(a) General Considerations
The regime established by Part XI was innovative in the sense that it provided the parallel
system, production policies, the transfer of technology, financial terms of contracts and
review conference. Nonetheless, some industrialised States, including the United States,
strongly objected to the framework governing the Area. On 29 January 1982, for instance,
US President Ronald Reagan stated that ‘while most provisions of the draft convention are
acceptable and consistent with US interests, some major elements of the deep seabed
mining regime are not acceptable’. Thus the United States voted against the Convention
and did not sign it. Other industrialised States abstained and did not ratify the Convention.
As a consequence, it became apparent that apart from Iceland, all States Parties to the
Convention were developing States.
In order to address this issue, UNCLOS III set out special rules for ‘pioneer investors’ in
two resolutions appended to the Final Act of the Conference. Resolution I relates to the
establishment of the preparatory commission for the Authority and for ITLOS. The commission
continued its work until being dissolved in 1994 on the entry into force of the LOSC
and the formal establishment of the Authority. Resolution II contained detailed rules
involving preparatory investment in pioneer activities relating to polymetallic nodules.
This resolution referred to four States (France, Japan, India and the USSR), four multinational
consortia and pioneers from developing States which satisfied certain conditions
as pioneer investors. A pioneer investor registered pursuant to this resolution had the
exclusive right to carry out pioneer activities in the pioneer area allocated to it from the
date of registration. Resolution II had effect until the entry into force of the LOSC.
Later on, major industrialised States, such as the United States (1980), the United
Kingdom (1981), Federal Republic of Germany (1980, amended 1982), France (1981), Japan
(1982), the USSR (1982) and Italy (1985), enacted unilateral domestic legislation in relation
to deep seabed mining. In 1984, eight industrialised States concluded the Provisional
Understanding Regarding Deep Seabed Matters in order to avoid overlapping in deep
seabed operations. This was called the reciprocating State regime or the ‘mini-treaty’ regime. However, there were growing concerns that this situation ran the serious risk of
damaging the unity and universality of the deep seabed regime established in Part XI and
the LOSC as a whole. The delay in the commercial exploitation of deep seabed resources and
economic moves towards market-orientated approaches at the global level also encouraged
States to reconsider Part XI.
Against that background, in July 1990, the UN Secretary-General Javier Pérez de Cuéllar
initiated informal consultation in order to meet the specific objections of the developed
States. These informal consultations took place from 1990 to 1994, and fifteen meetings were
convened. As a result, on 28 July 1994, the UN General Assembly adopted the Implementation
Agreement, by a vote of 121 in favour, none against and seven abstentions.
In addition to the Preamble, the Implementation Agreement is composed of ten Articles
and an Annex which is divided into nine sections. The provisions of the Implementation
Agreement and Part XI of the LOSC are to be interpreted and applied as a single instrument.
In the event of any inconsistency between the 1994 Agreement and Part XI, the provisions
of the former shall prevail. After the adoption of the 1994 Agreement, any instrument of
ratification or formal confirmation of or accession to the Convention shall also represent
consent to be bound by the 1994 Agreement. No State or entity may establish its consent
to be bound by the 1994 Implementation Agreement unless it has previously established or
establishes at the same time its consent to be bound by the Convention. Despite the title
of the ‘Implementation’ Agreement, it modifies the original regime of Part XI of the LOSC.
Four points merit highlighting in particular.
As stated in section 1(2) of the Agreement, cost-effectiveness is a key element in the
Implementation Agreement. As a corollary, the setting up and the functioning of the organs
and subsidiary bodies of the Authority are to be based on an evolutionary approach. For
example, the Secretariat of the Authority is to perform the functions of the Enterprise until
it begins to operate independently of the Secretariat. Upon the approval of a plan of work
for exploitation for an entity other than the Enterprise, or upon receipt by the Council of an
application for a joint-venture operation with the Enterprise, the Council of the Authority is
to take up the issue of the functioning of the Enterprise independently of the Secretariat of
The obligation of States Parties to fund one mine site of the Enterprise as provided for in
Annex IV, Article 11(3) shall not apply in light of the delay in commercial production of
mineral resources in the Area. Further to this, States Parties are not required to finance any of the operations in any mine site of the Enterprise or under its joint-venture arrangements by
virtue of section 2(3). The obligations applicable to contractors shall also apply to the
Enterprise under section 2(4). As a consequence, the Enterprise lost its original advantageous
Concerning the budget of the Authority, section 1(14) provides that until the end of the
year following the year during which the Agreement enters into force, the administrative
expenses of the Authority shall be met through the budget of the UN. Thereafter, the
administrative expense of the Authority is to be met by assessed contributions of its
members until the Authority has sufficient funds from other sources to meet those
expenses. The Authority shall not exercise the power to borrow funds to finance its
administrative budget provided in Article 174(1) of the LOSC. On the other hand, a Finance
Committee, which is composed of fifteen members, was established in section 9(1).
(c) The Market-orientated Approaches
The following changes to Part XI, which can, essentially, be characterised by their marketorientated
approaches, should be highlighted.
(i) Production policies: In order to prevent adverse effects on the economies of developing
countries which produce and export the mineral to be mined from the Area, Article 151 of
the LOSC provided for production limitation. However, the industrialised States opposed
the limitation of seabed production because it would deter the development of the exploitation
of deep seabed mineral resources. Thus, the production limitation was disapplied
by section 6(7) of the Implementation Agreement.
(ii) The obligation to transfer technology: The transfer of technology is crucial for the
developing States because the Enterprise would be unable to operate in the reserved areas if
it did not acquire technology necessary to the operation. Thus, Article 5 of Annex III of the
LOSC provided mandatory transfer of technology to the Enterprise. Nevertheless, this
obligation was unacceptable to the industrialised States because compulsory transfer of
technology was considered prejudicial to intellectual property rights and this requirement
would introduce a bad precedent. In response, the mandatory transfer of technology
enshrined in Article 5 of Annex III of the LOSC was disapplied by section 5(2) of the
(iii) Financial terms of contracts: Article 13(2) of Annex III of the LOSC required that a fee
be levied for the administrative cost of processing an application for approval of a plan of
work in the form of a contract and fixed it at an amount of US$500,000 per application.
Further, Article 13(3)–(10) of Annex III imposed on a contractor detailed financial obligations,
including an annual fixed fee of US$1 million from the date of entry into force of the contract. However, the industrialised countries considered that the financial terms of the
contract were too onerous. The Implementation Agreement thus halves the application
fee for either the exploration or exploitation phase to US$250,000 in accordance with
section 8(3). The detailed financial obligations of miners set out in Article 13(3)–(10) of
Annex III were deleted by section 8(2) of the Implementation Agreement. An annual fixed
fee is to be payable from the date of commencement of commercial production pursuant to
section 8(1)(d). This will further reduce the burden on the contractor.
(iv) Economic assistance: In order to assist developing countries which suffer serious
adverse effects on their export earnings or economies because of activities in the Area,
Article 151(10) of the LOSC requires the Assembly of the Authority to establish a system of
compensation or take other measures of economic adjustment assistance. However, the
factors necessary for gauging the adverse effects of deep seabed production on developing
land-based producer States would not be known until the commencement of commercial
production of mineral resources in the Area. It was also maintained that economic assistance
should not be excessive. Thus section 7(1) of the Implementation Agreement provides
that the Authority shall establish an economic assistance fund from a portion of the funds
of the Authority which exceeds those necessary to cover the administrative expenses of the
Authority; and that economic assistance to developing land-based producer States shall be
provided from the fund of the Authority.
Originally the Assembly was considered as the supreme organ of the Authority establishing
general policies under Article 160(1) of the LOSC. However, the Implementation Agreement
strengthened the power of the Council in policy-making. Furthermore, the decisionmaking
system in the Assembly and the Council was modified by the Implementation
Agreement. Under Article 159(7) and (8) of the LOSC, decisions on questions of procedure in
the Assembly were to be taken by a majority, and decisions on questions of substance in the
Assembly were to be taken by a two-thirds majority of members present and voting,
provided that such majority included a majority of the members participating in the session.
Under Article 161(8)(b) and (c), decisions on questions of substance in the Council were to
be taken by a two-thirds majority or a three-quarters majority of the members present and
However, section 3(2) of the Implementation Agreement introduced a consensus procedure.
If all efforts to reach a decision by consensus have been exhausted, decisions by voting
in the Assembly are to be taken by a majority of members present and voting, and decisions
on questions of substance are to be taken by a two-thirds majority of members present and
voting, as provided for in Article 159(8) of the LOSC (section 3(3)). Moreover, Article 161(8)
(b) and (c) of the Convention shall not apply. Instead, section 3(5) introduced a collectiveveto
system, by providing:
If all efforts to reach a decision by consensus have been exhausted, decisions by voting in the
Council on questions of procedure are to be taken by a majority of members present and voting,
and decisions on questions of substance, except where the Convention provides for decisions by
consensus in the Council, shall be taken by a two-thirds majority of members present and
voting, provided that such decisions are not opposed by a majority in any one of the chambers
referred to in paragraph 9.
Paragraph 9 refers to three chambers which are composed of four members, and one
chamber which consists of twenty-four States, respectively. The practical effect is that
three of the four members of each chamber can block substantive decisions which do not
require consensus. It is to be noted that Russia and the United States are permanently to be
elected as members of the chamber provided for in paragraph 15(a) of section 3.
(e) Review Conference
Article 155 of the LOSC provided procedures relating to the conference for the review of
those provisions of Part XI and the relevant Annexes. In the consultations, however, several
industrialised States, including the United States, cast doubt on the validity of this procedure.
Section 4 of the Implementation Agreement thus provides that Article 155(1), (3) and
(4) of the LOSC shall not apply.
(f ) Evaluation
The Implementation Agreement revised the original regime of the deep seabed under the
LOSC in favour of the industrialised States. However, it must be stressed that the essential
elements governing the Area, namely, the principle of the common heritage of mankind, the
non-appropriation of the Area and its natural resources, the use exclusively for peaceful
purposes, and the benefit of mankind as a whole, remain intact. In this regard, Article
311(6) of the LOSC makes it clear:
States Parties agree that there shall be no amendments to the basic principle relating to the
common heritage of mankind set forth in article 136 and that they shall not be party to any
agreement in derogation thereof.
The Preamble of the Implementation Agreement also reaffirmed that ‘the seabed and ocean
floor and subsoil thereof, beyond the limits of national jurisdiction . . . as well as the resources
of the Area, are the common heritage of mankind’. Moreover, section 4 of the Agreement
affirms that the principles referred to in Article 155(2) of the LOSC shall be maintained. This
provision confirms the essential elements of the principle of the common heritage of mankind.
As explained earlier, the establishment of the Enterprise was postponed. Even so, the direct
exploration and exploitation of natural resources in the Area through the Enterprise was
maintained because this is at the heart of the deep seabed regime. Thus it could well be said
that the ‘parallel system’ remains unchanged. Furthermore, as the Seabed Disputes Chamber
of ITLOS stated, the role of the sponsoring State is to realise the common interest of all States
in the proper implementation of the principle of the common heritage of mankind by
assisting the Authority and by acting on its own with a view to ensuring that entities under
its jurisdiction conform to the rules on deep seabed mining. Overall it may be concluded
that essential elements of the principle of the common heritage of mankind remain intact.
While the commercial exploitation of resources of the Area would seem to be a remote
possibility, the Authority is playing an important role in the elaboration of rules and
regulations with regard to activities in the Area. Furthermore, the Authority is required to
promote and encourage the conduct of marine scientific research in the Area and to
disseminate the results of such research under Article 143 of the LOSC. In relation to this,
in 2006, the Authority established the International Seabed Authority Endowment Fund for
Marine Scientific Research in the Area. Moreover, the role of the Authority is increasingly
important in the environmental protection of the Area. Overall it may be said that the
Authority is already playing a valuable role in the making of relevant rules regulating
seabed activities, environmental protection and scientific research in the Area.