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Who Owns the Oil that Traverses a Boundary on the Continental Shelf in an Enclosed Sea? Seeking Answers in Natural Law through Grotius and Selden

  • MELISSA H. LOJA
Abstract

The principle of sovereign rights under UNCLOS countenances competition among littoral states for ownership of a common oil deposit through the unilateral exploitation of their continental shelf. This leads to conflict, wastage, and resource sterilization. However, rather than apply the principle of sovereign rights, states seem to turn to natural law principles as a more reasonable regulation of their activities on the continental shelf. Two sources of natural law principles are relevant. One source consists of a priori principles of sociableness and necessity which prescribe that, for their own preservation, states ought to act pursuant to the common good. These principles underlie energy security policies which espouse interdependence. Another source of natural law principles are international agreements and national laws in which states temper their sovereign rights and interests and recognize the co-existence of the rights and interests of other states in a common deposit. These practices constitute a posteriori intervenient or secondary law of nations, which appears similar to customary law. Adherence is not dictated by conviction that these principles are obligatory. Rather, adherence seems to be based on discernment that, while permissible under the principle of sovereign rights, unilateral appropriation is impermissible under natural law.

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1 See Summary of Records of the Eighth Session, 1956, YILC, Vol. I, at 144.

2 Summary of Records of the Second Session, 1950, YILC, Vol. II, at 384.

4 Summary of Records of the First Session, 1949, YILC, at 237; J. Francois, Report on the High Seas, UN Doc. A/CN.4/17 (1950), at 2–3. See also, H. Kelsen, ‘On the Issue of the Continental Shelf: Two Legal Opinions’, (1986) Austrian Journal of Public and International Law Supplementum.

5 See the statement of George Scelle in UN Doc. A/CN.4/L.51 (1952), the English text of which was incorporated as Footnote 16 in Summary of Records of the Seventh Session, 1955, YILC, Vol. I, at 7–8.

6 1956, YILC, Vol. II, at 264.

8 Ibid., at 297.

12 For convenience, the term ‘oil’ is used to refer to offshore hydrocarbon resources beyond the territorial sea. The term common oil deposit or resource is used to refer also to shared, transboundary, cross-border, straddling, or migratory offshore hydrocarbon resources or deposits.

13 Secretariat, Memorandum on the Regime of the High Sea, UN Doc. A/CN.4/32 (1950), at 107–8.

14 C. Yamada, Fourth Report on Shared Natural Resources: Transboundary Groundwaters, UN Doc. A/CN.4/580 (2007), at 3–4.

15 See Guyana/Suriname, Award of the Arbitral Tribunal, 17 September 2007, 1–167, para. 470, at 156. Note that the fugacious nature of oil was not taken into account.

16 See T. Daintith, Finders Keepers? How the Law of Capture Shaped the World Oil Industry (2010), 402.

17 See, generally, Orakhelashvili, A., ‘Natural Law and Customary Law’, (2008) 68 Heidelberg Journal of International Law 69110.

18 H. Grotius, Commentary on the Law of Prize and Booty, trans. G. L. Williams (1950).

19 H. Grotius, De Jure Belli ac Pacis Libri Tres, trans. F. W. Kelsey (1925).

20 H. Grotius, Defense of Chapter V of the Mare Liberum, in H. Grotius, The Free Seas, trans. R. Hakluyt (2004).

21 J. Selden, Of the Dominion or Ownership of the Sea: Two Books, trans. M. Nedham (1652).

22 Art. 83, UNCLOS.

23 Art. 78.

24 499 UNTS 311.

25 1833 UNTS 897.

26 Art. 80, UNCLOS.

27 Art. 82.

28 Art. 85.

29 C. Hurst, ‘Whose is the Bed of the Sea?’, (1923–24) 4 BYBIL 34, at 36; Hurst, C., ‘The Continental Shelf’, (1948) 34 Transactions of the Grotius Society 153, at 166–7).

30 Art. 2, UNCLOS.

32 Bowett, D., ‘Jurisdiction: Changing Patterns of Authority over Activities and Resources’, (1982) 53 BYBIL 1, at 6–7.

33 See Gidel, G., ‘The Continental Shelf’, trans. Goldie, L. F. E., (1954–56) 3 U.W. Austl. Ann. L. Rev. 87; Oda, S., ‘A Reconsideration of the Continental Shelf Doctrine,’ (1957–58) 32 Tul. L. Rev. 21.

34 Waldock, C., ‘The Legal Basis of Claims to the Continental Shelf’, (1950) 36 Transactions of the Grotius Society 115; Trigg, R., ‘National Sovereignty over Maritime Resources’, (1950) 99 University of Pennsylvania Law Review 1.

35 See Waldock, ibid., at 140–3.

36 See Briggs, H., ‘Jurisdiction Over the Sea Bed and Subsoil Beyond Territorial Waters’, (1951) 45 AJIL 338, at 339–41; Gutteridge, J., ‘The 1958 Geneva Convention on the Continental Shelf’, (1959) 35 BYBIL 102, at 105.

37 R. Higgins, Problems and Process: International Law and How We Use It (1994), 137–8.

40 See Hurst, :‘The Continental Shelf’, supra note 29, at 162.

41 See Gidel, supra note 33, at 97.

42 See Hurst, ‘The Continental Shelf’, supra note 29, at 161.

43 Westmoreland and Cambria Natural Gas Co. v. De Witt, 130 Pa. 235 (1889). The issue was whether the first lessee fulfilled the requirement of possession to be entitled to injunction against drilling by the second lessee.

44 See Campbell, N., ‘Principles of Mineral Ownership in the Civil Law and Common Law Systems’, (1956–57) 31 Tul. L. Rev. 303.

45 Westmoreland and Cambria Natural Gas Co. v. De Witt. In jurisdictions that adhere to the Regalian Doctrine, like the Philippines, the state owns all mineral resources, but it may award lease rights to private persons.

46 Ibid., at 249–50.

48 Kelly vs. Ohio Oil Co., 39 LRA 765 (1897).

51 Kramer, B. and Anderson, O., ‘The Rule of Capture: An Oil and Gas Perspective’, (2005) 35 Environmental Law 899954, discusses state regulations which recognize the rule of capture as the prevailing rule on ownership of gas, but adopt the principle of correlative rights to restrict a co-owner's method of capture and prohibit deliberate wastage for the purpose of injuring other co-owners. In other words, the principle of correlative rights is corollary to the rule of capture (953).

52 See Guyana/Suriname, 156.

53 See Hurst, ‘The Continental Shelf’, supra note 29, at 162.

54 UN Doc. A/CN.4/32, supra note 13, and UN Doc. A/2456 (1953), at 216–217.

55 There are authors who erroneously attribute the formulation of the principle of unity of the deposit to Gidel (see Separate Opinion of Judge Jessup, North Sea Continental Shelf Judgment, [1969] ICJ Rep. 1, at 68; Comment of De Azcarraga in J. Francois, Fourth Report on the Regime of the High Seas, UN Doc. A/CN.4/60 (1953), 74; Onorato, W., ‘Apportionment of an International Common Petroleum Deposit’, (1968) 17 ICLQ 85102, 86; Ong, D., ‘Joint Development of Common Offshore Oil and Gas Deposits: “Mere” State Practice or Customary International Law?’, (1999) 93 AJIL 771804, 778). The official copy of the 1950 Memorandum is published in French in 1950, YILC, Vol. II, while the copy used in this article is an English mimeograph obtained from the Dag Hammarskjöld Library. The relevant pages of the French and English copies of the memorandum do not cite Gidel.

56 UN Doc. A/CN.4/32, supra note 13, at 108.

57 Ibid., at 109.

58 Optional Protocol of Signature Concerning the Compulsory Settlement of Disputes, 450 UNTS 169. See Summary Records of Meetings and Annexes, UN Doc. A/CONF.13/38 (1958), United Nations Conference on the Law of the Sea Official Records, Vol. II, 55, 90 and 92. See also Summary Records of Meetings and Annexes, UN Doc. A/CONF.13/42 (1958), United Nations Conference on the Law of the Sea Official Records Volume VI: Fourth Committee, at 95, and Volume II, Summary Records of Meetings of the First, Second, and Third Committees, Second Session, at 152, 289 and 295. The discussions were in reference to the rights and obligations of states that border a narrow continental shelf, such as those in enclosed or marginal seas.

59 See Report of the International Law Commission Sixty-second session, UN Doc. A/65/10, (2010) at 342–343.

60 See Shared Natural Resources: Comments and Observations Received from Governments on Oil and Gas, UN Doc. A/CN.4/607 (2009); Shared Natural Resources: Comments and Observations received from Governments, UN Doc. A/CN.4/633 (2010).

61 Oral report of the Chairman of the Working Group on Shared Natural Resources in UN Doc. A/CN.4/SR.3069 (2010), 12–13; Topical Summary of the Discussion held in the Sixth Committee of the General Assembly during its Sixty-Fifth Session, Prepared by the Secretariat, UN Doc. A/CN.4/638 (2011), 26.

62 See UN Doc. A/CN.4/638, ibid.

63 Ibid., at 27.

65 Ibid., 25.

66 Lauterpacht, H., ‘Codification and Development of International Law’, (1955) 49 AJIL 1643, 27.

67 See C. Robson, ‘Transboundary Petroleum Reservoir: Legal Issues and Solutions’ and R. Bundy, ‘Natural Resource Development (Oil and Gas) and Boundary Disputes,’ in G. Blake et al., The Peaceful Management of Transboundary Resources (1995).

68 UN Doc. A/CN.4/638, supra note 61, at 27.

69 Grotius, De Jure Belli, supra note 19, at 15, 19–20.

70 Ibid., at 10–11. See also H. Grotius, Freedom of the Seas or the Right Which Belongs to the Dutch to Take Part in the East Indian Trade, trans. J. Scott (1916), 1–2.

71 See Grotius, Freedom of the Seas, ibid. at 26.

72 Grotius, De Jure Praedae Commentaries, supra note 18, at 7; Grotius, De Jure Belli, supra note 19, at 11–20.

73 Grotius, De Jure Belli, supra note 19, 15–17.

75 God and Nature are used interchangeably (see Grotius, De Jure Praedae, 217)

76 Grotius, De Jure Praedae Commentaries, supra note 18, at 9.

77 Ibid., at 11–12.

78 Grotius, De Jure Belli, supra note 19, 13.

79 Ibid., at 12.

80 Ibid., at 13.

81 Grotius, De Jure Praedae Commentaries, supra note 18, at 12.

82 Grotius notes that the law of nature is often called the law of nations because there ‘is hardly any law common to all nations’ other than natural law. However, while the law of nations is that which ‘has received its obligatory force from the will of all nations or of many nations’, there can be a law of nation in one part of the world which is not observed elsewhere. (See Grotius, De Jure Belli, supra note 19, at 44.) The first type of law of nations is jus gentium primarium, which is a ‘body of moral precepts imposed by natural reason upon all peoples’, while the second type of law of nations is jus gentium secundarium, which is a volitional, positive, and consensual law of nations consisting of ‘rules commonly accepted by the members of the international community for the good of all’. (Ibid., at 12.) The last type of law of nation is akin to Selden's intervenient common law of nations.

83 Ibid., at 11.

84 Ibid., citing the Stoics.

85 Ibid., at 12.

86 Ibid., citing Seneca.

87 Grotius, De Jure Praedae Commentaries, supra note 18, at 10–11

88 Ibid., at 217–18.

89 Grotius, De Jure Belli, supra note 19, at 17.

90 Ibid., at 15.

92 Grotius, De Jure Praedae Commentaries, supra note 18, at 26.

93 Grotius, De Jure Belli, supra note 19, at 34.

95 Grotius, Defence, supra note 20, at 85 and 91.

97 Ibid., at 87.

98 Ibid., at 12 and 87.

99 Ibid., at 86. See also Grotius, De Jure Belli, supra note 19, at 192–3.

100 2 The Digest of Justinian, at 385.

101 Ibid.

102 Ibid., at 386.

103 Ibid.

104 Ibid.

105 Ibid.

106 Selden, Of the Dominion or Ownership of the Sea, supra note 21, Ibid., at 12–13.

107 Ibid., at 12.

108 Ibid.

109 Ibid., at 11.

110 Ibid.

111 Ibid., at 13.

112 Ibid.

113 Ibid.

114 Ibid.,

115 Ibid., at 15.

116 Ibid.

117 Ibid.

118 Ibid.

119 Ibid.

120 Ibid.

121 Ibid.

122 Ibid., at 43.

123 Ibid., at 42.

124 Ibid., at 25–8.

125 Ibid., at 42–134. It is interesting that most of the practices examined by Selden are those of nations surrounding enclosed and semi-enclosed.

126 Grotius, De Jure Praedae Commentaries, supra note 18, at 26–7.

127 Ibid.

128 Ibid.

129 Ibid. Grotius does not place accepted customs under the category of ‘law’ (ibid.).

130 Ibid., at 27.

131 Ibid.

132 North Sea Continental Shelf Judgment, [1969] ICJ Rep. 1, at 77.

133 Grotius, De Jure Praedae Commentaries, supra note 18, at 26.

134 See Robson, supra note 67, at 5.

135 M. W. Mouton, The Continental Shelf (1952), 421.

136 See UN Doc. A/CN.4/32, supra note 13, at 108.

137 Continental Shelf (Libyan Arab Jarnahiriya/Malta), Judgment, [1985] ICJ Rep. 13, at para. 50.

138 See Robson, supra note 67, at 11–3.

139 “B. Barton, Energy Security: Managing Risks in a Dynamic Legal and Regulatory Environment (2004), at 5. The full definition reads: Energy security is ‘a condition in which a nation and all, or most of its citizens and businesses have access to sufficient energy resources at reasonable prices for the foreseeable future free from serious risk of major disruption of service’.

140 J. Prantl, Cooperating in the Energy Security Regime Complex, 2011 Asia Security Initiative Policy Series No. 18, at 3–4.

141 See D. Moran and J. Russel, ‘Introduction: the Militarization of Energy Security’, in D. Moran and J. Russel, Energy Security and Global Politics: The Militarization of Resource Management (2009).

142 Ciuta, F., ‘Conceptual Notes on Energy Security: Total or Banal Security?’, (2010) 41 Security Dialogue, 128. However, there are authors who view energy security as energy independence but recognize that this must take place in an interdependent world. Achieving energy security is about the optimal balancing and management of the interdependent system (see Z. Daojoning. ‘Energy Interdependence’, (2006) China Security, at 12–14).

143 See N. Owen and C. Schofield, ‘Disputed South China Sea Hydrocarbons in Perspective’, (2012) Marine Policy, at 815–18.

144 B. Barton, C. Redgwell, A. Ronne, and D. Zillman, ‘Energy Security in the 20th Century’, in B. Barton, Energy Security: Managing Risks in a Dynamic Legal and Regulatory Environment, supra note 139, at 458. at 458–9. See also Bahgat, G., ‘Europe's Energy Security: Challenges and Opportunities’, (2006) 82 International Affairs 961, at 972–75.

145 See Goldie, L., ‘Equity and the International Management of Transboundary Resources’, (1985) 25 Transboundary Resource Management, 685 and 687.

146 E. Smith, Materials on International Petroleum Transactions (1993), 68.

147 See Robson, supra note 67.

148 P. Odell, ‘Hydrocarbons: The Pace Quickens,’ in Blake et al., Boundaries and Energy: Problems and Prospects (1998), at 33–4.

149 Ibid., at 38.

150 J. Woodliffe, ‘International Unitisation of an Offshore Gas Field’, (1977) 26 ICLQ 338.

151 See Odell, supra note 149, at 35–9.

152 Ibid.

153 See Supplementary Agreement to the Treaty Concerning Arrangements for Co-operation in the Ems Estuary (509 UNTS 140); Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of the Netherlands relating to the Exploitation of Single Geological Structures Extending Across the Dividing Line on the Continental Shelf under the North Sea (595 UNTS 105).

154 See G. Blake and R. Swarbrick, ‘Hydrocarbons and International Boundaries: A Global Overview’, in Blake, supra note 148, at 11.

155 I. Shihata and W. Onorato, ‘Joint Development of International Petroleum Resources in Undefined and Disputed Areas’, in G. Blake et al., supra note 148, at 433–5; P. Cameron, ‘The Rules of Engagement: Developing Cross-Border Petroleum Deposits in the North Sea and the Caribbean’, (2006) 55 ICLQ, 2.

156 Ibid.

157 H. Fox, Joint Development of Offshore Oil and Gas, Vol. I (1989), 3–4. There is a pending agreement between the United States and Mexico. See Vaca, J., ‘The New Legal Framework for Oil and Gas Activities near the Maritime Boundaries between Mexico and the US: Comments on the Agreement between the United Mexican States and the United States of America concerning Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico’, (2011) 5 Journal of World Energy Law and Business, 235.

158 Shihata and Onorato, supra note 155, at 435; M. Klare, Resource Wars (2001), 52.

159 In the Persian/Arabian Gulf, these are: Agreement concerning Delimitation of the Continental Shelf between Iran and Bahrain, Art. 2, see Oda, S. (ed.), The International Law of the Ocean Development: Basic Documents, Vol. 2. (1975), 63; Agreement between the Kingdom of Saudi Arabia and the Government of Bahrain, Art. 2, 1733 UNTS 3; Agreement concerning Delimitation of the Continental Shelf between Iran and Oman, Art. 2, Registration No. 14085; Agreement concerning the Boundary Line Dividing the Continental Shelf between Iran and Qatar, Art. 2, 787 UNTS 165; Agreement concerning the Sovereignty over the islands of Al-’Arabiyah and Farsi and the Delimitation of the Boundary Line Separating Submarine areas between the Kingdom of Saudi Arabia and Iran, Art. 4, 696 UNTS 189; Offshore Boundary Agreement between Iran and Dubai, Art. 2, Limits in the Sea No. 63; Agreement between the Kingdom of Saudi Arabia and the State of Kuwait concerning the Submerged Area Adjacent to the Divided Zone, Annex 1, Registration No. 37359; Muscat Agreement on the Delimitation of the Maritime Boundary between the Sultanate of Oman and the Islamic Republic of Pakistan (Gulf of Oman), Art. 6, 2183 UNTS 3; Agreement between Qatar and Abu Dhabi on the Settlement of Maritime Boundaries and Ownership of islands, para. 5, 2402 UNTS 49.

160 Ibid.

161 Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of Belgium relating to the Delimitation of the Continental Shelf between the Two Countries, 2494 UNTS 83; Treaty between the Kingdom of Denmark and the Federal Republic of Germany concerning the Delimitation of the Continental Shelf under the North Sea, 857 UNTS 109; Agreement between Denmark and Norway relating to the Delimitation of the Continental Shelf, 634 UNTS 71; Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of Denmark relating to the Delimitation of the Continental Shelf between the Two Countries, 592 UNTS 207; Treaty between the Kingdom of the Netherlands and the Federal Republic of Germany concerning the Delimitation of the Continental Shelf under the North Sea, 857 UNTS 131; Agreement between the United Kingdom of Great Britain and Northern Ireland and the Federal Republic of Germany relating to the Delimitation of the Continental Shelf under the North Sea between the two Countries, 880 UNTS 185; Agreement between the Government of the Kingdom of the Netherlands and the Government of the United Kingdom of Great Britain and Northern Ireland relating to the Exploitation of Single Geological Structures extending across the Dividing Line on the Continental Shelf under the North Sea, 595 UNTS 105; Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of Norway relating to the Delimitation of the Continental Shelf between the Two Countries, 551 UNTS 213; Agreement on the Continental Shelf between Iceland and Norway, International Legal Materials, Vol. 21, 122.

162 Agreement between the Commonwealth of the Bahamas and the Republic of Cuba for the Delimiting Line between their Maritime Zones, Registration No. I-49590; Exclusive Economic Zone Co-operation Treaty between the State of Barbados and the Republic of Guyana concerning the Exercise of Jurisdiction in their Exclusive Economic Zones in the Area of Bilateral Overlap within each of their Outer Limits and beyond the Outer Limits of the Exclusive Economic Zones of other States, 2277 UNTS 201; Agreement between the Government of the Jamaica and the Government of the Republic of Cuba on the Delimitation of the Maritime Boundary between the Two States, 34 Law of the Sea Bulletin 64–8; Treaty between the Republic of Trinidad and Tobago and the Republic of Venezuela on the Delimitation of Marine and Submarine Areas, 1654 UNTS 293; Boundary Delimitation Treaty between the Republic of Venezuela and the Kingdom of the Netherlands, 1140 UNTS 311; and Maritime Delimitation Treaty between Jamaica and the Republic of Colombia, 1776 UNTS 17.

163 J. Hilyard, International Petroleum Encyclopedia (2010), Table 1. World Reserves and Production; See also Table 11.1, (April 2013) US Energy Information Administration/Monthly Energy Review.

164 The Mexican Senate approved the agreement on 12 April 2012. See Vaca, J., ‘The New Legal Framework for Oil and Gas Activities near the Maritime Boundaries between Mexico and the US: Comments on the Agreement between the United Mexican States and the United States of America concerning Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico’, (2011) 5 Journal of World Energy Law and Business 235, 47. The agreement entered into force on 18 July 2014.

165 See C. Hagerty and J. Uzel, ‘Proposed US–Mexico Transboundary Hydrocarbons Agreement: Background and Issues for Congress’, 2013 Congressional Research Service.

166 Ibid. See also D. Ong, supra note 55; Miyoshi, M., ‘The Basic Concept of Joint Development of Hydrocarbon Resources on the Continental Shelf’, (1988) 3 International Journal of Estuarine and Littoral Law, 1.

167 See Cameron, supra note 155, at 561.

168 Adopted under Decree No. 33/2013/ND-CP dated 22 April 2013.

169 Model Petroleum Production Sharing Contract attached to Decree No. 139–2005-ND-CP, 11 November 2005.

* Melissa H. Loja is a PhD candidate at the Faculty of Law, University of Hong Kong. She obtained her LL M from the same university under a Sohmen Scholarship in Human Rights. She received the 2012 Anna Wu Prize [].

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