DSCC Interventions – 25/3/24

Date: 26 March 2024

First  intervention:

DSCC made a submission to the effective Control webinar last September which webinar we welcomed. It does not seem to be still on the website. It is available on the DSCC website. We welcome this thematic discussion today on this important issue.

Effective control matters for three reasons, enforcement, liability and the integrity of the ISA

Firstly, enforcement, because a contractor can escape enforcement sanctions through inadequate capitalization – in other words, not having sufficient assets within the sponsoring State. This is both a moral hazard in encouraging contractors to minimise their exposure, and a major hindrance to effective enforcement. The ability of States to effectively enforce contracts and their own laws is central to the ISA regime and is  undermined if there is no certainty that contractors can be held responsible for breaches.  Regardless  of the sponsoring State laws and of their implementation, they may be ineffective where it really matters  if the persons against whom the sponsoring State needs to enforce them, are outside jurisdiction.

Secondly, liability,  because if contractors can escape paying compensation in the event of liability, both the sponsoring State and the environment will suffer. In the absence of an economic effective control test, a contractor incorporated as a subsidiary in a sponsoring State could escape paying for the damage by simply declaring insolvency and a judgement could remain unpaid.

Integrity of the system put into place by the Convention is important because if economic control criteria were applied by the ISA to the relationship between contractor and sponsoring State, it is probable that some of the current private sector contractors seen at the ISA would fail the test, at least partly because effective control is exercised by the parent company and the majority of their shareholders and/or their directors are not located in the sponsoring State. This issue looms large in the context of the impending application by NORI, a subsidiary of the Metals Company, which is registered in Canada. The situation of UK Seabed Resources raises the same question: it is apparently owned by a Norwegian company Loke Marine Minerals. If ‘effective control’ is exercised in Norway, should Norway not be the sponsoring State?

So that is the answer we suggest to the first question.

Second intervention:

We can be very brief in this intervention for DSCC and Oceans North. Our answer to the second question is clear yes. It is the responsibility of the Council to develop “the criteria and procedures for implementation of the sponsorship requirements […] in the rules, regulations and procedures of the Authority.” According to Article 4 paragraph 3 of Annex III of the Convention. This must necessarily include a clear definition of “effective control” in the Exploitation Regulations.

Third intervention:

We can be equally brief 

The answer to the third question is that the Council must agree on an economic test for effective control. Many delegates have made this point and we agree. Taking into account the provisions of the Convention, the test must focus on economic control and this means the reality of the economics of the relationship between the sponsoring State and contractor. 

Fourth intervention:

We would like to make several observations: 

Firstly, we would observe that the term “serious harm”, which occurs in what appears to be bracketed text in DR13.3(b), is inconsistent with Article 145.

Secondly, we are concerned about the limiting qualifier of “intense” fishing activity” in DR13 para 4.b(iii) and in 13 Alt paragraph 8(iii).  

While we appreciate that this term is used in article 147(2)(b) of the Convention, it is our firm view that any fishing activity that could potentially be impacted should be identified. For example, an impact on tuna stocks or salmon populations on the high seas could affect fishing activity in coastal areas important to local communities or indigenous peoples,  not just “intense” fishing activity in the high seas.

We would note that the 1995 UN Fish Stocks Agreement obliges States to avoid adverse impacts on artisanal and subsistence fishers, indigenous people and women fishworkers, as well as to recognise the vulnerability of developing States dependent on fisheries for meeting the nutritional requirements of their populations. [in Articles 5 & 24]

The UN Fish Stocks Agreement also requires States to assess the impacts of human activities and environmental factors on species belonging to the same ecosystem; and recognises the need to ensure the conservation of associated and dependent species, protect habitats of special concern and protect biodiversity in the marine environment. [in Articles 5 & 6]

If this DR only addressed impacts on so-called “intense” fishing activity in areas where seabed mining might take place, the ISA could seriously undermine the aforementioned provisions of the UN Fish Stocks Agreement, the implementing agreement for Articles 63.2 and 64 of the Convention, and the measures taken to implement the Agreement.  It could also subvert measures established under Articles 65-67 of the Convention for the conservation of anadromous species important to indigenous peoples and local communities in the North Pacific.

To this end, a new criterion is needed that would require consideration of whether fisheries, food security or human health would be adversely affected by the environmental impacts of deep sea mining, wherever those impacts may occur. 

Mr President, distinguished delegates, the question of protecting fisheries is of course inherently tied to the biodiversity crisis and the knock-on impacts of that crisis on carbon cycling and sequestration. As we begin to feel the effects of such phenomena ever more acutely in the ocean, the prevention of biodiversity loss and the preservation of carbon cycling and sequestration functions must be a primary consideration for decision-makers at the ISA. Draft regulation 13, para 4(vi) lists the impacts that the “activity will not cause”. We are concerned to see, however, that the protection of “biological diversity and integrity of marine species, ecosystems and processes” is relegated to para 5(e) in DR13 and para 9(d)(v) in DR13alt, under which the Commission is required only to ‘take such factors into account’. In our view, the prevention of biodiversity loss and safeguarding the integrity of marine processes, including carbon cycling and sequestration, are fundamental in our crumbling Earth system, and the activity of deep-sea mining must not be permitted if it compromises these processes. 

In this regard, there is a real risk that the ISA could also undermine the UN Framework Convention on Climate Change, the Convention on Biological Diversity, the Convention on Migratory Species, the United Nations Declaration on the Rights of Indigenous Peoples and other related treaties and agreements. The discussions here must recognize the wider efforts States are engaged in to protect the oceans, halt and reverse biodiversity loss, restore ecosystems, address climate change and provide a livable planet for future generations.

Fifth intervention:

This intervention is behalf of DSCC  and Oceans North

The use of the term  ‘may’ instead of ‘shall’ in paragraph 1 alt is crucial, as the Commission must retain discretion NOT to approve a plan of work and must apply the principles of Regulation 2. It would be completely unacceptable that the Commission in any circumstance “must” or “shall” approve a plan of work. We support the intervention of Pew Charitable Trusts in this respect. 

We note also in this respect that there is no requirement that a plan of work cannot be approved if it is inconsistent with any part of Regulation 2.

We also support Belgium’s suggestion of an addition to paragraph 2 relating to other global frameworks and agreements.

Sixth intervention:

60 days as provided in paragraphs 1 and 2 is an absurdly short timeframe for the Council to reach a decision. The regulations could and should specify a longer period, as it would be a decision by Council. The Agreement provides that Council can provide for a longer period than 60 days.

Council would need to meet to consider an application, and convening a meeting would likely take half that time. Add to that the need for consideration, and the time period would need to be expressed in years.

The default approval suggested in paragraph 2, reflecting paragraph 11 of the 1994 Agreement, is a clear reminder of why a moratorium is needed. It would be completely unacceptable that such a potentially damaging decision – remembering that contracts could be in place for many decades- be made by default, as if a football team turned up late for a game. We join Costa Rica in this respect.

Seventh intervention:

DR 18 Para 4 reads that 

4.  An Exploitation Contract shall provide for security of tenure and shall not be revised, suspended, or terminated except in accordance with Regulation 18.ter.

But regulation 18 ter is not about revision at all but about suspension and termination.

If DSM were ever to start, contracts may potentially be in place for many decades. Any contract must be able to be revised, suspended or terminated including in case of harm to the marine environment.

We support Germany’s observation about article 194 para 2, and would extend the same argument to articles 145, 192 and other provisions of the Convention and indeed other international agreements. The regulations must not attempt to cement in provisions to bind future generations and in breach of other international obligations. For example, the ISA cannot contract out of the obligation in article 192, that States have the obligation to protect and preserve the marine environment, for instance.

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