ABOUT TDM
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A Proposal to Arbitrate the Caspian Sea Boundary Dispute
I read both Kaj Hober's brilliant proposal as well as interesting views submitted by others. However, I feel what were proposed by Mr. Hober and others suffer from lack of a suitable starting point, which I feel is (except in the case of Keykavoussi) the result of looking on the subject not from the perspective of those who are living in the region.
I believe this issue should be approached in the framework of replying to two questions: First, are the littoral states serious in resolving the dispute? Second, If yes, how the dispute can be figured out best either through arbitration or other dispute settlement methods? In coming up with response to these questions, Mr. Hober and in some extent others, started their arguments with two presuppositions: There are a huge amount of hydrocarbon resources in the Caspian region as well as a thirsty Western market for it in one hand, and a group of poor countries in urgent need of fresh sources of fund on the other. Hence, as reasonable nations they should count the seconds to see the dispute resolved as soon as possible. (First presupposition)
Because of "legal vacuum surrounding Caspian Sea" as Mr. Hober believe (but I don't), also because bilateral mechanisms as well as other arrangements have proved incompetent, the Caspian States are -or should be- looking for new dispute settlement methods. So, why not arbitration?
I think in response to questions, Mr. Hober as well as some others ignored some realities I attempt to indicate to some of them in subsequent parts:
1) Are The Littoral States Serious In Resolving The Dispute?
Mr. Hober noted that through his contacts with officials of all littoral states particularly Russia, and Iran, he found them positive toward arbitration as a device to resolve the dispute over Caspian legal regime. I would like to assert that according to following logical arguments, Mr. Hober's conclusion couldn't be true:
- Generally, in politics, attitudes taken by governments are divided into two different categories: declarative (those usually called political propaganda) and operative (those actually applied in real world even though governments deny its application). I want to assure Mr. Hober that "positive reaction" of Caspian littoral state (at least in relation with Russia and Iran) is of first category. In subsequent parts I will do my best to explain political behaviour of littoral states.
- We know that prior to choosing type of dispute settlement mechanism, and in order to be able to settle a dispute, parties should reach a real compromise in this regard. This compromise can be simply described as a contract or an "agreement of wills" according to which parties demonstrate their intention to resolve the given dispute. In relation with Caspian states, I am afraid, this "agreement of wills" neither exist nor can be expected to exist in near future because of huge amount of dissenting interests, misunderstandings, ambiguity in attitudes and absence of serious determination among politicians. It should be added that, as lawyers, we should not be misled be joint MOUs and declarations. Although others pointed out to these problems, nobody did analyse these facts exhaustively. I think recognizing these obstacles thoroughly would let us know why this dispute has not been solved after approximately a decade of hard working and, why shifting into a new mechanism cannot guarantee a better outcome.
- One of the first steps in solving a dispute is to distinguish type of interest each party is trying to protect and whether these dissenting interests are competent to be brought into line. I think the relation between parties' interests can be seen generally in two forms. First, similar interests i.e. those interests, which are of same nature. Here, the nature of subject matter of dispute is a quantitative one (normally a zero game). The best illustration for this type is what we see in, "North Sea Continental Shelf" and "Gulf of Fonesca cases. Although other variables were also vital for the parties however, main interest behind both disputes can be asserted to be economic interests. The second group are interests, which are of different characteristics. The Black Sea case noted by Professor Walde can be dealt with in this group. Having in mind the Cold War ear, while USSR main concern was to apply and maintain its military dominance over Black Sea, first (and definitely not the only) concern of Turkey was utilising its geopolitical position in Black Sea to attract as much economic interests as possible. Therefore, using a system of barter parties could reach an agreement. In the given case, although I don't know anything about the content of the agreement between Turkey and USSR, I guess it can be that simple: I recognise your economical income derives from having control over Bosphorus and Dardanelle straits, in condition that my military fleets have the unrestricted patrol and passage rights in the Sea. Nevertheless, in relation with second group, it is not always that simple. In most cases parties cannot reach an agreement and the dispute settlement process leads to nothing. This failure refers to cases in which either the interests at stake are not interchangeable or, the parties are not in a position to do a bargain.
- Unfortunately, the Caspian case is a complicated one because of those two sets of reasons noted in previous paragraph. The interests at stake in Caspian Sea are of different nature in relation with each of the parties. While quick delineation of maritime boundaries and subsequently exploitation of the hydrocarbon reserves is the priority of priorities for three CIS republics of Turkmenistan, Azerbaijan and Kazakhstan, extension of the frustrating atmosphere of uncertainty over Caspian legal regime is unquestionably advantageous for Russia and Iran. If the dispute remains unsolved for a longer period of time, it may oblige the Western companies to leave the region. In this case, and in the absence of any serious competitor, Russian oil companies can sign more petroleum contracts although, they have not been successful in performing their previous contractual covenants. Having in mind that, every solution extending the territorial waters of the littoral states imposes limitations on Russian military fleets in Caspian, continuation of status quo on the other hand, will guarantee the Russian military dominance over the Sea. Here, the interests of Russia are a package consisting of different categories of concerns such as military, geopolitical, security and economical interests among which Russian share of hydrocarbon plays an insignificant role. Hence, Russian interests are not similar to other littoral states.
- It is exactly the same for Iran. Although passing Caspian oil pipelines through Iranian territories may make huge amount of income for this country, Iran pays the least attention to hydrocarbon under beneath its share of the Sea. Geologically, Iranian share of the Sea is believed to contain the poorest hydrocarbon reservoirs in the Sea and accordingly developing Caspian oil will not be an Iran priority in the near future. On the other hand, it can be asserted that Iran main concern is to minimise the negative consequences of any prospective solution on its national as well as international security. Since Iran declarative attitude has been based on 1921 and 1940 treaties between Iran and USSR, which had recognized the Sea as a "common property" of both states, any legal solution, which gives less than a 20% share to this country, may cause severe reactions among public opinion inside Iran. The significance of these reactions on national security is better appreciated if we know that from time to time Iran has emphasized on a 50% share of the Sea based on a mistaken interpretation of the "common property" concept in 1921 and 1940 treaties, the fact that has created an unrealistic expectation among some Iranian people for a 50% share of the Sea. Hence, the nature of Iranian interests in Caspian is also completely different from those of CIS republics and even Russia. Moreover, there are pragmatic politicians inside Iran who are working hard to improve their relation with Iran old ally (USA), in the hope that this relation may strengthen their bargaining power in variety of cases including Caspian legal dispute. Thus, Iran is not in a position to sit on the negotiation table. It is that simple for Iran: an unsolved dispute is better than a lost one.
I conclude that at least, some of the littoral states are not serious in resolving the dispute; hence shifting from a dispute settlement mechanism to another cannot change the existing fact.
2) How The Dispute Can Be Solved Best Either Through Arbitration Or Other Dispute Settlement Methods?
Although I am personally sure that before emerging a real "agreement of wills" among the littoral states neither mechanism can solve this dispute, I would like to give some clarification about the content of Mr. Hober's proposal. I would appreciate if I have your comments:
- In order to assure the littoral states that their interests are better served, Mr. Hober suggests appointing a" non-neutral arbitrator" beside a neutral one by each of the parties. In relation with this suggestion, I would like to point out to some important issues. It is normally the fact that contending parties look for arbitrators whom they think will support their theoretical arguments and hence, will more probably act in their favour however, "neutrality" is an indispensable characteristic of an arbitrator. As I have examined there was no international, regional or even national legal documents, which did not commit itself to incorporate the concept of "neutrality" as an essential characteristic of an arbitrator. So, this suggestion should be considered as a dangerous heterodoxy. On the other hand, instead of giving the parties additional pace of mind, Mr. Hober's suggestion may complicate the bureaucracy by adding five more arbitrators. Because the decisive votes are usually those of independent arbitrators, If you give the right to the parties to choose even hundred "non-neutral" arbitrators it cannot give the parties that peace of mind.
- Despite my sincere admiration to those who has spent an immense part of their life in settlement of commercial disputes, I think Mr. Hober's proposal whatsoever precious, is mostly based on his strong familiarity with commercial disputes which are utterly different from the subject matter of a boundary dispute between two or more sovereign states. While even in a multi billion dollars commercial case, the loser government may face protests invoked by opposition parties or public opinion, losing a case related to a few square kilometres disputed area may lead to even regime change. Needless to say that, this public response is not limited to developing countries. Harsh reactions shown by some extremist French nationalist groups who accused Charles Deale of treason subsequent to evacuating Algeria, demonstrates the fact that even in developed countries, this type of issues can potentially be a source of crisis for governments.
- Mr. Hober believes that arbitration is regarded as a well-established method of settling international disputes. But by whom? Let me explain what arbitration does probably mean to developing countries people. As an example, Iran has both judicial and arbitral (Iran-US Arbitration Tribunal) experiences in settling international disputes. These experiences prove that judicial process, no matter how slow and expensive, serves the weaker parties' interests much better. From the perspective of those who are living in developing countries, arbitration is a suitable environment for corruption virus to nurture. It is swift not because arbitrators are compassionately doing their best to finalize the case as soon as possible in order to avoid more expenses, it is swift because they want nobody has enough time to scrutinize their collusion or incapability in defending national interests. It is confidential not because disclosing the content of arbitration may harm national interests; it is confidential because it supplies the arbitrators with a legal device to hide their corruptive secrets under the cover of the law. That's why concepts such as swiftness, confidentiality and finality of award, which are the strong features of arbitration mechanism, are observed pessimistically as its flaws. Moreover, there is a difference between developed and developing countries in dealing with this type of problems. Because of certainty in political scene, and thanks of variety of political supervisions over decision makers in developed countries, people are almost sure that if their politicians act against national interests there are enough tools to recognize an punish their faults. Hence, if the politicians lose a case, people can check why this happened and take necessary measures. Lacking these mechanisms in developing countries, people are almost always pessimistic about their politicians. To cope with this pessimism and in order to distribute the responsibility, politicians in developing countries prefer deliberate, time-consuming, open and well-known courts such as ICJ as the most appropriate mechanism to settle this type of disputes.
As a conclusion it can be asserted that in order to take further steps, it is necessary to have the mentioned facts in mind and avoid any waste of time.
Thanks
A Proposal to Arbitrate the Caspian Sea Boundary Dispute
I read both Kaj Hober's brilliant proposal as well as interesting views submitted by others. However, I feel what were proposed by Mr. Hober and others suffer from lack of a suitable starting point, which I feel is (except in the case of Keykavoussi) the result of looking on the subject not from the perspective of those who are living in the region.
I believe this issue should be approached in the framework of replying to two questions: First, are the littoral states serious in resolving the dispute? Second, If yes, how the dispute can be figured out best either through arbitration or other dispute settlement methods? In coming up with response to these questions, Mr. Hober and in some extent others, started their arguments with two presuppositions: There are a huge amount of hydrocarbon resources in the Caspian region as well as a thirsty Western market for it in one hand, and a group of poor countries in urgent need of fresh sources of fund on the other. Hence, as reasonable nations they should count the seconds to see the dispute resolved as soon as possible. (First presupposition)
Because of "legal vacuum surrounding Caspian Sea" as Mr. Hober believe (but I don't), also because bilateral mechanisms as well as other arrangements have proved incompetent, the Caspian States are -or should be- looking for new dispute settlement methods. So, why not arbitration?
I think in response to questions, Mr. Hober as well as some others ignored some realities I attempt to indicate to some of them in subsequent parts:
1) Are The Littoral States Serious In Resolving The Dispute?
Mr. Hober noted that through his contacts with officials of all littoral states particularly Russia, and Iran, he found them positive toward arbitration as a device to resolve the dispute over Caspian legal regime. I would like to assert that according to following logical arguments, Mr. Hober's conclusion couldn't be true:
- Generally, in politics, attitudes taken by governments are divided into two different categories: declarative (those usually called political propaganda) and operative (those actually applied in real world even though governments deny its application). I want to assure Mr. Hober that "positive reaction" of Caspian littoral state (at least in relation with Russia and Iran) is of first category. In subsequent parts I will do my best to explain political behaviour of littoral states.
- We know that prior to choosing type of dispute settlement mechanism, and in order to be able to settle a dispute, parties should reach a real compromise in this regard. This compromise can be simply described as a contract or an "agreement of wills" according to which parties demonstrate their intention to resolve the given dispute. In relation with Caspian states, I am afraid, this "agreement of wills" neither exist nor can be expected to exist in near future because of huge amount of dissenting interests, misunderstandings, ambiguity in attitudes and absence of serious determination among politicians. It should be added that, as lawyers, we should not be misled be joint MOUs and declarations. Although others pointed out to these problems, nobody did analyse these facts exhaustively. I think recognizing these obstacles thoroughly would let us know why this dispute has not been solved after approximately a decade of hard working and, why shifting into a new mechanism cannot guarantee a better outcome.
- One of the first steps in solving a dispute is to distinguish type of interest each party is trying to protect and whether these dissenting interests are competent to be brought into line. I think the relation between parties' interests can be seen generally in two forms. First, similar interests i.e. those interests, which are of same nature. Here, the nature of subject matter of dispute is a quantitative one (normally a zero game). The best illustration for this type is what we see in, "North Sea Continental Shelf" and "Gulf of Fonesca cases. Although other variables were also vital for the parties however, main interest behind both disputes can be asserted to be economic interests. The second group are interests, which are of different characteristics. The Black Sea case noted by Professor Walde can be dealt with in this group. Having in mind the Cold War ear, while USSR main concern was to apply and maintain its military dominance over Black Sea, first (and definitely not the only) concern of Turkey was utilising its geopolitical position in Black Sea to attract as much economic interests as possible. Therefore, using a system of barter parties could reach an agreement. In the given case, although I don't know anything about the content of the agreement between Turkey and USSR, I guess it can be that simple: I recognise your economical income derives from having control over Bosphorus and Dardanelle straits, in condition that my military fleets have the unrestricted patrol and passage rights in the Sea. Nevertheless, in relation with second group, it is not always that simple. In most cases parties cannot reach an agreement and the dispute settlement process leads to nothing. This failure refers to cases in which either the interests at stake are not interchangeable or, the parties are not in a position to do a bargain.
- Unfortunately, the Caspian case is a complicated one because of those two sets of reasons noted in previous paragraph. The interests at stake in Caspian Sea are of different nature in relation with each of the parties. While quick delineation of maritime boundaries and subsequently exploitation of the hydrocarbon reserves is the priority of priorities for three CIS republics of Turkmenistan, Azerbaijan and Kazakhstan, extension of the frustrating atmosphere of uncertainty over Caspian legal regime is unquestionably advantageous for Russia and Iran. If the dispute remains unsolved for a longer period of time, it may oblige the Western companies to leave the region. In this case, and in the absence of any serious competitor, Russian oil companies can sign more petroleum contracts although, they have not been successful in performing their previous contractual covenants. Having in mind that, every solution extending the territorial waters of the littoral states imposes limitations on Russian military fleets in Caspian, continuation of status quo on the other hand, will guarantee the Russian military dominance over the Sea. Here, the interests of Russia are a package consisting of different categories of concerns such as military, geopolitical, security and economical interests among which Russian share of hydrocarbon plays an insignificant role. Hence, Russian interests are not similar to other littoral states.
- It is exactly the same for Iran. Although passing Caspian oil pipelines through Iranian territories may make huge amount of income for this country, Iran pays the least attention to hydrocarbon under beneath its share of the Sea. Geologically, Iranian share of the Sea is believed to contain the poorest hydrocarbon reservoirs in the Sea and accordingly developing Caspian oil will not be an Iran priority in the near future. On the other hand, it can be asserted that Iran main concern is to minimise the negative consequences of any prospective solution on its national as well as international security. Since Iran declarative attitude has been based on 1921 and 1940 treaties between Iran and USSR, which had recognized the Sea as a "common property" of both states, any legal solution, which gives less than a 20% share to this country, may cause severe reactions among public opinion inside Iran. The significance of these reactions on national security is better appreciated if we know that from time to time Iran has emphasized on a 50% share of the Sea based on a mistaken interpretation of the "common property" concept in 1921 and 1940 treaties, the fact that has created an unrealistic expectation among some Iranian people for a 50% share of the Sea. Hence, the nature of Iranian interests in Caspian is also completely different from those of CIS republics and even Russia. Moreover, there are pragmatic politicians inside Iran who are working hard to improve their relation with Iran old ally (USA), in the hope that this relation may strengthen their bargaining power in variety of cases including Caspian legal dispute. Thus, Iran is not in a position to sit on the negotiation table. It is that simple for Iran: an unsolved dispute is better than a lost one.
I conclude that at least, some of the littoral states are not serious in resolving the dispute; hence shifting from a dispute settlement mechanism to another cannot change the existing fact.
2) How The Dispute Can Be Solved Best Either Through Arbitration Or Other Dispute Settlement Methods?
Although I am personally sure that before emerging a real "agreement of wills" among the littoral states neither mechanism can solve this dispute, I would like to give some clarification about the content of Mr. Hober's proposal. I would appreciate if I have your comments:
- In order to assure the littoral states that their interests are better served, Mr. Hober suggests appointing a" non-neutral arbitrator" beside a neutral one by each of the parties. In relation with this suggestion, I would like to point out to some important issues. It is normally the fact that contending parties look for arbitrators whom they think will support their theoretical arguments and hence, will more probably act in their favour however, "neutrality" is an indispensable characteristic of an arbitrator. As I have examined there was no international, regional or even national legal documents, which did not commit itself to incorporate the concept of "neutrality" as an essential characteristic of an arbitrator. So, this suggestion should be considered as a dangerous heterodoxy. On the other hand, instead of giving the parties additional pace of mind, Mr. Hober's suggestion may complicate the bureaucracy by adding five more arbitrators. Because the decisive votes are usually those of independent arbitrators, If you give the right to the parties to choose even hundred "non-neutral" arbitrators it cannot give the parties that peace of mind.
- Despite my sincere admiration to those who has spent an immense part of their life in settlement of commercial disputes, I think Mr. Hober's proposal whatsoever precious, is mostly based on his strong familiarity with commercial disputes which are utterly different from the subject matter of a boundary dispute between two or more sovereign states. While even in a multi billion dollars commercial case, the loser government may face protests invoked by opposition parties or public opinion, losing a case related to a few square kilometres disputed area may lead to even regime change. Needless to say that, this public response is not limited to developing countries. Harsh reactions shown by some extremist French nationalist groups who accused Charles Deale of treason subsequent to evacuating Algeria, demonstrates the fact that even in developed countries, this type of issues can potentially be a source of crisis for governments.
- Mr. Hober believes that arbitration is regarded as a well-established method of settling international disputes. But by whom? Let me explain what arbitration does probably mean to developing countries people. As an example, Iran has both judicial and arbitral (Iran-US Arbitration Tribunal) experiences in settling international disputes. These experiences prove that judicial process, no matter how slow and expensive, serves the weaker parties' interests much better. From the perspective of those who are living in developing countries, arbitration is a suitable environment for corruption virus to nurture. It is swift not because arbitrators are compassionately doing their best to finalize the case as soon as possible in order to avoid more expenses, it is swift because they want nobody has enough time to scrutinize their collusion or incapability in defending national interests. It is confidential not because disclosing the content of arbitration may harm national interests; it is confidential because it supplies the arbitrators with a legal device to hide their corruptive secrets under the cover of the law. That's why concepts such as swiftness, confidentiality and finality of award, which are the strong features of arbitration mechanism, are observed pessimistically as its flaws. Moreover, there is a difference between developed and developing countries in dealing with this type of problems. Because of certainty in political scene, and thanks of variety of political supervisions over decision makers in developed countries, people are almost sure that if their politicians act against national interests there are enough tools to recognize an punish their faults. Hence, if the politicians lose a case, people can check why this happened and take necessary measures. Lacking these mechanisms in developing countries, people are almost always pessimistic about their politicians. To cope with this pessimism and in order to distribute the responsibility, politicians in developing countries prefer deliberate, time-consuming, open and well-known courts such as ICJ as the most appropriate mechanism to settle this type of disputes.
As a conclusion it can be asserted that in order to take further steps, it is necessary to have the mentioned facts in mind and avoid any waste of time.
Thanks
