Abstract
In June 2021, the Republic of Nauru invoked a treaty provision known as the ‘two-year rule’ at the International Seabed Authority (ISA). Effectively, this provision requires the Council of the ISA to complete the elaboration and adoption of the necessary regulations within two years if requested by a Member State whose national intends to apply for the approval of a plan of work for the exploitation of seabed minerals in the Area. If the Council is unable to complete the elaboration of the regulations within the prescribed time and an exploitation application is submitted, the Council would still have to ‘consider’ and ‘provisionally approve’ the same despite the absence of the exploitation regulations. This article undertakes a detailed analysis of the two-year rule, particularly underscoring its legal consequences and implications, as the ISA pushes forward in developing exploitation regulations in the light of its invocation.
Introduction
The International Seabed Authority (ISA), established under the United Nations Convention on the Law of the Sea 1982 (LOSC),1 is an autonomous international organisation with the mandate to administer the mineral resources located on the seabed and subsoil thereof beyond the limits of national jurisdiction, otherwise known as ‘the Area’.2 Part XI of the LOSC affirms that the Area and its mineral resources are the ‘common heritage of (hu)mankind’ and that all rights in such resources are ‘vested in (hu)mankind as a whole, on whose behalf the [ISA] shall act’.3 Notably, the LOSC is to be read together with the 1994 Agreement Relating to the Implementation of Part XI of the LOSC (the 1994 Implementation Agreement).4 Of particular interest to this article is a provision known as the ‘two-year rule’, which is housed in section 1(15) to the Annex of the 1994 Implementation Agreement.5 Effectively, this provision allows any Member State of the ISA whose national intends to apply for the approval of a plan of work for exploitation to request that the Council of the ISA complete the elaboration and adoption of the necessary regulations within two years. If the Council is unable to complete the elaboration of the exploitation regulations within the prescribed time and an application is submitted, the Council would still have to ‘consider’ and ‘provisionally approve’ the same, even though the exploitation regulations still do not exist. In late June 2021, the Republic of Nauru submitted a request to the ISA pursuant to section 1(15), with the operative date being 9 July 2021.6
This article aims to provide a detailed legal analysis of section 1(15), particularly underscoring its legal consequences and implications, as the ISA pushes forward in developing regulations for exploitation activities in the light of its invocation amidst the COVID-19 pandemic. The following section sets the scene by introducing the ISA and its mandate over mineral resources that are located in areas beyond national jurisdiction, as well as broadly explaining the overall state-of-the-art in terms of the work of the ISA. Thereafter, the next section will explore the 1994 Implementing Agreement, which houses the ‘two-year rule’ in section 1(15), and will briefly discuss the circumstances surrounding its recent invocation. Thereafter, a detailed analysis of section 1(15), together with the consequences of its invocation and its corresponding implications, will be carried out as the crux of this article, before concluding with some final thoughts.
Setting the Scene
The 167 State Parties to the LOSC, together with the European Union (EU) constitute the ISA,7 which can be broken down into two of its primary organs, the Assembly and the Council (the third primary organ is the Secretariat).8 All State Parties to the LOSC are automatically Member States of the ISA Assembly,9 whereas the Council comprises only 36 States elected by the Assembly for four-year terms.10 The LOSC, as modified by the 1994 Implementing Agreement, provides the overall framework for the regulation of activities in the Area and entrusts the ISA to develop all necessary rules, regulations and procedures (RRPs) for the exploration and exploitation of the mineral resources of the Area.11 In particular, Article 162(2)(o)(ii) of the LOSC prescribes that the Council ‘shall adopt and apply provisionally, pending approval by the Assembly, the [RRPs relating] to prospecting, exploration and exploitation in the Area’. In turn, Article 160(2)(e)(ii) stipulates that the Assembly shall then ‘consider and approve the [RRPs] of the [ISA], and any amendments thereto, provisionally adopted by the Council’.
Decisions at the Council on questions of substance relating to Article 162(2)(o) shall be taken by consensus,12 which refers to ‘the absence of any formal objection’.13 In other words, unlike the decision-making processes that typically apply to most other matters at the Council,14 decisions pertaining to the adoption of RRPs relating to the exploration and exploitation of mineral resources in the Area will not be subject to the formal voting rules at the Council. Effectively, this means that just one formal objection at the Council could stall the adoption and provisional application of the specific RRP in question, resulting in a deadlock. If any formal objection is indeed made, the Council will seek to exhaust all efforts to achieve consensus,15 including through compulsory conciliation.16 This requirement to achieve consensus carries significant consequences because the LOSC itself does not appear to allow the Council to consider any applications for the approval of plans of work in the absence of regulations to facilitate exploration or exploitation activities. This scenario (insofar as it concerns exploitation activities at least) was subsequently addressed via the 1994 Implementing Agreement through section 1(15), which will be discussed below.
To date, the ISA has established a functional regulatory system to govern exploration activities covering three different mineral types. Regulations for polymetallic nodules were adopted in 2000 and revised in 2013,17 regulations for polymetallic sulphides in 2010,18 and regulations for cobalt-rich ferromanganese crusts in 2012.19 As of 1 January 2022, the ISA has awarded 31 exploration contracts.20 No exploitation applications or contracts have been considered or awarded as of yet, and one primary reason for this (in addition to mining operators not being ready to progress and prevailing economic conditions not justifying exploitation, among others) is that the development of regulations to facilitate exploitation activities have not been finalised. Efforts to develop the necessary RRPs to facilitate exploitation activities in the Area can be traced back to 2014, beginning with the work of the Council’s subsidiary organ, the Legal and Technical Commission (LTC).21 In March 2019, the LTC presented its fourth draft of the regulations.22 During its meetings in July 2019 and February 2020, the Council began its consideration of the said draft but did not get very far. At its February 2020 meeting, the Council decided to establish three informal working groups (IWG), in addition to an existing open-ended working group (OEWG) on the financial terms of exploitation contracts, to further facilitate exchanges and advance discussions on the regulations.23 Shortly after that, however, the COVID-19 global pandemic struck and the work of the Council on the regulations came to an abrupt halt.
In late June 2021, the Republic of Nauru opted to invoke section 1(15) and requested that the Council complete the elaboration and adoption of the exploitation regulations by 9 July 2023. At its recent meeting in December 2021 (which took place in a hybrid format with limited in-person attendance), the Council adopted a schedule of work or roadmap for 2022, in which the Council expects to meet for an unprecedented three times during the year (namely, for two weeks in March-April, July, and October-November respectively), in order to make progress with negotiations on the exploitation regulations through the IWGs and OEWG, and with the apparent aim to meet the July 2023 deadline.24
The 1994 Implementing Agreement, the ‘Two-Year Rule’ and its Recent Invocation
Before undertaking an in-depth analysis of the two-year rule, it is useful to explain how this provision came about as well as the pertinent circumstances behind its recent invocation. This section is divided into three parts. First, some historical background on the 1994 Implementing Agreement will be provided in order to better appreciate the genesis of section 1(15). Next, section 1(15) will be introduced and rationalised. Finally, some pertinent circumstances surrounding its recent invocation by the Republic of Nauru will be discussed.
The 1994 Implementing Agreement
While the LOSC was adopted and opened for signature in 1982, it struggled to attract sufficient ratifications to enter into force during its early years. The primary reason behind this was due to major disagreements on numerous provisions relating to the regime for the Area as adopted and featured in Part XI of the LOSC.25 Since the LOSC was negotiated as a package and did not permit any reservations on the applicability of its provisions for ratifying parties (meaning that contracting States could not pick and choose which parts of the treaty to be bound by),26 a significant number of industrialised States declined to ratify it due to objections specifically relating to the Part XI regime.27 Among these objections were concerns related to institutional arrangements and decision-making processes at the ISA, which are central to this article.28 In the 1980s, dissatisfied with the Part XI regime, some industrialised States even initiated the development of their own separate reciprocating regime for mineral mining in the Area,29 which caused a tense situation at that time.30
Indeed, it took several rounds of informal negotiations between 1990 and 1994 under the auspices of the then UN Secretary-General to ventilate the concerns that industrialised States had concerning the provisions of Part XI,31 culminating in the conclusion of the 1994 Implementing Agreement on 28 July 1994 and its entry into force shortly after.32 Both the LOSC and the 1994 Implementation Agreement ‘shall be interpreted and applied together as a single instrument’, though in the event of inconsistencies, the latter shall prevail.33 It is widely acknowledged that the conclusion of the 1994 Implementing Agreement facilitated the widespread acceptance of the LOSC and resulted in a single, universal regime for mining activities in the Area under the ISA,34 although numerous comprises were made by developing States to meet the demands of industrialised States that resulted in the LOSC being ‘diluted’. The extent of all the modifications brought about by the 1994 Implement Agreement will not be discussed here due to space constraints.35 Instead, this article will now turn to focus on the one particular provision that it introduced that is of present concern, namely section 1(15).
The ‘Two-Year Rule’
Section 1(15) provides as follows:
The [ISA] shall elaborate and adopt, in accordance with article 162, paragraph 2(o)(ii), of the Convention, [RRPs] based on the principles contained in sections 2, 5, 6, 7 and 8 of this Annex, as well as any additional [RRPs] necessary to facilitate the approval of plans of work for exploration or exploitation, in accordance with the following subparagraphs:
(a) The Council may undertake such elaboration any time it deems that all or any of such [RRPs] are required for the conduct of activities in the Area, or when it 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;
(b) If a request is made by a State referred to in subparagraph (a) the Council shall, in accordance with article 162, paragraph 2(o), of the Convention, complete the adoption of such [RRPs] within two years of the request;
(c) If the Council has not completed the elaboration of the [RRPs] relating to exploitation within the prescribed time and an application for approval of a plan of work for exploitation is pending, it shall none the less consider and provisionally approve such plan of work based on the provisions of the Convention and any [RRPs] that the Council may have adopted provisionally, or on the basis of the norms contained in the Convention and the terms and principles contained in this Annex as well as the principle of non-discrimination among contractors.
Several intentions appear to be behind the introduction of this provision via the 1994 Implementing Agreement. First, Article 162(2)(o)(ii) of the LOSC did not provide any legal consequences if regulations pertaining to the exploration or exploitation of polymetallic nodules or other minerals were not adopted in a timely fashion or within three years, which was seen as ambivalent and problematic.36 Second, section 1(15) provides a path for non-Council Member States to submit a request to the Council to initiate and complete elaboration of regulations. Without this avenue, it may not have been straightforward for non-Council Member States of the ISA to move the Council to take any action with respect to the development of RRPs. In this respect, it is pertinent to note that nearly four-fifths of the ISA Member States are not represented in the Council.37
Third, the provision accommodates special consideration for those that are ready to progress into exploitation but are left waiting due to the absence of the relevant regulations. In this respect, some exploration contractors might find themselves in a real quandary if they are ready to progress from exploration to exploitation, but the necessary regulations are not yet in place. In such an event, since the regime does not appear to anticipate the possibility for contractors to pause or defer their rights over the exploration contract area, it appears that such a contractor would be left with no choice but to either apply for an extension of the exploration contract or renounce its rights over the explored contract area.38 It may be seen as unfair to expect contractors to continuously apply for extensions of their exploration contracts (and pay the required fees) in order to maintain their rights for the sole reason that the ISA has not been able to complete the exploitation regulations, particularly since the 1994 Implementing Agreement and the Exploration Regulations expects that ‘[u]pon the expiration of a plan of work for exploration, the contractor shall apply for a plan of work for exploitation’.39
However, it is equally clear that exploration contractors must first complete all necessary preparatory work in good faith (including and especially their environmental obligations) before proceeding to the exploitation phase.40 Section 1(7) of the Annex to the 1994 Implementing Agreement provides that ‘[a]n application for approval of a plan of work shall be accompanied by an assessment of the potential environmental impacts of the proposed activities and by a description of a programme for oceanographic and baseline environmental studies’. In this respect, it would be logical to assume that the expectations for such assessments, descriptions and studies would correspond to the stage of activities, whereby applicants for an exploitation contract are expected to provide much more detailed and well-elaborated information and data on the above (as opposed to applicants for an exploration contract). Indeed, the exploration phase is there to enable the further collection of data and the assessment of impacts in order to facilitate the preparation of an eventual application for exploitation activities, if so desired. Based on present circumstances and available information, it would seem that none of the existing exploration contractors has completed their preparatory work to date.41 Besides, apart from the absence of regulations, it could also very well be the case that prevailing economic circumstances do not justify proceeding to the exploitation phase.42
Fourth and finally, it should also be recalled that RRPs relating to exploration and exploitation activities must be adopted by consensus at the Council, meaning, decisions relating to such matters can be blocked by as few as one Council member.43 According to the LOSC, as explained above, the existence of a formal objection could stall progress with respect to the elaboration and adoption of the regulations and cause a deadlock. In this respect, section 1(15) allows for certain manoeuvres (for instance, where a formal objection is deliberately raised by one or a small number of Council members as part of delaying tactics or to frustrate the progression to exploitation) to be legally circumvented.44 However, section 1(15) arguably is not tailored for situations where most Council members have serious reservations about the draft regulations that are under consideration or genuine apprehensions about the progression into the exploitation stage, and would like more time to carefully design an effective, robust and precautionary regime for exploitation activities.45
Invocation by the Republic of Nauru
On 25 June 2021, the Republic of Nauru notified the ISA of its intent to invoke section 1(15), with operative effect from 9 July 2021, on the basis that its sponsored national, Nauru Ocean Resources Inc. (NORI), intends to apply for the approval of a plan of work for exploitation.46 This effectively means that the Council should complete the elaboration and adoption of the exploitation regulations by 9 July 2023. Coincidentally, NORI, which is incorporated and registered in Nauru, is known to be a wholly-owned subsidiary of a foreign private company.47 Nauru, though a member of the Assembly, is not a member of the current composition (2021–2022) of the Council. In respect of the timing of the invocation, although not completely unexpected (since there had been increased speculation that this might happen in recent times),48 it seems fair to observe that the timing is still rather surprising and inopportune,49 given that the effects of the COVID-19 pandemic has since prevented the Council from meeting in-person to progress negotiations. Moreover, it is common knowledge that the Council has been prioritising and working hard to advance the development of the exploitation regulations in recent years.50 Clearly, its progress on negotiations has been derailed due to a global health emergency and not for any other extraneous reasons (although, it is acknowledged that the task ahead for the ISA in regulating an untested industry seeking to operate in remote parts of the world through a sui generis intergovernmental organisation would be quite challenging to say the least).
Queries have been raised as to the potential reasons behind the invocation of this provision. Although speculative, it seems possible that Nauru’s decision to invoke section 1(15) at this particular point in time may have been premised on one or more of the following reasons. One, that NORI truly intends to conduct exploitation activities in the near future. In this respect, it is apparent that its parent company has maintained its intention to commence exploitation activities as soon as 2024.51 Two, it is possible that the provision was invoked to give some sense of security to potential future investors and assure market confidence that NORI will soon be able to acquire an exploitation contract. The timing of the invocation of section 1(15) does leave some room for speculation in this respect.52 At the time of invocation, NORI’s parent company, DeepGreen, was looking to be acquired by and merge with Sustainable Opportunities Acquisition Corp (SOAC) to become The Metals Company with the view to seek listing on the Nasdaq Global Select Market in the third quarter of 2021.53 The merger and listing have since taken place.54
Three, it is also likely that there has been some dissatisfaction on the part of Nauru, NORI and its parent company, as well as other stakeholders (e.g., industry), over the lack of progress on the elaboration of the exploitation regulations, which had been put on hold for over 15 months.55 In this respect, it could very well be that the invocation of section 1(15) was undertaken with the intention to simply accelerate the finalisation of the regulations, and consequently, reduce the prevailing regulatory uncertainties that would impede commercial mining interests. Finally, the increasing calls for a ban, moratorium or precautionary pause on exploitation activities in the Area could have also contributed to the invocation of the provision. Although no Member State of the ISA has submitted a formal proposal to the ISA pertaining to any of the above, recent calls coming from the European Parliament,56 top global brands,57 and most recently, hundreds of leading marine scientists and policy experts58 and the International Union for Conservation of Nature,59 as well as numerous financial institutions, civil society and conservation groups,60 may have prompted the invocation of section 1(15) to ensure that the Council does not get side-tracked by such developments and shifts into reverse gear.
While the timing of the invocation of the provision may be perceived as inopportune, Nauru’s act of invoking the provision per se is, strictly speaking, not unlawful,61 particularly in the absence of any evidence that its invocation was done in bad faith or amounts to an abuse of right.62 Given that the ISA operates based on sovereign equality among its members,63 it is well within the rights of any Member State, irrespective of size, status or location, to invoke this provision in good faith. That said, it is also equally well within the rights of each Member State to determine its response (and to influence the reaction of others) to the said invocation.
Legal Analysis of the ‘Two-Year Rule’
In the following, section 1(15) will be analysed by considering its paragraphs in seriatim. The analysis will be conducted in the following order: the main or opening paragraph – characterised as ‘the premise of section 1(15)’; subparagraph (a) – characterised as ‘the scenarios of section 1(15)’; subparagraph (b) – characterised as ‘the consequences of section 1(15)’; and subparagraph (c) – characterised as ‘the implications of section 1(15)’.64 Given that ISA exploration regulations are already in force, section 1(15) will be read primarily with reference to the exploitation regulations.
The ensuing analysis will be guided by the general rules of treaty interpretation as laid down in the Vienna Convention on the Law of Treaties 1969 (VCLT).65 Thus, the relevant provisions of the LOSC and the 1994 Implementing Agreement will be interpreted ‘in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose’,66 as well as further explained where a ‘special meaning’ was intended by the parties.67 Moreover, where necessary, references will be made to some relevant supplementary material, in accordance with the VCLT, to help interpret and shed some light on the application of section 1(15) today.68 For the purposes of this article, such reference will be made particularly to previous draft negotiation texts of the 1994 Implementing Agreement (i.e., draft versions from 1993 and 1994).69
Section 1(15), Main Paragraph: The Premise
The main paragraph of section 1(15) provides the premise for the rest of the provision. The first point to note here is that that the ISA ‘shall elaborate and adopt’ exploitation regulations in accordance with Article 162(2)(o)(ii) of the LOSC. As such, section 1(15) must be read in conjunction with Article 162(2)(o)(ii).70 Second, the main paragraph also provides that the exploitation regulations are to be elaborated and adopted ‘based on the principles contained in sections 2, 5, 6, 7 and 8 of [the Annex to the 1994 Implementing Agreement]’. These refer to provisions relating to the Enterprise (the entrepreneurial organ of the ISA envisaged to carry out mining activities as an independent contractor but is yet to be operationalised), transfer of technology, commercial production policies, economic assistance to developing countries reliant on terrestrial mining whose economies are adversely affected because of activities in the Area, and the financial terms of exploitation contracts, respectively. This suggests that the Council must ensure that relevant matters pertaining to the above themes are considered and sufficiently reflected upon when elaborating the exploitation regulations. Interestingly, the equitable benefit-sharing theme is not implicated here, given the omission to make a broader reference to Article 162(2)(o) in the text (since RRPs pertaining to equitable benefit-sharing is covered under Article 162(2)(o)(i)). Third, the main paragraph of section 1(15) recognises the possibility that, apart from those that are covered in Article 162(2)(o)(ii), additional RRPs may be required to facilitate the approval of plans of work for exploitation. Section 1(15) thus anticipates that these will also be elaborated and adopted if and where necessary. Finally, section 1(15) subjects its main paragraph to three subparagraphs, which will be considered in turn below. It is important to stress here that the subparagraphs are to be read sequentially with each other. In other words, the subsequent subparagraph(s) are dependent and become operative on the occurrence of an event premised in the former one(s).
Section 1(15), Subparagraph (a): The Scenarios
Section 1(15)(a) stipulates three scenarios in which the Council ‘may undertake the elaboration’ of the relevant RRPs: one, ‘any time it deems that [such regulations] are required for the conduct of activities in the Area’; two, ‘when it determines that commercial exploitation is imminent’; and three, ‘at the request of a State whose national intends to apply for approval of a plan of work for exploitation’. It should be pointed out that the first scenario applies to RRPs relating to both exploration and exploitation activities, whereas scenarios two and three apply exclusively to RRPs in the context of exploitation activities.
Two critical questions arise in connection with subparagraph (a). First, does the use of the word ‘may’ at the beginning suggest that this is a matter of discretion for the Council (as opposed to the use of words such as ‘shall’ or ‘must’), and second, are the three scenarios mutually exclusive with each other (namely, the occurrence of one would preclude the others) or should they be read disjunctively from each other (namely, the occurrence of one would not preclude the others)?
Concerning the first question and use of the word ‘may’, this does indeed appear to indicate some level of discretion on the part of the Council,71 at least in relation to the first two scenarios, whereas the occurrence of the third scenario would deserve further consideration (and will be addressed below). The second question, that is, whether the three scenarios are mutually exclusive with each other or disjunctive from each other has broader consequences. In the event the three scenarios are to be read as mutually exclusive with each other, this would have serious ramifications to Nauru’s invocation of the provision as it may be argued that the Council has already occupied the field by pre-empting or anticipating the need for the exploitation regulations (and has already made considerable progress with the elaboration of the same). If this contention is accepted, the request made by the Republic of Nauru would have no legal significance, and the consequences and implications that follow in the subsequent subparagraphs would not apply.
It would appear, however, that all three scenarios should be considered disjunctively due to the use of punctuation marks that separate the scenarios,72 as well as the use of the word ‘or’ at the start of the scenario that follows the previous one. Moreover, this would help reveal the intention behind the use of the word ‘may’ at the beginning of the subparagraph, implying that the Council may undertake the elaboration of the exploitation regulations in the event any of the occasions that follow it occurs. Similarly, the existence of the subsequent two subparagraphs in section 1(15) also lend support to a disjunctive interpretation, given that these provisions only come into operation if (and when) the third scenario occurs.
Additionally, it is apparent that from subparagraphs (b) and (c) that it is only in the event where the third scenario occurs (i.e., request from a Member State whose national intends to submit an application for the approval of a plan of work for exploitation) that the 1994 Implementing Agreement intends for a deadline to apply. Whereas there are no time repercussions or other legal consequences attached to the other two scenarios, which, as noted above, is also the case under Article 162(2)(o)(ii) of the LOSC. Put differently, the modification brought about by section 1(15) appears to modify the gap under the LOSC by imposing a deadline if a request is made by a Member State in this respect.
Another point to consider in respect to the third scenario is the use of two specific words therein and their implications – namely, ‘national’ and ‘intends’. The use of the former term necessitates some discussion about what is a ‘national’ in the context of sponsorship to conduct activities in the Area. In the present case, it would seem to be incontrovertible that NORI, having been incorporated and registered under Nauruan domestic laws, is a national of Nauru.73 That said, it could be argued that NORI’s parent company, which is a foreign company and non-national of Nauru, is the one truly behind the intention to submit an exploitation application and not NORI, whereby NORI is merely a vehicle to obtain sponsorship from Nauru.74 On this point, it is indeed questionable as to whether Nauru exercises ‘effective control’ over NORI.75 However, it should be noted that the current approach of the ISA in determining ‘effective control’ merely requires sponsorship to meet the low threshold of regulatory control.76
Next, concerning the term ‘intends’, references to the prior negotiating texts concerning this aspect of section 1(15)(a) can help shed some light. In an earlier draft from August 1993, the following words were used (in respect of corresponding section 1(8)(a) there): ‘at the request of a State wishing to sponsor an application for approval of a plan of work for exploitation’ (emphasis added).77 Whereas, a later draft in November 1993 used the following words (in respect of the corresponding section 1(12)(a) there): ‘at the request of a State whose national is in a position to apply for approval of a plan of work for exploitation’ (emphasis added).78 Subsequent drafts and the final version adopted in July 1994 maintain the text as it appears in its present form.
In this respect, it can be surmised based on how subparagraph (a) appears in its present form that what is required is the mere existence of an intention of the national of the requesting State to apply for the approval of a plan of work for exploitation. Additionally, there is no temporal requirement, that is, when exactly the national intends to submit such an application, although this logically should be interpreted to mean in the immediate future. It is arguable that had those prior texts November 1993 been retained into the final text, the requesting State would have had to further justify that its national is already in a position to submit an application at the time of invocation. But that is not the case presently, and thus, the relevant requirement here is only a mere ‘intention’ to submit an application.
Section 1(15), Subparagraph (b): The Consequences
In terms of the consequences that follow from a Member State submitting a request under subparagraph (a), three points are relevant. First, subparagraph (b) uses the word ‘shall’, which would suggest that the Council does not have any discretion on this matter (as opposed to the other two scenarios and the use of the word ‘may’ in subparagraph (a), as discussed above). Second, while the Council may have already commenced the elaboration of RRPs for exploitation on its own accord, subparagraph (b) explicitly requires that the adoption of the same be completed within two years from the operative date of the request from a Member State under subparagraph (a). Third, it is important to note that subparagraph (b) cross-refers to Article 162(2)(o) in its entirety (and not specifically to 162(2)(o)(ii), as does the main paragraph of section 1(15)). Thus, subparagraph (b) appears to also require the Council to advance RRPs relating to the ‘equitable sharing of financial and other economic benefits derived from activities in the Area and the payments and contributions made pursuant to [Article 82]’, as laid out in Article 162(2)(o)(i) of the LOSC.79
That said, while subparagraph (b) provides the consequences of a request made by a Member State, it is very important to note that subparagraph (b) does not provide any legal implications for the inability of the Council to meet the prescribed deadline of two years. These are to be found in the following subparagraph (c), namely, in the case of where an application for the approval of a plan of work for exploitation is submitted to the ISA.
Section 1(15), Subparagraph (c): The Implications
Subparagraph (c) prescribes the ensuing legal implications in the event the Council is unable to complete the elaboration of the exploitation regulations within the prescribed time of two years. Subparagraph (c) is the crux of the discussion here, and thus, deserves meticulous treatment. Accordingly, the analysis that follows is subdivided into several dedicated parts.
When Does Subparagraph (c) Come into Operation?
At the outset, it is pertinent to point out that subparagraph (c), strictly speaking, is only concerned with the exploitation regulations and prescribes to that end. In other words, it does not seem to extend to RRPs concerning the equitable sharing of benefits mechanism that paragraph (b) arguably covers (as discussed above). Thus, legally speaking, it does appear that sub-paragraph (c) does not intend to include the absence of agreement on the benefit-sharing mechanism as part of the contingencies of the Council missing the deadline set under subparagraph (b). In this respect, it does seem to be the case that while the financial terms of an exploitation contract has been brought into and debated in the context of the exploitation regulations at the Council, the consideration of the benefit-sharing mechanism appears to have been taken up separately. That said, it does appear unlikely, from a political standpoint at least, that exploitation activities will be allowed to commence before the benefit-sharing mechanism has been clarified and put in place. This adds to the complexities on how the Council will approach subparagraph (c), should the time come.
Moreover, it should be noted that while the main paragraph of section 1(15) refers to both the ‘elaboration’ and ‘adoption’ of the regulations by the Council, whereas subparagraph (a) refers to ‘elaboration’ and subparagraph (b) to ‘adoption’, subparagraph (c) appears to only be concerned with completing the ‘elaboration’ of the same. Indeed, subparagraph (c) begins by stating ‘[i]f the Council has not completed the elaboration of the exploitation regulations’ (emphasis added), without going on to make any reference to the adoption of the same. In this respect, it is arguable that subparagraph (c), quite purposefully, seeks to only target the elaboration of the regulations and not its adoption.80
In light of the potentially conflicting outcomes, it might be helpful to look at earlier drafts of section 1(15) for guidance. An early draft of the negotiation texts concerning section 1(15)(c) in August 1993 provided the following (as section 1(8)(c) there): ‘If the Council has not completed its work within the prescribed time’ (emphasis added).81 Two later drafts in November 1993 (as section 1(12)(c) there) and April 1994 (as section 1(15)(c) there) then stipulated as follows: ‘If the Council has not completed rules, regulations and procedures relating to exploitation within the prescribed time’ (emphasis added).82 In this respect, it would seem that the use of the words ‘completed the elaboration of’ in the finalised 1994 Implementing Agreement suggests that there is an intention to create a distinction between full completion of the entire process (i.e., elaboration and adoption) and the mere completion of the elaboration of the exploitation regulations.
Therefore, it is arguable that the legal implications under subparagraph (c), which will be discussed below, would only come into operation if the Council fails to complete the elaboration of the regulations within the prescribed time. Conversely, these implications would not apply if the Council manages to complete the elaboration of the regulations within the prescribed time but is unable to or elects not to adopt them, or if the Council decides to adopt them with conditions precedent to their entry into force.83 If this interpretation is accepted, it would effectively mean that the remaining parts of section 1(15)(c) will not come into operation, or in other words, the Council would not be legally bound to consider any pending applications until the regulations (the elaboration of which have been completed) are adopted and provisionally applied by the Council.
It is foreseeable that the Council in choosing to embrace such interpretations would face considerable resistance, especially from Member States that might have an interest in conducting or sponsoring exploitation activities in the near future, whereby the contention would be that accepting such interpretations would render section 1(15) as ‘meaningless’. However, it is important to stress that arguably section 1(15) was inserted to address a deadlock at the Council and is particularly relevant where one or a few Council members deliberately raise formal objections to delay or frustrate the adoption of the exploitation regulations.84 Given that the ISA is at a point in time where the Council as a whole is genuinely advancing its discussions on the regulations and there does not appear to be any deadlock in negotiations, adopting such an interpretation would not undermine Section 1(15) but instead give effect to the contingencies that it seeks to protect (or avoid). Once things have reached a point where a significant majority of the Council is satisfied with the shape and form of the exploitation regulations and are prepared to adopt them even where a handful of members are resisting adoption, the implications under subparagraph (c) would then apply with force. In this respect, the solidarity and political will of the Council at a given point in time after the expiry of the prescribed time will determine the outcome of having missed the two-year deadline.85
Moreover, embracing such an interpretation would also give effect to a recent Council decision that made explicit that all ‘necessary standards and guidelines should be developed before the adoption of the regulations’,86 where there is an understanding that certain necessary standards and guidelines are to be adopted either before or together with the exploitation regulations.87 It would also give effect to the understanding already accepted at the ISA in terms of developing the exploitation regulations, whereby according to the building block or packaged approach to its regulatory development, ‘nothing is agreed until everything agreed’.88 Consequently, a situation could very well occur where the elaboration of the regulations have been completed within the prescribed time but has to be put aside (i.e., pending their adoption or entry into force) while waiting for the necessary standards and guidelines to be formulated and finalised. This could possibly also extend to other necessary components within the regulations (e.g., financial terms of exploitation contracts) or outside of the regulations but intrinsically related to the system of exploitation (e.g., the design of an appropriate mechanism for equitable benefit sharing) that still need to be agreed upon.89
What Does ‘and an Application … Is Pending’ Mean?
The words ‘and an application for approval of a plan of work pending’ here gives rise to the following question: at what point in time is an application considered to be ‘pending’? Should it be taken to mean as covering applications that are submitted before the expiration of the prescribed time (i.e., within or at the end of the two years), or rather, as covering applications that are submitted after the expiry of the two years and while the elaboration of the exploitation regulations remains incomplete?
A perfunctory reading of subparagraph (c) may lead to the conclusion that the provision intends to cover the former situation, that is, that the application must be submitted before the end of the two years and the Council fails in completing the elaboration of the exploitation regulations within the prescribed time. However, such a reading would potentially lead to some absurd outcomes. It would, for example, not cover applications that are submitted after two years but still before the elaboration of the regulations are completed by the Council. Besides, it would seem very reasonable (and also a matter of good faith) to accord the Council the full two years of the prescribed time – at the very minimum – to complete the elaboration of the regulations before an application is submitted.
Additionally, it would seem necessary to wait until the two-year period expires because the Council is well within its right to complete the elaboration of the regulations towards the very end of the prescribed time, and thereby, the applicant would only be able to fully prepare its application in accordance and compliance with the regulations once its elaboration has been completed. In this respect, the LOSC does explicitly require that ‘[e]very plan of work shall be in conformity [with the LOSC] and the [RRPs] of the [ISA]’.90 Otherwise, if an application is made before the two-year period ends and the Council happens to subsequently adopt the regulations within that same period, the applicant would most likely have to revise and resubmit its application to conform to the regulations adopted by the Council. Thus, it is submitted that the word ‘pending’ here should be interpreted to cover applications that are submitted after the prescribed time has expired and up until the point the elaboration of the regulations are completed.91
Finally, it should be stressed that the submission of an application here is not reserved to an application from the national of the Member State that submitted the request under section 1(15) since subparagraph (c) does not specify this. Thus, any other desiring applicant may submit an application for consideration according to subparagraph (c), and there are no restrictions to the number of applications that may be submitted. Conversely, it should be noted that there is no compulsion or legal obligation for the national of the State that invoked section 1(15) to submit an application, and neither is there any obligation (under international law at least) for that State to subsequently follow through and sponsor its national in its exploitation application. In fact, if NORI feels that it is not able to meet the requirements laid out in regulations that the Council has elaborated, or if its business model, priorities or financial circumstances have since changed, or if prevailing economic conditions simply do not justify exploitation activities, it may yet choose to refrain from applying for the time being.92 Similarly, if Nauru ultimately finds that it is not able to meet its responsibilities as a sponsoring State for exploitation activities, for example, if it is not able to meet expectations as prescribed in the regulations adopted by the Council, it may also decline to sponsor an exploitation application.
What Does ‘Shall None the Less Consider and Provisionally Approve’ Mean, and on What Basis Shall the Council Act upon When Considering Such Applications?
Before examining the meaning of the phrase ‘consider and provisionally approve’, it is perhaps more convenient to start by first considering the basis upon which the Council shall act when dealing with a pending application. Subparagraph (c) appears to indicate that such consideration should be based on three potential sources or categories – namely, (1) ‘provisions of [the LOSC] and any [RRPs] that the Council may have adopted provisionally’, (2) ‘or on the basis of the norms contained in [the LOSC] and the terms and principles contained in this Annex’ and (3) ‘as well as the principle of non-discrimination among contractors’.
Concerning the first two bases, the distinction here may be no longer pertinent, given that this provision was constructed at a time where the LOSC had not yet entered into force and the 1994 Implementing Agreement was just adopted and it was uncertain if it would receive sufficient ratifications to enter into force. Since both the LOSC and the 1994 Implementing Agreement are in force and are to be interpreted as a single instrument, it would seem unnecessary to consider this distinction as important. Moreover, although more clarifications would be welcome, it is obvious that the Council would have to uphold the ‘principle of non-discrimination among contractors’, which according to the 1994 Implementing Agreement would mean for the ISA to provide ‘similar and no less favourable arrangements’ across the board.93 In short, all three sources would apply in any case.
In addition, it would seem difficult for the Council to ignore other RRPs that may exist and are applicable. This includes the existing regulations on exploration activities, such as requirements pertaining to the submission of data to the ISA upon the expiration of an exploration contract, as prescribed under Section 11 in the ‘Standard clauses for exploration contract’, which features in Annex IV of all the Exploration Regulations. In this respect, it is crucial to note again that ‘[a]n application for the approval of a plan of work shall be accompanied by an assessment of the potential environmental impacts of the proposed activities and by a description of a programme for oceanographic and baseline environmental studies in accordance with [RRPs of the ISA]’.94
Conversely, it would appear that if the elaboration of the exploitation regulations are not completed at a time when the Council is considering an application, the Council ought not to be able to rely on their draft form unless an explicit decision is made to provisionally adopt (and provisionally apply) them pending the approval of the Assembly, whether in part or in their entirety.95 Indeed, if the Council is unable to reach consensus on the exploitation regulations in their entirety before the prescribed time expires and the submission of an application appears to be imminent, it might be prudent for the Council to explore if it could provisionally adopt some aspects of the regulations that would at the very least apply to instances where applications need to be considered in the absence of a full set of regulations.96
Having dealt with the sources upon which the Council should base its decision upon, it is now necessary to explore the meaning of the phrase that the Council ‘shall none the less consider and provisionally approve such plan of work’. This gives rise to several pressing questions. First, must the Council approve the said application under any circumstances, or is there a possibility for the Council to disapprove the same? Second, what would the decision-making process entail and does the process involve the LTC? Third, what evaluation criteria should be applied when assessing such an application? Fourth, can the LTC or Council choose to delay the consideration of pending applications? And fifth, does the provisional approval of an application for the approval of a plan of work automatically equate to the award of an exploitation contract (whether provisional or otherwise)? These questions will be discussed in turn.
Can the Council Disapprove an Application under Subparagraph (C)?
Interestingly, on this matter, one of the predominant views seems to be that the Council has no option but to approve the application. For example, the current ISA Secretary-General contends that ‘the architects of the 1994 Agreement [stipulated] provisions to prevent deadlock in the Council in the form of the two-year trigger clause, under which regulations must be adopted by consensus within two years of a request being made by a [M]ember State, failing which an exploitation contract must be granted based on the provisions of the Convention, the 1994 Agreement and the existing rules and regulations’ (emphasis added).97 Likewise, Oxman observes as follows:
The [1994 Implementing Agreement] requires the Council of the [ISA] to adopt necessary rules, regulations and procedures within two years of a request by a State whose national intends to apply for the right to exploit a mine site. This applies to manganese nodules or any other mineral resource. If the Council fails to complete the work on time, it must give provisional approval to an application based on [the LOSC and the 1994 Implementing Agreement], notwithstanding the fact that the rules and regulations have not been adopted.98
Contrary to the above, it is submitted here that the Council can decide to disapprove the application. This contention is premised on several reasons. First, the use of the word ‘consider’ indicates that the ISA would have to evaluate and assess the application based on, as explained above, the provisions of the LOSC and the 1994 Implementing Agreement, any other applicable RRPs that exist, and possibly even any relevant decisions taken by the Council in the interim. Second, it is to be stressed that in the context of Part XI, the term ‘consider and approve’ has been used in the LOSC to indicate that there is a need for the relevant ISA organ to exercise judgment when making decisions.99 Besides, it is worthwhile to note that Article 162(2)(j) of the LOSC (which has since been deleted by the 1994 Implementing Agreement)100 stipulated that the Council ‘shall approve plan of works’ but went on to provide that disapproval is also possible. As such, it should come as no surprise that subparagraph (c) is similarly framed in a positive manner. Such positive framing should not be taken to mean that there is no room for disapproval.
Third, if the intention behind subparagraph (c) were to make approvals absolute in the event the formalities are met, section 1(15) would have clarified this explicitly. For example, the 1994 Implementing Agreement does this elsewhere in section 1(6)(a)(ii) in the case involving the pioneer investors regime, which stipulates as follows: ‘[A] registered pioneer investor may request approval of a plan of work for exploration … Such a plan of work shall be considered to be approved’ (emphasis added). It is clear that subparagraph (c) does not use such explicit language, and thus, approvals are not automatic simply because the formalities are met.
What Does the Decision-Making Process Under Subparagraph (C) Entail, and Does the LTC Play a Role?
Section 1(15)(c) also gives rise to the question of whether the Council’s subsidiary organ, the LTC, would play a role in the application approval process (just like under ordinary circumstances where regulations are adopted and in force), or whether the process under subparagraph (c) is solely a task for the Council to tackle on its own. This is an important question because it carries certain repercussions if the decision on whether or not to approve such an application goes to a vote at the Council (i.e., if there is no consensus among Council members).
On the one hand, if the LTC is not involved, the Council would have to decide on the application as a question of substance, whereby decisions ‘shall be taken by a two-thirds majority of members present and voting, provided that such decisions are not opposed by a majority in any one of the chambers [of the Council]’.101 On the other hand, if the LTC is involved, the pathways for the Council would depend on the nature of the recommendations that the LTC provides it with. If the LTC recommends approval, the Council ‘shall approve [the] plan of work unless by a two-thirds majority of its members present and voting, including a majority of members present and voting in each of the chambers of the Council, the Council decides to disapprove a plan of work’.102 If, however, the LTC ‘recommends the disapproval of a plan of work or does not make a recommendation, the Council may nevertheless approve the plan of work in accordance with its rules of procedure for decision-making on questions of substance’ (which is the same as described above in the scenario where the LTC is not involved).103 In sum, if the LTC is involved in the application approval process, and especially if it recommends approval, it would be very difficult for the Council to overturn that recommendation and decide against approving the application.
While subparagraph (c) makes no explicit reference to the involvement of the LTC, it is most likely that the LTC will be involved in evaluating and assessing the application before making appropriate recommendations to the Council. Since subparagraph (c) refers back to the LOSC and the 1994 Agreement in terms of decision-making, it is noteworthy that there is a clear intention therein for all applications for the approval of a plan of work to be first reviewed by the LTC, which will then provide its recommendations to the Council. For instance, Article 153 of the LOSC explicitly provides the following: ‘Activities in the Area shall be carried out in accordance with a formal written plan of work drawn up in accordance with Annex III and approved by the Council after review by the Legal and Technical Commission’ (emphasis added).104 Furthermore, the Rules of Procedure of the Council clearly provide without exception that the Council shall act on the recommendation of the LTC when dealing with the approval of plans of work.105
In addition, it is necessary to appreciate that LTC is the technical and expert body established to support the work of the Council. If the evaluation process is solely left to the Council, it is arguable that the application will not be objectively and thoroughly reviewed, especially from a technical perspective, and the decision to approve or disapprove would practically become a political one. The LOSC seeks to reduce the possibility of this from happening by granting significant deference to the LTC on this matter.106 Moreover, in practice, the Council does not get to peruse all the documents that were submitted to the LTC and instead only relies on a document that is prepared by the LTC stating the reasons behind its recommendations.107 Indeed, most supporting documents submitted by the applicants in support of a plan of work for the perusal of the LTC are considered to contain confidential information, whereby LTC members are bound by oath not to disclose such information.108 In this respect, LTC meetings typically take place behind a closed door,109 whereas Council meetings are held in an open setting and all documentation are made public.110 Nevertheless, it is clear that the LTC reports when presenting its recommendations to the Council on such applications must be detailed and comprehensive, including provision of elaborate reasons or grounds to support its decision as well as disclosure of any diverging views among its members.
That said, the Council might instead decide to adopt a special procedure to deal specifically with applications submitted pursuant to section 1(15)(c), which could include the possibility of limiting the role of the LTC in evaluating applications or reducing the weight placed on its recommendations. Although this arguably would contravene or override the express wording and intention of the LOSC (and be open to legal challenge), such a manoeuvre would enable the Council to exercise more control over the decision-making process when assessing and deciding upon applications that are submitted while the regulations remain absent. However, for reasons explained above, it seems unlikely that the Council will be able to garner sufficient political support to exclude the involvement of the LTC or reduce its role in this regard. Besides, if the negotiators of the 1994 Agreement intended for the role of the LTC and the weight of its recommendations to be diminished in the case of evaluating applications submitted pursuant to section 1(15)(c), appropriate provisions would have been inserted within the 1994 Agreement to give effect to such intention.
What Criteria Should Be Applied When Assessing Such an Application?
Premised on the assumption that the LTC will be involved in assessing any applications for the approval of a plan of work for exploitation that are submitted pursuant to subparagraph (c) and provide the Council with its recommendations thereto, the question remains as to what considerations or evaluation criteria the LTC should apply in this respect. While the LOSC provides that the LTC shall ‘review formal written plans of work … and submit appropriate recommendations to the Council’, it also qualifies this task by stating that the LTC ‘shall base its recommendations solely on the grounds stated in Annex III’.111 Apart from ensuring conformity with the LOSC and other conditions that may be stipulated in any relevant RRPs,112 the primary considerations that the LTC should apply when evaluating applications appear to be those listed in Articles 4 and 6 of Annex III to the LOSC. Article 4 of Annex III of the LOSC stipulates some formal requirements, such as obtaining a valid sponsorship from an eligible Member State, as well as qualifications relating to the financial and technical capabilities of the applicant (which are expected to be detailed in RRPs), and the provision of necessary undertakings and assurances. Article 6 of Annex III of the LOSC provides that if the application conforms with those aforementioned requirements, it shall be approved unless certain situations apply (such as the proposed area overlaps with an existing area that has already been approved or if it contravenes anti-monopolisation provisions).
It would seem that if all those requirements were met, the LTC would have little discretion but to recommend the approval of the application. Indeed, the 1994 Implementing Agreement does provide an avenue for dispute resolution in situations ‘[w]here a dispute arises relating to the disapproval of a plan of work’,113 which presumably may be invoked if the LTC recommends the disapproval of an application on extraneous grounds. This implicates Article 187(d) of the LOSC, which stipulates that the Seabed Disputes Chamber of the International Tribunal for the Law of the Sea shall have jurisdiction over ‘disputes between the Authority and a prospective contractor who … has duly fulfilled the conditions referred to in Annex III, article 4, paragraph 6, and article 13, paragraph 2 [of the LOSC]’.114 One primary concern that arises here is in relation to the extent to which the LTC should evaluate applications for the approval of a plan of work from an environmental perspective, aside from the financial and technical qualifications of the applicant. This includes evaluating the adequacy of baseline environmental data and the robustness of the applicants’ Environmental Plans (which comprises an environmental impact statement, environmental management and monitoring plan, and closure plan), which support the plan of work, and assessing how these would fare against the overall environmental objectives of the ISA, including those laid out in the applicable regional environmental management plans.
While each application received by the ISA should arguably be evaluated in the light of Article 145 of the LOSC (i.e., to ensure the effective protection of the marine environment from the harmful effects of mining), Article 145 contains broad considerations that must be put into operation via RRPs, especially in those RRPs that relate to exploitation activities.115 Interestingly, in this respect, the 1994 Implementing Agreement does specify the following: ‘Between the entry into force of [the LOSC] and the approval of the first plan of work for exploitation, the ISA shall concentrate on the adoption of [RRPs] incorporating applicable standards for the protection and preservation of the marine environment’.116 This clearly demonstrates that the LOSC intended for the ISA to first adopt appropriate environmental measures and establish robust requirements and standards that will apply to exploitation activities before entertaining any application for the approval of a plan of work.
The absence of the exploitation regulations and accompanying standards that would contain the necessary operational and normative requirements pertaining to exploitation activities (and thereby giving effect to Article 145) would make the task of the LTC to conduct rigorous assessments of applications difficult and near impossible. Given that the exploitation regulations as well as its accompanying standards and guidelines are needed to give effect to Article 145, the fact that applications for the approval of plans of work can be considered in their absence pursuant to subparagraph (c) is very concerning. Consequently, if the Council is not able to agree (politically) that no applications will be considered until the exploitation regulations and the necessary standards are adopted by consensus, the Council could consider adopting a tentative set of regulations, including evaluation criteria, to apply for this specific situation and which the LTC will apply in its evaluation of an application submitted pursuant to subparagraph (c).117 Alternatively, the Council could exercise its powers to adopt guidelines or directives to the LTC laying out the applicable requirements and criteria it should apply when considering plans of work that happen to be submitted pursuant to subparagraph (c) while the regulations remain unfinished.118
Can the LTC or the Council Postpone or Delay the Consideration of Applications?
Another question that arises in the context of subparagraph (c) is whether the LTC or the Council could decide to postpone or delay the considerations of an application for the approval of a plan of work that is pending after the prescribed time has expired. For instance, the LTC or Council might be tempted to put aside the consideration of pending applications until the elaboration and adoption of the regulations are subsequently completed. It would appear that this possibility can be ruled out since the LTC and the Council would have to act promptly in considering any pending applications.
In this respect, the LOSC provides that ‘six months after the entry into force of [the LOSC], and thereafter each fourth month, the [ISA] shall take up for consideration proposed plans of work’,119 and that ‘all proposed plans of work shall be taken up in the order in which they are received’.120 Of course, the LTC may postpone the consideration of applications if more information is required where the application is incomplete or defective,121 or the applicant may itself request that consideration of its application be deferred.122 Otherwise, the Council would have to act promptly upon receiving the recommendations from the LTC. If not, the repercussions could be significant, as stipulated in the following provision: ‘If the Council does not take a decision on a recommendation for approval of a plan of work within a prescribed period, the recommendation shall be deemed to have been approved by the Council at the end of that period. The prescribed period shall normally be 60 days unless the Council decides to provide for a longer period’ (emphasis added).123 That said, the Council may decide ‘to provide for a longer period’ to apply for submissions made pursuant to section 1(15)(c). In this respect, the Council might be able to generate the political will needed for this purpose (given that many States would feel uneasy deciding upon any pending application in the absence of regulations).
What Does ‘Provisionally Approve’ Under Subparagraph (C) Mean?
At the outset, it should be clarified that ‘provisionally approve such plan of work’ here is different from ‘[RRPs] that the Council may have adopted provisionally’, the latter of which was discussed above, as this may be a source of confusion. Here, it is important to ascertain whether the provisional approval of an application of a plan of work for exploitation automatically equates to the award of an exploitation contract. It is well established that the approval of a plan of work is but one step (albeit a major one) in obtaining a contract with the ISA, and it is trite that there can be no activities in the Area without a valid contract executed between the ISA and the operator.124 As such, while the approval of a plan of work is essential and will eventually feature in the form of a contract, activities in the Area can only commence once a contract is concluded. In practice, after a plan of work is approved by the Council, the ISA Secretariat would draw up a draft contract incorporating the approved plan of work that the parties (i.e., the Secretary-General and the successful applicant, now a prospective contractor) ‘have to negotiate and to accept’.125 This is important because the ISA is only permitted to take legal action against an operator pursuant to the contract, while the due diligence responsibilities of the sponsoring State are also largely tied to the contractual obligations that its sponsored entity is bound thereunder.126 The bottom line here is that it is the contract that legally allows for mining activities to happen, and it is the binding and enforceable instrument that sets out the terms, conditions, rights and obligations of contractors – and not the approved plan of work per se, which will be incorporated in the contract.
In this respect, it could be argued that provisional approval of a plan of work does not automatically equate to the awarding of a contract, as the contract would still need to be negotiated and concluded.127 This is obvious from the practice of the ISA since its inception.128 Moreover, some interesting parallels with the present situation can be drawn from the prior experience of the ISA with the pioneer investors’ regime, whereby several exploration plans of work for polymetallic nodules were received before the applicable regulations were adopted. Interestingly, while all requests for approval of the plans of work submitted by pioneer investors were duly ‘considered to be approved’129 in 1997,130 the actual contracts were only executed after the year 2000, which was when the regulations for exploration of polymetallic nodules were adopted.131 Indeed, as observed by Lodge, ‘[t]he adoption of the regulations in 2000 enabled the conversion of these pioneer investor claims into legally binding contracts … in accordance with [the LOSC]’.132
Some guidance can be received from the LOSC and the 1994 Implementing Agreement to demonstrate that a ‘plan of work’ and a ‘contract’ are not interchangeable and that a plan of work must be given effect through a contract. Indeed, the LOSC acknowledges that disputes may arise between the ISA and a prospective contractor during the period after a plan of work has been approved up until the contract is executed.133 It can be gleaned from this that the approval of a plan of work confers rights upon the successful applicant to obtain a binding contract, and once the contract is executed, the contractor shall have security of tenure and revisions can only be made with the consent of all parties.134 Moreover, in another part of the LOSC on reserved areas, a distinction is also made between the approval of a plan of work and the signing of a contract.135 This suggests that it is expected that the former will lead to the latter, but that it is not one and the same.
That said, it should be noted that certain LOSC provisions relating to the link between a plan of work and a contract may seem a little confusing as it does on occasion make references to ‘plan[s] of work in the form of a contract’. The use of such terminology should not be considered as meaning that ‘plan of work’ is used interchangeably with ‘contract’. In this respect, the seemingly confusing use of the words ‘plan[s] of work in the form of a contract’ in the LOSC can be explained. It was originally intended under the LOSC that only applications for plans of work submitted by State Parties and sponsored entities and approved by the ISA would take the form of a contract.136 This can be seen from the following provision: ‘Upon its approval by the [ISA], every plan of work, except those presented by the Enterprise, shall be in the form of a contract concluded between the [ISA] and the applicant or applicants’ (emphasis added).137 Subsequently, the 1994 Implementing Agreement modified this and stipulated that the approval of a plan of work submitted by the Enterprise shall also be in the form of a contract.138 Therefore, it is now settled that all approved plans of work must take the form of a contract, which will be drawn up after the approval of the plan of work.
Consequently, if the precedent set with respect to the pioneer investors’ regime were to be applied here, it would appear that contracts for any exploitation plan of work applications that happen to be provisionally approved could only be formally drawn up and executed once the regulations have been adopted and are in force. This lends support to the earlier contention that although elaboration of the regulations may have been completed, their adoption and entry into force are a separate matter, and consequently, contracts (which will incorporate the approved plan of work) can only be executed once the regulations are adopted. This is important for several reasons, including the fact that the forthcoming exploitation regulations are expected to include ‘standard terms and conditions’ that have to be included in all contracts, as well as the financial terms of exploitation contracts, which would also need to be agreed upon and inserted into the contract. Alternatively, and given that subparagraph (c) only speaks to the provisional approval of a plan of work and is silent on the point of the conclusion of a contract, it would seem necessary for the Council to muster the political will to take some steps to address this legal gap. For example, premised on its decision to provisionally approve a plan of work, the Council may opt to direct the Secretary-General to conclude a contract with the successful applicant despite the absence of the exploitation regulations. In practice presumably, this would entail the Council establishing a set of specifically tailored regulations, procedures or directives that would apply to this interim period in order to deal with the legal implications under subparagraph (c). However, the conclusion of a contract to give effect to a provisionally approved plan of work in the absence of finalised regulations would seem to be very problematic, not least because exploitation contractors would be contractually bound to abide by and give effect to the exploitation regulations that would only follow later.
Finally, it should be noted that provisional approval of the plan of work also indicates that the said approval can (and will) be revisited in future,139 and that necessary conditions can be imposed when incorporating the approved plan of work into a contract in order to ensure that it conforms with the regulations that are eventually adopted. Indeed, the LOSC stipulates that exploration or exploitation shall be carried out only through plans of work that have been ‘approved by the [ISA] in accordance with [the LOSC] and the relevant [RRPs] of the [ISA]’,140 as well as that ‘[e]very approved plan of work shall be in conformity with [the LOSC] and the [RRPs] of the [ISA]’ (emphasis added).141 These provisions support the contention that there should be a distinction between plans of work that are provisionally approved and those that are fully approved. In this respect, it would be useful to clarify what provisional approval connotes from the outset.142 Additionally, it would seem necessary for the Council to make explicit when deciding to allow any such applications that all provisionally approved plans of work are conditional and will be subject to subsequent review (e.g., if material changes transpire because of the exploitation regulations that are later adopted).143
Conclusion
This article has attempted to rationalise section 1(15) as well as to forensically analyse this provision to clarify its legal consequences and implications. It is important to note that the consequences of the invocation of section 1(15) by a Member State, as provided under subparagraph (b), requires the Council to complete the elaboration and adoption of the exploitation regulations within the prescribed time of two years. However, the implications of the inability of the Council to meet the prescribed time as laid down in subparagraph (c) appears to be limited to failure to complete the elaboration of the regulations, and in any case, would be largely inconsequential until and unless an application is submitted upon its expiry. Even if an application is submitted, it appears to be entirely possible for the application to be disapproved by the Council. In this respect, it is important to note that the ISA itself can be subjected to compulsory dispute resolution procedures by any Member State,144 for example, if an exploitation application is approved in the absence of regulations and where grounds exist that do not justify such approval, including where there are concerns relating to the protection of the marine environment from the harmful effects of exploitation activities pursuant to the approved plan of work, or with respect to the adequacy of environmental information and measures relating to the plan of work, such as impact assessments or monitoring, as well as the need to apply the precautionary principle.145
In conclusion, missing the so-called deadline could largely prove to be inconsequential and, if deemed necessary, the ISA could choose to do so as a measured, calculated risk. As such, the ISA should not feel too pressured to finalise the regulations, particularly if this means that substandard, incoherent or incomplete requirements will be put in place in order to meet the perceived deadline. It would seem useful for the members of the ISA to convene internal discussions at the soonest possible opportunity in order to allow for an exchange on section 1(15), namely the consequences arising from subparagraph (b) and the ensuing implications under subparagraph (c). This would allow ISA members to seek agreement on how the provision should be interpreted and approached – legally and politically speaking – with a view to achieving a broad understanding on how the Council should proceed from here on, which may include the option of requesting for an advisory opinion to get legal clarity.
Once again, it is important to stress that section 1(15) was arguably inserted to address a deadlock at the Council and is particularly relevant where one or a few Council members deliberately raise formal objections to delay or frustrate the elaboration and adoption of the exploitation regulations. If the majority of the Council members are indeed concerned about the viability of the exploitation regulations that are to be adopted, as well as all other matters that intrinsically relate to implementing a robust system for exploitation activities in the Area that ensures the effective protection of the marine environment from the harmful effects of mining activities, the interpretations suggested above would allow for the true intention of section 1(15) to be effected.146
The open access publication of this article was made possible, thanks to financial support from the J.M. Kaplan Fund. United Nations Convention on the Law of the Sea (Montego Bay, 10 December 1982, in force 16 November 1994) 1833 UNTS 397 [LOSC].
Ibid., Article 1(1)(1).
Ibid., Articles 136, 137(2).
1994 Agreement Relating to the Implementation of Part XI of the United Nations Convention on the Law of the Sea (New York, 28 July 1994, in force 28 July 1996) 1836 UNTS 3.
Hereinafter simply referred to as ‘section 1(15)’ or the ‘two-year rule’.
See ISBA/26/C/38, Enclosure to Annex I, and Annex II (deferring the earlier operative date of 30 June 2021). For a general overview on recent discussions pertaining to the two-year rule and its invocation by the Republic of Nauru, see P Singh, ‘What Are the Next Steps for the International Seabed Authority after the Invocation of the ‘Two-year Rule’?’ (2022) 37(1) International Journal of Marine and Coastal Law (IJMCL) 152–165; C Blanchard, ‘Nauru and Deep-Sea Minerals Exploitation: A Legal Exploration of the 2-Year Rule’ (2021) NCLOS blog, https://site.uit.no/nclos/2021/09/17/nauru-and-deep-sea-minerals-exploitation-a-legal-exploration-of-the-2-year-rule/; accessed 1 December 2021; K Willaert, ‘Under Pressure: The Impact of Invoking the Two Year Rule within the Context of Deep Sea Mining in the Area’ (2021) 36(3) IJMCL 505–513.
LOSC (n 1), Article 157(1).
Ibid., Article 158(1).
Ibid., Article 156(2).
1994 Implementing Agreement (n 4), section 3(15); LOSC (n 1), Article 161(3).
LOSC (n 1), Annex III, Article 17, read together with LOSC Articles 160(2)(f)(ii) and 162(2)(o)(ii).
Ibid., Article 161(8)(d); 1994 Implementing Agreement (n 4), Annex, section 3(5).
LOSC (n 1), Article 161(8)(e).
As provided in sections 3(5) and 3(11)(a) of the Annex to the 1994 Implementing Agreement (n 4).
Ibid., Annex, Section 3(6): ‘The Council may defer the taking of a decision in order to facilitate further negotiation whenever it appears that all efforts at achieving consensus on a question have not been exhausted’.
LOSC (n 1), Article 161(8)(e).
ISBA/19/C/17 (and ISBA/19/A/9).
ISBA/16/A/12/Rev.1.
ISBA/18/A/11.
International Seabed Authority (ISA), ‘Exploration contracts’ available at https://www.isa.org.jm/exploration-contracts. All websites accessed 17 September 2021, unless otherwise mentioned.
For an overview, see ISA, ‘Draft Exploitation Regulations’ available at https://www.isa.org.jm/mining-code/ongoing-development-regulations-exploitation-mineral-resources-area.
ISA, Draft Regulations on Exploitation of Mineral Resources in the Area, 2019, ISBA/25/C/WP.1, available at https://isa.org.jm/files/files/documents/isba_25_c_wp1-e_0.pdf.
ISBA/26/C/11, para 1.
ISBA/26/C/13/Add.1 (see in particular, paragraphs 31–35 and the Annex).
UN Division for Ocean Affairs and the Law of the Sea, ‘Agreement relating to the implementation of Part XI of the United Nations Convention on the Law of the Sea of 10 December 1982: Overview’ (2 September 2016) available at https://www.un.org/depts/los/convention_agreements/convention_overview_part_xi.htm.
T Treves, ‘United Nations Convention on the Law of the Sea’ (2018) United Nations Audio Visual Library of International Law, available at https://legal.un.org/avl/pdf/ha/uncls/uncls_e.pdf.
S Vasciannie, ‘Part XI of the Law of the Sea Convention and Third States: Some general observations’ (1989) 84(1) Cambridge Law Journal 85–97.
D Anderson, ‘Further efforts to ensure universal participation in the United Nations Convention on the Law of the Sea’ (1994) 43(4) International and Comparative Law Quarterly 886–893. Some of the other main themes that contributed to the deadlock include costs to be incurred by State Parties to finance the ISA, the operationalisation of the Enterprise, transfer of technology to developing States, production policies, economic compensation to terrestrial mining developing countries, and the financial terms of contracts.
Y Tanaka, The International Law of the Sea (3rd ed., Cambridge University Press, Cambridge, 2019) 227–228.
ED Brown, ‘“Neither necessary nor prudent at this stage”: The regime of seabed mining and its impact on the universality of the UN Convention on the Law of the Sea’ (1993) 17(2) Marine Policy 81–107.
J Harrison, The Making of the Law of the Sea: A Study in the Development of International Law (Cambridge University Press, Cambridge, 2011) 89.
ED Brown, ‘The 1994 Agreement on the Implementation of Part XI of the UN Convention on the Law of the Sea: Breakthrough to universality?’ (1995) 19(1) Marine Policy 5–20.
1994 Implementing Agreement (n 4), Article 2(1).
M Wood, ‘International Seabed Authority: The first four years’ (1999) 3 Max Planck Yearbook of United Nations Law 173–241, at pp. 175, 183, 237; ED Brown, Sea-bed Energy and Minerals: The International Legal Regime – Volume 2: Seabed Mining (Kluwer Law International, Dordrecht, 2001) 4.
For a comprehensive overview on the informal consultations between 1990 and 1994, and especially the text negotiations of the 1994 Implementing Agreement (which were premised on the so-called ‘Boat Paper’), see S Nandan, M Lodge and S Rosenne, The Development of the Regime for Deep Seabed Mining (ISA, 2002) available at https://www.isa.org.jm/files/documents/EN/Pubs/Regime-ae.pdf.
See BH Oxman, ‘The 1994 Agreement and the Convention’ (1994) 88(4) American Journal of International Law 687–696, at pp. 692–693. Given that Article 162(2)(o)(ii) makes a distinction between regulations pertaining to polymetallic nodules and regulations pertaining to other mineral resources, and only prescribes a time period for the latter, it can be inferred that the intention behind this is that regulations pertaining to the former were expected to be expedited and completed within a period shorter than three years. In any event, this discussion is now academic, since section 1(15) would prevail over Article 162(2)(o)(ii).
The ISA Assembly comprises all 167 States and the European Union, whereas Council consists of only 36 States.
This is explicitly stipulated under all three Exploration Regulations: ‘Upon expiration of a plan of work for exploration, the contractor shall apply for a plan of work for exploitation unless the contractor has already done so, has obtained an extension for the plan of work for exploration or decides to renounce its rights in the area covered by the plan of work for exploration’. See Regulation 26(1) of ISBA/19/C/17 (polymetallic nodules) and Regulation 28(1) of ISBA/16/A/12/Rev.1 (polymetallic sulphides) and ISBA/18/A/11 (cobalt-rich ferromanganese crusts) respectively, as well as section 1(9) to the Annex of the 1994 Implementing Agreement (n 4).
In this respect, it may be worth considering if the Council could consider options that would allow exploration contractors to put their rights temporarily on hold for a certain period. This would be particularly relevant if the Council elects to take more time in order to carefully negotiate the regulations, or decides to explore other pathways that would effectively slow the transition from exploration to exploitation or postpone the commencement of exploitation activities (see Singh 2022 (n 6)).
See LOSC (n 1), Annex III, Article 4(6)(c), where exploration contractors would have provided, along with their application for the approval of an exploration plan of work, an undertaking to the ISA with a written assurance that their contractual obligations ‘will be fulfilled in good faith’.
See for instance, the Report of the Chair of the LTC on the work of the Commission at the second part of its twenty-fifth session (ISBA/25/C/19/Add.1), at paragraphs 14–15, and the decision of the Council in that respect (ISBA/25/C/37 at paragraph 12.)
See again notes 38 and 39.
See again Wood (n 34).
See DSM Observer, ‘What happens when we pull the trigger?’ (19 November 2020) available at https://dsmobserver.com/2020/11/what-happens-when-we-pull-the-trigger/, quoting P Singh: ‘Without this provision it was technically possible pursuant to [the LOSC] for one or a few Council members to deploy filibuster tactics to frustrate or impede the adoption of key regulations’.
See ibid., quoting P Singh: ‘By invoking the two-year trigger at this stage, an overzealous [M]ember [S]tate could risk the possibility of being isolated by a majority of Council members, and at the same time stands to be accused of not acting in good faith and perhaps even for undermining key provisions of [the LOSC], such as allowing for all efforts to achieve consensus at the Council to first be exhausted’. See also P Singh, ‘Commentary: Can the invocation of the ‘two-year rule’ at the International Seabed Authority be challenged?’ (DSM Observer, 30 September 2021) available at https://dsmobserver.com/2021/09/commentary-can-the-invocation-of-the-two-year-rule-at-the-international-seabed-authority-be-challenged/; accessed 1 December 2021.
See ISBA/26/C/38, Enclosure.
NORI’s parent company, formerly DeepGreen and very recently merged to become The Metals Company, also has close arrangements with two other ISA exploration contractors sponsored by Tonga and Kiribati respectively. See The Metals Company, ‘Sponsoring States’ available at https://metals.co/sponsoring-states/.
See generally, T Woody, ‘Covid-19 throws seabed mining negotiations off track’ (China Ocean Dialogue, 7 May 2020) available at https://chinadialogueocean.net/13685-covid-19-could-throw-seabed-mining-negotiations-off-track/.
See, e.g., the ‘Submission of members of the Council of the International Seabed Authority from the African Group in relation to the request by the Republic of Nauru pursuant to section 1, paragraph 15’, ISBA/26/C/40, where the following is stated in paragraph 3: ‘While appreciating the Republic of Nauru’s rationale to accelerate the discussions on the draft exploitation regulations, the African Group hereby expresses concern about the invocation … at a time of a global pandemic that continues to constrain the ability of Member States to effectively engage in deliberations’.
See for instance, the Council decision in ISBA/25/C/37 where the Council affirmed ‘its intention to ensure the thorough and timely development of the regulations’ in paragraph 5.
See, J Holman, ‘Canadian developer The Metals Company to start deep water tests in Q1 2022’ (S&P Global, 28 January 2021) available at https://www.spglobal.com/platts/en/market-insights/latest-news/energy-transition/012822-canadian-developer-the-metals-company-to-start-deep-water-tests-in-q1–2022; accessed 1 February 2022. It is not known, however, if NORI has been able to conduct and complete all of its necessary preparatory work over its existing exploration contract to date (e.g., collection of environmental baseline data and preparation of impact assessments) or whether it actually possesses the necessary technical and financial capabilities to actually carry out exploitation activities.
See E Shabahat, ‘Why Nauru is pushing the world toward deep-sea mining’ (Hakai Magazine, 14 July 2021) available at https://www.hakaimagazine.com/news/why-nauru-is-pushing-the-world-toward-deep-sea-mining/.
The Metals Company, ‘DeepGreen securityholders approve business combination with Sustainable Opportunities Acquisition Corp’ (June 2021) available at https://metals.co/deepgreen-securityholders-approve-business-combination-with-sustainable-opportunities-acquisition-corp/.
The Metals Company, ‘The Metals Company to trade on Nasdaq in bid to develop planet’s largest estimated resource of battery metals’ (September 2021) available at https://metals.co/the-metals-company-to-trade-on-nasdaq-in-bid-to-develop-planets-largest-estimated-resource-of-battery-metals/.
See Shabahat (n 52).
European Parliament, Resolution of 9 June 2021 on the EU Biodiversity Strategy for 2030: Bringing nature back into our lives (2020/2273(INI)), para 184, available at https://www.europarl.europa.eu/doceo/document/TA-9–2021–0277_EN.pdf.
The list of brands includes BMW, Samsung SDI, Google and the Volvo Group. See WWF, ‘Brands back call for moratorium on deep seabed mining’ (31 March 2021) available at https://wwf.panda.org/wwf_news/press_releases/?1909966/Brands-Back-Call-for-Moratorium-on-Deep-Seabed-Mining.
See ‘Marine Expert Statement Calling for a Pause to Deep-Sea Mining’ available at https://www.seabedminingsciencestatement.org/.
International Union for Conservation of Nature, Word Conservation Congress, Motion 069: Protection of deep-ocean ecosystems and biodiversity through a moratorium on seabed mining (adopted 8 September 2021) available at https://www.iucncongress2020.org/motion/069.
For a broad overview, see Deep Sea Conservation Coalition, ‘Momentum for a Moratorium’ available at http://www.savethehighseas.org/momentum-for-a-moratorium/.
See, e.g., Submission of members of the Council of the International Seabed Authority from the African Group in relation to the request by the Republic of Nauru pursuant to section 1, paragraph 15’, ISBA/26/C/40, at paragraph 5 acknowledging that ‘the request by Nauru is undertaken within the framework of the [LOSC]’.
Singh 2021 (n 45).
LOSC (n 1), Article 157(3).
Since the terms ‘consequences’ and ‘implications’ are quite similar to each other, it would be useful to clarify their usage in this article. On the one hand, the term ‘consequences’ is used with reference to subparagraph (b) to describe the consequences of a Member State submitting a request to the ISA in accordance with subparagraph (a), whereby such a request would then activate subparagraph (b) and impose the prescribed time of two years. One the other hand, the term ‘implications’ is used with reference to subparagraph (c) to connote the various implications that would arise if the Council fails to meet the said prescribed time.
Vienna Convention on the Law of Treaties (Vienna, 23 May 1969, in force 27 January 1980) 1155 UNTS 331 [VCLT]. Due to space constraints, it is not possible to discuss the rules of treaty interpretation in more detail. For an overview on treaty interpretation, see generally, R Gardiner, Treaty Interpretation (2nd ed., Oxford University Press, Oxford, 2015).
VCLT (n 65), Article 31(1).
Ibid., Article 31(4).
Pursuant to Article 32 of VCLT, ‘[recourse] to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion’ is permissible to help ‘confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31 [leaves] the meaning ambiguous or obscure; or [leads] to a result which is manifestly absurd or unreasonable’.
The various early drafts of the negotiation texts can be found in ISA, ‘Secretary-General’s Informal Consultations on Outstanding Issues relating to the deep seabed mining provisions of the United Nations Convention on The Law of the Sea: Collected documents’ (2002) available at https://isa.org.jm/files/files/documents/sg-informconsultations-ae.pdf. As explained above, the negotiation of the 1994 Implementing Agreement took place informally between 1990 and 1994 under the auspices of the UN Secretary-General. Apart from these collated documents, no other formal records were kept throughout the informal consultations, and there is no official collection of preparatory work. That said, there is a considerable body of contemporaneously published literature on the informal negotiations, some of which have been relied upon in this article.
In the event of inconsistencies, however, section 1(15) will prevail.
See also Blanchard (n 6).
The significance of the use of punctuation marks in treaties and their implications in treaty interpretation cannot be understated. Although they are only part of the picture and one tool in the toolbox, punctuation marks play an important role in clarifying how a particular provision within a treaty should be read. See for instance, Aegean Sea Continental Shelf (Greece v. Turkey), Judgment, ICJ Reports 1978, 3, where the ICJ observed at paragraph 53 as follows: ‘In the first place, the grammatical argument overlooks the commas placed both before and after “notamment”. To put the matter at its lowest, one possible purpose of these commas might have been to make it clear that in the phrase “et, notamment, les différend” etc., the word “et” is intended to be a true conjunctive introducing a category of “différends” additional to those already specified’.
While this is generally the case under international law (as well as pursuant to the current practices of the ISA in considering and approving exploration contracts), it might be worth considering if this assumption of nationality can be challenged, for example, if it is alleged and can be proven that the entity in question is a shell corporation acting as a front for a foreign entity.
See again, Singh 2021 (n 45).
See K Willaert and P Singh, ‘Deep sea mining partnerships with developing States: Favourable collaborations or opportunistic endeavours?’ (2021) 36(2) IJMCL 199–217.
Ibid.
ISA, ‘Secretary-General’s Informal Consultations’ (n 69), at pp. 169–191, 177.
Ibid., at pp. 199–222, 209.
Note that in contrast to the development of RRPs related to exploration or exploitation, the Council is not tasked to adopt and provisionally apply RRPs related to the equitable sharing of benefits. The role of the Council on this matter is limited to providing recommendations to the Assembly. Pursuant to Article 160(2)(f)(i) of the LOSC, the Assembly shall consider and approve such RRPs based on the Council’s recommendations or return the same back to the Council for reconsideration.
It is conceded, however, that subparagraph (c) could be construed differently, whereby, it is arguable that subparagraph (c) does not refer to the ‘adoption’ of the regulations simply because adopting them would not be possible if their ‘elaboration’ were not completed in the first place. Then again, it is possible to counter this by arguing that it would have been more apt to use the word ‘adoption’ instead of ‘elaboration’ here.
ISA (n 69), at pp. 169–191, 177.
Ibid., at pp. 199–222, 209; pp. 231–257, 245–246.
See again Singh 2022 (n 6).
Ibid., as well as Singh 2021 (n 45).
Ibid.
ISBA/25/C/37, paras 4–5.
See, e.g., ISBA/25/C/19/Add.1, Annex, for a list of standards and guidelines that have been earmarked for development and the respective phases anticipated for development.
ISA, ‘Developing a Regulatory Framework for Mineral Exploitation in the Area First Working Draft of the Regulations and Standard Contract Terms on Exploitation’ (2016) 6, available at https://www.isa.org.jm/files/documents/EN/Regs/DraftExpl/Draft_ExplReg_SCT.pdf; see also H Jessen, ‘Advancing the Deep Seabed ‘Mining Code’ in DJ Attard, DM Ong and D Kritsiotis (eds), The IMLI Treatise on Global Ocean Governance – Volume I (Oxford University Press, Oxford, 2018) 71–86.
P Singh, ‘The two-year deadline to complete the International Seabed Authority’s Mining Code: Key outstanding matters that still need to be resolved’ (2021) 134 Marine Policy 104804. Indeed, the Council could decide to make some of these as preconditions to the adoption of the exploitation regulations or as conditions precedent to their subsequent entry into force.
LOSC (n 1), Annex III, Article 3(4)(a).
In any event, if an application is ‘prematurely’ submitted (i.e., before the expiration of the two-year period) and this is not deemed to be in contradiction with subparagraph (c), it would still only be considered as ‘pending’ once the prescribed time has expired and only so in the event the elaboration of the regulations are yet to be completed.
This should not cast any aspersions on its earlier intention to submit an application, however, unless there is clear evidence to the contrary.
In this respect, some support can be drawn from section 1(6)(a)(iii) of the Annex to the 1994 Implementing Agreement in order to help decipher what the ‘principle of non-discrimination among contractors’ under section 1(15)(c) means, which is essentially to ensure ‘similar and no less favourable arrangements’.
1994 Implementation Agreement (n 4), Annex, section 1(7).
See again, Blanchard (n 6).
Singh 2022 (n 6).
M Lodge, ‘Opening remarks: Third Annual Consultative Meeting between Contractors’ (10 October 2019), at p. 4, available at https://isa.org.jm/files/documents/EN/SG-Stats/10_October_2019.pdf.
Oxman (n 36), at pp. 692–693 (emphasis added).
For example, see LOSC (n 1), Articles 160(f)(i), (ii) and (h), 172, 314(1).
1994 Implementing Agreement (n 4), Annex, section 3(11)(b).
Ibid., Annex, section 3(5).
Ibid., Annex, section 3(11)(a).
Ibid.
LOSC (n 1), Article 153(3).
Rules of Procedure of the Council, ISBA/C/12, Rule 70.
P Singh, ‘Commentary: Latest developments in the election of members of the LTC’ (DSM Observer, 22 May 2020) http://dsmobserver.com/2020/05/commentary-latest-developments-in-the-election-of-members-of-the-ltc/.
See, for example, Institute for Advanced Sustainability Studies, ‘Exchange of views relating to an application for approval of a plan of work for exploration by Blue Minerals Jamaica Ltd’ (IASS, 3 December 2020) para 3(a), available at https://isa.org.jm/files/files/documents/IASS.pdf.
Rules of Procedure of the LTC (ISBA/6/C/9), Rules 11(2), 12.
Ibid., Rule 6.
Rules of Procedure of the Council (ISBA/C/12), Rule 39(1).
LOSC (n 1), Article 165(2)(b); see also LOSC Annex III, Article 6(3).
Ibid., Annex III, Article 3(4)(a).
1994 Implementing Agreement (n 4), Annex, section 3(12).
Be that as it may, it would seem to be difficult for the Seabed Disputes Chamber of the International Tribunal for the Law of the Sea (SDC-ITLOS) to entertain a dispute alleging that the Council has wrongly disapproved an application that was decided upon based on the voting procedures at the Council. In this respect, Article 189 of the LOSC prescribes that the SDC-ITLOS has limited jurisdiction concerning decisions of the ISA and cannot substitute its discretion for that of the ISA. However, it does seem that if the LTC recommendations to the Council appear to include matters that are beyond what is legally permissible, especially where the recommendations are to disapprove the application and the Council accepts the same, this might be a ground for challenge through SDC-ITLOS. This could for instance, result in the disapproved application having to undergo fresh reconsideration by the LTC. That said, it would appear that the scope for potential challenges is very narrow.
See R Warner, ‘International environmental law principles relevant to exploitation activity in the Area’ (2020) 114 Marine Policy 103503, at p. 6: ‘A general threshold that could be applied to approving or rejecting a plan of work for exploitation is whether the applicant demonstrates an effective system to protect the marine environment from the harmful effects of exploitation activities. This threshold reflects the wording of Article 145 of the LOSC and aligns with the environmental protection responsibility of the Authority’.
1994 Implementing Agreement (n 4), section 1(5)(g).
See again Singh 2022 (n 6); and 2021 (n 89).
LOSC (n 1), Article 163(9). It should be noted that the scope of Article 163(9) has not been discussed or invoked to date. However, some guidance can be drawn from a recent technical report on what a ‘directive’ may connote in the context of section 2(2) of the Annex to the 1994 Implementation Agreement (i.e., on the Council issuing a directive providing for the independent functioning of the Enterprise) read together with Article 170(2) of the LOSC. See E Egede, M Pal and E Charles, ‘A study related to issues on the operationalization of the Enterprise’, Technical Report 1/2019 (ISA, 2019) available at https://isa.org.jm/files/files/documents/enterprise_study.pdf. On page 22, the report notes as follows: ‘There is, however, no precise definition in either [the LOSC] or the 1994 [Implementing] Agreement on what a ‘directive’ is. While a directive is definitely not intended to be a recommendation, the difference between a directive and a decision of the Council is unclear’. As the report goes on to explain, such a directive may set out goals or the result sought to be achieved, while ‘leaving the discretion as to how this is done to the entity to which the directive is addressed’. Coming back to the matter at hand, the Council could issue a directive to the LTC with a list of evaluation criteria, specific requirements and other considerations that the LTC should consider and apply when evaluating any applications for the approval of a plan of work for exploitation submitted pursuant to subparagraph (c) while the exploitation regulations remain absent.
LOSC (n 1), Annex III, Article 6(1).
Ibid., Annex III, Article 6(3).
Ibid., Annex III, Article 6(2)(a).
As has been done before in practice, see e.g., ISBA/15/LTC/6, where two applicants (NORI and Tonga Offshore Mining Ltd) requested that the ‘consideration of their applications for approval of plans of work for exploration for polymetallic nodules be postponed’.
1994 Implementing Agreement (n 4), section 3(11)(a).
See discussion above. See also A Jaeckel, ‘Deep seabed mining and adaptive management: The procedural challenges for the International Seabed Authority’ (2016) 70 Marine Policy 205–211, at p. 206: ‘Pursuant to [the LOSC], mining operations in the Area can only be carried out under a contract issued by the ISA, which grants exclusive but temporary rights to the mining operator, called the contractor’.
R Wolfrum, ‘Legitimacy of international law and the exercise of administrative functions: The example of the International Seabed Authority, the International Maritime Organization (IMO) and international fisheries organizations’ (2008) 9(11) German Law Journal 2039–2060, at p. 2052.
Ibid., at p. 2053, as well as Article 4(4) of Annex III to UNCLOS (n 1). See generally, Responsibilities and Obligations of States with Respect to Activities in the Area, Advisory Opinion, 1 February 2011, ITLOS Reports 2011, p. 10.
Indeed, the LOSC recognises this in the context of dispute resolution, whereby the Seabed Disputes Chambers of the International Tribunal for the Law of the Sea would have jurisdiction over disputes between the ISA and prospective contractors ‘concerning the refusal of a contract or a legal issue arising in the negotiation of the contract’ (see LOSC (n 1), Article 187(d)).
Indeed, once the Council considers and approves an application for approval of a plan of work for exploitation, the ISA Secretary-General will be directed to prepare a contract between the ISA and the proposed contractor.
These applications were ‘considered to be approved’ because the special interests of the pioneer investors were recognised under Resolution II in the Final Act of the LOSC and given effect via the 1994 Implementing Agreement pursuant to section 1(6)(a)(ii) thereunder. See also S Nandan, ‘Administering the mineral resources of the deep seabed’, Keynote Lecture: Law of the Sea Symposium, The British Institute of International and Comparative Law (March 2005), at p. 15, available at https://www.biicl.org/files/1392_nandan_opening.doc.
See ISBA/3/C/9, in particular paragraph 3.
See ISBA/7/C/4, in particular paragraphs 3–5.
M Lodge, ‘The International Seabed Authority and the exploration and exploitation of the deep seabed’ (2014) 47(1) Belgian Review of International Law 129–136, at p. 131.
LOSC (n 1), Article 187(d) – namely, disputes between the ISA and a prospective contractor ‘concerning the refusal of a contract or a legal issue arising in the negotiation of the contract’.
Ibid., Article 153(6), as well as Annex III, Articles 16 and 19.
See ibid., Annex III, Article 8: ‘The area designated shall become a reserved area as soon as the plan of work for the non-reserved area is approved and the contract is signed’.
See, e.g., ibid., Article 153(3); Annex III, Article 6(2).
Ibid., Annex III, Article 3(5).
1994 Implementing Agreement (n 4), Annex, section 2(4).
See DSM Observer, ‘What happens when we pull the trigger?’ (n 44), quoting P Singh: ‘[The invocation of section 1(15)] could also possibly backfire and result in a situation that disadvantages the applicant hoping to take advantage of the two-year trigger, such as the imposition of stricter conditions (including higher financial guarantees), the issuance of a provisional (and conditional) approval that could be reversed or significantly altered subsequently, or outrightly deciding to disapprove the application. The regulatory uncertainties and political differences that could potentially arise as a result of pulling the trigger, resulting in a half-baked process that would need to be revisited in future, are certainly not favourable for investors looking to back prospective applicants for exploitation contracts’ (emphasis added).
LOSC (n 1), Annex III, Article 3(3).
Ibid., Annex III, Article 3(4)(a).
Willaert (n 6), at p. 511: ‘Finally, it is important to know what the legal effects are of a provisional approval. The 1994 Implementation Agreement does not specify what a provisional approval exactly implies, but the wording clearly suggests that this would need to be confirmed by a definitive approval, following a reconsideration of the application once all relevant regulations, standards and guidelines are in place’.
However, given the fact that the provisional approval of a plan of work would convert the successful applicant into a prospective contractor with certain rights and interests, it should be noted that significant changes introduced through RRPs adopted after the provisional approval that prejudices the prospective contractor and its legitimate expectations will likely result in litigation.
LOSC (n 1), Article 187(b).
As cautioned by the Seabed Disputes Chamber in Responsibilities and Obligations of States with Respect to Activities in the Area (n 126).
The author would like to thank Dr Aline Jaeckel and Hannah Lily for their very helpful and thorough comments on an earlier draft, as well as Dr Arianna Broggiato, Dr Harald Ginzky and Dr Till Markus for their general input in support of this article.
