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On Cooperation in Joint Development

On cooperation in joint development in international law and realities (Chapter III)

In international realities, there are a lot of agreements relating to the establishment of the areas of the joint exploitation in the sea.

PRINCIPLES AND CONTENTS GUARANTEEING SOVEREIGNTY, THE RIGHT TO SOVEREIGNTY AND NATIONAL BENEFITS IN COOPERATION IN JOINT EXPLOITATION

On the basis of international law, the modern law of the sea and the realities of the joint exploitation in many different regions in the world, in which there are realities of the Southeast Asian region, it is possible to withdraw a number of principles and contents that need being applied and taken note of so as to guarantee sovereignty, the right to sovereignty and benefits of the states concerned in cooperation in the joint exploitation.

I. PRINCIPLE OF COPERATION IN JOINT EXPLOITATION

To be able to guarantee their sovereignty, the right to sovereignty and benefits, the states which are the members of an agreement on the joint exploitation should guarantee the observance of the following principles:

1. The principle of volunteer

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That the coastal states concerned shall decide whether to have the joint exploitation or not is the issue of national sovereignty and stems from the benefits and requirements of these states. Or in other words, the decision on whether to cooperate the joint exploitation or not depends on the will of all the states concerned, conforming to the principle of sovereign equality among the states and the principle of the national right to self-determination in international law. The states concerned should respect the principle of volunteer, not to use force or threaten to use force or any economic or political pressure to compel other coastal states to agree to the joint exploitation.

2. Observance of international law

When signing the agreement on the joint exploitation and implement the activities of the joint exploitation, the states concerned should observe the fundamental principles of international law, of the modern law of the sea and the provisions of the 1982 Convention on the Law of the Sea.

3. Respecting sovereignty of coastal states

In the process of setting up the zone for the joint exploitation and starting the joint exploitation in this zone, the states concerned should respect sovereignty, the right to sovereignty and jurisdiction of the states which are the participants in the agreement of this joint exploitation and of other coastal states towards their sea waters set up in conformity with the provisions of the 1982 Convention on the Law of the Sea.

4. The scope of the zone for the joint exploitation

The scope of the zone for cooperation in the joint exploitation should be clearly and concretely determined. In the sea waters which are yet to be determined and have tense disputes over sovereignty and the rights to sovereignty, cooperation in the joint exploitation had better be performed in the overlapping zone created by the legal claims of sovereignty of the states concerned.

The legal claims of sovereignty mentioned here are the claims already determined in conformity with the standards of international law and the provisions of the international law of the sea, in which there is the 1982 Convention on the Law of the Sea, without being protested by the participating states or international community. That a state concerned raises its claim of the sovereignty line which is not in conformity with the international law of the sea, in which there is the 1982 Convention on the Law of the Sea, in an attempt to create an overlapping zone beneficial to them cannot be considered as a legal claim, and so, cannot be considered a basis suitable to set up a zone for the joint exploitation.

5. Respecting the principle of equality, justice and mutual benefits

The agreement on the joint exploitation should guarantee the legal rights and benefits of the states concerned. To this end, cooperation in the joint exploitation should be carried out on the basis of respecting the principle of equality, justice, reasonability and mutual benefits in the division of benefits and responsibility, in the management of the activities of the joint exploitation and in exercising the rights of the coastal states in the zone of the joint exploitation. In the case when it relates to two states only, it is possible to have an agreement on the joint exploitation between these two states, but in the case when it relates to many states, the agreement on the joint exploitation should have the unanimity of views of all the states concerned.

6. It does not influence the delimitation of the sea in future

Cooperation in the joint exploitation in the overlapping zone is only the temporary solution so as to advance towards the definite settlement of the marine delimitation and the sovereignty issue among the states in dispute in the future. That is why, the agreement on cooperation in the joint exploitation shall not jeopardize the results of the final delimitation of this overlapping zone. In other words, the provisions in the agreements on the joint exploitation shall not create the rights, advantages or obligations as well as any disadvantages to one of the states in dispute.

7. Contributing to peace, stability, cooperation and development

Cooperation in the joint exploitation is not simply the mutual exploitation of the resources; it should make a contribution to relieving the tensions of the dispute over sovereignty, to containing violent conflicts and to maintaining peace, security and stability in the region and the world.

The aforesaid seven principles are closely associated with one another, creating a unified form. It is the important legal basis for the states concerned to be able to apply to defend their sovereignty, the right to sovereignty and benefits while signing and deploying the agreement on the joint exploitation.

II. THE MAIN CONTENTS OF AN AGREEMENT ON THE JOINT EXPLOITATION

To guarantee sovereignty and benefits of their own, the states participating in cooperation in the joint exploitation should include in the agreement on the joint exploitation the following contents:

1. The scope of the zone for cooperation in the joint exploitation

The scope of the zone for cooperation in the joint exploitation should be exactly determined by the parties concerned with the specific coordinates.

In the overlapping marine area which is yet to be determined, the zone for cooperation in the joint exploitation is usually set up by the legal claim line of sovereignty or the right to sovereignty of the parties concerned. The legal claim line is the claim line which is determined in conformity with international law and the international law of the sea, especially the provisions on determining the marine area in the 1982 Convention on the Law of the Sea.

In case when the zone is already determined, each state participating in the joint exploitation shall contribute an equal part of area calculating from the marine boundary delimitation to create the zone for the joint exploitation. With respect to the cases when the oil and gas fields or the mineral mines that lie across the marine boundary delimitation, the scope of the zone for the joint exploitation could include the entire merged mine area with a view to ensuring the most effective exploitation of the resources of joint exploitation. The area contributed by each state to the zone of the joint exploitation is one of the bases for the states concerned to divide equally the benefits accrued from the joint exploitation.

2. The objects for the joint exploitation

The states participating in an agreement on the joint exploitation should determine clearly the kinds of resources they exploit together in the zone for the joint exploitation, depending on the requirement and interests of all the states concerned. These states could agree to jointly exploit the marine living resources or the oil and gas resources or could together exploit both of these resources.

In terms of the joint exploitation of the marine living resources, the states concerned should pay special attention to entering the agreement with the stipulations so as to be able to preserve and maintain this resource. Especially, it is necessary to have the stipulation that the quantity of fish allowed to be caught shall not be beyond the optimal quantity of fish so as to be able to guarantee the sustainable exploitation of the fish resource inside and outside the zone for the joint exploitation.

As far as the zone for the joint exploitation of oil and gas is concerned, the states concerned should enter the agreement on the joint exploitation with the provisions on the obligations of protecting the marine environment and the marine ecosystems in accordance with the provisions of the 1982 Convention on the Law of the Sea in order to protect the marine environment not only inside, but also outside of the zone for the joint exploitation. This obligation comprises the measures needed for the participating parties to take to prevent and resolve the environmental pollution due to the exploration and exploitation of the natural resources. If necessary, it is possible to hand over the authority to the International Management Agency to promulgate the provisions to guard against pollution, make the plan in response to the urgent cases and raise the level of compensations by the oil and gas company for the damage to the marine environment.

3. The Jurisdiction

In the determined marine zones, each state participating in the joint exploitation shall exercise its jurisdiction in the part of the zone for the joint exploitation in the exclusive economic zone and the continental shelf in conformity with the legal provisions and the agreement on the joint exploitation.

In the yet-to-be-determined marine zones, the agreements on cooperation in the joint exploitation in the overlapping sovereign zone should clearly stipulate that the joint exploitation shall not make any impact on the results of the final delimitation of the overlapping zone; at the same time, it is necessary to stipulate clearly the jurisdiction of the states concerned for the zone of the joint exploitation.

The jointly exploiting states can come to an agreement: The Governments of the states participating in the joint exploitation are all possible to exercise their jurisdiction in the zone for the joint exploitation, in which there is management of the fishing activities, navigation, marine geological surveys and combat against environmental pollution (as in Clause 1, Article IV of the Memorandum of Understanding on establishing the Common Authority Agency to exploit the seabed resources in the continental shelf as already determined in the Gulf of Thailand between Malaysia and Thailand in 1979)

In case when the zone for the joint exploitation is divided into the sub-zones, the participating states with the companies being chosen as the “oil and gas enterprises” in each sub-zone shall exercise the jurisdiction in that sub-zone (Article 19 of the Agreement relating to the joint exploitation in the South  of the contiguous continental shelf between Japan and the Republic of Korea in 1974).

In case when the states participating in the joint exploitation project have reached an agreement on delimitating the marine boundary at the time when the joint exploitation starts, then this boundary shall be applied as the delimitation to exercise the jurisdiction of each state (Article 3 of the Agreement on delimitating the neutral zone between Kuwait and Saudi Arabia in 1965).

4. Sharing the costs and accrued profits

Sharing the costs and accrued profits shall be agreed upon by the participating parties in the joint exploitation, depending on each concrete case.

In case when there is yet to be the marine boundary because all the parties concerned have the claim of sovereignty over the entire zone for the joint exploitation, the principle usually applied is the equal sharing of the exploiting costs and the accrued profits (In reality, Article 9 of the Agreement on the Joint Exploitation between Japan and the Republic of Korea in 1974, Article 4.5 of the Memorandum of Understanding between Malaysia and Thailand in 1979, Article 2.2 of the Treaty on the Joint Development between Australia and Indonesia in 1989 have applied the said principle).

As far as the marine area with the marine boundary is concerned, one fact shows that the area of oil field and the resource reserve lying on the two sides of this boundary is not completely equal, so the obligation of bearing the costs and the right to enjoy the income by each participating party is usually determined on the basis of the principle of equality, by applying the principle of sharing income which is in direct ratio with the level of contribution of each participating party. In reality, how to make this sharing equal still depends on the negotiation among the participating parties. In case when there is an oil field lying crossing the delimitation and the parties agree to exploit jointly, it is necessary for the parties to together conduct the survey and determine the oil and gas reserve in each side so that it is possible to determine the ratio of profit and cost sharing. In case when there is the joint exploitation between Austria and the former Czechoslovakia, the distribution of income is decided by the Joint Committee in order to meet the practical demands. Take the case between Iceland and Norway in the Jan Mayen sea area for example, it is because that the area in the North of the boundary (on the side of Norway) is 32,750 square kilometers and the area in the South of the boundary (on the side of Iceland) is only 12,720 square kilometers, so the right to exploitation by Iceland in the North and by Norway in the South is 25% for each side, but the initial exploratory cost is borne completely by Norway (Article 6 of the Agreement on the Issues relating to Fisheries and Continental Shelf between Iceland and Norway in 1981).

5. The agency managing the joint exploitation activities

To make the cooperation in the joint exploitation more effective, the participating states need to set up an agency to manage all the joint exploitation activities. These states can select one of the two following agencies with different authorities: the agency with the authority to make decisions and the agency with the authority to have consultation.

The management agency with the authority to make decisions is assigned with the task of acting on behalf of the states concerned to grant licenses to explore and exploit the natural resources, provide the condition for exploration and exploitation and together with the company of the third country sign the exploitation contract. How big the power of this agency is shall be decided by the states concerned (In case when the Joint Committee set up by Sudan and Saudi Arabia. This Committee is authorized to accept and examine the application for license and concession of exploitation. Or the resolutions approved by the Joint Committee set up by Austria and former Czechoslovakia were naturally agreed upon by the two states concerned if the two countries did not have any protest in one month’s time. Or the Common Authority Agency of Australia and Indonesia has the full personal legal status, placed directly under the Council of Ministers and is entitled to sign the contract of exploration and exploitation, handle the real estates, confiscate assets and prosecute a law suit). After deploying its activities, this agency could form a necessary apparatus and draft a charter for its activities.

The management agency with authority for consultation is the clue for keeping contacts and has less power. The participating parties shall determine clearly the rights of this agency in the agreement on establishing the joint exploitation project. However, the Joint Committee set up by Japan and the Republic of Korea has a rather large power. This Committee is assigned with the task of evaluating the observance of the Agreement between the two countries, receiving the technical and financial reports, outlining the solutions to treat the possible disputes between the beneficiaries of the two sides, supervising all the exploration and exploitation activities, studying the application of the law of the states concerned and receiving the legal documents made public by the parties concerned (Article 25 of the Agreement relating to the Joint Exploitation in the South of the contiguous continental shelf between Japan and the Republic of Korea in 1974). There is a case when a management agency has very little power like the case of the Standing Committee set up by Kuwait and Saudi Arabia. This Committee is only able to study the relevant issues and make recommendations to the Ministers of Energy of the two countries.

Realities of the joint exploitation in the Southeast Asian region and the world show that the management agency with a lot of powers is more suitable to the long term exploitation of the oil and gas resources in the sea.

6. Settlement of disputes

It is very necessary to include a clause in the agreement on the joint exploitation to settle the dispute arising from the explanation and application of the provisions in the agreement. The participating parties shall negotiate the concrete content of this clause. However, it is possible to include in this clause certain measures to settle disputes as follows:

– It is first of all to settle disputes in the common management agency. In this case, the parties concerned need to hand over the authority to the agency to settle a certain number of disputes arising in the process of performing the agreement.

– In the case when the common management agency cannot resolve the problem, the dispute shall be resolved by the parties in dispute through the diplomatic negotiation. This is the popular and effective method of settling the disputes.

– If the dispute cannot be resolved through negotiation among the parties concerned, it is possible to bring the case to an arbitrator of the third party for settlement. This is the flexible and practical mode of settling the dispute. The arbitrator can be an ad hoc arbitrator and also a stand-by arbitrator such as the International Chamber of Commerce (ICC), the UN Commission on International Trade Law (UNCITRAL) and the London Court of International Arbitration.

– If it is not resolved, the dispute could be brought to an international court for settlement. In this case, the parties bringing the dispute to the international court shall have to accept the coercive character of the court and any temporary measures decided by the international court.

7. The effective duration of the agreement on cooperation in the joint exploitation

The states participating in the joint exploitation need to determine clearly the effective duration, the reasons and procedures to end the agreement on cooperation in the joint exploitation. The effective duration for the agreement on the joint exploitation of oil and gas is usually from 30 years to 40 years; the duration for the agreements on the joint exploitation of the marine living resources is usually from 5 years to 10 years. The participating states in the joint exploitation can end or extend the effective duration of the agreement of the joint exploitation, depending on the requirement of cooperation of all the parties.

CONCLUSION

Cooperation in the joint exploitation of the states concerned is the objective requirement for the effective management and exploitation of the marine resources which are shared by two or many states. In the marine areas in dispute, cooperation in the joint exploitation is the temporary solution of an important role in preventing the disputes of sovereignty over the sea from breaking out into the violent disputes, thus making a contribution to maintaining peace and stability; at the same time it meets the requirements of exploiting the marine resources to serve the demands of the economic development of the states concerned. However, cooperation in the joint exploitation in the overlapping marine area could also be possible to create conditions for a number of states to step by step affirm their sovereignty and the right to sovereignty over that overlapping marine area.

That is why, to guarantee their sovereignty, the right to sovereignty and benefits, the states participating in the agreement on the joint exploitation should guarantee:

– Firstly, the agreement on cooperation in the joint exploitation and the activities of the joint exploitation should be performed on the basis of respecting the principle of cooperation in the joint exploitation (already cited in Chapter III of this book). This is the principle formed from the fundamental principles of international law and the modern international law of the sea, especially the 1982 Convention on the Law of the Sea.

– Secondly, the aforesaid principles should be expressed clearly into the concrete contents in the agreement on cooperation in the joint exploitation, in which it is necessary to pay special attention to the determination of the scope of the zone for the joint exploitation; the distribution of equal benefits among the states concerned.

The above-said principles of the joint exploitation and the specific contents are the important legal instrument to guarantee that sovereignty, the right to sovereignty and benefits of the states that participate in the joint exploitation are not jeopardized./.

Translated by Manh Chuong

Source: http://www.vietnam.vn/on-cooperation-in-oint-development-in-international-law-and-realities-chapter-iii-c1068n20130228102737433.htm

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