The “Two Years Rule” and the Common Heritage of Mankind

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In July 2023, the two-year period within which the Council of the International Seabed Authority (Authority) was to complete the elaboration of the Regulations on exploitation of mineral resources in the Area expired. Thereafter, “if an application for approval of a plan of work for exploitation is pending, the Council shall none the less consider and provisionally approve such a plan of work” [para. 15 (c), Sec. 1, Annex, Agreement]. As there is no consensus among members States regarding the legal interpretation of this provision, rumors about the need to request an Advisory Opinion from the Seabed Disputes Chamber are increasing (article 191, Convention).

Interpretation of subparagraph (c) in conjunction with Part XI

Apparently, can be appreciated a contradiction between subparagraph (c) and several provisions of Part XI, which clearly state that the exploitation of the resources of the Area must be regulated by the Authority in order to be carried out [i. e. article 153 (1), article 160 (2) (f) (g), article 162 (2) (o).

However, article 2 of the Agreement explicitly indicates that the provisions of its Annex and Part XI “shall be interpreted and applied together as a single instrument”. Therefore, subparagraph (c) shall be interpreted and applied in conjunction with the provisions of Part XI, including Section 2 on the principles governing the Area. In addition, subparagraph (c) refers to the rules of Part XI by stating that the Council shall in any case proceed to consider and provisionally approve such plan of work “on the basis of the rules contained in the Convention”.

Legal status of the Area and its resources

Article 136 states that the Area and its resources are the common heritage of mankind and article 137 refers to the special legal status of the Area and its resources. In particular, paragraph 2 contains three interrelated elements: first, that all rights in the resources of the Area are vested in mankind as a whole on whose behalf the Authority shall act; second, that these resources are not subject to alienation; third, that the minerals recovered from the Area may only be alienated in accordance with Part XI and the rules, regulations and procedures of the Authority.

In other words, according to Part XI, minerals of the Area cannot be commercially exploited until the Authority fulfils its mandate to regulate these activities to ensure the equitable exploitation of these resources for the benefit of mankind as a whole (article 140) and the effective protection of the marine environment (article 145). This interpretation is confirmed by Annex III, which emphasises that the title to minerals shall pass upon recovery in accordance with the Convention. And that only a plan of work for exploitation approved in conformity with the rules, regulations and procedures of the Authority confers on the operator the exclusive right to exploit the specified categories of resources in the area covered by the plan of work [article 3 (4) (c)].

Rules, regulations and procedures ad hoc 

Subparagraph (c) also includes the possibility that the Council adopts provisionally “any rules, regulations and procedures” to consider and provisionally approve the pending plan of work. That option is quite unlikely due to the complexity of the package of regulations being negotiated (including Standards and Guidelines) and the lack of consensus on certain crucial aspects of the system of exploitation and production policy (the financial terms of the contract, the inspection mechanism, the equitable sharing of financial and other economic benefits, the economic assistance to affected developing land-based producer States and the environmental regulations). Moreover, this possibility could be contrary to the principle of non-discrimination provided for in the same subparagraph (c)

Concluding remarks

The common heritage of mankind is not a rhetorical principle. Articles 136 and 137 (2) of the Convention do not allow the alienation of the minerals recovered from the Area until specific regulations on exploitation are adopted by the Authority. TThis means that if the Council decides to provisionally approve a plan of work for exploitation under subparagraph (c), it cannot in any case authorise the conclusion of a contract between the Authority and the applicant [article 3 (3), Annex III].

The Council shall decide on the legal consequences of such provisional approval and on the procedure by which the Legal and Technical Commission shall review and potentially recommend the plan of work according to the Regulations on exploitation once adopted. This provisional status of the plan of work does not affect the rights acquired under existing contracts of exploration (Sec. 4, Annex, Agreement). In any case, it may be suggested that the Seabed Disputes Chamber should have jurisdiction over disputes between the Authority and the applicant concerning the interpretation or application of a provisional plan of work approved under subparagraph (c) [article 187 (c) (1)].

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Michel MORIN says

March 15, 2024

Dear Ms Salamanca-Aguado,

Thank you for pointing out in your post the function of the principle of “Common Heritage of Mankind”.
As you say it, it is not a rhetorical one. However, since the implementation of Part XI UNCLOS has begun, it appears that the ISA has not paid much attention to this principle. In particular, it has ignored the criterion set out in Article 153 (2) (b) UNCLOS and Article 9 (4) of its Annex III, which provides that, to be a qualified applicant, a sponsored company must be effectively controlled by the sponsoring State.
In the NAURU/NORI example which has triggered the 2-year rule, at the time of the approval of the plan of work for exploration, the ISA has checked the existence of a sponsorship certificate without reviewing whether NORI was “effectively” controlled by NAURU (see the report of the Legal and Technical Commission to the ISA Council relating to NORI application, document ISBA/17/C/9 of 11 July 2011).
On this question of “effective control” by the sponsoring State, ITLOS has expressed its position in its advisory opinion of 1st February 2011, in Point 159:
“Equality of treatment between developing and developed sponsoring States is consistent with the need to prevent commercial enterprises based in developed States from setting up companies in developing States, acquiring their nationality and obtaining their sponsorship in the hope of being subjected to less burdensome regulations and controls. The spread of sponsoring States “of convenience” would jeopardize uniform application of the highest standards of protection of the marine environment, the safe development of activities in the Area and protection of the common heritage of mankind”.
In this opinion, issued at the request of NAURU, the Tribunal makes a clear analogy between the possibility of using “States of convenience” by mining companies of developed countries and the use of “flags of convenience” by maritime companies for the registration of their vessels. The second sentence of this Point 159 corresponds to a strong warning, from ITLOS, against such a practice. This Tribunal does not warn against the “possibility” or the “likelihood” of such “States of convenience”, but against a “spread of States of convenience”!
There has been a lack of consideration of that Point 159 by the ISA. In a report to the Legal and Technical Commission, the ISA Secretary-General made a short summary of the advisory opinion, only reminding the procedural steps and replicating the conclusions (document ISBA/17/C/6 -ISBA/17/ LTC/5 of March 2011). It looks as if the ISA Secretary-General wanted to avoid any debate within the ISA itself on the issues raised in the opinion. That is a failure of this Organization.
It is well-known that the ISA Secretariat is pushing forward for kicking-off the exploitation of the deep seabed. But, before it happens, the referral to the Seabed Disputes Chamber becomes more desirable than ever.
Among others, the issue of “effective control” by the sponsoring State, which is directly linked to the protection of the common heritage of mankind, needs to be clarified.