The revenue-sharing mechanism became a “new rule of equity in the form of a
unique royalty in international law”.
104
UNCLOS disciplined the revenue-sharing mechanism and governed the particulars of that system of payments and contributions. Firstly, the coastal state is given
discretion as to the modality, whether it opts for payment or contribution in kind.
Secondly, payments are due after 5 years of production at an extraction site, in a sort
of “grace period”, with respect to the entirety of production.
105 For the period
between the sixth and twelfth year of production, the Convention set up a system
of gradual increase in the rate of payment or contribution, starting at 1% of the value
or volume of production in the sixth year. Then, “the rate shall increase by 1 per cent
for each subsequent year until the twelfth year and shall remain at 7 per cent
thereafter”, as stated in paragraph 2, Art. 82. Refusal to make payments or contributions will amount to an international illicit and may trigger judicial proceedings by
any other state, given the individual states’ legitimate interests in the wellfunctioning of Part XI. Parallelly, the ISA may start proceedings before ITLOS.
106
Despite the creation of a revenue-sharing system, the management, protection and
exploitation of outer continental shelf resources is subject to the national jurisdiction
of the coastal state. The Convention imposes upon them the obligation to share
revenues, but the loose wording leaves plenty of maneuver room as to how each state
will raise and transfer the cash to the Authority. Hence, the resolution of issues and
problems emerging from the implementation of Art. 82 is primarily a responsibility
of the coastal state and, although the ISA is not obliged to advise the coastal state in
that regard, coastal states are expected to interact with the Authority in tackling
practical implementation difficulties.
Coastal states will pursue exploration efforts of continental shelf resources,
aiming at an exploitation that may come to life sooner than expected. The likelihood
of exploration and exploitation of outer continental shelf resources can be attested in
two particular episodes, one of which of direct interest for this work: the assumption
by the ISA of potential mineral and hydrocarbon resources on the Brazilian outer
continental shelf, and the recent (and rather concrete) Norwegian oil and gas
discoveries off the Canadian coast beyond 200 nm.
Firstly, the Norwegian state petroleum company, Statoil, has recently reported
both the discovery of oil and gas reservoirs off the Canadian east coast beyond
200 nm and the intention to implement Art. 82.
107 Thus far, Norway and the United
been there. What the coastal state did was merely claim jurisdiction over a submarine portion of its
land territory.
104 Chircop (2011), p. 183.
105 Art. 82, paragraph 2, UNCLOS, on the sharing of revenues.
106 Art. 20, paragraph 2, Annex VI, UNCLOS.
107 This information has been obtained via e-mail interview with Dr. Wiley Spicer, one of the
authors of the ISA Technical Study no. 15, on the key expressions of Art. 82 UNCLOS, an absolute
authority worldwide on the topic. When enquired no the existence of any ongoing exploitation
projects on the continental shelf beyond 200 nm, Spicer confirmed that Statoil has a discovery off
the Canadian coast beyond that threshold. Regarding the implementation of Art. 82, Spicer
5.3 The Outer Continental Shelf and the Area
133
unique royalty in international law”.
104
UNCLOS disciplined the revenue-sharing mechanism and governed the particulars of that system of payments and contributions. Firstly, the coastal state is given
discretion as to the modality, whether it opts for payment or contribution in kind.
Secondly, payments are due after 5 years of production at an extraction site, in a sort
of “grace period”, with respect to the entirety of production.
105 For the period
between the sixth and twelfth year of production, the Convention set up a system
of gradual increase in the rate of payment or contribution, starting at 1% of the value
or volume of production in the sixth year. Then, “the rate shall increase by 1 per cent
for each subsequent year until the twelfth year and shall remain at 7 per cent
thereafter”, as stated in paragraph 2, Art. 82. Refusal to make payments or contributions will amount to an international illicit and may trigger judicial proceedings by
any other state, given the individual states’ legitimate interests in the wellfunctioning of Part XI. Parallelly, the ISA may start proceedings before ITLOS.
106
Despite the creation of a revenue-sharing system, the management, protection and
exploitation of outer continental shelf resources is subject to the national jurisdiction
of the coastal state. The Convention imposes upon them the obligation to share
revenues, but the loose wording leaves plenty of maneuver room as to how each state
will raise and transfer the cash to the Authority. Hence, the resolution of issues and
problems emerging from the implementation of Art. 82 is primarily a responsibility
of the coastal state and, although the ISA is not obliged to advise the coastal state in
that regard, coastal states are expected to interact with the Authority in tackling
practical implementation difficulties.
Coastal states will pursue exploration efforts of continental shelf resources,
aiming at an exploitation that may come to life sooner than expected. The likelihood
of exploration and exploitation of outer continental shelf resources can be attested in
two particular episodes, one of which of direct interest for this work: the assumption
by the ISA of potential mineral and hydrocarbon resources on the Brazilian outer
continental shelf, and the recent (and rather concrete) Norwegian oil and gas
discoveries off the Canadian coast beyond 200 nm.
Firstly, the Norwegian state petroleum company, Statoil, has recently reported
both the discovery of oil and gas reservoirs off the Canadian east coast beyond
200 nm and the intention to implement Art. 82.
107 Thus far, Norway and the United
been there. What the coastal state did was merely claim jurisdiction over a submarine portion of its
land territory.
104 Chircop (2011), p. 183.
105 Art. 82, paragraph 2, UNCLOS, on the sharing of revenues.
106 Art. 20, paragraph 2, Annex VI, UNCLOS.
107 This information has been obtained via e-mail interview with Dr. Wiley Spicer, one of the
authors of the ISA Technical Study no. 15, on the key expressions of Art. 82 UNCLOS, an absolute
authority worldwide on the topic. When enquired no the existence of any ongoing exploitation
projects on the continental shelf beyond 200 nm, Spicer confirmed that Statoil has a discovery off
the Canadian coast beyond that threshold. Regarding the implementation of Art. 82, Spicer
5.3 The Outer Continental Shelf and the Area
133