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The relevance of the granting of Oil Concessions in a Maritime delimitation: The jurisprudence of the International Court of Justice
Summary: The analysis of the jurisprudence of the International Court of Justice for the past thirty years shows that the granting of petroleum concessions may be a relevant factor to be taken into account in the adjudication of maritime claims over the continental shelf between coastal States. Thismight be the case when petroleum concessions are aligned in combination with an agreement between the two States; but not when there is either an overlap of the concession limits or a buffer zone between them.
In a judgement rendered on 10 0ctober 2002 in the case of the maritime delimitation between Cameroon and Nigeria[1], the International Court of Justice recalled that it has, in the past, dealt with the role of oil practice in maritime delimitation disputes. This judgement provides an opportunity to review the Court’s jurisprudence which may have a direct impact on the practice of oil companies when they are granted oil concessions in disputed areas.[2]
The starting point of the legal analysis is the 1969[3]North Sea Continental Shelfcases whereby the Court ruled that the continental shelf belonged to the coastal State: “Delimitation is a process which involves establishing the boundaries of an area already, in principle, appertaining to the coastal State and not the determination de novoof such an area.”[4]The Court continues by stating that the most fundamental of all the rules of law relating to the continental shelf is “namely, that the rights of the coastal State in respect of the area of continental shelf that constitutes a natural prolongation of its land territory into and under the sea exist ipso factoand ab initio, by virtue of its sovereignty over the land, and as an extension of it in an exercise of sovereign rights for the purpose of exploring the seabed and exploiting its natural resources. In short there is there an inherent right. In order to exercise it, no special legal process has to be gone through, nor have any special legal acts to be performed. Its existence can be declared (and many States have done this) but does not need to be constituted. Furthermore, the right does not depend on its being exercised… It is “exclusive” in the sense that if the coastal State does not choose to exploit the areas of shelf appertaining to it, that is its own affair, but no one else may do so without its express consent.”[5]Furthermore, the Court stated “Evidently any dispute about boundaries must involve that there is a disputed marginal or fringe area, to which both parties are lying claims, so that any delimitation of it which does not leave it wholly to one of the parties will in practice divide it between them in certain shares, or operate as if such division had been made. But this does not mean that there has been an apportionment of something that previously consisted of an integral, still less an undivided whole.”[6]
Therefore, it can be inferred from the above that (1) the granting of oil concession by a State is not obligatory and the fact that it does not exploit its offshore resources does not affect its sovereign rights over its continental shelf, (2) the granting of oil concession by a State does not prejudge any issue of sovereignty over the delimitation of its territory or over the territory of a facing or adjacent State, wherever the limits of the oil concession may be located, and a contrary act by another State cannot jeopardise the inherent right of a State and, (3) the delimitation, when it occurs, either respects the limits of oil concessions or disregards them if located on the wrong side of the subsequent established boundary line.
In the course of examination of the parties’ arguments during various maritime delimitation cases (Continental shelf and/or Economic Exclusive Zone) the Court established the jurisprudence that delimitation must be the object of an agreement between the States concerned; such agreement must be reached in accordance with equitable principles and in application of the “couple equitable principles/relevant circumstances” in order to achieve an equitable result[7]. To apply such approach, beyond the 12-miles zonesof territorial sea, an equidistant line is to be provisionally drawn from the defined relevant coastlines of the parties by reference to which the location of the base points to be used in the construction of the equidistant line will be determined. The Court then considers whether there are circumstances which must lead to an adjustment of that line. As the Court stated: “It is, however, the result which is predominant; the principles are subordinated to the goal. The equitableness of a principle must be assessed in the light of its usefulness for the purpose of arriving at an equitable result.”[8]Those principles were embodied in Article 83 of the United Nations Convention on the Law of the Sea of 1982.
The first time the Court examined the question of the significance of petroleum concessions for maritime delimitation was in the case concerning the Continental Shelf between Libya and Tunisia in 1982.The Court noted that the absence of any agreement delimiting any part of the continental shelf has not prevented a certain amount of exploration and exploitation of it. Each party granted licences and concessions pursuant to their own legislation and drilling had already taken place. The eastern boundary for Tunisia and the western boundary for Libya was a line drawn from the boundary pillar some 26° degrees from the meridian.[9]In 1974, Libya granted a concession the western boundary of which was further west of the equidistant line, so that the result was an overlapping of claims in an area some 50 miles from the coasts. Following protests by each Government at the activities of the other, discussions led to the signing of the Special Agreement of 10 June 1977 by which the matter was brought before the Court.[10]The Court did not take into consideration the direct northward line asserted as boundary of the Libyan petroleum zone and “found that close to the coasts the concessions of the parties showed and confirmed the existence of a modus vivendi.”[11]At paragraph 96 of the 1982 Judgment the Court stated that it “ could not fail to note the existence of a de facto linefrom Ras Ajdir at an angle of some 26° east of north, which was the result of the manner in which both Parties initially granted concessions for offshore exploration and exploitation of oil and gas. This line of adjoining concessions, which was tacitly respected for a number of years, and which approximately corresponds furthermore to the line perpendicular to the coast at the frontier point which had been in the past observed as a de factomaritime limit, does appear to the Court to constitute a circumstance of great relevance for the delimitation.”[12] For the Court, this was a circumstance related to the parties’ conduct. It stated “the phenomenon of actual overlapping of claims did not appear until 1974 and then only in respect of areas some 50 miles from the coast…The result was the appearance on the map of a de factoline dividing concession areas which were the subject of active claims, in the sense that exploration activities were authorized by oneParty, without interference, or (until 1976) protests, by the other.”[13]The Court adds that “it is not making a finding of tacit agreement between the Parties … nor is it holding that they are debarred by conduct from pressing claims inconsistent with suchconduct on the basis as estoppel.”[14]
The second time the Court was confronted with arguments concerning the relevance of oil concessions for maritime delimitation was in the case concerning Delimitation of the maritime boundary in the Gulf of Maine Area of 1984[15]. Canada requested the Chamber to find that the conduct of the Parties proved at least the existence of a ‘”modus vivenvimaritime limit” or a “de factomaritime limit” based on the coincidence between the Canadian equidistance line and the United States “BLM line”, which is claimed was respected by the two Parties and by numerous oil companies from 1965 to 1972. The United States denies that its petroleum and gas permits respected any particular line and even the existence of the “BLM line”. The Chamber noted “that, even supposing that there was a de factodemarcation between the areas for which the Parties issued permits … this cannot be recognized as a situation comparable to that on which the Court based its conclusions in the Tunisia/Libyacase. It is true that the Court relied upon the fact of the division between the petroleum concessions issued by the two States concerned. But it took special account of the conduct of the Powers [France and Italy], which it found amounted to a modus vivendi, and which the two States continued to respect when, after becoming independent, they began to grant petroleum concessions”. Moreover, the period from 1965 to 1972, which according to Canada, is the one in which the modus vivendiwas instituted, is considered too short to have produced a legal effect of this kind[16].
The third time the matter arose was in the case concerning the Continental Shelf between Libya and Malta which was judged in 1985[17]. The Court found nothing from the history of the dispute or from legislative and exploratory activities in relation to the continental shelf worth considering. “It is not argued by either Party that the circumstances in this case give rise to ‘the appearance on the map of a de factoline dividing concession areas which were the subject of active claims’, which might be taken into account as indicating ‘the line or lines which the Parties themselves may have considered equitable or acted as such’, as the Court was able to find in the case concerning the Continental Shelf (Tunisia/Libyan Arab Jamahiriya) (I.C.J. Reports 1982,p. 84, paras. 117-118)”. The Court added “ from the standpoint of its duty to ‘take into account whatever indicia are available of the [delimitation] line or lines which the Parties themselves may have considered equitable or acted upon as such… [i]t is however unable to discern any pattern of conduct on either side sufficiently unequivocal to constitute either acquiescence or any helpful indication of any view of either Party as to what would be equitable differing in any way from the view advanced by that Party before the Court.”[18]
The fourth and fifth times such issue was raised were in the cases concerning the Maritime Delimitation in the Jan Mayen Areaof 1993[19]and the case of the Maritime Delimitation between Qatar and Bahrain of 2001[20]. In those cases the Court did not consider any practice of the Parties as to the granting of oil concessions.
The Sixth time was the case between Cameroon and Nigeria in October 2002 mentioned above[21]. Nigeria contended that State practice with regards to oil concessions is a decisive factor in the establishment of maritime boundaries and argued that the Court could not, through maritime delimitation, redistribute the oil concessions established by the practice of Nigeria, Equatorial Guinea and Cameroon, and that it must respect the configuration of the concessions in its determination of the course of the maritime boundary. Nigeria considered the existence of any areas of overlapping licences to be without effect on the evidentiary weight of oil practice. Its operations had been completely open and Cameroon never disputed them and lodged no objection until the date on which the Court proceedings were instituted. Nigeria concluded that its oil practice in the area was public, open and of a long duration and was therefore a basis for acquiescence and the establishment of a vested right. Nigeria breached no obligation to inform Cameroon of its practice and the information was publicly available. Cameroon argued that the granting of oil concessions is a unilateral fait accompli, and not a legal fact that is opposable to another State. It also maintained that the existence of oil concessions had never been accorded particular significance in matters of maritime delimitation ininternational law. Quoting from the Judgment “Overall, it follows from the jurisprudence that, although the existence of an express or tacit agreement between the parties on the siting of their respective oil concessions may indicate a consensus on the maritime areas to which they are entitled, oil concessions and oil wells are not in themselves to be considered as relevant circumstances justifying the adjustment or shifting of the provisional delimitation line. Only, if they are based on express or tacit agreement between the parties may they be taken into account. In the present case there is no agreement between the Parties regarding oil concessions. The Court is therefore of the opinion that the oil practice of the Parties is not a factor to be taken into account in the maritime delimitation in the present case. “[22]
Finally, one may mention the last Judgment rendered in December 2002 by the I.C.J. in the case on Sovereignty over Pulau Ligitan and Pulau Sipatanbetween Indonesia and Malaysia. Although this case is not a maritime delimitation case, it is worth mentioning the conduct of the parties concerning the granting of oil concessions and the position of the Court[23]. Indonesia had granted Japanese oil companies concessions for oil exploration and exploitation in the area. The concession areas did not overlap, as the southern limit of the Malaysian concession lay along 4° 10’ 30’’ latitude north and the northern limit of the Indonesian concession along 4° 09’ 30 latitude north. Pulau Ligitan and Pulau Sipadan did not lie in either concession area. None of the Parties claimed that its concession area had been violated by the other Party.[24]. In paragraph 35 of his dissenting opinion, ad hocJudge Thomas Frank stated: “ This Court has held that, while oil concessions cannot shift existing delimitations, ‘the existence of an express or tacit agreement between the Parties on the siting of their respective oil concessions may indicate a consensus on the maritime areas to which they are entitled’ ”(Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v. Nigeria): Equatorial Guinea intervening), Judgment, I.C.J. Reports, 2002, para. 304). In the present case, there was neither overlap nor alignment of oil concessions. Grants of petroleum concessions thus were disregarded by the Court.
In conclusion, the position taken in 1969 by the Court has been upheld through its subsequent jurisprudence which confirmed that (1) overlap and buffer zone between petroleum concessions are not a relevant factor for the delimitation of the continental shelf between two coastal States and (2) alignment of petroleum concessions granted by two different States to the same or two different oil companies is a relevant circumstance to be taken into account for the maritime delimitation when it indicates, a consensus, a modus vivendior a de factoagreement between two States.
At the 20thanniversary of UNCLOS which was celebrated in December 2002, Ambassador Felipe Paolillo of Uruguay addressed the Members of the United Nations by stating: “The Convention did put an end to the anarchy that reigned in the preceding decades resulting from the multiplicity of claims by States seeking to extend their sovereignty over the sea; in this way, the Convention made a gigantic step in the promotion of international peace and security in the seas; it established criteria that have been applied by States and by international tribunals for determining the external limits of maritime areas under national jurisdiction and boundaries.”[25]
However, it remains that a part of paragraph 97 of the 1969 Judgments of the Court was never applied in the subsequent proceedings:“…another factor to be taken into consideration in the delimitation of areas of continental shelf as between adjacent States is the unityof any deposits. … Yet it frequently occurs that the same deposit lies on both sides of the line dividing a continental shelf between two States, and since it is possible to exploit such a deposit from either side, a problem immediately arises on account of the risk of prejudicial or wasteful exploitation by one or other of the States concerned. … The Court does not consider that unity of deposit constitutes anything more than a factual element which is reasonable to take into consideration in the course of the negotiations for a delimitation.” The issue of a deposit extending across a boundary line is usually dealt with in maritime delimitation agreements[26]through the means of joint development zones, “solution appearing particularly appropriate when it is a question of preserving the unity of a deposit”[27]and shared exploitation and shared profits[28]. It should be noted, however, that in none of the above-mentioned cases have the parties indicated their basic interest in the probable existence of deposit of oil and gas in the disputed seabed or made submissions in that respect. “The Court now turns to the question whether access to the resources of the area of overlapping claims constitutes a factor relevant to the delimitation … Little information has however been given to the Court in that respect , although reference has been made to the possibility of there being deposits of polymetallic sulphides and hydrocarbons in the area.”[29] The interests of the oil companies might be, not identical with those of Governments which are concerned with the national revenue to be derived from fees, taxes royalties or profit-sharing, with increases in national productivity and the impact on the balance of payments. In addition, States might also be reluctant to encounter claims for compensation for any natural resources that may have been extracted or may be extracted “South of the line of delimitation that will be fixed by the Judgment of the Court”[30]More thought should perhaps be given to such concerns of unitization and claims for compensation in the near future.
