Environmental Obligations and Liability of Private Contractors: Potential Use of Sponsoring States of Convenience in the Deep Seabed Mining Regime

Abstract

A comprehensive international legal framework for activities of prospecting, exploration, and exploitation was established mainly in Part XI and Annexes III and IV of UNCLOS, the 1994 Implementation Agreement and the Mining Code. The ISA was determined by UNCLOS to administrate and regulate deep seabed mining in the Area and its mineral resources. To conduct activities in the Area, sponsoring States and their respective contractors must comply with the international legal framework. And, for its proper implementation by contractors, this international legal framework must be internalised by the national legislation of their respective sponsoring State. Nonetheless, this does not prevent private parent corporations based in developed States from using sponsoring States of convenience. In order to circumvent stricter rules, primary companies can create subsidiaries in developing States. This sponsorship system can exploit flaws in the flexible application of environmental obligations and liability. Considering this, the main question addressed in this work is whether the environmental obligations and liability in the legal framework for deep seabed mining enable the creation of a sponsorship of convenience system. The hypothesis developed throughout the work is that, given the discretion of States to incorporate the international legal framework for deep seabed mining, there are no legal boundaries to prevent the formation of a forum shopping system that benefits sponsorships of convenience through the flexibilisation of their legislation. A possible solution to this problem would be the standardised application of a strict liability approach, relying on a compensation fund to guarantee complete reparation against any environmental damage caused by the contractors. However, the international environmental obligations and liability as currently established by the international legal framework for deep seabed mining do not provide any mechanism to efficiently stop sponsoring States of convenience from creating flexible legislation to incentivise private corporations to opt for their sponsorship. The objective of this research is not to provide an exhaustive description and analysis of the practice of a set of States in relation to the sponsorship regime. Instead, it will identify more generally different groups of common practices among States and assess their compatibility under the Law of the Sea. This will be achieved through the analysis of the international legal framework, national legislation, decisions in administrative and judicial proceedings, sponsorship, and exploration contracts. The structure of this work is as follows: 1. Introduction; 2. The Deep Seabed Mining Regime under the International Seabed Authority; 3. The Role of Private Contractors under the Deep Seabed Mining Regime; 4. International Environmental Obligations of Private Contractors; 5. International Environmental Liability of Private Contractors; 6. National Environmental Obligations and Liability of Private Contractors; 7. Conclusions.