Compensation for the unlawful arrest and detention of the Arctic Sunrise and its crew

Arbitral Tribunal orders the Russian Federation to pay a little under 5,4 million euros to the Netherlands

On 18 July 2017, almost two years after that an Arbitral Tribunal (Tribunal) found that the Russian Federation must compensate the Netherlands following the wrongful arrest of the Arctic Sunrise and its crew, the Tribunal handed down its Award on the issue of compensation.

Background

Before looking at this recent decision in more in depth, the history of the dispute will be laid out. Starting on 18 September 2013, when Greenpeace activists tried to enter the Russian offshore oil platform (the Prirazlomnaya) in order to protest against attempts to begin exploiting oil and gas resources in the Arctic. One day later, the Russian Federation boarded and arrested the Arctic Sunrise and detained its crew. Subsequently, the vessel was brought to the port of Murmansk and the crew was charged with having committed a range of administrative and criminal offences, including acts of terrorism and hooliganism.

The Netherlands initiates Proceedings before an Arbitral Tribunal 

Some two weeks later, on 4 October 2013, The Netherlands, being the flag State of the Arctic Sunrise, started proceedings before an Arbitral Tribunal that was established pursuant to Annex VII of the 1982 Law of the Sea Convention. The Russian Federation refused to participate in the Arbitral proceedings that were initiated by the Netherlands. The position of the Russian Federation was, that this type of dispute was beyond the jurisdiction of an international court or tribunal, due to a declaration it had made at the time of becoming a party to the 1982 Law of the Sea Convention. However, the proceedings went ahead, despite the non-participation of the Russian Federation.

The Netherlands requests Interim Measures from the ITLOS

On 21 October 2013, the Netherlands requested interim measures from the International Tribunal for the Law of the Sea (ITLOS). According to the Netherlands, the Russian Federation had to immediately release the Arctic Sunrise and its crew, after the posting of a bond, upon which they would be free to leave Russian territory as well as any maritime areas under its jurisdiction. ITLOS gave an Order on interim measures on 22 November 2013. Initially, the Russian Federation did not comply with the Order of the ITLOS – eventually, however, the vessel and crew were released in late November 2013. The Russian release of vessel and crew was based on its national laws, the Order of the ITLOS played no decisive role in this, according to the Russian Federation  – as it happened, the effect of the national laws and regulations on which the Russian Federation relied, coincided with what was set out by the ITLOS in its Order containing interim measures.

Arbitral Award on the Merits

One of the main substantive issues on which the Arbitral Tribunal was asked to rule during the merits phase, was the (un)lawfulness of the response of the Russian Federation to the presence of the Arctic Sunrise and its crew. The gist of the argument of the Netherlands was that, as the flag State, it had sole jurisdiction over the ship and the crew on-board during the entirety of this incident (Article 58 of the 1982 Law of the Sea Convention). On 14 August 2015, the Tribunal released its Award on the merits. The Arbitral Tribunal found that the Netherlands had exclusive jurisdiction over the Arctic Sunrise whilst it was operating in the exclusive economic zone of the Russian Federation. This means that the Russian Federation could have only lawfully initiated steps against the vessel that was flagged to the Netherlands and its crew with the latter’s consent. After coming to this conclusion, the Tribunal went on to state that the Netherlands had to be compensated.

Arbitral Award on Compensation

In its recent Award on compensation, the Tribunal set the total amount of compensation owed by the Russian Federation to the Netherlands at a little under 5,4 million euros. This sum was arrived at by adding up the damage that was done to the Arctic Sunrise (EUR 1,695,126.18); compensation related to the unlawful arrest, prosecution and detention of its crew (EUR 600,000); a variety of other damages incurred by the Netherlands, including the failure to release the vessel and crew in a timely manner (EUR 2,461,935.43); costs made by the Netherlands in issuing a bank guarantee (EUR 13,500); and lastly, the Netherlands had to be reimbursed for paying the full amount of deposits required by the Tribunal (EUR 625,000) – meaning that the Russian Federation had to pay the half it owed of the costs that were needed for the proceedings to be initiated. Although the Russian Federation is required under international law to abide by the ruling on compensation, whether it will actually do so remains to be seen.

 

IISTL’s Engagement with Insurance Industry on IUU Fishing

The Institute of International Shipping and Trade Law (IISTL), a research centre within the College of Law and Criminology, continues to expand its operations. On 26 June, it collaborated with marine advocacy group Oceana to organise an afternoon seminar in London on the insurance and regulatory aspects of irregular fishing (known in the trade as fishing that is illegal, unreported and uncontrolled (IUU)). The main purpose of the event was to disseminate as widely as possible the results of a study carried out by three members of the Institute (Barış Soyer, George Leloudas and Dora Nikaki) in collaboration with researchers from University of British Columbia (Canada). In summary, the study found that it had been disconcertingly easy for vessels involved in IUU fishing to get liability insurance in the market. The study recommended an urgent review of underwriting processes and consideration of regulatory changes to put insurers under a legal duty to deny cover to vessels known to be connected with IIU activities.

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Professor Soyer delivering the findings of the project to the delegates

The event, which attracted an impressive 60 delegates, provided an excellent opportunity for those throughout the sector to engage in the debate. Presentations from Lasse Gustavsson (Senior Vice President of Oceana Europe) , Kjetil Saeter (Norwegian Business Daily), David Vajnai (Vice President Marsh Global Marine Practice),  Baris Soyer and Gerorge Leloudas (IISLT) and Dana Miller (a marine scientist with Oceana Europe) were followed by a lively debate led by insurers, brokers and policy-makers. The afternoon ended with a reception generously sponsored by the Waterloo Foundation, which was also the funder of the project. An academic article, which is co-written by Professor B. Soyer, Associate Professor G. Leoudas and Dr D. Miller, detailing main findings of the project is to appear in Transnational Environmental Law later this year.

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Mr David Vajnai (Marsh Global Marine Perspective) debating the matter from the perspective of the insurance brokers
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Dr Leloudas talking about the regulatory aspects of the issue

Admiralty jurisdiction over torts in the UK’s EEZ.

 

Virgin Media Ltd v Joseph Whelan T/A M and J Fish [2017] EWHC 1380 Admlty is an interesting decision on whether the Admiralty Court has jurisdiction in personam over a tort claim arising in the exclusive economic zone of the United Kingdom.  The claimant alleged that its fibre optic telecommunications cable, which ran across the Irish Sea between Dublin and Lytham St Annes, was damaged by a trawler at a location within the exclusive economic zone of the UK, but outside its territorial waters. The issue before the Admiralty Court was whether the courts of England and Wales had jurisdiction under the 2012 Recast Judgments Regulation. Under art.4 of the Regulation the defendant should be sued in the place of its domicile, the Republic of Ireland, subject to any of the additional grounds of jurisdiction provided for in the Regulation. Here the relevant one was contained in art 7(2) which provides that “A person domiciled in a Member State may be sued in another Member State in matters relating to tort, delict or quasi-delict in the courts for the place where the harmful event occurred or may occur”.

The Admiralty Registrar held that the Admiralty Court had no greater rights over a collision with a fixed structure than it would in respect of any collision between ships which would be none unless the action is brought in rem or falls within one of the exceptions in s.22 of the Senior Courts Act 1981. Any extension of jurisdiction would have to be established by reference to an international convention or treaty. The relevant treaty would be the UN Convention on the Law of the Sea (UNCLOS).

Article 60(2) of UNCLOS provides that the coastal state has exclusive jurisdiction over artificial islands, installations and structures within its EEZ, and this formed the basis for Burton J’s decision in Conocophillips (UK) Ltd v Partnereederei MS Jork [2010] EWHC 1214 (Comm) that the Commercial Court had jurisdiction over a negligence claim against a shipowner in connection with a collision between a vessel and an unmanned oil platform 40 miles off the coast of Norfolk. Where there is a collision between a vessel and a platform which is an effective prolongation of the territory of the United Kingdom, the Court would have jurisdiction. The concept of ‘place’ in the predecessor provision to art 7(2) in the 2001 Judgments Regulation was limited to matters addressed in UNCLOS art. 60.

In contrast, art.58(1) provided that all States, and not just the Coastal State had the freedom to lay submarine cables and pipelines within their EEZ, but did not provide for the coastal state to have jurisdiction. Article 56 of UNCLOS gives an English court jurisdiction over matters with respect to fishing, but did not provide that the coastal state may assume jurisdiction with regard to civil disputes arising out of fishing. Accordingly, the Admiralty Court was not a court for the place where the harmful event occurred under art 7(2) and the Court declared it had no jurisdiction over the claim. The appropriate jurisdiction was in the Courts of the Republic of Ireland under art. 4 of the Recast Regulation.

Did Obama Just Permanently Block All Offshore Drilling in US Federal Arctic Waters?

He just might have!

The 1953 Outer Continental Shelf Lands Act (OCSLA) provides federal jurisdiction over the leasing of the outer continental shelf (i.e. submerged land lying seaward of state coastal waters and extending to 3 miles offshore) for the purposes of energy exploration. Interestingly however, under the same act the President of the United States has the right to withdraw from disposition any of the lands of the outer continental shelf which are unleased (see § 1341 – Reservation of lands and rights).

Using this authority, yesterday President Obama, in co-ordination with Canada’s Prime Minister Trudeau (who is enacting parallel actions within Canada, albeit with a five-year time limit), announced the withdrawal of almost 119 million acres of US ocean from future mineral extraction (including areas within the north and mid Atlantic, and the US Arctic Ocean, thereby encompassing the entirety of the US Chukchi Sea and significant portions of the US Beaufort Sea). It is usual for the President to announce a five year plan for the leasing of federal waters (Obama announced his 2017-2022 plan earlier this year), but the enactment of this right to withdraw is rare and might have long-lasting consequences: while it has been used in the past by previous presidents (the most recent being Clinton), most of those enactments were limited to a certain period of time – President Obama’s is not, with the White House having described the ban as indefinite.

Considering the policies of the current President-Elect it’s unlikely that such a move will remain unchallenged once the new regime comes into power. This then begs the question: can the decision be reversed?

The short answer is not anytime soon. The OCSLA might endow the President with the right to withdraw these lands from being leased for offshore exploration and exploitation, but it doesn’t provide him (or subsequent presidents) with any express authority to repeal that decisionIt’s even possible to argue that had Congress intended this right to be reversible, they would have drafted the relevant OCSLA provision accordingly.

It means that if Trump wants to fight this, he’ll have to do it through the courts – this would be unprecedented and therefore the potential outcome is unclear. The ban has been enacted in the past without a time limit (Eisenhower did it back in the 1950s when he permanently blocked drilling off the Florida Keys) but while the ban still remains in place to this day, it’s never had to withstand the test of a battle in court and thus offers no real guidance on establishing whether the withdrawn lands could be un-withdrawn.

Of course, Trump’s other option would be to convince Republican-dominated Congress to amend the OSCLA to expressly allow for such a rescission (thus saving himself the trouble of needing to establish whether the right to un-withdraw existed in the first place), but were Congress to agree, the amendments would take time to enact; meanwhile, the ban would remain in place.

It’s difficult to say definitively whether or not Obama has managed to permanently ban offshore drilling in the US-controlled areas of the Arctic Ocean, but it’s going to be a while before anyone can answer that question with absolute certainty, let alone actually try to reverse his decision.

As a side note (considering this is a maritime law blog) it’s also worth noting that in the White House’s announcement yesterday it was stated that Canada and the US are launching the first processes ever to identify sustainable shipping lanes throughout their connected Arctic waters. I’ll be honest, I don’t know what those processes are or could entail, but I suppose it’s nice to see that they’re trying…

IX European Colloquium of Maritime Law Research 2016

This is a free conference taking place in Bilbao, Spain on 14-15 September, at the Bizkaia Aretoa. The theme is maritime liens, mortgages and forced sales. Details here. A large number of excellent speakers, including Profs Erik Røsæg and Paul Myburgh. Two IISTL stalwarts will be speaking, Prof Andrew Tettenborn and Prof Rhidian Thomas.  For information contact Olga Fotinopoulos, Olga.fotinopulos@ehu.eus, Tel + 00 34 945 01 3417.

The Award of the Arbitral Tribunal in the South China Sea Arbitration (The Republic of the Philippines v. The People’s Republic of China): the legitimacy of China’s position takes a heavy (at least symbolic) blow

On 12 July 2016, the Arbitral Tribunal, established pursuant to Annex VII of the 1982 Law of the Sea Convention (LOSC or LOS Convention), delivered its award in the South China Sea Arbitration (The Republic of the Philippines v. The People’s Republic of China). In 2013, the proceedings were unilaterally initiated by the Philippines concerning the relevant disputes in the South China Sea between the Philippines and China. Having declared under Article 298(1)(a) LOSC its non-acceptance of arbitration with respect to maritime boundary disputes or those involving historic titles, China has refused to participate in the proceedings. Irrespective of the refusal of China to participate – which, in hindsight, seems to have not worked to its advantage – the Tribunal found in 2015 that it had jurisdiction to proceed to deal with the matter on the merits.

A critical aspect for the Tribunal to assess was whether the declaration made by China pursuant to Article 298(1)(a)(i) LOSC would prohibit it from considering the case on the merits, because the submissions of the Philippines were concerned with categories of disputes that China has excluded from the jurisdictional reach of an international court or tribunal: those concerning a historic title or maritime delimitation. The Tribunal concluded that the matters brought to its attention did not bear on the issue of delimitation (para. 214), since disputes over whether certain maritime features have entitlements to maritime zones are separate from the issue of delimitation, which is essentially concerned with dividing overlapping entitlements that have been established. On the matter of a historic title, the Tribunal went to analyse the meaning of ‘historic title’. In this context, it was deemed critical that reference was made to ‘title’, which means in legal jargon the complete ownership over something. The word ‘sovereignty’ only surfaces in the LOSC in connection with the territorial sea, where the coastal State has sovereignty up to a point that is 12 nautical miles (nm) removed from its coast. Given the Chinese reliance on that it has certain historic rights over the South China Sea, its claim was interpreted as not being concerned with the claiming of a historic title (paras. 225-226, 229).

There are a number of critical substantial findings of the Tribunal to be found in the award, some aspects which may have more wide-reaching implications. The following four findings will be briefly discussed in this blog post:

  1. One of the main findings of the Tribunal is that it dismissed the validity under international law of the Chinese ‘nine-dash line’. The specifics of the nine-dash line have never been really elaborated on by China, and have given risen to different interpretations (see e.g. here, here, here and here). One interpretation is that China has claimed to have some sort of a ‘special’ historic right over the relevant areas of the South China Sea that are within the nine-dash line, by virtue of a long and consistent practice of where some measure of authority was continuously exercised. A second interpretation is that the maritime features located within the nine-dash line are all under the sovereignty of China and, at least some of them, could project maritime zones up to at least the 200 nm limit. According to the Tribunal, the extent of maritime entitlements of States in the South China Sea are regulated by the LOSC, and the nine-dash claim of China, as far as it goes beyond the limits imposed by the LOSC, is superseded by the LOSC. Although the Tribunal found the alleged Chinese historic rights to be fully incompatible with the LOS Convention, basically, the rights China claimed to have are in fact assigned to other coastal States in the area under the concept of the Exclusive Economic Zone (EEZ). However, the door was left open for that under certain circumstances – and following, amongst others, the judgment in the Chagos Marine Protected Area Arbitration (Mauritius v. United Kingdom) – a historic title and right might be brought under the regime set out in the LOS Convention (para. 238).
  2. Another critical finding was that none of the maritime features China claims to have sovereignty over, including those that are part of the hotly contested Spratly Islands, have entitlements to an EEZ or continental shelf. Therefore, according to the Tribunal, there was no overlap of the entitlements of China and the Philippines to the same maritime space, given that China has no territory from which it is entitled to claim maritime zones up to at least 200 nm, which would have otherwise created an overlap with the entitlements and claims of the Philippines. As regards the hotly contested Spratly Islands, the reasoning of the Tribunal suggests that these have at best an entitlement to a territorial sea. According to the Tribunal, none of the disputed maritime features that are part of the Spratly Islands meet, without human assistance, the conditions set out under Article 121(3) of the LOSC, that is that they can sustain human habitation or economic life of their own. The threshold concerning when isolated maritime features would be entitled to an EEZ and continental shelf seems to have been set high by the Tribunal. Its approach as to how to define a ‘rock’ within the meaning of Article 121(3) of the LOSC may have more widespread consequences, and may raise some concerns on the part of other States that are faced with similar issues.
  3. Pursuant to the LOS Convention, different types of maritime features have different entitlements to generate maritime zones, ranging from those that can claim zones up to the 200 nm mark to those that due to their characteristics have no entitlements to maritime zones at all. Falling into this latter group are so called low-tide elevations. These can, assuming they are located in close proximity to the coasts of States, be relevant in the measuring of the baseline, but have no entitlements to maritime zones of their own. In contrast, islands are principally treated similarly to land and have entitlements to a territorial sea, EEZ and continental shelf. Rocks, on the other hand, may only be accorded part of the treatment that islands receive: that is, whenever they fall within the paragraph 3 exception of Article 121 LOSC, that they are unable to sustain human habitation or have an economic life of their own, the most they can generate in terms of maritime zones is a territorial sea. For example, Scarborough Shoal, which has been the venue for various incidents between China and the Philippines, was classified by the Tribunal as a rock that is unable to meet the two conditions set out in Article 121(3) of the LOS Convention. Further, the Tribunal found that Mischief Reef is a low-tide elevation, which is thus unable to generate any maritime zones of its own. As a result of this classification, and given that low-tide elevations cannot be appropriated by States, there could be no sovereignty dispute over Mischief Reef, and more generally between China and the Philippines. The Tribunal went on to state that Mischief Reef is firmly placed in what can be regarded to be the EEZ of the Philippines. Therefore, amongst others, fishing activities that have been performed by Chinese fishermen at Mischief Reef infringed on the sovereign rights the Philippines has over the EEZ, pursuant to the LOS Convention. This same reef was also used by China to construct a large artificial island on top, whilst proceedings before the Tribunal were already set in motion. Given that this happened without the consent of the Philippines, which would have been required because Mischief Reef is a low-tide elevation located within its EEZ and continental shelf, China infringed on the sovereign rights that the Philippines has in this regard.
  4. More generally, and in addition to the actions undertaken concerning Mischief Reef, the land reclamation works and construction of artificial islands that China conducted on a broader scale, and in relation to a number of other maritime features (e.g. Cuarteron Reef, Fiery Cross Reef) in the South China Sea, were heavily condemned by the Tribunal. The Tribunal found that China aggravated the existing dispute between China and the Philippines through the reclamation works it conducted, whilst the dispute was brought to the consideration of the Tribunal. It also found that the Chinese actions aggravated the existing dispute between the parties over the Spratly Islands – however, it needs to be noted that this dispute figures, besides China and the Philippines, four additional players (i.e. Taiwan, Malaysia, Vietnam and Brunei). The Chinese reclamation works and building of artificial islands were also condemned for not being in line with the obligations that States have under the LOSC, particularly under Article 192 and 194(5) LOSC, in relation to the protection of the marine environment.

Directly after the award on the merits was handed down, China sought to brush over the validity of the award as being farcical in the extreme. In a further – undeniably weak – attempt to challenge the value of the award, a government sanctioned press release resorted to attacking a number of the individual members of the Arbitral Tribunal for exhibiting a perceived lack of consistency between the decision that the Tribunal arrived at and their earlier pronounced views in literature. In support of its position that the Arbitral Tribunal wrongly found to have jurisdiction over the dispute, in its view essentially by misconstruing what lies at the core of the dispute, China in this same press release cited heavily from an article previously published by Talmon, who expressed his misgivings over the Tribunal assuming jurisdiction over the dispute.

Given that the award was dismissed with a significant measure of exaggeration by China, and that it already indicated earlier, and subsequently reinforced its intentions to not follow the final outcome of the award, the question remains as to what effect the award might have on the (sometimes volatile) situation in the South China Sea. The position that China finds itself in is not an easy one. However, contrary to the ad hominin arguments aimed against individual members of the Tribunal, and the perceived biased composition it was argued to have according to the Chinese side, there is no doubt that the Tribunal was impartial and constructed in conformity with the LOS Convention – which not unimportantly, China is a party to. Although the award of the Tribunal is not enforceable, it carries substantial (diplomatic) weight. The fact that its legal position concerning the South China Sea was overwhelming rejected by the Tribunal will necessitate a rethinking on the part of China of its legal arguments, if it wants to pursue an amicable solution through diplomacy. Entering into negotiations with other claimant States bordering the South China Sea, on the basis of a position that has been essentially rejected by an independent Tribunal that has been constructed in accordance with the LOSC, is unlikely to bear much fruit.

Youri van Logchem involved in BIICL Law of the Sea Project

Mr Youri van Logchem was invited to contribute as an external expert to a research project of the British Institute of International and Comparative law (BIICL) titled ‘Law of the Sea – Rights and Duties of States in the Undelimited Maritime Area’ (http://www.biicl.org/undelimited-maritime-area). The project seeks to investigate what the rights and obligations of States are in areas that remain undelimited by way of maritime boundary, with a focus on those areas that, in addition, are not governed by provisional arrangements. Emphasis is placed particularly on the contents and implications of the obligation included in paragraph 3 of Articles 74 and 83 of the 1982 UN Convention on the Law of the Sea, calling on States having overlapping claims and entitlements over the exclusive economic zone and continental shelf to abstain from engaging in unilateral acts that hamper or jeopardise final delimitation.

The Institute is keen to enhance its presence in the field of law of the sea so this initiative is very timely and will enable us to make a positive contribution.