A collective vision of a shared future

Article 140 of UNCLOS establishes that activities in the Area shall be carried out for the benefit of mankind as a whole, irrespective of the geographical location of States, whether coastal or landlocked, and taking into particular consideration the interests and needs of developing States. To this end, ISA is required to develop a mechanism for the equitable sharing of financial and other economic benefits derived from activities in the Area.

The development of a benefit-sharing mechanism for activities in the Area

Article 162 (2) (o) (i) of UNCLOS assigns to the Council the power to recommend to the Assembly the rules, regulations and procedures on the equitable sharing of financial and other economic benefits derived from activities in the Area. In turn, the Assembly has the power to consider and approve such rules (Article 160 (2) (f) (i)).

The 1994 Agreement further provides that decisions of the Assembly and the Council on the matter of the rules, regulations and procedures on the equitable sharing of benefits are to take into account recommendations of the Finance Committee (FC). It is therefore a primary responsibility of the FC to draft such rules and procedures.

In line with the progress on the draft regulations on the exploitation of mineral resources in the Area of the seabed beyond national jurisdiction, since 2018 the FC took up the development of rules, regulations and procedures on the equitable sharing of financial and other economic benefits derived from activities in the Area. With a view to assist the FC in its consideration of the question, the Secretary-General prepared a report identifying key elements requiring interpretation and elaboration. (ISBA/24/FC/4).

The FC also requested the Secretary-General to develop a report on criteria for the equitable sharing of financial and other economic benefits derived from deep seabed mining which was considered at a joint meeting with the Legal and Technical Commission held on 9 July 2019. A supplementary report was subsequently prepared to outline three alternative formulae for the fair and equitable allocation of a given sum of royalties available for distribution, taking into account widely accepted measures of relative inequality and global social welfare, A web-based model was made available on the ISA website to allow for visualization and comparison of the impact of each formula on any Member of ISA under the different scenarios.

The FC decided to also consider an alternative or supplemental approach to the direct distribution of financial benefits. In this respect, it requested the Secretariat to prepare a report developing the concept of a global fund to support global public goals, investment in human and physical capital or deep-sea research. The report was reproduced and further elaborated in ISA Technical No. 31.

In July 2023, the FC considered a draft proposal for the establishment of such fund (ISBA/28/FC/4). The proposed fund has been referred to as the Common Heritage Fund and is intended to invest in capacity development, knowledge and competence related to the ocean with a view to enhancing ISA’s contributions to the implementation of the 2030 Agenda for Sustainable Development and the achievement of the Sustainable Development Goals. The rationale behind its establishment is to create and maintain inherent value for generations to come.

The Council and the Assembly expressed support for the objectives of the Fund and invited the FC to continue working on both the equitable distribution formulae and on the Common Heritage Fund for the equitable sharing of financial benefits derived from activities in the Area.

Article 82 of UNCLOS and the sharing of benefits from exploitation of the continental shelf beyond 200 nautical miles

Article 82 of UNCLOS provides for a system of revenue sharing between coastal States and the international community. It establishes that payments or contributions in kind are to be made by coastal States in respect of the exploitation of the non-living resources of the continental shelf beyond 200 nautical miles.

Article 82 (4) assigns ISA the responsibility to distribute to States parties to UNCLOS, on the basis of equitable sharing criteria, payments and contributions made by coastal States in respect of the exploitation of non-living resources on the continental shelf beyond 200 nautical miles, taking into account the interests and needs of developing States, particularly the least developed and landlocked amongst them.

The work of ISA with regard to the implementation of Article 82 (4) of UNCLOS started in 2009 and included the convening of a seminar in London in 2009 and a workshop in Beijing in 2012 to explore important related legal and technical issues (See ISA Technical Study No. 4, No. 12, and No. 15).

The FC considered questions relating to Article 140 of UNCLOS and Article 82 (4) in parallel. It found that, despite the remedial rationale of both Article 140 and Article 82 is inspired by distributive justice, in the case of Article 82 (4), the remedial effect is geographic and socioeconomic, hence the highlighting of the needs and interests of landlocked States, which have no entitlement to the continental shelf. Moreover, contrary to Article 140, only States that have ratified UNCLOS are entitled to receive the benefits accruing from the exploitation of the resources of the continental shelf beyond 200 nautical miles. Finally, the function of ISA under Article 82 is to only serve as a conduit for the transmission of payments and in-kind contributions to States parties in accordance with Article 82 (1).

The FC noted that, despite such differences, the distribution formulae developed in relation to Article 140 could also be applied to distributions under Article 82 (4). The FC further discussed the topic at its meeting in July 2023 and decided to keep the matter of Article 82 (4) on its agenda, with a view to compiling a clear recommendation in due course (ISBA/28/A/4-ISBA/28/C/13).