COMMISSION OF THE EUROPEAN COMMUNITIES 
C0MC94) 305 final 
Brussels, 13.07.1994 
94/0182 (ACC) 
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
on the results of the 
informal consultations held by the UN Secretary General 
to seek universal acceptance of the 1982 UN Convention 
on the Law of the Sea; 
Proposal for a 
COUNCIL DECISION 94/0182 (ACC) 
concerning the signing by the European Community of the Agreement relating to the 
implementation of Part XI of the 1982 United Nations Convention on the Law of the 
Sea and the provisional implementation by the Community of that Agreement and of 
Part XI of the Convention 
(presented by the Commission) 
I. INTRODUCTION 
The Convention, which has so far been ratified by 61 states, all of them developing countries 
except Iceland, former Yugoslavia and Malta, will enter into force on 16 November, one year 
after the sixtieth ratification. 
The industrialized nations have not ratified (some, notably Germany, the United Kingdom and 
the United States, have not even signed the Convention) because they consider that Part XI 
establishes dirigiste, bureaucratic and extremely costly arrangements for deep seabed mining. 
The developing countries' view, on the other hand, is that Part XI paves the way to a new world 
economic order. 
The only reasons for the developing countries' recognition of a need to amend the deep seabed 
mining arrangements in order to make the Convention universally acceptable are the political and 
economic changes of recent years and the financial burdens which they would otherwise have 
had to shoulder without the industrialized world. 
Mr Pérez de Cuéllar, the UN Secretary-General, accordingly took the initiative in 1990 of calling 
together a number of the states with an interest in the matter to determine which aspects of 
Part XI were causing the industrialized nations the most problems and to seek compromise 
solutions. 
Ths second phase of the consultations was open to all the countries with an interest in the matter 
and to the Community. 
This ended on 3 June of this year with the production of a draft Resolution and a draft Agreement 
on the implementation of Part XI. 
The vast majority of the delegations in attendance expressed their satisfaction, with only the 
Russian Federation differing in its view on the grounds that a number of its proposals had been 
rejected by the delegations of the Group of 77. 
The draft Resolution and Agreement will be referred for adoption to the 48th UN General 
Assembly, which will be reconvened from 27 to 29 July for the purpose. The Agreement will be 
open for signing immediately after adoption. 
Under the terms of the Convention, signed by the Community on 7 December 1984, the 
Community cannot sign the agreement without a majority of the Member States first having 
signed it themselves (see Article 3 of the Agreement, Article 305(1 )(f) of the Convention and 
Article 2 of Annex IX to the Convention). 
\-
II. EVALUATION OF THE DRAFT RESOLUTION AND DRAFT AGREEMENT (1) 
1. Introduction 
1.1. When signing the United Nations Law of the Sea Convention, on December 7, 1984, the 
European Community made the following statement: 
On signing the United Nations Convention on the Law of the Sea, the European 
Economic Community declares that it considers that the Convention constitutes, within 
the framework of the Law of the Sea, a major effort in the codification and progressive 
development of international law in the fields to which its declaration pursuant to Article 
2 of Annex IX of the Convention refers. The Community would like to express the hope 
that this development will become a useful means for promoting co-operation and stable 
relations between all countries in these fields. 
The Community, however, considers that significant provisions of Part XI of the 
Convention are not conducive to the development of the activities to which that Part 
refers in view of the fact that several Member States of the Community have already 
expressed their position that this Part contains considerable deficiencies and flaws 
which require rectification. The Community recognises the importance of the work 
which remains to be done and hopes that conditions for the implementation of a sea 
bed mining regime, which are generally acceptable and which are therefore likely to 
promote activities in the international sea bed area can be agreed. The Community, 
within the limits of its competencies, will play a full part in contributing to the task of 
finding satisfactory solutions. 
A separate decision on formal confirmation will have to be taken at a later stage. It will 
be taken in the light of the results of the efforts made to attain a universally acceptable 
Convention. 
1.2. Other industrialised countries, in particular those interested in the exploitation of the sea­
bed, made similar declarations. 
1.3. The Preparatory Commission for the International Sea-Bed Authority and the 
International Tribunal of the Law of the Sea has proved to be the adequate framework 
for the elaboration of rules, regulations and procedures, as long as these were of a 
technical and "neutral" nature, but not for rectifying the "deficiencies and flaws". 
(1) Drawn up by the Commission and approved in New York on 2 June 1994 by the members of the 
working party on the Law of the Sea in their personal capacities. 
2 
1.4. At the end of the eighties, it became apparent that the Convention had been ratified 
almost exclusively by developing States (with the exception of Iceland and Yugoslavia) 
and that the industrialised countries in East and West would not ratify it as long as the 
sea-bed mining regime remained unchanged. A number of important political and 
economic changes affecting international relations in general that had taken place since 
the adoption of the Convention led the United Nations Secretary General to make a new 
effort in order to achieve the universal acceptability of the latter. 
1.5. He invited a limited number of developing and industrialised States with a particular 
interest to "Informal Consultations" where eight elements of Part XI were identified as 
representing the major reasons for which industrialised States have not ratified or acceded 
to, the Convention: 
Costs to States Parties 
Enterprise 
Decision making procedures of the Authority 
Review Conference 
Transfer of Technology 
Production Limitation 
Compensation Fund 
Financial Terms of Contract 
1.6. After nearly four years, the consultations - which since the beginning of 1992 had been 
open to all interested States and to the European Community - have led to agreements on 
all the eight identified issues and on the establishment of a subsidiary organ of the 
Authority to deal with financial matters (Article 162, paragraph 2(y) of the Convention), 
the "Finance Committee". 
1.7. In the last phase of the consultations, the participating delegations were also able to agree 
on the legal form to be given to the results of the negotiations, i. e. on the drafting of an 
Agreement relating to the implementation of Part XI of the Convention. The 
solutions to the eight identified problems and the provisions on the establishment of the 
"Finance Committee" form an annex to the agreement. The first section, dealing with the 
problem of "Costs to States Parties" contains also provisions concerning "institutional 
arrangements". 
2. THE IMPLEMENTATION AGREEMENT 
2.1. The Agreement is a legally binding instrument which modifies the provisions of Part XI 
of the Convention. It prescribes that the provisions of the Agreement and Part XI shall be 
interpreted and applied together as a single instrument. In the event of any inconsistency 
between the two texts, the provisions of the Agreement shall prevail. 
2.2. The Agreement reconciles the Interests of those States among them the European 
Community and its Member States - which until now have refused to ratify, or to accede 
to, the Convention because of its sea-bed mining regime, and of those States which have 
already ratified, but which have accepted, in order to achieve its universal acceptance, to 
modify certain provisions of Part XI, as long as the principle of the Area and its resources 
being the common heritage of mankind is reaffirmed and as there is a clear indication that 
the States which had refused the original mining regime, will accept the modified 
Convention. 
The provision concerning provisional application will avoid, to the extent possible, a 
situation whereby different Member States might, at least temporarily, apply different 
versions of the Convention: From the entry into force of the Convention, and until the 
entry into force of the Agreement, the latter shall be applied provisionally 
by all States which have voted in the United Nations General Assembly for its 
adoption and which have not expressively notified the depository before the entry 
into force of the Convention that they will not do so; 
by States which have signed the Agreement and have not notified the depository 
that they will not apply it provisionally; 
by the States which have acceded to the Agreement. 
This does not exclude that States which have voted against the adoption of the Agreement 
or which have not been represented at the meeting of the General Assembly may apply 
the un-modified Convention. But there is no doubt that the Agreement will obtain the 
consent of virtually all States which were represented at the "Informal Consultations" and, 
in particular, of the developing countries among them, which have already ratified the 
Convention and which have indicated, by their presence, their interest in the sea-bed 
mining regime. 
2.3. States can express in different forms their consent to be bound by the Agreement 
(Articles 4 and 5). The simplified procedure allows governments of States which have 
already ratified the Convention to give their consent tacitly if they wish to do so. The 
other forms are, as usual, signature not subject to ratification, ratification and accession. 
For the European Community, The procedure of the Convention concerning the formal 
confirmation by "international organisations" (Annex DC, Article 3) applies. 
2.4. The Agreement enters into force 30 days after the date, when 40 States have established 
their consent to be bound, provided such States include at least seven "Pioneer Investor" 
States (Resolution n, paragraph 1(a) 2) among, of which at least five must be 
industrialised States. This gives the developing States the assurance that the 
modifications of Part XI to which they have agreed, have produced the intended result, 
that is the acceptance of the Convention by industrialised States. 
2.5. For the same reason, the Agreement prescribes (Article 7, paragraph 3) that the 
provisional application shall terminate on 16 November 1998, that is four years after the 
entry into force of the Convention, if at that time the conditions mentioned in paragraph 4 
have not been fulfilled. 
2 ) among them: Belgium, Germany, France, Italy, the Netherlands and the UK 
2.6. Conclusion 
The Agreement and its provisions concerning the provisional application will give 
the industrialised countries which have not yet ratified the Convention full access 
to the organs of the Authority and leave them sufficient time, until 15 November 
1998, to complete their internal ratification or accession procedures. On the other 
hand, the developing States which already ratified, will have satisfactory 
guarantees that the concessions they have made in the course of the consultations, 
will be compensated by the universal acceptability which the Convention will now 
enjoy. 
3. THE ANNEX TO THE IMPLEMENTATION AGREEMENT 
3.1. COSTS TO STATES PARTIES AND INSTITUTIONAL ARRANGEMENTS 
3.1.1. COSTS TO STATE PARTIES 
3.1.1.1. The Provisions of Part XI of the Convention 
The International Sea-Bed Authority and it's Secretariat, as defined by Part XI of the 
Convention, has been criticised as being bureaucratic, "dirigiste", interventionist and 
extremely costly. Industrialised countries in general and the Community and its 
Member States in particular could not accept 
• certain provisions of Part XI which impose very high financial obligations upon the 
States Parties, especially the obligation to make available to the Enterprise, in the 
form of long-term interest-free loans, 50% of the funds necessary to explore and 
exploit one mine site, and to transport, process and market the minerals recovered 
... and to meet its initial administrative expenses, and the obligation to contribute to 
the Compensation Fund for the assistance to affected developing land-based 
producers (see chapters 3.2 and 3.7 below); 
• that a complete Authority with all subsidiary organs and a large Secretariat be 
established immediately after the entry into force of the Convention, that is at least 
fifteen years before the first commercial operation might begin and before many of 
the Authority's competencies will have to be exercised. 
3.1.1.2. The Implementation Agreement 
The Agreement recognises that after the entry into force of the Convention, the 
activities of the Authority will be limited as long as sea-bed mining is not 
economically viable. Therefore, the setting up and the functioning of the various 
organs and subsidiary bodies shall be based on an evolutionary approach and on cost-
effectiveness. The Agreement identifies precisely the activities on which the Authority 
shall concentrate in the period before the approval of the first plan of work for 
exploitation. 
The Agreement establishes a Finance Committee (Section 9) whose recommendations 
the Assembly and the Council have to take into account in all decisions on financial 
matters. Decisions by the Finance Committee on questions of substance shall be taken 
by consensus (see chapter 3.9 below). Until the Authority is self-financing, the 
membership of the Committee (of 15 members) shall include the five largest 
contributors (USA, Japan, Germany, Russia, France) to the administrative budget of 
the Authority. 
In addition, the provisions of Sections 2 and 7 of the Agreement eliminate all financial 
obligations resulting from the establishment of the Enterprise and a "Compensation 
Fund" (see chapters 3.2 and 3.7 below). 
Finally, the Agreement prescribes that registered pioneer investors may request 
approval of a plan of work for exploration within 36 months of entry into force of the 
Convention and that the fee of US$ 250'000 paid pursuant to Resolution II shall be 
deemed to be the fee relating to the exploration phase. The Agreement also establishes 
the principle of non-discrimination between arrangements for registered pioneer 
investors and arrangements for States or entities which have requested from the 
Authority approval of a plan of work. 
3.1.1.3. Evaluation 
The costs to States Parties have been considerably reduced for three reasons: 
• During the long period before the exploitation of the Area becomes 
economically viable, the Authority will have only a limited number of 
functions. The principle of the evolutionary approach should assure that 
during this time, the number and duration of meetings of the Assembly and 
the Council will be extremely reduced, that subsidiary bodies will only be set 
up if needed and that the Secretariat will be very small, as its tasks are 
precisely enumerated. The council, acting under the "chamber voting system" 
(see chapter 3.3 below) and assisted by the "Finance Committee" (chapter 3.9 
below) will watch over the stict application of the principle of cost-
effectiveness. 
• Even after this initial period, the functions of the authority will be significantly 
more limited than they would have been under the original Part XI because 
the Agreement has "de-bureaucratised" the Authority: Functions which would 
have caused the establishment of large services in the Secretariat (e.g. the 
production limitation system and the administration of a "Compensation 
Fund") are replaced by less bureaucratic provisions. 
• Finally, the financially most dangerous provisions of the Convention -
concerning the funding by the States Parties of the first mine site of the 
enterprise (see chapter 3.2 below) and of a "Compensation Fund" (see chapter 
3.7) - are definitively eliminated. 
3.1.2. INSTITUTIONAL ARRANGEMENTS 
3.1.2.1. The Implementation Agreement 
3.1.2.1.1. Provisional Membership 
The Agreement might enter into force before all States, and in particular before all 
sponsoring States have accomplished their ratification or accession procedures. The 
Agreement therefore provides for the possibility that such States continue to be 
members of the Authority on a provisional basis or, for the period between the 15 
November 1996 and the 16 November 1998, may request the Council to grant such a 
continued membership. 
An approved plan of work for exploration, if sponsored by at least one State 
provisionally applying the Agreement, shall terminate if such a State ceases to apply 
the Agreement (Article 7) and has neither become a member on a provisional basis nor 
a State Party. 
3.1.2.1.2. Rights and obligations of members of the Authority on a provisional basis 
Such members shall apply Part XI and the Agreement in accordance with their national 
or internal law and annual budgetary appropriations and shall have the same rights and 
obligations as other members, including the obligation to contribute to the 
administrative budget of the Authority (see paragraph 3.1.2.1.3 below) and the right to 
sponsor an application for a plan of work for exploration. 
If such a member has failed to comply with its obligations, its membership on a 
provisional basis shall be terminated. 
3.1.2.1.3. Provisional funding of the Authority through the UN budget 
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 UN 
budget, subject to a decision of the General Assembly (Paragraph 7 of the draft UNGA 
resolution contains such a decision). 
3.1.2.1.4. Rules, regulations and procedures 
The provisions of Article 162, paragraph 2 (o)(ii) of the Convention, indicating the 
matters for which the Authority shall adopt rules, regulations and procedures, is 
extended to the provisions of the Agreement relating to the Enterprise, transfer of 
technology, production policy and financial terms of contract. If the Council has not 
completed the rules, regulations and procedures relating to exploitation within the 
prescribed time, it shall consider and in case approve provisionally a plan of work for 
exploitation. 
3.1.2.2. Evaluation 
The provisional financing of the administrative expenses of the Authority 
through the UN budget resolves problems of such States which for constitutional 
reasons can not contribute to the budget of an international organisation without 
having acceded to it. 
The provisions on the adoption of rules, regulations and procedures take into 
account that detailed provisions related to many aspects of sea-bed mining can 
not be adopted before the economic, technological and environmental conditions 
of sea-bed mining are better known, that is at a time when commercial operations 
might take place in a near future. 
The system of "membership on a provisional basis" gives States with complicated 
or long ratification procedures the assurance that they can continue to be a 
member of the Authority on a provisional basis after the entry into force of the 
Agreement until 15 November 1998. 
3.2. THE ENTERPRISE 
3.2.1. The Provisions of Part XI of the Convention and of Annex IV 
The Establishment of the Enterprise has been considered, at the time of the adoption of 
the Convention, by many developing States to be the first emanation of the "New 
International Economic Order". For the same reasons, the "parallel system" has been 
criticised in Western industrialised States as incompatible with their economic system, 
because it created an international "State company ".exposed through the Authority to 
political interference, was to be financed by extremely high contributions from the 
States Parties, and enjoyed many privileges in relation to its competing contractors, 
e.g. prospecting of the reserved Area at the expense of its competitors, cost-free 
financing of the first mining operation, exemption for an initial period of ten years 
from payments to the Authority, immunity from seizure, attachment or execution 
before a final judgement against it, right to obligatory transfer of technology from its 
competitors. It was also pointed out that the Enterprise whose economic activity was 
limited to a single sector, i.e; sea-bed mining, would be extremely vulnerable to the 
volatility of the world commodity markets. 
3.2.2. The Implementation Agreement 
As sea-bed mining will not become viable for at least fifteen years, the activities of the 
Enterprise will mainly consist in monitoring trends and developments and assessing 
data. Therefore, at the beginning, its functions will be performed by the Secretariat of 
the Authority. 
The Enterprise shall conduct its initial operations through joint ventures. Only upon 
the approval of a plan of work for exploitation for another contractor, or in the case of 
an application for a joint venture with the Enterprise shall the Council consider its 
functioning independently of the Secretariat. If a joint venture accords with sound 
commercial principles, the Council shall decide such independent functioning. 
States Parties will be under no obligation to finance any of the operations of the 
Enterprise, including those under its joint venture arrangements. 
All obligations applicable to contractors shall also be applicable to the Enterprise. 
A contractor which has contributed a particular area to the Authority as the reserved 
Area shall have the right of first refusal to enter into a joint venture with the Enterprise 
or, if the Entereprise does not submit an application for a plan of work within 15 years 
of the commencement of itrs independent functioning, the contractor may apply for a 
plan of work for that area with the Enterprise as a joint venture partner. 
3.2.3. Evaluation 
It has been argued, also within the European Union, that the Enterprise as such 
is not compatible with the principle of the market economy. On the other hand, it 
is still for many developing countries the symbol of the principle of the common 
heritage of mankind. 
The Agreement has maintained the Enterprise but has eliminated those of its 
elements which are not compatible with a world market economy: Even when it 
will be allowed to function independently of the Secretariat, the Enterprise will 
not be more than a kind of semi-autonomous body for the administration of the 
Authority's own mineral resources. 
Formally, the Agreement prescribes only that the Enterprise shall conduct its 
initial mining operations through joint ventures. But even in the long run, it will 
not be in a position to finance an independent operation because the States 
Parties are not obliged to fund a mine site of the Enterprise and the developing 
countries, in particular land-based producers, will not want it to accumulate for 
such a purpose all the profits resulting from joint ventures instead of transferring 
them to the Economic Assistance Fund or using them for other development aims. 
The Agreement assures non-discrimination between the Enterprise and other 
operators. 
As the Enterprise will not function independently from the Secretariat before sea­
bed mining becomes viable, the principle of cost-effectiveness is respected. 
For these reasons, the provisions of the Agreement concerning the Enterprise are 
acceptable. 
3.3. DECISION MAKING 
3.3.1. The Provisions of Part XI of the Convention 
As in the case of the United Nations, the membership of the Sea-Bed Authority will 
include a large number of very small developing countries, whose individual financial 
contributions are limited to 0,01% of the budget. In conformity with the principles of 
sovereignty and equality of States, all States Parties are represented in the Assembly 
which takes its decisions on questions of substance by a two-thirds majority. 
The Convention does not sufficiently counter-balance these principles by the 
recognition that decisions of the Authority will affect very important financial and 
economic interests of certain categories of States and that these legitimate interests can 
not unconditionally be subject to majority decisions. 
10 
The existence of specific interests is recognised in the provisions concerning the 
Council, which assure a minimum representation of the groups of consumers, 
investors, land-based producers and developing countries with special interests. 
However, as the 36-member Council takes its decisions on questions of substance by a 
two-thirds or, in some cases, a three-quarter's majority, any of the groups can be easily 
overruled (This does not only concern the interests of industrialised countries: those of 
developing land-based producers might also be put in jeopardy). 
As far as the interests of the Member States of the European Union are concerned, this 
could happen in the case of decisions on financial matters, on the regulation and 
administration of sea-bed mining, on the Enterprise and, possibly, on certain aspects of 
commodity policies. 
3.3.2. The Implementation Agreement 
• As a general rule, decision-making in the organs of the Authority should be by 
consensus. If all efforts to reach a decision by consensus have exhausted, decisions 
by voting shall be taken under the following conditions: 
• The provisions concerning the voting in the Assembly remain unchanged. 
However, decisions on any matter for which the Council has also competence or on 
any administrative, budgetary or financial matter, shall be based on the 
recommendation of the Council. If the Assembly does not accept the 
recommendation, it shall return the matter to the Council which has to reconsider it 
in the light of the views expressed by the Assembly. 
• In the Council, four chambers are established: 
1. four members representing the largest consumer States, including the largest 
consumer of the Eastern European region (Russia) and the State having the 
largest economy on the date of entry into force of the Convention (USA); 
2. four members representing the eight largest investors; 
3. four members representing the land-based producers, including at least two 
developing States; 
4. the developing States elected as the six developing States with special 
interests and those elected according to the principle of equitable 
geographical distribution. 
ii 
The Council takes decisions on questions of substance (ifconsensus could not be 
reached) by a two-thirds majority, provided that they are not opposed by a 
majority in any of the Çhamfrerç. 
Decisions by the Assembly or the Council having financial orbudgetary 
implications shall be based on the recommendations of the Finance Committee. 
3.3.3. Evaluation 
The Chamber voting system excludes the possibility that a single State might 
paralyse by a veto the decision-making of the Council but it protects the main 
interest groups by giving them a collective veto power. 
The fourth category of Council members (developing countries with special 
interests), being defined on the basis of criteria not related to sea-bed mining, 
could not be recognised as a Chamber. It was therefore agreed to form a larger 
Chamber of all developing States represented in the Council (except the 
developing countries represented in the first three Chambers). This provision will 
have no practical effect because a two-thirds majority decision against the 
developing States is virtually impossible. 
The fact that the decisions of the Assembly on all important matters shall be 
based on the recommendations of the Council makes the latter the central organ 
of the Authority and assures that interests of minorities are also protected in the 
Assembly. 
The obligation to base decisions by the Assembly or the Council having 
financially or budgetary implications on the recommendations of the Finance 
Committee, gives additional protection to the interests of the Member States 
which will be among the main contributors to the budget of the Authority. 
The interest of Member States of the Community to have access to the first two 
Chambers is taken into account: The United States are not defined as a member 
of the "Western European States and Others Group" (WEOG), so that a 
candidature from a Member State can not be opposed with the argument that the 
WEOG is already represented. As the USA can also choose to belong to a 
Chamber other than the first, there will be more flexibility for the representation 
of Member States in the first Chamber. Furthermore, the principle of rotation 
shall apply. 
12 
3.4. REVIEW CONFERENCE 
3.4.1. Part XI of the Convention 
The Convention provides for a conference which, fifteen years after the earliest 
commercial operation, shall review the whole system of exploration and exploitation 
of the Area. It shall make every effort to reach agreement by consensus but, in the end, 
can adopt, by a three-fourths majority of the States Parties, amendments to the system. 
Amendments shall enter into force for all States Parties after ratification or accession 
by three fourths of the States Parties. 
The Review Conference has been criticised by industrialised States for the same 
reasons as the decision making procedures: It allows the majority to disregard the 
interests of minority groups . 
The industrialised States have also stressed the constitutional problems caused by the 
fact that an amendment could become applicable law in their countries, after the 
ratification by three fourths of the States Parties, even if their own parliaments or 
governments have not approved it. 
3.4.2. The Implementation Agreement 
The provisions relating to the Review Conference shall not apply. In place of the 
Conference, the Council may at any time recommend to the Assembly to undertake a 
review of the sea-bed mining regime. The resulting amendments will be subject to the 
normal treaty amendment procedures of the Convention (Articles 314-316). 
The Agreement does not modify Article 316, paragraph 5 which provides for the entry 
into force of such amendment for all States Parties one year following the deposit of 
instruments of ratification or accession by three fourths of the States Parties. 
3.4.3. Evaluation 
The new procedure offers more protection for minority interests. The 
recommendation of the Council to the Assembly is more than just an invitation to 
undertake a review of the sea-bed mining system; the Council can specify 
precisely what kind of amendments it deems necessary. If the Assembly does not 
agree, it has to refer the matter back to the Council. 
By the consensus principle and, as the last resource, by the chamber voting 
system in the Council, the interests of the industrialised countries will be 
protected throughout the procedure. 
13 
The entry into force for all States Parties after the ratification of the amendment 
by three quarters of the States Parties results from the fact that Part XI of the 
Convention not only establishes rights and obligations between the States Parties 
(as in other Parts of the Convention), but creates a comprehensive regulatory and 
administrative system for the exploitation of the Area. Such a system can not 
function if it is not applied in a uniform way (not withstanding the provision of 
Article 155, paragraph 5, that amendments shall not affect rights acquired under 
existing contracts). 
3.5. TRANSFER OF TECHNOLOGY 
3.5.1. Part XI and Annex III of the Convention 
According to Annex III, Article 5, in every contract for exploration or exploitation, the 
contractor shall undertake to make available to the Enterprise (or to developing States 
which have applied for a contract), on fair and reasonable commercial terms, the 
technology which it intends to use in the Area and which it is legally entitled to 
transfer. The contractor shall also undertake to obtain a written assurance from the 
owner of technology which it intends to use in the Area, that the owner is ready to 
make that technology available to the Enterprise or developing States. If this assurance 
is not obtained, the technology in question shall not be used by the contractor. 
Such obligations are considered in industrialised countries as an infringement of 
intellectual property rights and as incompatible with the principles of a market 
economy. 
3.5.2. The Implementation agreement 
As the Enterprise will conduct its operations through joint ventures, the provisions of 
Annex HI, Article 5 have become obsolete. The Agreement therefore stipulates that 
they shall not apply. Article 144 of the Convention - which also deals with the transfer 
of Technology but which does not impose particular obligations upon the contractors -
remains in force. 
3.5.3. Evaluation 
The Implementation Agreement abolishes the principle of obligatory transfer of 
technology. If the provisions of Article 144 should ever be applied - which is 
unlikely as the activities of the Enterprise will always be limited to joint ventures 
- the chamber-voting system in the Council will protect the interests of the 
industrialised States. 
The provisions of the Agreement are therefore acceptable. 
14 
3.6. PRODUCTION POLICY 
3.6.1. The Provisions of Part XI to the Convention 
Article 151, paragraph 4 provides for a production ceiling for any year of a 25 year 
long interim period. The ceiling limits sea-bed production to 60% of the growth rate of 
world nickel production, calculated on a trend line based on the most recent 15 year 
period. 
Calculations based on such a period can not take into account new factors and, as the 
development since the adoption of the Convention in 1982 has already shown, produce 
results that do not reflect the realities of the market. The production limitation system 
was supposed to protect the developing land-based producers of the four minerals 
contained in the manganese nodules. However, it discriminates against sea-bed 
production, protecting all land-based producers, in industrialised as well as in 
developing States. In fact, production in industrialised countries would profit more 
from the system than developing countries: Of the four metals, only cobalt is produced 
mainly (74%) in developing States, whereas the figures for the other three are 45% 
(copper), 28% (manganese) and 27% (nickel) respectively. 
On the other hand, the system does not protect the developing cobalt producers, which 
are most likely to be hurt by sea-bed mining, as a single maritime mining operation 
will produce more then 20% of the present world consumption. 
3.6.2. The Implementation Agreement 
The implementation agreement replaces the production limitation system of Part XI by 
rules for a production policy based on the present and future provisions of the 
relevant codes of GATTAVTO. In particular, it refers to the GATT definition of 
permitted and non-permitted subsidies. It imposes upon land-based and sea-bed 
producers the obligation not to discriminate between minerals derived from the Area 
and from other sources and not to give preferential access for such minerals. 
States Parties, which are parties to the GATTAVTO shall have recourse to the 
dispute settlement procedures of these agreements. However, where one or more 
parties to a dispute are not parties to the GATTAVTO, the dispute settlement 
procedures set out in the Convention shall apply. This provision is not entirely 
satisfactory, as it allows non-GATT institutions to interpret GATT rules, but it is 
unavoidable, because the dispute settlement procedures of the GATTAVTO can only 
be applied among parties to these agreements. 
15 
If a determination is made under the GATTAVTO that a State Party has engaged in 
subsidisation which is prohibited or has resulted in adverse effects to the interests of an 
other State Party, the latter, if it is a party to the GATTAVTO agreements, shall have 
the choice to take appropriate steps under the GATT provisions or to request the 
Council of the Sea-Bed Authority to take appropriate measures. 
Under the new production policy system; it will not only be prohibited for States 
Parties to give non-permitted subsidies, but also for contractors to accept them. 
The acceptance of such subsidies shall constitute a violation of the fundamental terms 
of the contract. A State Party may request the Council to take measures against such a 
contractor. The sponsoring State and the contractor have recourse to the dispute 
settlement procedures of the Sea-Bed Dispute Chamber of the International Tribunal 
for the Law of the Sea. 
3.6.3. Evaluation 
The reference to the GATT provisions assures fair competition between land-
based and sea-bed producers as well as among the sea-bed producers. The fact 
that the dispute settlement procedures of the GATTAVTO can only be applied if 
all parties to a dispute are parties to these agreements is a consequence of the 
GATT procedures. It is regrettable but unavoidable that in a limited number of 
cases, GATT provisions might have to be interpreted by the Council of the 
Authority and by the Sea-Bed Dispute Chamber of the International Tribunal 
for the Law of the Sea. But as sea-bed mining will not become economically viable 
before at least fifteen years, it is quite likely that all potential sea-bed producer 
States will have acceded to the WTO before the start of the first commercial 
operation. 
3.7. ECONOMIC ASSISTANCE 
3.7.1. The Provisions of Part XI of the Convention 
Articles 151, paragraph 10 and 171 (f) provide for a Compensation Fund to assist 
developing countries that suffer serious adverse effects resulting from a reduction in 
the price of an affected mineral or in the volume of exports of that mineral, if such 
reduction is caused by sea-bed mining. The European Community and its Member 
States have always maintained, in the discussions on the Law of the Sea Convention as 
well as in other fora, that compensation funds are not an incentive for the adaptation to 
new economic circumstances but favour the maintenance of non-competitive 
production and; therefore, would necessarily not be of a temporary nature. 
16 
To administer a compensation fund, the Authority, even assisted by a large and 
expensive bureaucracy, would not have the necessary expertise to help an adversely 
affected land-based producer with the development of alternative economic activities 
outside the mining sector. 
3.7.2. The Implementation Agreement 
The Agreement replaces the Compensation Fund by an Economic Assistance Fund 
from which the Authority shall provide assistance to affected developing land-based 
producer States in co-operation with existing global or regional development 
institutions that have the necessary expertise. 
The Fund shall be established from a portion of funds from the Authority which 
exceed those necessary to cover the administrative expenses. Only payments from 
contractors, including the Enterprise, and voluntary contributions shall be used. 
3.7.3. Evaluation 
The provisions of the Implementation Agreement reflect fully the positions taken 
by the Community and its Member States. 
3.8. FINANCIAL TERMS OF CONTRACT 
3.8.1. Part XI and Annex III of the Convention 
The financial burdens imposed on the contractor are a strong disincentive for sea-bed 
mining. The payments to be made to the Authority are higher than those imposed on 
land-based producers. This discourages the industry to develop the necessary marine 
mining technology and to engage in sea-bed mining as long as land-based resources, 
even of a low degree of productivity, are available. 
The imposition of a considerable production charge i. e. payments to be made to the 
Authority whether the mining operation has reached the stage of profitability or not, 
does not take into account the high costs caused by the development and the initial 
operation phase of the mining equipment. 
17 
3.8.2. The Implementation Agreement 
The provisions of Annex III Article 13, paragraph 3 to 10, of the Convention shall not 
be applied. The Agreement does not replace them by another regime but prescribes a 
list of principles which will form the basis for the rules, regulations and procedures to 
be adopted by the Authority at a later stage (see paragraph 3.1.2.1.4 above).The system 
of financial payments shall be 
• fair both to the contractor and the Authority; 
• within the range of payments prevailing in respect of land-based mining; 
• transparent and not impose major administrative costs on the Authority or 
contractor. 
3.8.3. Evaluation 
The principles for the rules regulations and procedures, to be adopted by the 
Authority, correspond to the demands made by the industrialised States. Taking 
into account the chamber-voting system to be applied in the Council, the 
provisions of the Agreement are acceptable. 
3.9. THE FINANCE COMMITTEE 
3.9.1. Part XI of the Convention 
Article 162, paragraph 2 (y) obliges the Council, to establish a subsidiary organ for the 
elaboration of draft financial rules, regulations and procedures relating to financial 
matters. 
3.9.2. The Implementation Agreement 
The Agreement establishes a "Finance Committee" which shall not only elaborate draft 
rules, regulations and procedures, but also make recommendations for all activities of 
the Authority having administrative and budgetary implications. 
3.9.3. Evaluation 
The Finance Committee as established by the Agreement will assure - in 
combination with the chamber-voting system in the Council - the respect of the 
principle of cost-effectiveness by the Authority. 
18 
4. CONCLUSION 
4.1. The "flaws and deficiencies" of the sea-bed mining regime which the Community 
had criticised on 7 December 1984 when signing the Convention, have been 
eliminated. They are either replaced by completely satisfactory provisions of the 
Implementation Agreement or will be replaced at a later stage by the Authority 
through rules, regulations and procedures, based on criteria laid down in the 
agreement and to be adopted under the chamber voting system. 
4.2. The Community and its Member States have since long accepted the principle of 
"Common Heritage of Mankind". It was only the translation of this principle 
into a bureaucratic and interventionist system that they could not accept. Some of 
the old language will remain in Part XI and related Annexes but without any 
undesirable consequences of a political, economic or operational nature. 
4.3. The Agreement has made the Convention "universally acceptable". It reflects to 
a large extent the positions expressed many times by the Community and its 
Member States. 
4.4. The Agreement shall be adopted, as an annex to a resolution, by the members of 
the United Nations General Assembly. The European Community, not being a 
member of the General Assembly, will not be able to participate in the adoption 
and to express by its vote the position that the Agreement is in conformity with 
the results of the "informal consultations" in which the Community has actively 
participated. 
4.5. However, the possibility of signing the Agreement immediately after its adoption 
offers the occasion for such an endorsement. According to Annex IX, Article 2 to 
the Convention, the Community may only sign the Agreement if a majority of its 
Member States are signatories of it. For the Community to be able to sign the 
Agreement immediately after its adoption, it would therefore be necessary that at 
least a majority of the Member States do so simultaneously. 
4.6. As the "flaws and deficiencies" of Part XI have now been removed, it is in the 
interests of the Community and its Member States to strengthen the universal 
applicability of the Convention by ratifying, or acceding to, it rapidly. It would 
have a significant political effect, if all Member States and the Community would 
emphasize this common intention by jointly and simultaneously signing the 
agreement at that date. 
III. ACTION PROPOSED 
1. Like the other parts of the Convention, Part XI deals with matters which fall partly 
within the sphere of competence of the Member States and partly under that of the 
European Community. For the reasons already explained, the Commission considers 
that the Agreement should be signed by the Community and its Member States 
immediately after adoption at the 27 to 29 July session of the UN General Assembly. 
The Community and the Member States (to the degree that their constitutions permit) 
should then begin implementing the Agreement provisionally on 16 November of this 
year, when the Convention enters into force. 
2. When it signed the Convention on 7 December 1984, the Community made a 
declaration in accordance with Article 2 of Annex IX (participation of international 
organizations) "specifying the matters governed by (the) Convention in respect of 
which competence (had) been transferred to (it) by its States members". It pointed out 
its responsibility for commercial policy, including issues of unfair trade, in connection 
with the content of Part XI. 
3. The legal basis for the signing of the Agreement is Article 113 of the EC Treaty. 
Because the matter of provisional implementation relates only to Part XI of the 
Convention, Article 113 also provides the legal basis for that measure. 
4. Since several Member States have indicated that they intend to ratify the Convention 
and the Agreement rapidly, the Commission will provide as soon as possible (in draft 
form) formal confirmation and a declaration on competences, in accordance with 
Article 5 of Annex DC to the Convention. This will give Parliament enough time to 
draw up its opinion and enable the Community to give formal confirmation once the 
majority of the Member States have ratified or acceded to the Convention and the 
Agreement. 
5 The Commission accordingly requests the Council to adopt the attached Decision. 
20 
Annex 
94/0182 (ACC) 
Proposal for a Council Decision of 
concerning the signing by the European Community of the Agreement relating to the 
implementation of Part XI of the 1982 United Nations Convention on the Law of the 
Sea and the provisional implementation by the Community of that Agreement and of 
Part XI of the Convention 
The Council of the European Union, 
Having regard to the Treaty establishing the European Community, and in particular 
Article 113 thereof, 
Having regard to the proposal from the Commission, 
Whereas the Agreement stemming from the informal consultations held by the United 
Nations Secretary-General has made the Convention on the Law of the Sea universally 
acceptable; 
Whereas the Member States have made clear their intention to sign and, to the degree 
that their constitutions allow, provisionally implement that Agreement, 
HAS DECIDED AS FOLLOWS: 
Article 1 
1. The Agreement relating to the implementation of Part XI of the 1982 United Nations 
Convention on the Law of the Sea shall be signed by the Community and its Member 
States together immediately after its adoption by the United Nations General 
Assembly. 
2. The President of the Council is hereby authorized to designate the person empowered 
to sign the Agreement. 
3. The text of the Agreement is attached. 
Article 2 
The Agreement referred to in Article 1 and Part XI of the 1982 United Nations 
Convention on the Law of the Sea shall be implemented provisionally from 
16 November 1994. 
Done at 
For the Council, 
21 
UNITED 
NATIONS A 
General Assembly 
Distr. 
GENERAL 
A/48/950 
9 June 1994 
ORIGINAL: ENGLISH 
Forty-eighth session 
Agenda item 36 
LAW OF THE SEA 
Consultations of the Secretary-General on outstanding 
issues relating to the deep seabed mining provisions 
of Çhe United Nations Convention on the Law of the Sea 
Report o£ tte Secretary-General 
CONTENTS 
Paragraphs Page 
REPORT OF THE SECRETARY-GENERAL 1-28 2 
Annexes 
I. Draft resolution and draft Agreement relating to the Implementation 
of Part XI of the United Nations Convention on the Law of the Sea 
of 10 December 1982 8 
II. Informal Understanding to be read by the President of the General 
Assembly at the time of the adoption of the resolution 32 
94-24482 (E) 150694 15/06/94 
11 
A/48/950 
English 
Page 2 
REPORT OF THE SECRETARY-GENERAL 
1. In July 1990 the Secretary-General, Mr. Javier Pérez de Cuéllar, took the 
initiative to convene informal consultations aimed at achieving universal 
participation in the United Nations Convention on the Law of the Sea. The 
Secretary-General stressed the importance of securing general acceptance of the 
United Nations Convention on the Law of the Sea, an instrument which represented 
many years of negotiations and which had already made a significant contribution 
to the international legal maritime order. He pointed out that though he would 
continue to encourage all States which had not done so to ratify or accede to 
the Convention, it had to be acknowledged that there were problems with some 
aspects of the deep seabed mining provisions of the Convention which had 
prevented some States from ratifying or acceding to the Convention. 
2. He noted that in the eight years that had elapsed since the Convention was 
adopted certain significant political and economic changes had occurred which 
had had a marked effect on the regime for deep seabed mining contained in the 
Convention. Prospects for commercial mining of deep seabed minerals had receded 
into the next century, which was not what was envisaged during the negotiations 
at the Third United Nations Conference on the Law of the Sea. The general 
economic climate had been transformed as a result of the changing perception 
with respect to the roles of the public and private sectors. There was a 
discernible shift towards a more market-oriented economy. In addition, the 
Secretary-General made mention of the emergence of a new spirit of international 
cooperation in resolving outstanding problems of regional and global concern. 
These factors were to be taken into account in considering the problems with 
respect to deep seabed mining. 1/ 
3. Thus began a series of informal consultations under the aegis of the 
Secretary-General on outstanding issues relating to the deep seabed mining 
provisions of the United Nations Convention on the Law of the Sea. 
4. These informal consultations took place in the years 1990 to 1994, during 
which 15 meetings were convened. 2/ They can be conveniently divided into two 
phases. The first phase was devoted to the identification of issues of concern 
to some States, the approach to be taken in examining them and the search for 
solutions. During the second phase more precision was given to the results 
reached so far,- additional points were raised for consideration and participants 
directed their attention to an examination of consolidated texts embodying these 
solutions and on the procedure whereby they might be adopted. 
'* 
The first phase 
5. During the initial part of this phase the consultations identified nine 
issues as representing areas of difficulty: costs to States parties; the 
Enterprise; decision-making; the Review Conference; transfer of technology; 
production limitation; compensation fund; financial terms of contract; and 
environmental considerations. After examining the various approaches that might 
be taken in the examination of these issues, there was general agreement on an 
approach which enabled participants to examine all the outstanding issues with a 
aMduMMWWJMWM^HSMWd^^ 
A/48/950 
English 
Page 3 
view to resolving them and to decide how to deal with those that might remain 
unresolved. 
6. Participants then began to review all of these issues seriatim. This 
review was based on information notes compiled by the Secretariat containing 
background information, questions that needed to be addressed and possible 
approaches for the resolution of these issues. 
7. In the course of six informal consultations held during the years 1990 and 
1991, participants completed the consideration of all the outstanding issues 
relating to the deep seabed mining provisions of the United Nations Convention 
on the Law of the Sea. It can fairly be said that a certain measure of general 
agreement was emerging on these issues. 
8. The results of the Secretary-General's informal consultations held in 1990 
and 1991 were set out in the summary of informal consultations conducted by the 
Secretary-General on the law of the sea during 1990 and 1991, dated 
31 January 1992, and in an information note dated 26 May 1992. These results 
fell under two categories. First, general agreement seemed to have been reached 
on relatively detailed solutions on: costs to States parties, the Enterprise, 
decision-making, Review Conference and transfer of technology. Secondly, with 
respect to production limitation, the compensation fund and financial terms of 
contract it was generally agreed that it was neither necessary nor prudent to 
formulate a new set of detailed rules for these items. Accordingly, for those 
items the information note set out general principles to be applied when 
commercial production of deep seabed minerals was imminent. 
The second phase 
9. In 1992 I continued the informal consultations initiated by my predecessor. 
During this phase the consultations were open to all delegations. Some 75 to 90 
delegations attended these meetings. In the first three rounds of this phase, 
consideration was given to the nine issues in order to give more precision to 
the results reached so far in the consultations. Additional points were 
submitted for consideration on the following issues: costs to States parties; 
the Enterprise; decision-making; Review Conference; and transfer of technology. 
During these consultations it was decided to remove the issue of environmental 
considerations from the list of issues, since it was no longer considered to be 
a controversial issue in the context of deep seabed mining. 
10. At the informal consultations held on 28 and 29 January 1993, it was 
generally felt among participants that the stage had been reached when a text 
based on a more operational approach should be prepared in a form which could be 
the basis of an agreement. 
11. In accordance with this request, an information note dated 8 April 1993 was 
prepared. This information note contained two parts : 
(a) Part A dealt with various procedural approaches with respect to the 
use to be made of the results of the consultations. The four approaches could 
be summarized as follows: 
tk-
A/48/950 
English 
Page 4 
(i) A contractual instrument such as a protocol amending the Convention; 
(ii) An interpretative agreement consisting of understandings on the 
interpretation and application of the Convention; 
(iii) An interpretative agreement on the establishment of an initial 
Authority and an initial Enterprise during an interim regime 
accompanied by a procedural arrangement for the convening of a 
conference to establish the definitive regime for the commercial 
production of deep seabed minerals when such production became 
feasible; 
(iv) An agreement additional to the Convention providing for the transition 
between the initial phase and the definitive regime, in particular, 
the Authority would be mandated to develop solutions for issues still 
outstanding on the entry into force of the Convention; 
(b) Part B set out an operationally directed formulation of the results 
reached so far in the consultations. It was divided into two sections: 
(i) Arrangements following the entry into force of the Convention; 
(ii) Draft texts concerning the definitive deep seabed mining regime. 
12. The procedural approaches were reviewed during consultations held on 27 and 
28 April 1993. Certain basic elements emerged from the review of these 
approaches. It was generally agreed that, whatever approach might be adopted, 
it must be of a legally binding nature. It was also pointed out that a duality 
of regimes must be avoided. Finally, as the position of States which have 
ratified or acceded to the Convention must be respected, it was considered 
useful to examine the role that the notion of implied or tacit consent might 
play in protecting their positions. 
13. For the next round of consultations, held from 2 to 6 August 1993, an 
information note dated 4 June 1993 was circulated which updated parts A 
arid B (i) of the information note of 8 April 1993 to reflect the observations 
made during the previous round of consultations. During the course of this 
round of consultations a paper dated 3 August 1993 prepared by representatives 
of several developed and developing States was circulated among delegations as a 
contribution to the process of the consultations. It was understood that the 
paper, which was commonly known as the "boat paper", did not necessarily reflect 
the position of any of the delegations involved, but that it was considered to 
provide a useful basis for negotiation. 
14. Thereafter, while addressing the substantive issues contained in the 
information note dated 4 June 1993, delegations also made cross-references to 
the relevant portions of the "boat paper". That paper was divided into three 
parts: (i) a draft resolution for adoption by the General Assembly; (ii) a 
draft Agreement relating to the Implementation of Part XI of the United Nations 
Convention on the Law of the Sea; and (iii) two annexes. Annex I contained the 
agreed conclusions of the Secretary-General's consultations and annex II was 
entitled "Consequential adjustments". 
/. • • 
A/48/950 
English 
Page 5 
15. At the last round of consultations held in 1993 (8-12 November), 
participants had before them three documents: the information note dated 
4 June 1993; a new version of the "boat paper" consolidating the two annexes to 
the original paper into one; and a paper entitled "Agreement on the 
Implementation of Part XI and Annexes III and IV of the United Nations 
Convention on the Law of the Sea", submitted by the delegation of Sierra Leone. 
At this November meeting participants completed the review of all the items 
contained in the information note dated 4 June 1993. After having completed 
consideration of those issues, delegations embarked upon a renewed examination 
of the issue of "Costs to States parties and institutional arrangements", but 
this time based essentially on the "boat paper". 
16. On 16 November 1993, the Convention on the Law of the Sea received its 
sixtieth instrument of ratification or accession, which means that, in 
accordance with its terms (article 308), it will enter into force on 
16 November 1994. The General Assembly itself invited all States to participate 
in the consultations and to increase efforts to achieve universal participation 
in the Convention as early as possible. 3/ The imminent entry into force of the 
Convention introduced a sense of urgency to the informal consultations. 
17. During the first round held in 1994 (31 January-4 February), the 
consultations examined a revised version of the "boat paper", dated 
November 1993. This revision took into account the discussions which had taken 
place during the Secretary-General's informal consultations held in 
November 1993. The work of the current round of consultations focused on some 
crucial issues: 
(a) Decision-making, in particular the question of the relationship 
between the Authority and the Council, and the question as to which group of 
States in the Council should be considered chambers for the purposes of 
decision-making in the Council; 
(b) Whether the administrative expenses of the Authority should be met by 
assessed contributions of its members, including the provisional members of the 
Authority, or through the budget of the United Nations ; 
(c) The issue of provisional application of the Agreement and of 
provisional membership in the Authority. 
During this round of consultations progress was made on the latter two issues. 
A revised version of the document submitted by the delegation of Sierra Leone 
was submitted to this round of consultations. 
18. The second round of the Secretary-General's informal consultations in 1994 
was held from 4 to 8 April. The meeting had before it a further updated version 
of the "boat paper" entitled "Draft resolution and draft Agreement relating to 
the Implementation of Part XI of the 1982 United Nations Convention on the Law 
of the Sea", dated 14 February 1994. 
19. Participants undertook an article-by-article review of the draft Agreement. 
Attention was then focused on the two most important issues facing the 
consultations: decision-making in the Council, and the Enterprise. These 
A/48/950 
English 
Page 6 
issues, which lay at the heart of the consultations, proved most difficult to 
resolve. From the outset of the consultations it was evident that these issues 
could only be resolved in the final stages of this process, when a clearer 
picture of the results of the consultations had emerged. With respect to 
decision-making the debate was directed at the system of chambered voting, in 
particular whether the categories or groups of States, mainly developing States, 
should be treated as chambers for the purposes of decision-making in the 
Council. The discussion on the Enterprise centred on the type of mechanism 
which would trigger the commencement of its operations as well as its functions. 
20. Revisions were made to the draft Agreement in the light of the debates on 
the various issues. This in fact was a unique feature of this round of 
consultations, reflecting the urgency of the situation. The revisions related 
to provisional application of the Agreement; provisional membership in the 
Authority; the treatment of the registered pioneer investors; and production 
policy. 
21. Based on these revisions, the draft resolution and draft Agreement relating 
to the Implementation of Part XI of the United Nations Convention on the Law of 
the Sea were revised in their entirety and a revised text was issued on 
8 April 1994, the last day of the meeting. 
22. During this round of consultations, according to many delegations, 
significant progress was achieved. It appeared that solutions were found to 
several important issues, including decision-making, the Enterprise and the 
treatment of the registered pioneer investors. However, not all the issues were 
resolved in this round of consultations. 
23. The last meeting of the Secretary-General's consultations was held from 
31 May to 3 June 1994. The primary purpose of this final round of consultations 
was the harmonization of the text in the various language versions of the draft 
resolution and draft Agreement relating to the Implementation of Part XI of the 
1982 United Nations Convention on the Law of the Sea. The meeting had before it 
the draft resolution and draft Agreement dated 15 April 1994 which was revised 
on the basis of discussions in the previous round of consultations and a 
corrigendum to the document dated 23 May 1994. Two documents (SG/LOS/CRP.1 and 
SG/LOS/CRP.2), containing suggested amendments of a drafting nature prepared by 
the Secretariat, were also submitted to the meeting in order to facilitate the 
process of harmonizing the language versions of the text. 
24. The first part of the meeting addressed the substantive issues that were 
still pending, and solutions were found for some of those issues. Delegations, 
however, continued their search for solutions on matters relating, inter alia, 
to the treatment of the registered pioneer investors and the issue of 
representation in the Council. The second part of the meeting was devoted to 
the task of harmonizing the language versions of the draft resolution and draft 
Agreement. The final part dealt with the decisions to be taken with regard to 
the convening of a resumed forty-eighth session of the General Assembly to adopt 
the draft resolution and draft Agreement. 
25. At the close of the meeting, delegations were presented with a revised text 
(SG/LOS/CRP.1/Rev.l), dated 3 June 1994. That document elicited a few drafting 
A/48/950 
English 
Page 7 
comments which are reflected in the text of the draft resolution and draft 
Agreement relating to the Implementation of Part XI of the United Nations 
Convention on the Law of the Sea of 10 December 1982, contained in annex I to 
the present report. A proposed solution to the question of the issue of 
representation in the Council is to be found in the informal understanding 
contained in annex II. 
26. At the conclusion of the informal consultations the delegation of the 
Russian Federation made a statement reserving its position in view of the fact 
that a number of proposals it had made had not been reflected in the draft 
Agreement. In reply, it was pointed out that all proposals made by delegations 
or groups had been thoroughly examined without exception but that it had not 
been possible to accept every one of them. 
27. The consultations then indicated that Member States wished to convene a 
resumed forty-eighth session of the General Assembly of the United Nations from 
27 to 29 July 1994, for adoption of the resolution. They further wished that, 
after the adoption of the resolution, the Agreement would be immediately opened 
for signature. 
28. I wish to recall that the objective of the consultations was to achieve 
wider participation in the Convention from the major industrialized States in 
order to reach the goal of universality. Accordingly, it is with satisfaction 
that I report to the General Assembly that these consultations, initiated by my 
predecessor and continued by me, have led to a result which in my view could 
form the basis of a general agreement on the issues that were the subject of the 
consultations. In the light of the outcome, I consider that I have fulfilled my 
mandate. 
i/ See A/45/721 and A/46/724. 
2/ Informal consultations were held on the following dates : 
19 July 1990; 30 October 1990; 25 March 1991; 23 July 1991; 14 and 
15 October 1991; 10 and 11 December 1991; 16 and 17 June 1992; 6 and 
7 August 1992; 28 and 29 January 1993; 27 and 28 April 1993; 2-6 August 1993; 
8-12 November 1993; 31 January-4 February 1994; 4-8 April 1994; and 31 May-
3 June 1994. 
3_/ General Assembly resolution 48/28. 
-18 -
A/48/950 
English 
Page 8 
ANNEX I 
Draft resolution and draft Agreement relating to the 
Implementation of Part XI of the United Nations 
Convention on the Law of the Sea of 10 December 1982 
I. INTRODUCTION 
This is a revised version of document SG/LOS/CRP. 1/Rev.l of 3 June 1994. 
It incorporates the changes made during the last meeting of the final session of 
the informal consultations, held on 3 June 1994. In addition to a few purely 
editorial corrections, the changes are: 
(a) Page B. article 10 
At the end of the article, add the following 
IN WITNESS WHEREOF, the undersigned Plenipotentiaries, being duly 
authorized thereto, have signed this Agreement. 
DONE AT NEW YORK, this .. . day of July, one thousand nine hundred 
and ninety-four. 
(b) Page 20, section 6, paragraph 1 (d), line 2 
Delete those derived 
(c) Page 20, section 6, paragraph 1 (d) (ii) , line 1 
Delete to markets 
(d) Page 22, section 8. paragraph 1 (e), line 1 
Delete financial 
(e) Page 23, section 8, paragraph 3, last line 
Delete for each phase. 
A/48/950 
English 
Page 9 
II. DRAFT RESOLUTION FOR ADOPTION BY THE GENERAL ASSEMBLY 
The General Assembly. 
Prompted by the desire to achieve universal participation in the United 
Nations Convention on the Law of the Sea of 10 December 1982 (hereinafter 
referred to as "the Convention") 1/ and to promote appropriate representation 
in the institutions established by it. 
Reaffirming that the seabed and ocean floor and subsoil thereof, beyond the 
limits of national jurisdiction (hereinafter referred to as the "Area"), as well 
as the resources of the Area, are the common heritage of mankind, 2/ 
Recalling that the Convention in its Part XI and related provisions 
(hereinafter referred to as "Part XI") established a regime for the Area and its 
resources, 
Taking note of the consolidated provisional final report of the Preparatory 
Commission for the International Seabed Authority and for the International 
Tribunal for the Law of the Sea, 3_/ 
Recalling its resolution 48/28 of 9 December 1993 on the law of the sea, 
Recognizing that political and economic changes, including in particular a 
growing reliance on market principles, have necessitated the re-evaluation of 
some aspects of, the regime for the Area and its resources. 
Noting the initiative of the Secretary-General which began in 1990 to 
promote dialogue aimed at achieving universal participation in the Convention, 
Welcoming the report of the Secretary-General on the outcome of his 
informal consultations, including the draft of an agreement relating to the 
implementation of Part XI, 
Considering that the objective of universal participation in the Convention 
may best be achieved by the adoption of an agreement relating to the 
implementation of Part XI, 
Recognizing the need to provide for the provisional application of such an 
agreement from the date of entry into force of the Convention on 
16 November 1994, 
1/ Official Records of the Third United Nations Conference on the Law of 
the Sea, vol. XVII (United Nations publication, Sales No. E.84.V.3), document 
A/CONF.62/122. 
2/ General Assembly resolution 2749 (XXV); article 136 of the United 
Nations Convention on the Law of the Sea. 
3/ LOS/PCN/130 and Add.l. 
/.. 
~lo -
A/48/950 
English 
Page 10 
I. Expresses its appreciation to the Secretary-General for his report on 
the informal consultations; 
2- Reaffirms the unified character of the United Nations Convention on 
the Law of the Sea of 10 December 1982; 
3. Adopts the Agreement relating to the Implementation of Part XI of the 
United Nations Convention on the Law of the Sea of 10 December 1982 (hereinafter 
referred to as "the Agreement"), the text of which is annexed to the present 
resolution; 
4. Affirms that the Agreement shall be interpreted and applied together 
with Part XI as a single instrument; 
5. Considers that future ratifications or formal confirmations of or 
accessions to the Convention shall represent also consent to be bound by the 
Agreement and that no State or entity may establish its consent to be bound by 
the Agreement unless it has previously established or establishes at the same 
time its consent to be bound by the Convention; 
6. Calls upon States which consent to the adoption of the Agreement to 
refrain from any act which would defeat its object and purpose; 
7. Expresses its satisfaction at the entry into force of the Convention 
on 16 November 1994; 
8. Decides to fund the administrative expenses of the International 
Seabed Authority in accordance with section 1, paragraph 14, of the annex to the 
Agreement; 
9. Requests the Secretary-General to transmit immediately certified 
copies of the Agreement to the States and entities referred to in article 3 
thereof, with a view to facilitating universal participation in the Convention 
and the Agreement, and to draw attention to articles 4 and 5 of the Agreement; 
10. Also requests the Secretary-General to open the Agreement for 
signature in accordance with article 3 thereof immediately after its adoption; 
II. Urges all States and entities referred to in article 3 of the 
Agreement to consent to its provisional application as from 16 November 1994 and 
to establish their consent to be bound by the Agreement at the earliest possible 
date; 
12. Also urges all such States and entities that have not already done so 
to take all appropriate steps to ratify, formally confirm or accede to the 
Convention at the earliest possible date in order to ensure universal 
participation in the Convention; 
13. Calls upon the Preparatory Commission for the International Seabed 
Authority and for the International Tribunal for the Law of the Sea to take into 
account the terms of the Agreement when drawing up its final report. 
/.-• 
m 
A/48/950 
English 
Page 11 
III. DRAFT AGREEMENT RELATING TO THE IMPLEMENTATION OF 
PART XI OF THE UNITED NATIONS CONVENTION ON THE 
LAW OF THE SEA OF 10 DECEMBER 1982 
The States Parties to this Agreement. 
Recognizing the important contribution of the United Nations Convention on 
the Law of the Sea of 10 December 1982 (hereinafter referred to as "the 
Convention") to the maintenance of peace, justice and progress for all peoples 
of the world, 
Reaffirming that the seabed and ocean floor and subsoil thereof, beyond the 
limits of national jurisdiction (hereinafter referred to as "the Area"), as well 
as the resources of the Area, are the common heritage of mankind, 
Mindful of the importance of the Convention for the protection and 
preservation of the marine environment and of the growing concern for the global 
environment, 
Having considered the report of the Secretary-General of the United Nations 
on the results of the informal consultations among States held from 1990 to 1994 
on outstanding issues relating to Part XI and related provisions of the 
Convention (hereinafter referred to as "Part XI"), 
Noting the political and economic changes, including market-oriented 
approaches, affecting the implementation of Part XI, 
Wishing to facilitate universal participation in the Convention, 
Considering that an agreement relating to the implementation of Part XI 
would best meet that objective, 
Have agreed as follows: 
Article 3, 
Implementation of Part XI 
1. The States Parties to this Agreement undertake to implement Part XI in 
accordance with this Agreement. 
2. The Annex forms an integral part of this Agreement. 
Article 2 
Relationship between this Agreement and Part XI 
1. The provisions of this Agreement and Part XI shall be interpreted and 
applied together as a single instrument. In the event of any inconsistency 
It-
A/48/950 
English 
Page 12 
between this Agreement and Part XI, the provisions of this Agreement shall 
prevail. 
2. Articles 309 to 319 of the Convention shall apply to this Agreement as they 
apply to the Convention. 
Article 3 
Signature 
This Agreement shall remain open for signature at United Nations 
Headquarters by the States and entities referred to in article 305, 
paragraph 1 (a), (c), (d), (e) and (f), of the Convention for 12 months from the 
date of its adoption. 
Article 4 
Consent to be bound 
1. After the adoption of this Agreement, any instrument of ratification or 
formal confirmation of or accession to the Convention shall also represent 
consent to be bound by this Agreement. 
2. No State or entity may establish its consent to be bound by this Agreement 
unless it has previously established or establishes at the same time its consent 
to be bound by the Convention. 
3. A State or entity referred to in article 3 may express its consent to be 
bound by this Agreement by: 
(a) Signature not subject to ratification, formal confirmation or the 
procedure set out in article 5; 
(b) Signature subject to ratification or formal confirmation, followed by 
ratification or formal confirmation; 
(c) Signature subject to the procedure set out in article 5; or 
(d) Accession. 
4. Formal confirmation by the entities referred to in article 305, 
paragraph 1 (f ), of the Convention shall be in accordance with Annex IX of the 
Convention. 
5. The instruments of ratification, formal confirmation or accession shall be 
deposited with the Secretary-General of the United Nations. 
/.. 
A/48/950 
English 
Page 13 
Article 5 
Simplified procedure 
1. A State or entity which has deposited before the date of the adoption of 
this Agreement an instrument of ratification or formal confirmation of or 
accession to the Convention and which has signed this Agreement in accordance 
with article 4, paragraph 3 (c), shall be considered to have established its 
consent to be bound by this Agreement 12 months after the date of its adoption, 
unless that State or entity notifies the depositary in writing before that date 
that it is not availing itself of the simplified procedure set out in this 
article. 
2. In the event of such notification, consent to be bound by this Agreement 
shall be established in accordance with article 4, paragraph 3 (b) . 
Article 6 
Entry into force 
1. This Agreement shall enter into force 30 days after the date on which 
40 States have established their consent to be bound in accordance with 
articles 4 and 5, provided that such States include at least seven of the States 
referred to in paragraph 1 (a) of resolution II of the Third United Nations 
Conference on the Law of the Sea (hereinafter referred to as "resolution II") 
and that at least five of those States are developed States. If these 
conditions for entry into force are fulfilled before 16 November 1994, this 
Agreement ! shall enter into force on 16 November 1994. 
i 
2. For each State or entity establishing its consent to be bound by this 
Agreement after the requirements set out in paragraph 1 have been fulfilled, 
this Agreement shall enter into force on the thirtieth day following the date of 
establishment of its consent to be bound. 
Article 7 
Provisional application 
1. If on 16 November 1994 this Agreement has not entered into force, it shall 
be applied provisionally pending its entry into force by: 
(a) States which have consented to its adoption in the General Assembly of 
the United Nations, except any such State which before 16 November 1994 notifies 
the depositary in writing either that it will not so apply this Agreement or 
that it will consent to such application only upon subsequent signature or 
notification in writing; 
(b) States and entities which sign this Agreement, except any such State 
or entity which notifies the depositary in writing at the time of signature that 
it will not so apply this Agreement ,-
/... 
Zk-
A/48/950 
English 
Page 14 
(c) States and entities which consent to its provisional application by so 
notifying the depositary in writing; 
(d) States which accede to this Agreement. 
2. All such States and entities shall apply'this Agreement provisionally in 
accordance with their national or internal laws and regulations, with effect 
from 16 November 1994 or the date of signature, notification of consent or 
accession, if later. 
3. Provisional application shall terminate upon the date of entry into force 
of this Agreement. In any event, provisional application shall terminate on 
16 November 1998 if at that date the requirement in article 6, paragraph 1, of 
consent to be bound by this Agreement by at least seven of the States (of which 
at least five must be developed States) referred to in paragraph 1 (a) of 
resolution II has not been fulfilled. 
Article 8 
States Parties 
1. For the purposes of this Agreement, "States Parties" means States which 
have consented to be bound by this Agreement and for which this Agreement is in 
force. 
2. This Agreement applies mutatis mutandis to the entities referred to in 
article 305, paragraph 1 (c), (d), (e) and (f), of the Convention which become 
Parties to this Agreement in accordance with the conditions relevant to each, 
and to that extent "States Parties" refers to those entities. 
Article ? 
Depositary 
The Secretary-General of the United Nations shall be the depositary of this 
Agreement. 
/... 
A/48/950 
English 
Page 15 
Article 10 
Authentic texts 
The original of this Agreement, of which the Arabic, Chinese, English, 
French, Russian and Spanish texts are equally authentic, shall be deposited with 
the Secretary-General of the United Nations. 
IN WITNESS WHEREOF, the undersigned Plenipotentiaries, being duly 
authorized thereto, have signed this Agreement. 
DONE AT NEW YORK, this . . . day of July, one thousand nine hundred and 
ninety-four. 
/... 
-14 -
A/48/950 
English 
Page 16 
ANNEX 
SECTION 1. COSTS TO STATES PARTIES AND INSTITUTIONAL 
ARRANGEMENTS 
1. The International Seabed Authority (hereinafter referred to as "the 
Authority") is the organization through which States Parties to the Convention 
shall, in accordance with the regime for the Area established in Part XI and 
this Agreement, organize and control activities in the Area, particularly with a 
view to administering the resources of the Area. The powers and functions of 
the Authority shall be those expressly conferred upon it by the Convention. The 
Authority shall have such incidental powers, consistent with the Convention, as 
are implicit in, and necessary for, the exercise of those powers and functions 
with respect to activities in the Area. 
2. In order to minimize costs to States Parties, all organs and subsidiary 
bodies to be established under the Convention and this Agreement shall be 
cost-effective. This principle shall also apply to the frequency, duration and 
scheduling of meetings. 
3. The setting up and the functioning of the organs and subsidiary bodies of 
the Authority shall be based on an evolutionary approach, taking into account 
the functional needs of the organs and subsidiary bodies concerned in order that 
they may discharge effectively their respective responsibilities at various 
stages of the development of activities in the Area. 
4. The early functions of the Authority upon entry into force of the 
Convention shall be carried out by the Assembly, the Council, the Secretariat, 
the Legal and Technical Commission and the Finance Committee. The functions of 
the Economic Planning Commission shall be performed by the Legal and Technical 
Commission until such time as the Council decides otherwise or until the 
approval of the first plan of work for exploitation. 
5. Between the entry into force of the Convention and the approval of the 
first plan of work for exploitation, the Authority shall concentrate on: 
(a) Processing of applications for approval of plans of work for 
exploration in accordance with Part XI and this Agreement; 
(b) Implementation of decisions of the Preparatory Commission for the 
International Seabed Authority and for the International Tribunal for the Law of 
the Sea (hereinafter referred to as "the Preparatory Commission") relating to 
the registered pioneer investors and their certifying States, including their 
rights and obligations, in accordance with article 308, paragraph 5, of the 
Convention and resolution II, paragraph 13; 
(c) Monitoring of compliance with plans of work for exploration approved 
in the form of contracts; 
/... 
A/48/950 
English 
Page 17 
(d) Monitoring and review of trends and developments relating to deep 
seabed mining activities, including regular analysis of world metal market 
conditions and metal prices, trends and prospects; 
(e) Study of the potential impact of mineral production from the Area on 
the economies of developing land-based producers of those minerals which are 
likely to be most seriously affected, with a view to minimizing their 
difficulties and assisting them in their economic adjustment, taking into 
account the work done in this regard by the Preparatory Commission; 
(f) Adoption of rules, regulations and procedures necessary for the 
conduct of activities in the Area as they progress. Notwithstanding the 
provisions of Annex III, article 17, paragraph 2 (b) and (c), of the Convention, 
such rules, regulations and procedures shall take into account the terms of this 
Agreement, the prolonged delay in commercial deep seabed mining and the likely 
pace of activities in the Area,-
(g) Adoption of rules, regulations and procedures incorporating applicable 
standards for the protection and preservation of the marine environment; 
(h) Promotion and encouragement of the conduct of marine scientific 
research with respect to activities in the Area and the collection and 
dissemination of the results of such research and analysis, when available, with 
particular emphasis on research related to the environmental impact of 
activities in, the Area; 
(i) Acquisition of scientific knowledge and monitoring of the development 
of marine technology relevant to activities in the Area, in .^particular 
technology relating to the protection and preservation of the marine 
environment ; 
(j) Assessment of available data relating to prospecting and exploration; 
(k) Timely elaboration of rules, regulations and procedures for 
exploitation, including those relating to the protection and preservation of 
the marine environment. 
6. (a) An application for approval of a plan of work for exploration shall be 
considered by the Council following the receipt of a recommendation on the 
application from the Legal and Technical Commission. The processing of an 
application for approval of a plan of work for exploration shall be in 
accordance with the provisions of the Convention, including Annex III thereof, 
and this Agreement, and subject to the following: 
(i) A plan of work for exploration submitted on behalf of a State or 
entity, or any component of such entity, referred to in resolution II, 
paragraph 1 (a) (ii) or (iii), other than a registered pioneer 
investor, which had already undertaken substantial activities in the 
Area prior to the entry into force of the Convention, or its successor 
in interest, shall be considered to have met the financial and 
technical qualifications necessary for approval of a plan of work if 
the sponsoring State or States certify that the applicant has expended 
/-.-
-IS 
A/48/950 
English 
Page 18 
an amount equivalent to at least US$ 30 million in research and 
exploration activities and has expended no less than 10 per cent of 
that amount in the location, survey and evaluation of the area 
referred to in the plan of work. If the plan of work otherwise 
satisfies the requirements of the Convention and any rules, 
regulations and procedures adopted pursuant thereto, it shall be 
approved by the Council in the form of a contract. The provisions of 
section 3, paragraph 11, of this Annex shall be interpreted and 
applied accordingly; 
(ii) Notwithstanding the provisions of resolution II, paragraph 8 (a), a 
registered pioneer investor may request apprdval of a plan of work for 
exploration within 36 months of the entry into force of the 
Convention. The plan of work for exploration shall consist of 
documents, reports and other data submitted to the Preparatory 
Commission both before and after registration and shall be accompanied 
by a certificate of compliance, consisting of a factual report 
describing the status of fulfilment of obligations under the pioneer 
investor regime, issued by the Preparatory Commission in accordance 
with resolution II, paragraph 11 (a) . Such a plan of work shall be 
considered to be approved. Such an approved plan of work shall be in 
the form of a contract concluded between the Authority and the 
registered pioneer investor in accordance with Part XI and this 
Agreement. The fee of US$ 250,000 paid pursuant to resolution II, 
paragraph 7 (a), shall be deemed to be the fee relating to the 
exploration phase pursuant to section 8, paragraph 3, of this'Annex. 
Section 3, paragraph 11, of this Annex shall be interpreted and 
applied accordingly; 
(iii) In accordance with the principle of non-discrimination, a contract 
with a State or entity or any component of such entity referred to in 
subparagraph (a) (i) shall include arrangements which shall be similar 
to and no less favourable than those agreed with any registered 
pioneer investor referred to in subparagraph (a) (ii) . If any of the 
States or entities or any components of such entities referred to in 
subparagraph (a) (i) are granted more favourable arrangements, the 
Council shall make similar and no less favourable arrangements with 
regard to the rights and obligations assumed by the registered pioneer 
investors referred to in subparagraph (a) (ii), provided that such 
arrangements do not affect or prejudice the interests of the 
Authority; 
(iv) A State sponsoring an application for a plan of work pursuant to the 
provisions of subparagraph (a) (i) or (ii) may be a State Party or a 
State which is applying this Agreement provisionally in accordance 
with article 7, or a State which is a member of the Authority on a 
provisional basis in accordance with paragraph 12; 
(v) Resolution II, paragraph 8 (c), shall be interpreted and applied in 
accordance with subparagraph (a) (iv). 
/•• 
A/48/950 
English 
Page 19 
(b) The approval of a plan of work for exploration shall be in accordance 
with article 153, paragraph 3, of the Convention. 
7. An application for approval of a plan of work shall be accompanied by an 
assessment of the potential environmental impacts of the proposed activities and 
by a description of a programme for océanographie and baseline environmental 
studies in accordance with the rules, regulations and procedures adopted by the 
Authority. 
8. An application for approval of a plan of work for exploration, subject to 
paragraph 6 (a) (i) or (ii), shall be processed in accordance with the 
procedures set out in section 3, paragraph 11, of this Annex. 
9. A plan of work for exploration shall be approved for a period of 15 years. 
Upon the expiration of a plan of work for exploration, the contractor shall 
apply for a plan of work for exploitation unless the contractor has already 
done so or has obtained an extension for the plan of work for exploration. 
Contractors may apply for such extensions for periods of not more than 
five years each. Such extensions shall be approved if the contractor has made 
efforts in good faith to comply with the requirements of the plan of work but 
for reasons beyond the contractor's control has been unable to complete the 
necessary preparatory work for proceeding to the exploitation stage or if the 
prevailing economic circumstances do not justify proceeding to the exploitation 
stage. 
10. Désignâtion,of a reserved area for the Authority in accordance with 
Annex III, article 8, of the Convention shall take place in connection with 
approval of an application for a plan of work for exploration or approval of an 
application for a plan of work for exploration and exploitation. 
11. Notwithstanding the provisions of paragraph 9, an approved plan of work for 
exploration which is sponsored by at least one State provisionally applying this 
Agreement shall terminate if such a State ceases to apply this Agreement 
provisionally and has not become a member on a provisional basis in accordance 
with paragraph 12 or has not become a State Party. 
12. Upon the entry into force of this Agreement, States and entities referred 
to in article 3 of this Agreement which have been applying it provisionally in 
accordance with article 7 and for which it is not in force may continue to be 
members of the Authority on a provisional basis pending its entry into force for 
such States and entities, in accordance with the following subparagraphs: 
(a) If this Agreement enters into force before 16 November 1996, such 
States and entities shall be entitled to continue to participate as members of 
the Authority on a provisional basis upon notification to the depositary of the 
Agreement by such a State or entity of its intention to participate as a member 
on a provisional basis. Such membership shall terminate either on 
16 November 1996 or upon the entry into force of this Agreement and the 
Convention for such member, whichever is earlier. The Council may, upon the 
request of the State or entity concerned, extend such membership beyond 
16 November 1996 for a further period or periods not exceeding a total of 
two years provided that the Council is satisfied that the State or entity 
ko -
A/48/950 
English 
Page 20 
concerned has been making efforts in good faith to become a party to the 
Agreement and the Convention; 
(b) If this Agreement enters into force after 15 November 1996, such 
States and entities may request the Council to grant continued membership in the 
Authority on a provisional basis for a period or periods not extending beyond 
16 November 1998. The Council shall grant such membership with effect from the 
date of the request if it is satisfied that the State or entity has been making 
efforts in good faith to become a party to the Agreement and the Convention; 
(c) States and entities which are members of the Authority on a 
provisional basis in accordance with subparagraph (a) or (b) shall apply the 
terms of Part XI and this Agreement in accordance with their national or 
internal laws, regulations and annual budgetary appropriations and shall have 
the same rights and obligations as other members, including: 
(i) The obligation to contribute to the administrative budget of the 
Authority in accordance with the scale of assessed contributions; 
(ii) The right to sponsor an application for approval of a plan of work for 
exploration. In the case of entities whose components are natural or 
juridical persons possessing the nationality of more than one State, a 
plan of work for exploration shall not be approved unless all the 
States whose natural or juridical persons comprise those entities are 
States Parties or members on a provisional basis ; 
(d) Notwithstanding the provisions of paragraph 9, an approved plan of 
work in the form of a contract for exploration which was sponsored pursuant to 
subparagraph (c) (ii) by a State which was a member on a provisional basis shall 
terminate if such membership ceases and the State or entity has not become a 
State Party; 
(e) If such a member has failed to make its assessed contributions or 
otherwise failed to comply with its obligations in accordance with this 
paragraph, its membership on a provisional basis shall be terminated. 
13. The reference in Annex III, article 10, of the Convention to performance 
which has not been satisfactory shall be interpreted to mean that the contractor 
has failed to comply with the requirements of an approved plan of work in spite 
of a written warning or warnings from the Authority to the contractor to comply 
therewith. 
14. The Authority shall have its own budget. Until the end of the year 
following the year during which this Agreement enters into force, the 
administrative expenses of the Authority shall be met through the budget of the 
United Nations. Thereafter, the administrative expenses of the Authority shall 
be met by assessed contributions of its members, including any members on a 
provisional basis, in accordance with articles 171, subparagraph (a), and 173 of 
the Convention and this Agreement, until the Authority has sufficient funds from 
other sources to meet those expenses. The Authority shall not exercise the 
power referred to in article 174, paragraph 1, of the Convention to borrow funds 
to finance its administrative budget. 
A/48/950 
English 
Page 21 
15. The Authority shall elaborate and adopt, in accordance with article 162, 
paragraph 2 (o) (ii), of the Convention, rules, regulations and procedures based 
on the principles contained in sections 2, 5, €, 7 and 8 of this Annex, as well 
as any additional rules, regulations and procedures necessary to facilitate the 
approval of plans of work for exploration or exploitation, in accordance with 
the following subparagraphs: 
(a) The Council may undertake such elaboration any time it deems that all 
or any of such rules, regulations or procedures are required for the conduct of 
activities in the Area, or when it determines that commercial exploitation is 
imminent, or at the request of a State whose national intends to apply for 
approval of a plan of work for exploitation; 
(b) If a request is made by a State referred to in subparagraph (a) the 
Council shall, in accordance with article 162, paragraph 2 (o), of the 
Convention, complete the adoption of such rules, regulations and procedures 
within two years of the request; 
(c) If the Council has not completed the elaboration of the rules, 
regulations and procedures relating to exploitation within the prescribed time 
and an application for approval of a plan of work for exploitation is pending, 
it shall none the less consider and provisionally approve such plan of work 
based on the provisions of the Convention and any rules, regulations and 
procedures that the Council may have adopted provisionally, or on the basis of 
the norms contained in the Convention and the terms and principles contained in 
this Annex as\ well as the principle of non-discrimination among contractors. 
16. The draft rules, regulations and procedures and any recommendations 
relating to the provisions of Part XI, as contained in the reports and 
recommendations of the Preparatory Commission, shall be taken into account by 
the Authority in the adoption of rules, regulations and procedures in accordance 
with Part XI and this Agreement. 
17. The relevant provisions of Part XI, section 4, of the Convention shall be 
interpreted and applied in accordance with this Agreement. 
SECTION 2. THE ENTERPRISE 
1. The Secretariat of the Authority shall perform the functions of the 
Enterprise until it begins to operate independently of the Secretariat. The 
Secretary-General of the Authority shall appoint from within the staff of the 
Authority an interim Director-General to oversee the performance of these 
functions by the Secretariat. 
These functions shall be: 
(a) Monitoring and review of trends and developments relating to deep 
seabed mining activities, including regular analysis of world metal market 
conditions and metal prices, trends and prospects; 
/- •-
U2 
A/48/950 
English 
page 22 
(b) Assessment of the results of the conduct of marine scientific research 
with respect to activities in the Area, with particular emphasis on research 
related to the environmental impact of activities in the Area; 
(c) Assessment of available data relating to prospecting and exploration, 
including the criteria for such activities; 
(d) Assessment of technological developments relevant to activities in the 
Area, in particular technology relating to the protection and preservation of 
the marine environment; 
(e) Evaluation of information and data relating to areas reserved for the 
Authority; 
(f) Assessment of approaches to joint-venture operations; 
(g) Collection of information on the availability of trained manpower; 
(h) Study of managerial policy options for the administration of the 
Enterprise at different stages of its operations. 
2. The Enterprise shall conduct its initial deep seabed mining operations 
through joint ventures. 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 shall 
take up the issue of the functioning of the Enterprise independently of the 
Secretariat of\the Authority. If joint-venture operations with the Enterprise 
accord with sound commercial principles, the Council shall issue a directive 
pursuant to article 170, paragraph 2, of the Convention providing for such 
independent functioning. 
3. The obligation of States Parties to fund one mine site of the Enterprise as 
provided for in Annex TV, article 11, paragraph 3, of the Convention shall not 
apply and States Parties shall be under no obligation to finance any of the 
operations in any mine site of the Enterprise or under its joint-venture 
arrangements. 
4. The obligations applicable to contractors shall apply to the Enterprise. 
Notwithstanding the provisions of article 153, paragraph 3, and Annex III, 
article 3, paragraph 5, of the Convention, a plan of work for the Enterprise 
upon its approval shall be in the form of a contract concluded between the 
Authority and the Enterprise. 
5. A contractor which has contributed a particular area to the Authority as a 
reserved area has the right of first refusal to enter into a joint-venture 
arrangement with the Enterprise for exploration and exploitation of that area. 
If the Enterprise does not submit an application for a plan of work for 
activities in respect of such a reserved area within 15 years of the 
commencement of its functions independent of the Secretariat of the Authority or 
within 15 years of the date on which that area is reserved for the Authority, 
whichever is the later, the contractor which contributed the area shall be 
/.-• 
A/48/950 
English 
Page 23 
entitled to apply for a plan of work for that area provided it offers in good 
faith to include the Enterprise as a joint-venture partner. 
6. Article 170, paragraph 4, Annex IV and other provisions of the Convention 
relating to the Enterprise shall be interpreted and applied in accordance with 
this section. 
SECTION 3. DECISION-MAKING 
1. The general policies of the Authority shall be established by the Assembly 
in collaboration with the Council. 
2. As a general rule, dec is ion-making in the organs of the Authority should be 
by consensus. 
3. If all efforts to reach a decision by consensus have been exhausted, 
decisions by voting in the Assembly on questions of procedure shall be taken by 
a majority of members present and voting, and decisions on questions of 
substance shall be taken by a two-thirds majority of members present and voting, 
as provided for in article 159, paragraph 8, of the Convention. 
4. Decisions of the Assembly on any matter for which the Council also has 
competence or on any administrative, budgetary or financial matter shall be 
based on the recommendations of the Council. If the Assembly does not accept 
the recommendation of the Council on any matter, it shall return the matter to 
the Council for further consideration. The Council shall reconsider the matter 
in the light of the views expressed by the Assembly. 
5. If all efforts to reach a decision by consensus have been exhausted, 
decisions by voting in the Council on questions of procedure shall 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. In taking decisions the Council shall seek to 
promote the interests of all the members of the Authority. 
6. The Council may defer the taking of a decision in order to facilitate 
further negotiation whenever it appears that all efforts at achieving consensus 
on a question have not been exhausted. 
7. Decisions by the Assembly or the Council having financial or budgetary 
implications shall be based on the recommendations of the Finance Committee. 
8. The provisions of article 161, paragraph 8 (b) and (c), of the Convention 
shall not apply. 
9. (a) Each group of States elected under paragraph 15 (a) to (c) shall be 
treated as a chamber for the purposes of voting in the Council. The developing 
States elected under paragraph 15 (d) and (e) shall be treated as a single 
chamber for the purposes of voting in the Council. 
/... 
kk-
A/48/950 
English 
Page 24 
(b) Before electing the members of the Council, the Assembly shall 
establish lists of countries fulfilling the criteria for membership in the 
groups of States in paragraph 15 (a) to (d). If a State fulfils the criteria 
for membership in more than one group, it may only be proposed by one group for 
election to the Council and it shall represent only that group in voting in the 
Council. 
10. Each group of States in paragraph 15 (a) to (d) shall be represented in the 
Council by those members nominated by that group. Each group shall nominate 
only as many candidates as the number of seats required to be filled by that 
group. When the number of potential candidates in each of the groups referred 
to in paragraph 15 (a) to (e) exceeds the number of seats available in each of 
those respective groups, as a general rule, the principle of rotation shall 
apply. States members of each of those groups shall determine how this 
principle shall apply in those groups. 
11. (a) The Council shall approve a recommendation by the Legal and Technical 
Commission for approval of a plan of work unless by a two-thirds majority of its 
members present and voting, including a majority of members present and voting 
in each of the chambers of the Council, the Council decides to disapprove a plan 
of work. If the Council does not take a decision on a recommendation for 
approval of a plan of work within a prescribed period, the recommendation shall 
be deemed to have been approved by the Council at the end of that period. The 
prescribed period shall normally be 60 days unless the Council decides to 
provide for a longer period. If the Commission recommends the disapproval of a 
plan of work «or does not make a recommendation, the Council may nevertheless 
approve the plan of work in accordance with its rules of procedure for 
decision-making on questions of substance. 
(b) The provisions of article 162, paragraph 2 (j), of the Convention 
shall not apply. 
12. Where a dispute arises relating to the disapproval of a plan of work, such 
dispute shall be submitted to the dispute settlement procedures set out in the 
Convention. 
13. Decisions by voting in the Legal and Technical Commission shall be by a 
majority of members present and voting. 
14. Part XI, section 4, subsections B and C, of the Convention shall be 
interpreted and applied in accordance with this section. 
15. The Council shall consist of 36 members of the Authority elected by the 
Assembly in the following order: 
(a) Four members from among those States Parties which, during the last 
five years for which statistics are available, have either consumed more than 
2 per cent in value terms of total world consumption or have had net imports of 
more than 2 per cent in value terms of total world imports of the commodities 
produced from the categories of minerals to be derived from the Area, provided 
that the four members shall include one State from the Eastern European region 
having the largest economy in that region in terms of gross domestic product and 
/... 
A/48/950 
English 
Page 25 
the State, on the date of entry into force of the Convention, having the largest 
economy in terms of gross domestic product, if such States wish to be 
represented in this group; 
(b) Four members from among the eight States Parties which have made the 
largest investments in preparation for and in the conduct of activities in the 
Area, either directly or through their nationals; 
(c) Four members from among States Parties which, on the basis of 
production in areas under their jurisdiction, are major net exporters of the 
categories of minerals to be derived from the Area, including at least two 
developing States whose exports of such minerals have a substantial bearing upon 
their economies; 
(d) Six members from among developing States Parties, representing special 
interests. The special interests to be represented shall include those of 
States with large populations, States which are land-locked or geographically 
disadvantaged, island States, States which are major importers of the categories 
of minerals to be derived from the Area, States which are potential producers of 
such minerals and least developed States; 
(e) Eighteen members elected according to the principle of ensuring an 
equitable geographical distribution of seats in the Council as a whole, provided 
that each geographical region shall have at least one member elected under this 
subparagraph. For this purpose, the geographical regions shall be Africa, Asia, 
Eastern Europe, Latin America and the Caribbean and Western Europe and Others. 
16. The provisions of article 161, paragraph 1, of the Convention shall not 
apply. 
SECTION 4. REVIEW CONFERENCE 
The provisions relating to the Review Conference in article 155, 
paragraphs 1, 3 and 4, of the Convention shall not apply. Notwithstanding the 
provisions of article 314, paragraph 2, of the Convention, the Assembly, on the 
recommendation of the Council, may undertake at any time a review of the matters 
referred to in article 155, paragraph 1, of the Convention. Amendments relating 
to this Agreement and Part XI shall be subject to the procedures contained in 
articles 314, 315 and 316 of the Convention, provided that the principles, 
regime and other terms referred to in article 155, paragraph 2, of the 
Convention shall be maintained and the rights referred to in paragraph 5 of that 
article shall not be affected. 
/-
U -
A/48/950 
English 
Page 26 
SECTION 5. TRANSFER OF TECHNOLOGY 
1. In addition to the provisions of article 144 of the Convention, transfer of 
technology for the purposes of Part XI shall be governed by the following 
principles : 
(a) The Enterprise, and developing States wishing to obtain deep seabed 
mining technology, shall seek to obtain such technology on fair and reasonable 
commercial terms and conditions on the open market, or through joint-venture 
arrangements ; 
(b) If the Enterprise or developing States are unable to obtain deep 
seabed mining technology, the Authority may request all or any of the 
contractors and their respective sponsoring State or States to cooperate with it 
in facilitating the acquisition of deep seabed mining technology by the 
Enterprise or its joint venture, or by a developing State or States seeking to 
acquire such technology on fair and reasonable commercial terms and conditions, 
consistent with the effective protection of intellectual property rights. 
States Parties undertake to cooperate fully and effectively with the Authority 
for this purpose and to ensure that contractors sponsored by them also cooperate 
fully with the Authority; 
(c) As a-general rule, States Parties shall promote international 
technical and scientific cooperation with regard to activities in the Area 
either between the parties concerned or by developing training, technical 
assistance and scientific cooperation programmes in marine science and 
technology and the protection and preservation of the marine environment. 
2. The provisions of Annex III, article 5, of the Convention shall not apply. 
SECTION 6. PRODUCTION POLICY 
l. The production policy of the Authority shall be based on the following 
principles : 
(a) Development of the resources of the Area shall take place in 
accordance with sound commercial principles; 
(b) The provisions of the General Agreement on Tariffs and Trade; its 
relevant codes and successor or superseding agreements shall apply with respect 
to activities in the Area; 
(c) In particular, there shall be no subsidization of activities in the 
Area except as may be permitted under the agreements referred to in 
subparagraph (b). Subsidization for the purpose of these principles shall be 
defined in terms of the agreements referred to in subparagraph (b) ; 
(d) There shall be no discrimination between minerals derived from the 
Area and from other sources. There shall be no preferential access to markets 
for such minerals or for imports of commodities produced from such minerals, in 
particular: 
/•• 
A/48/950 
English 
Page 27 
(i) By the use of tariff or non-tariff barriers; and 
(ii) Given by States Parties to such minerals or commodities produced by 
their state enterprises or by natural or juridical persons which possess their 
nationality or are controlled by them or their nationals; 
(e) The plan of work for exploitation approved by the Authority in respect 
of each mining area shall indicate an anticipated production schedule which 
shall include the estimated maximum amounts of minerals that would be produced 
per year under the plan of work; 
(f) The following shall apply to the settlement of disputes concerning the 
provisions of the agreements referred to in subparagraph (b): 
(i) Where the States Parties concerned are parties to such agreements, 
they shall have recourse to the dispute settlement procedures of those 
agreements ; 
(ii) Where one or more of the States Parties concerned are not parties to 
such agreements, they shall have recourse to the dispute settlement 
procedures set out in the Convention; 
(g) In circumstances where a determination is made under the agreements 
referred to in subparagraph (b) that a State Party has engaged in subsidization 
which is prohibited or has resulted in adverse effects on the interests of 
another State Party and appropriate steps have not been taken by the relevant 
State Party or States Parties, a State Party may request the Council to take 
appropriate measures. 
2. The principles contained in paragraph 1 shall not affect the rights and 
obligations under any provision of the agreements referred to in 
paragraph 1 (b), as well as the relevant free trade and customs union 
agreements, in relations between States Parties which are parties to such 
agreements. 
3. The acceptance by a contractor of subsidies other than those which may be 
permitted under the agreements referred to in paragraph 1 (b) shall constitute a 
violation of the fundamental terms of the contract forming a plan of work for 
the carrying out of activities in the Area. 
4. Any State Party which has reason to believe that there has been a breach of 
the requirements of paragraphs 1 (b) to (d) or 3 may initiate dispute settlement 
procedures in conformity with paragraph 1 (f ) or (g) . 
5. A State Party may at any time bring to the attention of the Council 
activities which in its view are inconsistent with the requirements of 
paragraph 1 (b) to (d). 
6. The Authority shall develop rules, regulations and procedures which ensure 
the implementation of the provisions of this section, including relevant rules, 
regulations and procedures governing the approval of plans of work. 
/. . 
U-
A/48/950 
English 
Page 28 
7. The provisions of article 151, paragraphs 1 to 7 and 9, article 162, 
paragraph 2 (q), article 165, paragraph 2 (n), and Annex III, article 6, 
paragraph 5, and article 7, of the Convention shall not apply. 
SECTION 7. ECONOMIC ASSISTANCE 
1. The policy of the Authority of assisting developing countries which suffer 
serious adverse effects on their export earnings or economies resulting from a 
reduction in the price of an affected mineral or in the volume of exports of 
that mineral, to the extent that such reduction is caused by activities in the 
Area, shall be based on the following principles: 
(a) 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. The amount set aside for this purpose 
shall be determined by the Council from time to time, upon the recommendation of 
the Finance Committee. Only funds from payments received from contractors, 
including the Enterprise, and voluntary contributions shall be used for the 
establishment of the economic assistance fund; 
(b) Developing land-based producer States whose economies have been 
determined to be seriously affected by the production of minerals from the deep 
seabed shall be assisted from the economic assistance fund of the Authority; 
(c) The Authority shall provide assistance from the fund to affected 
developing land-based producer States, where appropriate, in cooperation with 
existing global or regional development institutions which have the 
infrastructure and expertise to carry out such assistance programmes; 
(d) The extent and period of such assistance shall be determined on a 
case-by-case basis. In doing so, due consideration shall be given to the nature 
and magnitude of the problems encountered by affected developing land-based 
producer States. 
2. Article 151, paragraph 10, of the Convention shall be implemented by means 
of measures of economic assistance referred to in paragraph 1. Article 160, 
paragraph 2 (1), article 162, paragraph 2 (n) , article 164, paragraph 2 (d) , 
article 171, subparagraph (f), and article 173, paragraph 2 (c), of the 
Convention shall be interpreted accordingly. 
SECTION 8. FINANCIAL TERMS OF CONTRACTS 
1. The following principles shall provide the basis for establishing rules, 
regulations and procedures for financial terms of contracts: 
(a) The system of payments to the Authority shall be fair both to the 
contractor and to the Authority and shall provide adequate means of determining 
compliance by the contractor with such system; 
A/48/950 
English 
Page 29 
(b) The rates of payments under the system shall be within the range of 
those prevailing in respect of land-based mining of the same or similar minerals 
in order to avoid giving deep seabed miners an artificial competitive advantage 
or imposing on them a competitive disadvantage; 
(c) The system should not be complicated and should not impose major 
administrative costs on the Authority or on a contractor. Consideration should 
be given to the adoption of a royalty system or a combination of a royalty and 
profit-sharing system. If alternative systems are decided upon, the contractor 
has the right to choose the system applicable to its contract. Any subsequent 
change in choice between alternative systems, however, shall be made by 
agreement between the Authority and the contractor; 
(d) An annual fixed fee shall be payable from the date of commencement of 
commercial production. This fee may be credited against other payments due 
under the system adopted in accordance with subparagraph (c) . The amount of the 
fee shall be established by the Council; 
(e) The system of payments may be revised periodically in the light of 
changing circumstances. Any changes shall be applied in a non-discriminatory 
manner. Such changes may apply to existing contracts only at the election of 
the contractor. Any subsequent change in choice between alternative systems 
shall be made by agreement between the Authority and the contractor; 
(f ) Disputes concerning the interpretation or application of the rules and 
regulations based on these principles shall be subject to the dispute settlement 
procedures set out in the Convention. 
2. The provisions of Annex III, article 13, paragraphs 3 to 10, of the 
Convention shall not apply. 
3. With regard to the implementation of Annex III, article 13, paragraph 2, of 
the Convention, the fee for processing applications for approval of a plan of 
work limited to one phase, either the exploration phase or the exploitation 
phase, shall be US$ 250,000. 
SECTION 9. THE FINANCE COMMITTEE 
1. There is hereby established a Finance Committee. The Committee shall be 
composed of 15 members with appropriate qualifications relevant to financial 
matters. States Parties shall nominate candidates of the highest standards of 
competence and integrity. 
2. No two members of the Finance Committee shall be nationals of the same 
State Party. 
3. Members of the Finance Committee shall be elected by the Assembly and due 
account shall be taken of the need for equitable geographical distribution and 
the representation of special interests. Each group of States referred to in 
section 3, paragraph 15 (a) , (b) , (c) and (d) , of this Annex shall be 
represented on the Committee by at least one member. Until the Authority has 
/-
-So -
A/48/950 
English 
Page 30 
sufficient funds other than assessed contributions to meet its administrative 
expenses, the membership of the Committee shall include representatives of the 
five largest financial contributors to the administrative budget of the 
Authority. Thereafter, the election of one member from each group shall be on 
the basis of nomination by the members of the respective group, without 
prejudice to the possibility of further members being elected from each group. 
4. Members of the Finance Committee shall hold office for a term of five 
years. They shall be eligible for re-election for a further term. 
5. In the event of the death, incapacity or resignation of a member of the 
Finance Committee prior to the expiration of the term of office, the Assembly 
shall elect for the remainder of the term a member from the same geographical 
region or group of States. 
6. Members of the Finance Committee shall have no financial interest in any 
activity relating to matters upon which the Committee has the responsibility to 
make recommendations. They shall not disclose, even after the termination of 
their functions, any confidential information coming to their knowledge by 
reason of their duties for the Authority. 
7. Decisions by the Assembly and the Council on the following issues shall 
take into account recommendations of the Finance Committee: 
(a) Draft financial rules, regulations and procedures of the organs of the 
Authority and the financial management and internal financial administration of 
the Authority; 
(b) Assessment of contributions of members to the administrative budget of 
the Authority in accordance with article 160, paragraph 2 (e), of the 
Convention; 
(c) All relevant financial matters, including the proposed annual budget 
prepared by the Secretary-General of the Authority in accordance with 
article 172 of the Convention and the financial aspects of the implementation of 
the programmes of work of the Secretariat; 
(d) The administrative budget; 
(e) Financial obligations of States Parties arising from the 
implementation of this Agreement and Part XI as well as the administrative and 
budgetary implications of proposals and recommendations involving expenditure 
from the funds of the Authority; 
(f) Rules, regulations and procedures on the equitable sharing of 
financial and other economic benefits derived from activities in the Area and 
the decisions to be made thereon. 
8. Decisions in the Finance Committee on questions of procedure shall be taken 
by a majority of members present and voting. Decisions on questions of 
substance shall be taken by consensus. 
A/48/950 
English 
Page 31 
9. The requirement of article 162, paragraph 2 (y) , of the Convention to 
establish a subsidiary organ to deal with financial matters shall be deemed to 
have been fulfilled by the establishment of the Finance Committee in accordance 
with this section. 
/. -
-S^ 
A/48/950 
English 
Page 32 
ANNEX II 
Informal Understanding to be read by the President of 
the General Assembly at the time of the adoption of 
the resolution 
Once there is a widespread participation in the International Seabed 
Authority and the number of members of each regional group participating in the 
Authority is substantially similar to its membership in the United Nations, it 
is understood that each regional group would be represented in the Council of 
the Authority as a whole by at least three members. 
ISSN 0254-1475 
COM(94) 305 final 
DOCUMENTS 
EN 11 
Catalogue number : CB-CO-94-322-EN-C 
ISBN 92-77-71561-8 
Offîce for Official Publications of the European Communities 
L-29&5 Luxembourg