submits an application for exploitation, particularly given Nauru’s indication that its sponsored contractor intends to do so, how will the Authority respond? If that occurs, member States will need to grapple with how they fulfil their legal obligations under UNCLOS and the 1994 Agreement, including Paragraph 15 and the Fallback Provision, and the legal consequences of the various courses of actions being proposed. This includes the potential for Sponsoring States or contractors to seek to enforce their rights through UNCLOS’s regime of mandatory and binding dispute settlement.
The RRPs for the exploitation phase of deep seabed mining face a critical juncture at the Authority’s July session. The Authority and its member States will need to carefully consider the various options before them, how they chart the future of deep seabed mining, and the implications for UNCLOS more broadly. Contractors, and prospective contractors, Sponsoring States and investors are tracking these developments closely, looking at how to best protect and advocate for their rights and interests through this process, and seeking advice on an increasingly complex and contested area of law.
Sydney Partner Nathan Eastwood is an authority on public international law and one of only a handful of internationally recognized experts on deep seabed mining and the Law of the Sea. He currently acts for and advises contractors, sponsoring States, investors and applicant contractors concerning their activities in the Area. Sydney Special Counsel Devon Whittle has deep experience and expertise advising on complex and high-profile international negotiations and public international law issues, including relating to deep seabed mining. Bangkok Associate Aaron Murphy regularly advises clients on public international law matters, including rights under investment treaties and issues related to deep seabed mining and the Law of the Sea.