8 – U.N. Law of the Sea Convention and America’s spacefaring future


As noted in Spacefaring America
Blog 4, the Aerospace Commission concluded: “America must explore and exploit space to assure national and planetary security, economic benefit and scientific discovery.”  A natural question that arises is what rules will govern America’s spacefaring activities?  One possibility is a world-wide convention similar to the United Nation’s Convention on Law of the Sea.  This blog looks at the question of whether the Law of the Sea is a beneficial model for governing American spacefaring activities.  This is relevant because the United States has not yet joined this convention.  However, recently, President Bush has taken steps to move in this direction.  Should the United States sign and ratify this treaty, then it would logically be seen as an international legal precedent for governing national/commercial activities in space–to include the those of the United States.

 

Background:

 

President George W. Bush recently signaled his intention to have the United States join the United Nation’s Convention on Law of the Sea (UNCLOS).  (For background information, see here.  For text of the treaty, see here.  Excerpts that I found of interest are below.) 

 

Discussion:

 

On 13 June 2007, the Honorable John D. Negroponte, Deputy Secretary of States, and the Honorable Gordon England, Deputy Secretary of Defense, published an op-ed article, “U.S. Officials Cite Benefits of Joining Law of the Sea Convention: U.S. accession supports, strengthens maritime security and economic rights.”

 

The government web site posting this article provides a comment form.  The following is the feedback I provided:

 

15 June 2007

 

The Honorable John D. Negroponte

The Honorable Gordon England

 

Re: U.S. Officials Cite Benefits of Joining Law of the Sea Convention, 13 June 2007

 

Sirs:

 

President Bush’s announcement of his administration’s advocacy of the United States joining the United Nations Law of the Sea Convention has significant implications that were not addressed in your joint op-ed article of 13 June 2007.

 

While there are many benefits for the United States from the provisions of the convention, as you cite, your op-ed article did not address what I understand to be one of the primary reasons why the convention was not adopted in the 1980’s by President Reagan; this is the provisions of Part XI (and associated annexes) dealing with commercial operations on the “high seas.” In this regard, the convention establishes a world authority, associated administrative and technical organizations, and a commercial “enterprise”. The convention, while not stating it as such, effectively establishes an organization with sovereign rights with respect to the seabed. It has the legal jurisdiction to control, regulate, enforce, and compete in the area of commercial exploration and exploitation of natural resources on or under the seabed. From this perspective, while ships and airplanes may pass unrestricted over the high seas and fishing fleets may operate in the high seas, the seabed of the high seas is closed with prior and substantially burdensome approvals, restrictions, technology sharing, and taxes.

 

I understand that the initial basis for the objections to this part of the convention arose from prospects of undersea mining of the seabed. In fact, it appears that Part XI was specifically written to address planned U.S. undersea mining as the writers of the convention appeared to view this as a lucrative source of “world government” funding. (If my understanding is correct, the International Seabed Authority, established under Part XI, would have the authority to tax net profits of any commercial mining at a rate of between 40 and 70 percent, while at the same time reserving the right to establish competitive mining operations run by the authority. It would also have the authority to seize technology and/or require the transfer of such information to itself and other States. Further, the Authority would have the ability to levy charges to compensate lost income by other States due to the entry into the world market of new undersea “minerals”.)

 

At this time, to my knowledge, undersea mining is not viewed as commercially viable. However, this part of the convention establishes significant threats to future U.S. commercial operations. Should the United States agree to join this convention, this would establish unambiguous United States acceptance of the legality of such world “authorities” to have effective sovereignty over U.S. commercial operations beyond U.S. territorial and associated economic zones in the high seas. In the 21st century, this will have significant impact on United States commercial operations on the seabed as well as outer space.

 

The importance of space to the United States is clear. The 2006 U.S. National Space Policy makes this point. (See Spacefaring America Blog 3.) The 2002 Aerospace Commission previously made this point specifically when it concluded, “the nation will have to be a space-faring nation to be the global leader in the 21st century—our freedom, mobility, and quality of life will depend on it. America must explore and exploit space to assure national and planetary security, economic benefit and scientific discovery. At the same time, the United States must overcome the obstacles that jeopardize its ability to sustain leadership in space.” Once the United States accepts the precedence of an international authority over the seabed, the extension of this to outer space where space would be viewed legally as being the same as the “high seas” is obvious. Just as “world federalists” worked to establish effective world sovereignty over U.S. commercial seabed operations, it may be expected that similar efforts would be undertaken to expand and augment existing international agreements on the use of space.

 

President Bush has stated the importance of the United States becoming energy independent and has stated the importance of the United States switching to non-petroleum, renewable energy sources. Advances in American aerospace technology may enable space-based energy production to become a viable energy source within the next 25 years for national base load electrical power. (In terms of magnitude of energy production, it may be the only alternative to nuclear energy.) Further, this new energy source could be “exported” providing a substantial source of trade income. The establishment of comparable Part XI provisions applied to outer space–where State and State commercial activities operating into outer space would be seen to be comparable to such operations on or under the seabed–is likely should the United States join the Law of the Sea Convention. This would then limit and probably make any future commercial space power investments unprofitable; would require the sharing of space technologies with a new international authority and other States; and, would potentially require compensatory payments to current oil-producing countries in compensation for loss of income as the United States stops buying their oil.

 

As your op-ed article did not address these points, it is possible that these implications were not apparent. The purpose of this letter is to identify these possible negative implications of the United States joining the Law of the Sea Convention. It is possible that some measures taken by the U.S. government prior to the joining of the convention would eliminate the provisions of Part XI and the potential of a legal precedent being established that would negatively impact future U.S. commercial space operations. If this is not possible, then I argue that the United States should not join the Law of the Sea Convention.

 

=====

 

When you read these portions of the convention, in your mind  substitute “outer space” for the “area” or “high seas”; “International Space Authority” for “International Seabed Authority” or “authority”; “aerospace” for “marine” technology; “satellites, space stations, and space bases” for “artificial islands, installations, and structures.”  This will provide a general idea of the potential scope of the impact of the convention, as international law precedent, on U.S. commercial operations in space.

 

Excerpts from UNCLOS (part, article, and paragraph numbers are shown)

 

 Part I, Introduction:

 

Article 1 – Use of terms and scope:

 

1 (1) “Area means the seabed and ocean floor and subsoil thereof, beyond the limits of national jurisdiction.”  This covers most of the ocean.

 

1 (2) “Authority” means the International Seabed Authority.

 

1 (3) “Activities in the Area” means all activities of exploration for, and exploitation of, the resources of the Area.

 

 Part V, Exclusive Economic Zone:

 

Article 55 – Specific legal regime of the exclusive economic zone:

 

The exclusive economic zone is an area beyond and adjacent to the territorial sea, subject to the specific legal regime established in this Part, under which the rights and jurisdiction of the coastal State and the rights and freedoms of other States are governed by the relevant provisions of this Convention.

 

Article 56 – Rights, jurisdiction and duties of the coastal State in the exclusive economic zone:

 

1. In the exclusive economic zone, the coastal State has:

 

(a) sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to the seabed and of the seabed and its subsoil, and with regard to other activities for the economic exploitation and exploration of the zone, such as the production of energy from the water, currents and winds.”

 

Article 59 – Basis for the resolution of conflicts regarding the attribution of rights and jurisdiction in the exclusive economic zone:

 

In cases where this Convention does not attribute rights or jurisdiction to the coastal State or to other States within the exclusive economic zone, and a conflict arises between the interests of the coastal State and any other State or States, the conflict should be resolved on the basis of equity and in the light of all the relevant circumstances, taking into account the respective importance of the interests involved to the parties as well as to the international community as a whole.”

 

Article 60 – Artificial islands, installations and structures in the exclusive economic zone:

 

1. In the exclusive economic zone, the coastal State shall have the exclusive right to construct and to authorize and regulate the construction, operation and use of:

 

(a) artificial islands;

 

(b) installations and structures for the purposes provided for in article 56 and other economic purposes;

 

(c) installations and structures which may interfere with the exercise of the rights of the coastal State in the zone.

 

2. The coastal State shall have exclusive jurisdiction over such artificial islands, installations and structures, including jurisdiction with regard to customs, fiscal, health, safety and immigration laws and regulations.

 

3. Due notice must be given of the construction of such artificial islands, installations or structures, and permanent means for giving warning of their presence must be maintained. Any installations or structures which are abandoned or disused shall be removed to ensure safety of navigation, taking into account any generally accepted international standards established in this regard by the competent international organization. Such removal shall also have due regard to fishing, the protection of the marine environment and the rights and duties of other States. Appropriate publicity shall be given to the depth, position and dimensions of any installations or structures not entirely removed.

 

4. The coastal State may, where necessary, establish reasonable safety zones around such artificial islands, installations and structures in which it may take appropriate measures to ensure the safety both of navigation and of the artificial islands, installations and structures.

 

5. The breadth of the safety zones shall be determined by the coastal State, taking into account applicable international standards. Such zones shall be designed to ensure that they are reasonably related to the nature and function of the artificial islands, installations or structures, and shall not exceed a distance of 500 metres around them, measured from each point of their outer edge, except as authorized by generally accepted international standards or as recommended by the competent international organization. Due notice shall be given of the extent of safety zones.

 

6. All ships must respect these safety zones and shall comply with generally accepted international standards regarding navigation in the vicinity of artificial islands, installations, structures and safety zones.

 

7. Artificial islands, installations and structures and the safety zones around them may not be established where interference may be caused to the use of recognized sea lanes essential to international navigation.

 

8. Artificial islands, installations and structures do not possess the status of islands. They have no territorial sea of their own, and their presence does not affect the delimitation of the territorial sea, the exclusive economic zone or the continental shelf.

 

Part VII, High Seas:

 

Article 86 – Application of the provisions of this Part:

 

The provisions of this Part apply to all parts of the sea that are not included in the exclusive economic zone, in the territorial sea or in the internal waters of a State, or in the archipelagic waters of an archipelagic State. This article does not entail any abridgement of the freedoms enjoyed by all States in the exclusive economic zone in accordance with article 58.

 

Article 87 – Freedom of the high seas:

 

1. The high seas are open to all States, whether coastal or land-locked. Freedom of the high seas is exercised under the conditions laid down by this Convention and by other rules of international law. It comprises, inter alia, both for coastal and land-locked States:

 

(a) freedom of navigation;

 

(b) freedom of overflight;

 

(c) freedom to lay submarine cables and pipelines, subject to Part VI;

 

(d) freedom to construct artificial islands and other installations permitted under international law, subject to Part VI;

 

(e) freedom of fishing, subject to the conditions laid down in section 2;

 

(f) freedom of scientific research, subject to Parts VI and XIII.

 

Article 88 – Reservation of the high seas for peaceful purposes:

 

The high seas shall be reserved for peaceful purposes.

 

Article 89 – Invalidity of claims of sovereignty over the high seas:

 

No State may validly purport to subject any part of the high seas to its sovereignty.

 

Part XI, The Area:

 

Section 1, General Provisions:

 

Article 133 – Use of terms:

 

For the purposes of this Part:

 

(a) “resources” means all solid, liquid or gaseous mineral resources in situ in the Area at or beneath the seabed, including polymetallic nodules.

 

(b) resources, when recovered from the Area, are referred to as “minerals”.

 

Article 135 – Legal status of the superjacent waters and air space:

 

Neither this Part nor any rights granted or exercised pursuant thereto shall affect the legal status of the waters superjacent to the Area or that of the air space above those waters.

 

Section 2, Principles Governing the Area:

 

Article 136 – Common heritage of mankind:

 

The Area and its resources are the common heritage of mankind.

 

Article 137 – Legal status of the Area and its resources:

 

1. No State shall claim or exercise sovereignty or sovereign rights over any part of the Area or its resources, nor shall any State or natural or juridical person appropriate any part thereof. No such claim or exercise of sovereignty or sovereign rights nor such appropriation shall be recognized.

 

2. All rights in the resources of the Area are vested in mankind as a whole, on whose behalf the Authority shall act. These resources are not subject to alienation. The minerals recovered from the Area, however, may only be alienated in accordance with this Part and the rules, regulations and procedures of the Authority.

 

3. No State or natural or juridical person shall claim, acquire or exercise rights with respect to the minerals recovered from the Area except in accordance with this Part. Otherwise, no such claim, acquisition or exercise of such rights shall be recognized.

 

Article 138 – General conduct of States in relation to the Areas:

 

The general conduct of States in relation to the Area shall be in accordance with the provisions of this Part, the principles embodied in the Charter of the United Nations and other rules of international law in the interests of maintaining peace and security and promoting international cooperation and mutual understanding.

 

Article 139 – Responsibility to ensure compliance and liability for damage:

 

1. States Parties shall have the responsibility to ensure that activities in the Area, whether carried out by States Parties, or state enterprises or natural or juridical persons which possess the nationality of States Parties or are effectively controlled by them or their nationals, shall be carried out in conformity with this Part. The same responsibility applies to international organizations for activities in the Area carried out by such organizations.

 

Article 140 – Benefit of mankind:

 

1. Activities in the Area shall, as specifically provided for in this Part, be carried out for the benefit of mankind as a whole, irrespective of the geographical location of States, whether coastal or land-locked, and taking into particular consideration the interests and needs of developing States and of peoples who have not attained full independence or other self-governing status recognized by the United Nations in accordance with General Assembly resolution 1514 (XV) and other relevant General Assembly resolutions.

 

2. The Authority shall provide for the equitable sharing of financial and other economic benefits derived from activities in the Area through any appropriate mechanism, on a non-discriminatory basis, in accordance with article 160, paragraph 2(f)(i).

 

Article 141 – Use of the Area exclusively for peaceful purposes:

 

The Area shall be open to use exclusively for peaceful purposes by all States, whether coastal or land-locked, without discrimination and without prejudice to the other provisions of this Part.”

 

Article 143 – Marine scientific research:

 

1. Marine scientific research in the Area shall be carried out exclusively for peaceful purposes and for the benefit of mankind as a whole, in accordance with Part XIII.

 

Article 144 – Transfer of technology

 

1. The Authority shall take measures in accordance with this Convention:

 

(a) to acquire technology and scientific knowledge relating to activities in the Area; and

 

(b) to promote and encourage the transfer to developing States of such technology and scientific knowledge so that all States Parties benefit therefrom.”

 

2. To this end the Authority and States Parties shall cooperate in promoting the transfer of technology and scientific knowledge relating to activities in the Area so that the Enterprise and all States Parties may benefit therefrom. In particular they shall initiate and promote:

 

 (a) programmes for the transfer of technology to the Enterprise and to developing States with regard to activities in the Area, including, inter alia, facilitating the access of the Enterprise and of developing States to the relevant technology, under fair and reasonable terms and conditions;

 

(b) measures directed towards the advancement of the technology of the Enterprise and the domestic technology of developing States, particularly by providing opportunities to personnel from the Enterprise and from developing States for training in marine science and technology and for their full participation in activities in the Area.”

 

Article 145 – Protection of the marine environment:

 

Necessary measures shall be taken in accordance with this Convention with respect to activities in the Area to ensure effective protection for the marine environment from harmful effects which may arise from such activities. To this end the Authority shall adopt appropriate rules, regulations and procedures for inter alia:

 

(a) the prevention, reduction and control of pollution and other hazards to the marine environment, including the coastline, and of interference with the ecological balance of the marine environment, particular attention being paid to the need for protection from harmful effects of such activities as drilling, dredging, excavation, disposal of waste, construction and operation or maintenance of installations, pipelines and other devices related to such activities;

 

(b) the protection and conservation of the natural resources of the Area and the prevention of damage to the flora and fauna of the marine environment.”

 

Article 147 – Accommodation of activities in the Area and in the marine environment:

 

2. Installations used for carrying out activities in the Area shall be subject to the following conditions:

 

(a) such installations shall be erected, emplaced and removed solely in accordance with this Part and subject to the rules, regulations and procedures of the Authority. Due notice must be given of the erection, emplacement and removal of such installations, and permanent means for giving warning of their presence must be maintained;

 

(b) such installations may not be established where interference may be caused to the use of recognized sea lanes essential to international navigation or in areas of intense fishing activity;

 

(c) safety zones shall be established around such installations with appropriate markings to ensure the safety of both navigation and the installations. The configuration and location of such safety zones shall not be such as to form a belt impeding the lawful access of shipping to particular maritime zones or navigation along international sea lanes;

 

(d) such installations shall be used exclusively for peaceful purposes;

 

(e) such installations do not possess the status of islands. They have no territorial sea of their own, and their presence does not affect the delimitation of the territorial sea, the exclusive economic zone or the continental shelf.”

 

Article 148 – Participation of developing States in activities in the Area:

 

The effective participation of developing States in activities in the Area shall be promoted as specifically provided for in this Part, having due regard to their special interests and needs, and in particular to the special need of the land-locked and geographically disadvantaged among them to overcome obstacles arising from their disadvantaged location, including remoteness from the Area and difficulty of access to and from it.

 

Section 3, Development of Resources of the Area:

 

Article 150 – Policies relating to activities in the Area:

 

Activities in the Area shall, as specifically provided for in this Part, be carried out in such a manner as to foster healthy development of the world economy and balanced growth of international trade, and to promote international cooperation for the over-all development of all countries, especially developing States, and with a view to ensuring:

 

(a) the development of the resources of the Area;

 

(b) orderly, safe and rational management of the resources of the Area, including the efficient conduct of activities in the Area and, in accordance with sound principles of conservation, the avoidance of unnecessary waste;

 

(c) the expansion of opportunities for participation in such activities consistent in particular with articles 144 and 148;

 

(d) participation in revenues by the Authority and the transfer of technology to the Enterprise and developing States as provided for in this Convention;

 

(e) increased availability of the minerals derived from the Area as needed in conjunction with minerals derived from other sources, to ensure supplies to consumers of such minerals;

 

(f) the promotion of just and stable prices remunerative to producers and fair to consumers for minerals derived both from the Area and from other sources, and the promotion of long-term equilibrium between supply and demand;

 

(g) the enhancement of opportunities for all States Parties, irrespective of their social and economic systems or geographical location, to participate in the development of the resources of the Area and the prevention of monopolization of activities in the Area;

 

(h) the protection of developing countries from adverse effects on their economies or on their export earnings resulting from a reduction in the price of an affected mineral, or in the volume of exports of that mineral, to the extent that such reduction is caused by activities in the Area, as provided in article 151;

 

(i) the development of the common heritage for the benefit of mankind as a whole; and

 

(j) conditions of access to markets for the imports of minerals produced from the resources of the Area and for imports of commodities produced from such minerals shall not be more favourable than the most favourable applied to imports from other sources.”

 

Article 151 – Production policies:

 

1 (a) Without prejudice to the objectives set forth in article 150 and for the purpose of implementing subparagraph (h) of that article, the Authority, acting through existing forums or such new arrangements or agreements as may be appropriate, in which all interested parties, including both producers and consumers, participate, shall take measures necessary to promote the growth, efficiency and stability of markets for those commodities produced from the minerals derived from the Area, at prices remunerative to producers and fair to consumers. All States Parties shall cooperate to this end.

 

1 (b) The Authority shall have the right to participate in any commodity conference dealing with those commodities and in which all interested parties including both producers and consumers participate. The Authority shall have the right to become a party to any arrangement or agreement resulting from such conferences. Participation of the Authority in any organs established under those arrangements or agreements shall be in respect of production in the Area and in accordance with the relevant rules of those organs.

 

1 (c) The Authority shall carry out its obligations under the arrangements or agreements referred to in this paragraph in a manner which assures a uniform and non-discriminatory implementation in respect of all production in the Area of the minerals concerned. In doing so, the Authority shall act in a manner consistent with the terms of existing contracts and approved plans of work of the Enterprise.

 

9.  The Authority shall have the power to limit the level of production of minerals from the Area, other than minerals from polymetallic nodules, under such conditions and applying such methods as may be appropriate by adopting regulations in accordance with article 161, paragraph 8.

 

10. Upon the recommendation of the Council on the basis of advice from the Economic Planning Commission, the Assembly shall establish a system of compensation or take other measures of economic adjustment assistance including cooperation with specialized agencies and other international organizations to assist developing countries which suffer serious adverse effects on their export earnings or economies resulting from a reduction in the price of an affected mineral or in the volume of exports of that mineral, to the extent that such reduction is caused by activities in the Area. The Authority on request shall initiate studies on the problems of those States which are likely to be most seriously affected with a view to minimizing their difficulties and assisting them in their economic adjustment.

 

Article 153 – System of exploration and exploitation:

 

1. Activities in the Area shall be organized, carried out and controlled by the Authority on behalf of mankind as a whole in accordance with this article as well as other relevant provisions of this Part and the relevant Annexes, and the rules, regulations and procedures of the Authority.

 

2. Activities in the Area shall be carried out as prescribed in paragraph 3:

 

(a) by the Enterprise, and

 

(b) in association with the Authority by States Parties, or state enterprises or natural or juridical persons which possess the nationality of States Parties or are effectively controlled by them or their nationals, when sponsored by such States, or any group of the foregoing which meets the requirements provided in this Part and in Annex III.

 

4. The Authority shall exercise such control over activities in the Area as is necessary for the purpose of securing compliance with the relevant provisions of this Part and the Annexes relating thereto, and the rules, regulations and procedures of the Authority, and the plans of work approved in accordance with paragraph 3. States Parties shall assist the Authority by taking all measures necessary to ensure such compliance in accordance with article 139.

 

5. The Authority shall have the right to take at any time any measures provided for under this Part to ensure compliance with its provisions and the exercise of the functions of control and regulation assigned to it thereunder or under any contract. The Authority shall have the right to inspect all installations in the Area used in connection with activities in the Area.

 

Section 4, The Authority:

 

Article 156 – Establishment of the Authority:

 

1. There is hereby established the International Seabed Authority, which shall function in accordance with this Part.

 

2. All States Parties are ipso facto members of the Authority.

 

Article 157 – Nature and fundamental principles of the Authority:

 

3. The Authority is based on the principle of the sovereign equality of all its members.

 

Article 158 – Organs of the Authority:

 

1. There are hereby established, as the principal organs of the Authority, an Assembly, a Council and a Secretariat.

 

Article 159 – Composition, procedure and voting:

 

1. The Assembly shall consist of all the members of the Authority. Each member shall have one representative in the Assembly, who may be accompanied by alternates and advisers.

 

6. Each member of the Assembly shall have one vote.

 

Article 164 – The Economic Planning Commission:

 

1. Members of the Economic Planning Commission shall have appropriate qualifications such as those relevant to mining, management of mineral resource activities, international trade or international economics. The Council shall endeavour to ensure that the membership of the Commission reflects all appropriate qualifications. The Commission shall include at least two members from developing States whose exports of the categories of minerals to be derived from the Area have a substantial bearing upon their economies.

 

2. The Commission shall:

 

(a) propose, upon the request of the Council, measures to implement decisions relating to activities in the Area taken in accordance with this Convention;

 

(b) review the trends of and the factors affecting supply, demand and prices of minerals which may be derived from the Area, bearing in mind the interests of both importing and exporting countries, and in particular of the developing States among them;

 

(c) examine any situation likely to lead to the adverse effects referred to in article 150, subparagraph (h), brought to its attention by the State Party or States Parties concerned, and make appropriate recommendations to the Council;

 

(d) propose to the Council for submission to the Assembly, as provided in article 151, paragraph 10, a system of compensation or other measures of economic adjustment assistance for developing States which suffer adverse effects caused by activities in the Area. The Commission shall make the recommendations to the Council that are necessary for the application of the system or other measures adopted by the Assembly in specific cases.”

 

Article 170 – The Enterprise

 

1. The Enterprise shall be the organ of the Authority which shall carry out activities in the Area directly, pursuant to article 153, paragraph 2(a), as well as the transporting, processing and marketing of minerals recovered from the Area.

 

2. The Enterprise shall, within the framework of the international legal personality of the Authority, have such legal capacity as is provided for in the Statute set forth in Annex IV. The Enterprise shall act in accordance with this Convention and the rules, regulations and procedures of the Authority, as well as the general policies established by the Assembly, and shall be subject to the directives and control of the Council.

 

4. The Enterprise shall, in accordance with article 173, paragraph 2, and Annex IV, article 11, be provided with such funds as it may require to carry out its functions, and shall receive technology as provided in article 144 and other relevant provisions of this Convention.

 

Article 171 – Funds of the Authority:

 

The funds of the Authority shall include:

 

(a) assessed contributions made by members of the Authority in accordance with article 160, paragraph 2(e);

 

(b) funds received by the Authority pursuant to Annex III, article 13, in connection with activities in the Area;

 

(c) funds transferred from the Enterprise in accordance with Annex IV, article 10;

 

(d) funds borrowed pursuant to article 174;

 

(e) voluntary contributions made by members or other entities; and

 

(f) payments to a compensation fund, in accordance with article 151, paragraph 10, whose sources are to be recommended by the Economic Planning Commission.

 

Article 174 – Borrowing power of the Authority:

 

1. The Authority shall have the power to borrow funds.

 

2. The Assembly shall prescribe the limits on the borrowing power of the Authority in the financial regulations adopted pursuant to article 160, paragraph 2(f).

 

3. The Council shall exercise the borrowing power of the Authority.

 

4. States Parties shall not be liable for the debts of the Authority.

 

Article 176 – Legal status

 

The Authority shall have international legal personality and such legal capacity as may be necessary for the exercise of its functions and the fulfilment of its purposes.

 

Article 177 – Privileges and immunities:

 

To enable the Authority to exercise its functions, it shall enjoy in the territory of each State Party the privileges and immunities set forth in this subsection. The privileges and immunities relating to the Enterprise shall be those set forth in Annex IV, article 13.

 

Article 178 – Immunity from legal process:

 

The Authority, its property and assets, shall enjoy immunity from legal process except to the extent that the Authority expressly waives this immunity in a particular case.

 

Article 179 – Immunity from search and form of seizure:

 

The property and assets of the Authority, wherever located and by whomsoever held, shall be immune from search, requisition, confiscation, expropriation or any other form of seizure by executive or legislative action.

 

Article 180 – Exemption from restrictions, controls and moratoria:

 

The property and assets of the Authority shall be exempt from restrictions, regulations, controls and moratoria of any nature.

 

Part XIV, Development and Transfer of Marine Technology:

 

Article 266 – Promotion of the development and transfer of marine technology:

 

1. States, directly or through competent international organizations, shall cooperate in accordance with their capabilities to promote actively the development and transfer of marine science and marine technology on fair and reasonable terms and conditions.

 

2. States shall promote the development of the marine scientific and technological capacity of States which may need and request technical assistance in this field, particularly developing States, including land-locked and geographically disadvantaged States, with regard to the exploration, exploitation, conservation and management of marine resources, the protection and preservation of the marine environment, marine scientific research and other activities in the marine environment compatible with this Convention, with a view to accelerating the social and economic development of the developing States.

 

3. States shall endeavour to foster favourable economic and legal conditions for the transfer of marine technology for the benefit of all parties concerned on an equitable basis.

 

Article 267 – Protection of legitimate interests:

 

States, in promoting cooperation pursuant to article 266, shall have due regard for all legitimate interests including, inter alia, the rights and duties of holders, suppliers and recipients of marine technology.

 

Article 268 – Basic objectives:

 

States, directly or through competent international organizations, shall promote:

 

(a) the acquisition, evaluation and dissemination of marine technological knowledge and facilitate access to such information and data;

 

(b) the development of appropriate marine technology;

 

(c) the development of the necessary technological infrastructure to facilitate the transfer of marine technology;

 

(d) the development of human resources through training and education of nationals of developing States and countries and especially the nationals of the least developed among them;

 

(e) international cooperation at all levels, particularly at the regional, subregional and bilateral levels.

 

Article 269 – Measures to achieve the basic objectives:

 

In order to achieve the objectives referred to in article 268, States, directly or through competent international organizations, shall endeavour, inter alia, to:

 

(a) establish programmes of technical cooperation for the effective transfer of all kinds of marine technology to States which may need and request technical assistance in this field, particularly the developing land-locked and geographically disadvantaged States, as well as other developing States which have not been able either to establish or develop their own technological capacity in marine science and in the exploration and exploitation of marine resources or to develop the infrastructure of such technology;

 

(b) promote favourable conditions for the conclusion of agreements, contracts and other similar arrangements, under equitable and reasonable conditions;

 

(c) hold conferences, seminars and symposia on scientific and technological subjects, in particular on policies and methods for the transfer of marine technology;

 

(d) promote the exchange of scientists and of technological and other experts;

 

(e) undertake projects and promote joint ventures and other forms of bilateral and multilateral cooperation.

 

Article 274 – Objectives of the Authority:

 

“Subject to all legitimate interests including, inter alia, the rights and duties of holders, suppliers and recipients of technology, the Authority, with regard to activities in the Area, shall ensure that:

 

(a) on the basis of the principle of equitable geographical distribution, nationals of developing States, whether coastal, land-locked or geographically disadvantaged, shall be taken on for the purposes of training as members of the managerial, research and technical staff constituted for its undertakings;

 

(b) the technical documentation on the relevant equipment, machinery, devices and processes is made available to all States, in particular developing States which may need and request technical assistance in this field;

 

(c) adequate provision is made by the Authority to facilitate the acquisition of technical assistance in the field of marine technology by States which may need and request it, in particular developing States, and the acquisition by their nationals of the necessary skills and know-how, including professional training;

 

(d) States which may need and request technical assistance in this field, in particular developing States, are assisted in the acquisition of necessary equipment, processes, plant and other technical know-how through any financial arrangements provided for in this Convention.”

 

Annex III, Basic Conditions of Prospecting, Exploration and Exploitation.

 

Article 2 – Prospecting:

 

1. (a) The Authority shall encourage prospecting in the Area.

 

1. (b) Prospecting shall be conducted only after the Authority has received a satisfactory written undertaking that the proposed prospector will comply with this Convention and the relevant rules, regulations and procedures of the Authority concerning cooperation in the training programmes referred to in articles 143 and 144 and the protection of the marine environment, and will accept verification by the Authority of compliance therewith. The proposed prospector shall, at the same time, notify the Authority of the approximate area or areas in which prospecting is to be conducted. (c) Prospecting may be conducted simultaneously by more than one prospector in the same area or areas.

 

2. Prospecting shall not confer on the prospector any rights with respect to resources. A prospector may, however, recover a reasonable quantity of minerals to be used for testing.

 

Article 3 – Exploration and exploitation:

 

1. The Enterprise, States Parties, and the other entities referred to in article 153, paragraph 2(b), may apply to the Authority for approval of plans of work for activities in the Area.

 

2. The Enterprise may apply with respect to any part of the Area, but applications by others with respect to reserved areas are subject to the additional requirements of article 9 of this Annex.

 

3. Exploration and exploitation shall be carried out only in areas specified in plans of work referred to in article 153, paragraph 3, and approved by the Authority in accordance with this Convention and the relevant rules, regulations and procedures of the Authority.

 

4. Every approved plan of work shall:

 

(a) be in conformity with this Convention and the rules, regulations and procedures of the Authority;

 

(b) provide for control by the Authority of activities in the Area in accordance with article 153, paragraph 4;

 

(c) confer on the operator, in accordance with the rules, regulations and procedures of the Authority, the exclusive right to explore for and exploit the specified categories of resources in the area covered by the plan of work. If, however, the applicant presents for approval a plan of work covering only the stage of exploration or the stage of exploitation, the approved plan of work shall confer such exclusive right with respect to that stage only.”

 

5. Upon its approval by the Authority, every plan of work, except those presented by the Enterprise, shall be in the form of a contract concluded between the Authority and the applicant or applicants.

 

Article 5 – Transfer of technology:

 

1. When submitting a plan of work, every applicant shall make available to the Authority a general description of the equipment and methods to be used in carrying out activities in the Area, and other relevant non-proprietary information about the characteristics of such technology and information as to where such technology is available.

 

2. Every operator shall inform the Authority of revisions in the description and information made available pursuant to paragraph 1 whenever a substantial technological change or innovation is introduced.

 

3. Every contract for carrying out activities in the Area shall contain the following undertakings by the contractor:

 

(a) to make available to the Enterprise on fair and reasonable commercial terms and conditions, whenever the Authority so requests, the technology which he uses in carrying out activities in the Area under the contract, which the contractor is legally entitled to transfer. This shall be done by means of licences or other appropriate arrangements which the contractor shall negotiate with the Enterprise and which shall be set forth in a specific agreement supplementary to the contract. This undertaking may be invoked only if the Enterprise finds that it is unable to obtain the same or equally efficient and useful technology on the open market on fair and reasonable commercial terms and conditions;

 

(b) to obtain a written assurance from the owner of any technology used in carrying out activities in the Area under the contract, which is not generally available on the open market and which is not covered by subparagraph (a), that the owner will, whenever the Authority so requests, make that technology available to the Enterprise under licence or other appropriate arrangements and on fair and reasonable commercial terms and conditions, to the same extent as made available to the contractor. If this assurance is not obtained, the technology in question shall not be used by the contractor in carrying out activities in the Area;

 

(c) to acquire from the owner by means of an enforceable contract, upon the request of the Enterprise and if it is possible to do so without substantial cost to the contractor, the legal right to transfer to the Enterprise any technology used by the contractor, in carrying out activities in the Area under the contract, which the contractor is otherwise not legally entitled to transfer and which is not generally available on the open market. In cases where there is a substantial corporate relationship between the contractor and the owner of the technology, the closeness of this relationship and the degree of control or influence shall be relevant to the determination whether all feasible measures have been taken to acquire such a right. In cases where the contractor exercises effective control over the owner, failure to acquire from the owner the legal right shall be considered relevant to the contractor’s qualification for any subsequent application for approval of a plan of work;

 

(d) to facilitate, upon the request of the Enterprise, the acquisition by the Enterprise of any technology covered by subparagraph (b), under licence or other appropriate arrangements and on fair and reasonable commercial terms and conditions, if the Enterprise decides to negotiate directly with the owner of the technology;

 

(e) to take the same measures as are prescribed in subparagraphs (a), (b), (c) and (d) for the benefit of a developing State or group of developing States which has applied for a contract under article 9 of this Annex, provided that these measures shall be limited to the exploitation of the part of the area proposed by the contractor which has been reserved pursuant to article 8 of this Annex and provided that activities under the contract sought by the developing State or group of developing States would not involve transfer of technology to a third State or the nationals of a third State. The obligation under this provision shall only apply with respect to any given contractor where technology has not been requested by the Enterprise or transferred by that contractor to the Enterprise.

 

4. Disputes concerning undertakings required by paragraph 3, like other provisions of the contracts, shall be subject to compulsory settlement in accordance with Part XI and, in cases of violation of these undertakings, suspension or termination of the contract or monetary penalties may be ordered in accordance with article 18 of this Annex. Disputes as to whether offers made by the contractor are within the range of fair and reasonable commercial terms and conditions may be submitted by either party to binding commercial arbitration in accordance with the UNCITRAL Arbitration Rules or such other arbitration rules as may be prescribed in the rules, regulations and procedures of the Authority. If the finding is that the offer made by the contractor is not within the range of fair and reasonable commercial terms and conditions, the contractor shall be given 45 days to revise his offer to bring it within that range before the Authority takes any action in accordance with article 18 of this Annex.

 

5. If the Enterprise is unable to obtain on fair and reasonable commercial terms and conditions appropriate technology to enable it to commence in a timely manner the recovery and processing of minerals from the Area, either the Council or the Assembly may convene a group of States Parties composed of those which are engaged in activities in the Area, those which have sponsored entities which are engaged in activities in the Area and other States Parties having access to such technology. This group shall consult together and shall take effective measures to ensure that such technology is made available to the Enterprise on fair and reasonable commercial terms and conditions. Each such State Party shall take all feasible measures to this end within its own legal system.

 

8. For the purposes of this article, “technology” means the specialized equipment and technical know-how, including manuals, designs, operating instructions, training and technical advice and assistance, necessary to assemble, maintain and operate a viable system and the legal right to use these items for that purpose on a non-exclusive basis.

 

Article 13 – Financial terms of contracts:

 

1. In adopting rules, regulations and procedures concerning the financial terms of a contract between the Authority and the entities referred to in article 153, paragraph 2(b), and in negotiating those financial terms in accordance with Part XI and those rules, regulations and procedures, the Authority shall be guided by the following objectives:

 

(a) to ensure optimum revenues for the Authority from the proceeds of commercial production;

 

(b) to attract investments and technology to the exploration and exploitation of the Area;

 

(c) to ensure equality of financial treatment and comparable financial obligations for contractors;

 

(d) to provide incentives on a uniform and non-discriminatory basis for contractors to undertake joint arrangements with the Enterprise and developing States or their nationals, to stimulate the transfer of technology thereto, and to train the personnel of the Authority and of developing States;

 

(e) to enable the Enterprise to engage in seabed mining effectively at the same time as the entities referred to in article 153, paragraph 2(b); and

 

(f) to ensure that, as a result of the financial incentives provided to contractors under paragraph 14, under the terms of contracts reviewed in accordance with article 19 of this Annex or under the provisions of article 11 of this Annex with respect to joint ventures, contractors are not subsidized so as to be given an artificial competitive advantage with respect to land-based miners.

 

4. Within a year of the date of commencement of commercial production, in conformity with paragraph 3, a contractor shall choose to make his financial contribution to the Authority by either:

 

(a) paying a production charge only; or

 

(b) paying a combination of a production charge and a share of net proceeds.

 

5. (a) If a contractor chooses to make his financial contribution to the Authority by paying a production charge only, it shall be fixed at a percentage of the market value of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract. This percentage shall be fixed as follows:

 

(i) years 1-10 of commercial production            5 per cent

 

(ii) years 11 to the end of commercial production 12 per cent

 

5. (b) The said market value shall be the product of the quantity of the processed metals produced from the polymetallic nodules extracted from the area covered by the contract and the average price for those metals during the relevant accounting year, as defined in paragraphs 7 and 8.

 

6. If a contractor chooses to make his financial contribution to the Authority by paying a combination of a production charge and a share of net proceeds, such payments shall be determined as follows:

 

(a) The production charge shall be fixed at a percentage of the market value, determined in accordance with subpara-graph (b), of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract. This percentage shall be fixed as follows:

 

(i) first period of commercial production           2 per cent

 

(ii) second period of commercial production       4 per cent. 

 

If, in the second period of commercial production, as defined in subparagraph (d), the return on investment in any accounting year as defined in subparagraph (m) falls below 15 per cent as a result of the payment of the production charge at 4 per cent, the production charge shall be 2 per cent instead of 4 per cent in that accounting year.

 

(b) The said market value shall be the product of the quantity of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract and the average price for those metals during the relevant accounting year as defined in paragraphs 7 and 8.

 

(c) (i) The Authority’s share of net proceeds shall be taken out of that portion of the contractor’s net proceeds which is attributable to the mining of the resources of the area covered by the contract, referred to hereinafter as attributable net proceeds.

 

C (ii) The Authority’s share of attributable net proceeds shall be determined in accordance with the following incremental schedule:

 

  • That portion representing a return on investment which is greater than 0 per cent, but less than 10 per cent

 

  • 35 percent during the first period of commercial production (Note: the period of time when development costs are being recovered from revenues generated)

 

  • 40 percent during the second period of commercial production (Note: this is the period of time after development costs have been recovered.)

 

  • That portion representing a return on investment which is 10 per cent or greater, but less than 20 percent

 

  • 42.5 per cent  during the first period of commercial production

 

  • 50 percent during the second period of commercial production

 

  • That portion representing a return on investment which is 20 per cent or greater

 

  • 50 percent during the first period of commercial production

 

  • 70 percent during the second period of commercial production

 

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