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

In May 1980 Iceland and Norway concluded an agreement concerning fisheries and continental shelf questions, but left open the issue concerning Iceland's claim to an economic zone on the continental shelf extending beyond the 200 nautical mile limit in the area near Jan Mayen Island. Jan Mayen Island is an inhabited volcanic island approximately 290 miles off the coast of Iceland under Norwegian sovereignty. (174) Although Norway's title to Jan Mayen was by act of Parliament in 1929, Norway did not claim a 200 nautical mile EEZ around the island when it established one around the mainland. (175) When Norway tried to correct its omission in 1978, there were immediate objections from Iceland. (176)

The states provided for the establishment of a Conciliation Commission to consider the issue of the boundary of the continental shelf area between Iceland and Jan Mayen Island. (177) The Commission was to "take into account Iceland's strong economic interests [in this region of the continental shelf,] existing geographical and geological factors and [any] other special circumstances." (178) The recommendations of the Commission had to be unanimous and were not binding on Iceland and Norway, but reasonable regard had to be paid to any such recommendations by those states during any further negotiations. (179) The recommendation of the Commission was to form a joint development arrangement for that area where there was significant hydrocarbon prospectivity. (180) Each of the parties would appoint one member, and the third would be jointly selected. (181)

A scientific committee was assembled to determine the potential for petroleum deposits in the disputed area. (182) The Commission ultimately suggested a detailed JDZ, which comprised the areas with the highest potential for hydrocarbon recovery. (183) This approach was indeed adopted in the subsequent 1981 Agreement on the Continental Shelf between Iceland and Jan Mayen. (184) The treaty provided for unitization if a cross-border deposit was discovered, either across the delimitation line or across the boundary of the southern part of the JDZ. The Commission, as did the ICJ in the North Sea Continental Shelf Cases, recognized the importance of, and in fact depended on, unitization for the most effective economic recovery. (185)

3. The U.K./France Arbitration

France and the United Kingdom submitted to arbitration the issue of the delimitation of the international boundary between those states on the continental shelf. (186) There were notable differences between this case and the North Sea Continental Shelf Cases. Here an arbitral tribunal was asked to decide this matter between states in accordance with the rules of international law, and draw an international boundary line. (187) Both states were parties to the 1958 U.N. Convention on the Continental Shelf. (188) The third state affected, Ireland, was not a party to the proceedings. (189)

France and the United Kingdom engaged in negotiations between 1970 and 1974, with the purpose of delimiting the continental shelf that lies between them. (190) The negotiations resulted in limited agreement only, and the dispute was submitted to an arbitration commission by agreement in 1979. (191) The matter at issue in the arbitration had to do with the meaning of "special circumstances." (192) Although the ICJ in the North Sea Continental Shelf Cases stated there "[i]s no legal limit to the considerations which States may take account of for the purpose of making sure that they apply equitable procedures," (193) it subsequently determined that the presence of petroleum within the continental shelf alone was not sufficient to invoke special circumstances unless the parties provided otherwise by agreement. (194)

4. The Greece/Turkey Aegean Sea Continental Shelf Case

Turkey granted petroleum exploration permits in 1974 and began to explore for petroleum in the portion of the Aegean Sea that lay outside Greece's territorial waters. (195) Greece did not recognize Turkey's claim to that portion of the seabed. (196) Subsequent to unsuccessful negotiations, (197) Turkey proceeded to send further scientific expeditions to the area, with warships available to respond to any attacks on the expeditions. (198) This action prompted Greece to submit the dispute to the ICJ in 1976. (199) In justification of its request for interim measures, Greece alleged that the granting of petroleum exploration permits and the exploring of the vessel MTA Sismik I by Turkey constituted infringements of its exclusive sovereign rights to the exploration and exploitation of its continental shelf, and that the breach of the right of a coastal state's to exclusivity of knowledge of its continental shelf constituted irreparable prejudice. Furthermore, the activities complained of would, if continued, aggravate the dispute. (200)

Turkey avoided the ICJ proceedings on jurisdictional grounds, but contended through communication to the Registry of the Court that these activities "[could not] be regarded as involving any prejudice to the existence of any rights of Greece over the disputed areas" and that, even if they could, there would be no reason why such prejudice could not be compensated and that "Turkey [had] no intention of taking the initiative in the use of force." (201)

The ICJ, viewing the matter in the context of Article 41 of its Statute, held that it was unable to find such a risk of irreparable prejudice to Greece's rights as might require interim measures of protection. (202)

5. The Tunisia/Libya Continental Shelf Case

Tunisia and Libya submitted their question to the ICJ to determine the exact principles and rules of international law that may be applied in delimiting the continental shelf between them. Both states also wanted the Court to specify the most practical application of those principles in order to accomplish the delimitation without difficulty. (203)

In this case, the Court reiterated the natural prolongation principle but did not specify the concept of "equitable principles" or "special circumstances." (204) For that reason the two dissenting judges on the Court criticized the judgment as lacking in legal principle. (205) The Court came to the conclusion that the existing economic status of the parties may not be taken into consideration as part of the relevant circumstances when delimiting the boundary. (206) However, "the presence of oil-wells in an area to be delimited, ... may, depending on the facts, be an element to be taken into account in the process of weighing all relevant factors to achieve an equitable result." (207)

Judge Evensen, in his dissenting opinion, proposed a system of joint development of petroleum resources. (208) In his view, joint development represented an equitable alternative solution to the maritime boundary dispute. (209) After the verdict was issued, "the maritime boundary dispute was settled amicably." (210) The two states signed three agreements: one on delimitation of the continental shelf boundary, as indicated in the 1982 judgment, which was signed on August 8, 1988; another on the designation of a joint exploration zone in the Gulf of Gabes area, (211) including actions for managing joint development; (212) and a third on the participation of Tunisia in ten percent of the income from the future production in the E1 Bouri oil fields on the Libyan side of the continental shelf. (213) It is noteworthy that Judge Evensen's suggestions were apparently implemented in the Tunisia-Libya 1988 joint development agreement. (214)

6. The Australia/Indonesia Seabed Case

Australia and Indonesia disputed rights to a portion of the common continental shelf between them. Because most of the border had been established in 1972 based largely on continental shelf principles, the dispute concerned only a part of the boundary, known as the Timor Gap. (215) The gap had arisen because, in 1972, East Timor was still governed by Portugal and negotiations between Australia and Portugal had not been concluded. (216) In 1975 East Timor was annexed by Indonesia, requiring Australia and Indonesia eventually to negotiate the Timor Gap Treaty. (217) The need for a JDZ stemmed from the fact that Indonesia relied on the 1982 UNCLOS to claim a median line basis for delimitation based on the 200 nautical mile EEZ, (218) whereas Australia maintained delimitation should be based on the principle of natural prolongation of territorial land as proposed in the North Sea Continental Shelf Cases. (219) Under the 1982 UNCLOS the extension of the landmass borders to the shelf appears to be a primary basis for continental shelf jurisdiction on the basis of sovereign rights and not sovereignty. (220) Also, the 200 nautical mile EEZ is based on sovereign rights so it might be argued that these two states are on equal footing regarding their assertions of jurisdiction.

The states chose to resolve their differences in the disputed area by adopting a temporary three-part Zone of Cooperation. Within this zone, joint development activities were to proceed under different legal and economic sharing regimes. (221) It has been reported that unitization is also provided for deposits straddling the boundaries of the joint development area. (222)

7. The Eritrea v. Yemen Tribunal Phase H Decision