On 10 April 2019, the International Tribunal of the Sea (ITLOS) gave its judgment in the long-awaited – though somewhat quietly received – M/V “Norstar” (Panama v Italy) case. The Tribunal ruled (by 15 votes to 7) that by arresting and detaining the Panamanian-flagged vessel, the M/V “Norstar”, Italy had violated Article 87(1) of the 1982 UN Convention on the Law of the Sea (UNCLOS) by undermining the vessel’s freedom of navigation. This is the first time that Article 87 has been in direct contention before an international tribunal, and in ruling that Italy contravened the principle the judgment arguably buttresses a quite expansive reading of the exclusive flag state jurisdiction principle under Article 92 UNCLOS.
Whilst the case had previously thrown up interesting jurisdictional and procedural questions at the preliminary objections stage – discussed elsewhere by Mirko Forti here – in this post I will confine my discussion primarily to the ruling on freedom of navigation, insofar as the Tribunal found that Italy’s attempt to exert prescriptive jurisdiction over what were otherwise lawful activities on the high seas violated Article 87(1). In doing so, I will highlight how the Tribunal’s understanding of the exclusive flag state jurisdiction principle arguably runs counter to a notable trend in the academic literature, which was reflected in a somewhat forceful seven-judge dissenting opinion, to treat the principle in a much more circumscribed way. I will also comment on the way in which Italy’s argument in the case seems to put it somewhat at odds with its position in the ongoing Enrica Lexie arbitration – discussed previously by Douglas Guilfoyle here, and Hari Sankar here.
I will first set out the background to and facts of the case before turning to discuss the contentious position on high seas jurisdiction. I also offer a few final thoughts on the contrasting, arguably conflicted positions adopted by Italy in this case versus its position in Enrica Lexie.
Background to the Case
The M/V “Norstar” case represents the latest instance of the Tribunal considering the legality of so-called ‘bunkering’, that is, offshore refuelling occurring outside of a state’s internal or territorial waters. However, unlike the earlier cases of M/V “Saiga” (No. 2) and M/V “Virginia G”, which dealt with bunkering in the context of illegal, unregulated and unreported (IUU) fishing within the exclusive economic zones (EEZ) of, respectively, Guinea and Guinea-Bissau, the activity in the current case related to bunkering of pleasure crafts in international waters. The M/V “Norstar” was a Panamanian-flagged oil tanker which between 1994 and 1998 was known to be involved in the sale of gasoil to so-called ‘mega yachts’ in the Mediterranean Sea, immediately outside of the territorial waters of Italy, Spain and France. Although ostensibly within the EEZ, the nature of this activity falls clearly outside of coastal state jurisdiction such that, following Article 58(1) UNCLOS, traditional high seas freedoms continue to apply.
At the time of its arrest, the Norstar was owned by a Norwegian shipping company but under charter to a Maltese-owned company. The vessel was arrested and seized in September 1998 by Spanish authorities whilst anchored in the bay of Palma de Mallorca – that is, within Spanish internal waters – following a request for judicial assistance from Italy. The request was made on the authority of a decree of seizure from the Public Prosecutor of the Court of Savona on 11 August 1998, which was issued in the course of criminal proceedings against eight individuals said to be involved in smuggling and tax fraud. In its judgment on the case in March 2003 the Court of Savona acquitted the accused individuals and the judge ordered the release of the M/V “Norstar” to its owners. Following an appeal by the Public Prosecutor in October 2005 the Court of Appeal of Genova upheld the acquittals and, a year later, in October 2006, it also issued a further order calling for the enforcement of the original award vis-à-vis the Norstar.
Panama instituted proceedings before ITLOS in December 2015 (over nine years after the last order of the Court of Appeal), initially arguing that Italy had breached a number of provisions of UNCLOS, including Articles 33, 73, 87, 111, 226 and 300. Following an Italian request for a Preliminary Objections ruling, the Tribunal gave judgment in November 2016 asserting its jurisdiction and the admissibility of the case. Nevertheless, it restricted itself to considering arguments related to Articles 87(1) (the alleged infringement of the Norstar’s freedom of navigation), 87(2) (the ‘due regard’ provision) and 300, with Panama additionally alleging bad faith and an abuse of rights on the part of Italy. As noted above, the Tribunal would eventually rule against Panama in relation to the latter two claims – a point to which I will briefly return below – though the core of the case and resultant damages awarded turned more centrally on the alleged infringement of Article 87(1) UNCLOS.
In considering the application of Article 87(1) the Tribunal first considers whether in issuing the decree of seizure Italy’s actions were aimed at conduct occurring on the high seas “or alleged crimes committed in the territory of Italy, or both” [para 153]. In its submission, Italy had contended that the bunkering activity was an instrumentality in the commission of a criminal act that was perpetrated on Italian soil or, more precisely, that it was the “corpus delicti of an alleged series of crimes consisting essentially of smuggling and tax evasion” [para 162], thus making the scope of jurisdiction exercised “strictly territorial” [para 166]. However, the Tribunal took a different view, holding that the Decree of Seizure related to “both alleged crimes committed in the territory of Italy and bunkering activities conducted by the M/V “Norstar” on the high seas” and that such activities “constitute not only an integral part, but also a central element, of the activities targeted by the Decree of Seizure and its execution” [para 186, emphasis added].
Having established that the targeted activity was, in this sense, conduct that occurred on the high seas, the next question that the Tribunal asked itself was whether Italy’s actions constituted an actual interference with the Norstar’s freedom of navigation. Here, the Tribunal claimed that such freedom would be illusory if coastal states were able to exercise their jurisdiction against foreign-flagged vessels [para 216]. The Tribunal also then acknowledged – recalling its dicta in M/V “Virginia G” – that bunkering falls under the traditional freedoms exercised on the high seas [para 219]. Furthermore, it claimed, interference with the freedom of navigation did not just arise from physical acts, but could just as easily arise from the exercise of jurisdiction – whether prescriptive or enforcement jurisdiction – and thus extended to Italy’s purported attempt to exercise juridical control over the actions of the Norstar [paras 222-224]. As such, the Tribunal found that the mere attempt to apply customs and criminal law in international waters, whether or not enforced on those waters, was a clear breach of Article 87(1). As it argued, “even when enforcement is carried out in internal waters”, as it was in this case, “article 87 may still be applicable and be breached if a State extends its criminal and customs laws extraterritorially to activities of foreign ships on the high seas and criminalizes them” [para. 226].
I’ll come back to this point again in a moment. Before doing so, however, it is necessary to briefly note that as Italy itself was not engaged in any usage of international waters in this case Article 87(2) – the obligation of exercising one’s high seas freedoms with ‘due regard’ to the rights of other states – was not breached by Italy’s conduct. Moreover, after an extensive consideration of Article 300, the ‘good faith/abuse of rights’ provision, it was clear on the facts that Italy’s conduct could not be regarded as being in breach of that provision. In fact, although finding against Italy on the freedom of navigation point, it seems clear that there was a certain lack of sympathy for Panama’s position, and a degree of bewilderment at the failure to reclaim the vessel or bring any initial action since the ordering of the Norstar’s release on 26 March 2003. In fact, the Tribunal awarded Panama just 285,000 USD in compensation (reflecting the value of the vessel at the time of its seizure, and less than 1% of the amount Panama had requested), refusing to award any additional damages for inter alia additional costs and loss of profits arising after March 2003 [para 370].
Freedom of Navigation, Bunkering and Exclusive Flag State Jurisdiction
The question of the precise scope and application of the exclusive flag state jurisdiction principle is one that likely still divides opinion in the literature. However, as argued by Arron Honniball, there would appear to be a majority view – at least amongst those who have considered the question explicitly – that the principle applies to enforcement jurisdiction only. Indeed, this is the position consistently held by Douglas Guilfoyle, and applied in his consideration of the Enrica Lexie arbitration, briefly mentioned above, in which India claims jurisdiction to prosecute two Italian marines who mistakenly shot and killed unarmed Indian fishermen aboard an Indian-flagged vessel. Indeed, that the principle is restricted to enforcement jurisdiction alone would also seem to follow logically from the kind of public order rationale that supports such exclusivity on the high seas. The view of the majority in the case, then, that exclusive flag state jurisdiction “prohibits not only the exercise of enforcement jurisdiction on the high seas by States other than the flag State but also the extension of their prescriptive jurisdiction to lawful activities conducted by foreign ships on the high seas”, [para. 225] would seem to run against the grain of prevailing scholarly opinion.
These thoughts add context to the quite compelling seven-judge dissenting opinion from judges Cot, Pawlak, Yanai, Hoffmann, Kolodkin and Lijnzaad, joined by Judge Ad Hoc Treves. The dissent essentially rejects both steps taken by the majority (above), arguing both against the applicability of Article 87(1) and, even if applicable, that Italy was not in breach of this provision. As to the first claim, whilst Article 87 was clearly “relevant”, and therefore sufficient to establish the Tribunal’s jurisdiction to hear the case, the minority claimed that this fact alone was not sufficient to justify its applicability to the actions of Italy [para 14]. In fact, they follow Guilfoyle and cite the continuing validity of the Lotus principle (allowing concurrent jurisdiction over criminal acts occurring on the high seas) to argue [at para 19] that:
…nothing in the text of the Convention, in its travaux préparatoires, in other international treaties, in customary international law, or in the practice of States suggests that article 87 and its corollary article 92 altogether excludes the right of non-flag States to exercise their prescriptive criminal jurisdiction with respect to activities on the high seas.
Furthermore, insofar as the majority suggest that the limitation on prescriptive jurisdiction applies to what are lawful activities on the high seas, this might seem to suggest that unlawful activities can be subjected to legitimate coastal state jurisdiction. As such, the dissenting judges note that, given that the bunkering itself was not an unlawful act under Italian law – and was not targeted as such – but that such bunkering was a crucial factual element of an overarching criminal scheme which was indeed unlawful under Italian law, this would seem to fall within the framing of legitimate interference according to the majority [para 26]. However, even if Article 87(1) was engaged in the first place – that is, even if any form of attempt to extend jurisdiction over otherwise lawful conduct under international law would itself be unlawful – they argue anyway that the actions of Italy could be construed as an exercise of territorial jurisdiction given that the offence is initiated and concluded within Italian territory:
In these circumstances, the conduct on the high seas was merely an element of the alleged crime which took place in Italian territory. Thus, there was more than enough connection to Italy to justify under international law the exercise of its prescriptive criminal jurisdiction… In our view, it does not matter in this case whether the exercise of jurisdiction with respect to activities on the high seas is labelled “territorial” or “extraterritorial”. Even in the latter instance, the exercise by Italy of its prescriptive criminal jurisdiction in respect of the conduct on the high seas would have been in conformity with international law. [paras 33-34, emphasis added]
The dissent concludes with a strong parting shot, essentially asserting the continuing validity of Lotus insofar as they claim that it is did not matter whether or not international law actively permits Italy’s attempt to exercise jurisdiction; it remains sufficient that ‘it is not prohibited by international law to do so’ [para 36].
Treading a tightrope on the Exclusive Flag State Jurisdiction Principle
It is interesting to note that the dissenting opinion arguably goes much further than Italy itself ultimately purports to, as the latter limits its argument essentially to the simple fact that freedom of navigation itself is not undermined by its targeting of the criminal conduct in this case [para 208]. Nevertheless, in its various submissions Italy does make the case that prescriptive jurisdiction is not prohibited in general and, specifically, not by Article 87(1) itself [para 207]. In this sense, Italy concedes that freedom of navigation is “first and foremost” a freedom from the exercise of foreign state enforcement jurisdiction [para 205, emphasis added – though also added by the Tribunal itself], but it still leaves open the possibility of prescriptive criminal jurisdiction in any case
This position is thus interesting to contrast with the arguments that Italy had previously made in the context of the ITLOS provisional measures ruling in the Enrica Lexie case. In that case, Italy argued inter alia that India’s arrest and detention of the vessel was an interference with its freedom of navigation and its exclusive flag state jurisdiction protected under Article 92. As Honniball has noted, ‘this is not just exclusive enforcement jurisdiction on the high seas, but in relation to the high seas’ thus giving rise to ‘practical prescriptive exclusivity’ [at 514]. Although another part – and arguably a quite uncompelling part – of Italy’s argument was to view the shooting as an ‘incident of navigation’, and therefore subject to the explicit reversal of Lotus provided in Article 97 UNCLOS, it is clear nonetheless that the broader aspects of its argument on exclusive flag state jurisdiction in Enrica Lexie would seem to sit rather uncomfortably with its position adopted in the immediate case.