Cross-border unitization and joint development agreements: an international law perspective.

The agency held exclusive mineral and oil titles and could act alone or in association with other companies or international organizations, but was subject to the guidance and instructions of the joint governmental authority consisting of the heads of the impacted governments or their delegates. (355) The applicable law with regards to mining and petroleum was the law of Senegal, with the law of Guinea-Bissau applying to the fishery resources. (356)

g. Argentina-U.K. Joint Declaration, 1995 (357)

The history of this area reflects the long-standing dispute between Argentina and the United Kingdom over sovereignty of the Falkland/Malvinas Islands, which culminated in war in 1982. (358) Subsequently, there was a series of agreements, mainly with respect to fishing, in the disputed area between the islands and Argentina. These agreements were followed on September 27, 1995, by the Joint Declaration on Cooperation over Offshore Activities in the South West Atlantic. (359) This declaration defined a "Special Area" to the southwest of the islands within which the states agreed to cooperate in the exploration for and exploitation of hydrocarbons. (360)

As is usual in such agreements, it is without prejudice to any sovereignty or maritime delimitation claims by the states. The declaration indicates that nothing in the conduct or content must be interpreted as a change in the position of either party with regard to the sovereignty, territorial, or maritime jurisdiction over the Falkland/Malvinas Islands, South Georgia, the South Sandwich Islands, and the surrounding maritime areas. (361) However, "the two [states] agreed to cooperate in order to encourage offshore activities in the [specified area.]" (362) Exploration for and exploitation of petroleum was to be implemented:

(i) "[B]y means of the establishment of a Joint Commission, composed of delegations from both sides;" and,

(ii) "[B]y means of coordinated activities in up to 6 tranches, each of about 3,500 square kilometers." (363)

The Joint Commission was to submit recommendations and proposed standards for the protection of the marine environment to both governments, to coordinate activities in the tranches through an established subcommittee, to promote the exploration for and exploitation of petroleum, and to submit recommendations on any related matters that may arise in the future. (364)

A subcommittee acting under the supervision of the Joint Commission was in charge of coordination of activities in the tranches. (365) It was established to encourage activities in each tranche by means of joint ventures; seek nominations from companies; make recommendations on proposals to both governments for development projects; seek coordination of all aspects of operations such as level of fees, royalties, charges, taxes, the harmonization of timing, commercial terms and conditions, and compliance with recommended standards; and recommend additional tranches on the basis of geological data known to both sides. (366) The expectation was that joint petroleum development would proceed on a 50:50 licensing basis between the Falklands/Malvinas Islands government and the Argentina government. (367)

The joint declaration did not specify the duration of the arrangement and did not provide for criminal jurisdiction over exploration and exploitation in the Special Area.

h. Timor Sea Treaty (Australia-East Timor), 2001 (368)

The validity of the Timor Gap Treaty between Australia and Indonesia had been called into question by several political events. Portugal had challenged Indonesia's authority to conclude such a treaty as, in its view, the annexation of East Timor was illegal under international law. (369) Then in 1999, the East Timorese people voted for independence and this set a chain of events in motion for a renegotiation of the treaty. (370)

The United Nations Transitional Administration of East Timor (UNTAET) took over government functions on behalf of East Timor on October 25, 1999. (371) An MOU was agreed between UNTAET and Australia on February 10, 2000, and was to take effect on October 25, 1999. The MOU permitted the continued operation of the JDZ established between Australia and Indonesia in 1989, with UNTAET representing the position of East Timor. (372) The sharing basis of 50:50 of the prior Australia-Indonesia agreement (373) was maintained by this temporary arrangement. (374) However, in March 2000, negotiations were started between UNTAET (with representation from the East Timor Transitional Administration) and Australia, and this led to another MOU on July 5, 2001. (375) The second MOU provided for a continuation of the joint development principle over the renamed JPDA, covering only Area A of the Australia-Indonesia agreement, but with a significantly modified basis for sharing of benefits: ninety percent to East Timor and ten percent to Australia. (376)

On achieving full independence on May 20, 2002, East Timor (now the Democratic Republic of Timor-Leste) signed the Timor Sea Treaty with Australia, replacing the interim agreement between UNTAET and Australia. (377) An Exchange of Notes on the same date allowed the continued operations until the treaty was ratified by both states and came into force on May 20, 2002. (378)

Administration of the JPDA is based on a three-tiered structure, with a Ministerial Council, a Joint Commission, and a Designated Authority. (379) The Ministerial Council consists of an equal number of Ministers from each state, but East Timor has the right to appoint one more commissioner than Australia to the Joint Commission. (380) "The Joint Commission shall establish policies and regulations relating to petroleum activities in the JPDA and shall oversee the work of the Designated Authority." (381) After the first three years of the treaty, unless otherwise agreed, "the Designated Authority shall be the East Timor Government Ministry responsible for petroleum activities or, if so decided by the Ministry, an East Timor statutory authority." (382) The Designated Authority is responsible to the Joint Commission and carries out the day-to-day regulation and management of petroleum activities. (383)

The treaty is explicitly based on the 1982 UNCLOS requirement for states with opposite or adjacent coasts to enter into "provisional arrangements of a practical nature," pending agreement on boundary delimitation. (384) As is usual in JDZ treaties, the agreement is without prejudice to the eventual delimitation. In this case, however, the treaty is automatically terminated if agreement is reached on the permanent seabed delimitation prior to its duration of thirty years. (385) Notwithstanding any termination of the treaty, ongoing petroleum activities "shall continue even if the Treaty is no longer in force under conditions equivalent to those in place under the Treaty." (386) Negotiations on permanent maritime delimitation between the two states are ongoing, though reports indicate that little or no progress has been made due to the diametrically opposed views of the two states.

i. Nigeria-Sao Tome e Principe, 2001 (387)

The two states were unable to reach agreement on their maritime boundary due to their conflicting positions. In 2001, they established a JDZ in their overlapping EEZs covering seabed, subsoil, and adjacent waters. (388) The zone extended from the median line towards Sao Tome e Principe and provides for a 60:40 split in favor of Nigeria. (389) As is usual for JDZ agreements, the treaty contained a "without prejudice" clause stating that nothing in the treaty shall be interpreted as a renunciation of any right or claim to the area in whole or part. (390)

As with the Timor Gap Treaty, this treaty established a Joint Ministerial Council (391) as well as a Joint Authority. The Joint Authority was governed by a board made up of four executive directors; two appointed by the heads of state of each state. (392) The Joint Authority was responsible to the Ministerial Council. (393) The Joint Authority had juridical personality in international law and under the law of each of the states, and legal capacities under the law of both states as were necessary for the exercise of its powers. (394)

The Joint Authority was to prepare, for the approval of the ministerial council, a regulatory and tax regime consistent with this treaty, which became the applicable law relating to the exploration for and exploitation of petroleum in the JDZ. (395) This was prepared in 2003. (396) Only petroleum activities undertaken in the JDZ pursuant to a petroleum development contract between the Joint Authority and one or more contractors were valid. (397) The 2003 licensing round with nine blocks on offer received thirty-three bids from twenty-three companies. (398)

C. General Structure of Agreements

Establishing the area to be covered by a joint development agreement is not a trivial exercise. Although such agreements are invariably without prejudice to subsequent delimitation, it is important that each state ensures that its claim is reflected in the area covered by the JDZ, to the extent that the claim is valid under international law. In some cases, it may be appropriate to establish more than one zone in the agreement, with different terms applying to each area.

Existing joint petroleum development agreements show a wide variation in structure. However, six major issues can be identified as being particularly important for any such agreement. These key issues are the (i) sharing of resources, (ii) management of joint development, (iii) applicable law, (iv) operator and position of contractors, (v) financial provisions, and (vi) dispute resolution. (399)