Proposal for a COUNCIL DECISION 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
Date: 1994-07-13
Institutions: European Commission
Subjects: EU Member State, European Community, UN convention, international agreement, law of the sea, signature of an agreement

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. 

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. 

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 
modifications  of  Part  XI  to  which  they  have  agreed,  have  produced  the  intended  result, 
that is the acceptance of the Convention by industrialised  States. 

the  developing  States 

the  assurance 

that 

2.3. 

2.4. 

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 
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. 

the  obligation 

to  contribute 

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. 

these  principles  by  the 
The  Convention  does  not  sufficiently  counter-balance 
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 
the 
any  administrative,  budgetary  or  financial  matter,  shall  be  based  on 
recommendation  of 
the 
the  Assembly  does  not  accept 
recommendation,  it shall return the matter to the Council which has to reconsider it 
in the light of the views expressed by the Assembly. 

the  Council.  If 

•  In the Council, four chambers are established: 

1. 

2. 

3. 

4. 

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); 

four members representing the eight largest investors; 

four  members  representing  the  land-based  producers,  including  at  least  two 
developing States; 

the  developing  States  elected  as  the  six  developing  States  with  special 
interests  and 
to  the  principle  of  equitable 
geographical  distribution. 

those  elected  according 

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 
the  maintenance  of  non-competitive 
new  economic  circumstances  but  favour 
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. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

CONCLUSION 

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. 

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. 

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. 

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. 

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. 

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 
the 
emphasize  this  common  intention  by  jointly  and  simultaneously  signing 
agreement at that date. 

III. ACTION PROPOSED 

1. 

2. 

3. 

4. 

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. 

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. 

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. 

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 

Proposal for a Council Decision of 

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 

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. 

2. 

3. 

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. 

The President  of the Council  is hereby authorized  to designate the person  empowered 
to sign the Agreement. 

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 

General Assembly 

A 

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 

REPORT OF THE SECRETARY-GENERAL 

CONTENTS 

Annexes 

Paragraphs  Page 

1 - 28 

2 

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 

II.  Informal Understanding to be read by the President of the General 

Assembly at the time of the adoption of the resolution 

8 

32 

94-24482  (E)  150694 

15/06/94 

11 

A/48/950 
English 
Page 2 

REPORT OF THE SECRETARY-GENERAL 

In July 1990 the Secretary-General, Mr. Javier Pérez de Cuéllar, took the 

1. 
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. 

He noted that in the eight years that had elapsed since the Convention was 

2. 
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. 

These informal consultations took place in the years 1990 to 1994, during 
4. 
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^^ 

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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-

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(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". 

/. • • 

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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 

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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 

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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. 

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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. 

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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. 

/.. 

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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 

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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 

The States Parties to this Agreement undertake to implement  Part XI in 

1. 
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-

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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. 

Formal confirmation by the entities referred to in article 305, 

4. 
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. 

/.. 

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Article 5 

Simplified procedure 

A State or entity which has deposited before the date of the adoption of 

1. 
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. 

In the event of such notification, consent to be bound by this Agreement 

2. 
shall be established  in accordance with article 4, paragraph 3  (b) . 

Article 6 

Entry into force 

This Agreement shall enter into force 30 days after the date on which 

1. 
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 

For each State or entity establishing its consent to be bound by this 

2. 
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 

If on 16 November 1994 this Agreement has not entered  into force, it shall 

1. 
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-

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(c)  States  and  entities  which  consent  to  its  provisional  application  by  so 

notifying  the  depositary  in  writing; 

(d)  States  which  accede  to  this  Agreement. 

All  such  States  and  entities  shall  apply'this  Agreement  provisionally  in 

2. 
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. 

Provisional  application  shall  terminate  upon  the  date  of  entry  into  force 

3. 
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 

For  the purposes  of  this  Agreement,  "States  Parties" means  States  which 

1. 
have  consented  to  be  bound  by  this Agreement  and  for which  this  Agreement  is  in 
force. 

This  Agreement  applies  mutatis  mutandis  to  the  entities  referred  to  in 

2. 
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. 

/... 

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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. 

/... 

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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. 

In order to minimize costs to States Parties, all organs and  subsidiary 

2. 
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; 

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(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. 

(a)  An  application  for approval  of  a plan of  work  for exploration  shall  be 

6. 
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 

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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). 

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(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. 

An application for approval of a plan of work for exploration, subject to 

8. 
paragraph 6  (a)  (i) or  (ii), shall be processed in accordance with the 
procedures set out in section 3, paragraph 11, of this Annex. 

A plan of work for exploration shall be approved for a period of 15 years. 

9. 
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 

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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. 

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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; 

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(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. 

The  Enterprise  shall  conduct  its  initial  deep  seabed  mining  operations 

2. 
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. 

The  obligation  of  States  Parties  to  fund one  mine  site  of  the  Enterprise  as 

3. 
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. 

The  obligations  applicable  to  contractors  shall  apply  to  the  Enterprise. 

4. 
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. 

A  contractor  which  has  contributed  a particular  area  to  the Authority  as  a 

5. 
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 

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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. 

Article 170, paragraph 4, Annex IV and other provisions of the Convention 
6. 
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. 

As a general rule, dec is ion-making in the organs of the Authority should be 

2. 
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. 

Decisions by the Assembly or the Council having financial or budgetary 

7. 
implications shall be based on the recommendations of the Finance Committee. 

The provisions of article 161, paragraph 8  (b) and  (c), of the Convention 

8. 
shall not apply. 

(a)  Each group of States elected under paragraph 15  (a) to  (c) shall be 

9. 
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. 

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(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 

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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. 

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SECTION  5.  TRANSFER  OF  TECHNOLOGY 

In addition  to  the provisions  of  article  144  of  the  Convention,  transfer  of 

1. 
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 

The production  policy  of  the Authority  shall  be  based  on  the  following 

l. 
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: 

/ •• 

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(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. 

The principles  contained  in paragraph  1 shall not affect  the  rights  and 

2. 
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. 

The acceptance  by  a  contractor of  subsidies  other  than those  which may  be 

3. 
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) . 

A  State  Party may  at  any  time bring  to the attention of  the  Council 

5. 
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-

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The  provisions  of  article  151, paragraphs  1  to  7 and  9,  article  162, 

7. 
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 

The policy  of  the Authority  of  assisting  developing  countries  which  suffer 

1. 
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. 

Article  151, paragraph  10, of  the  Convention  shall  be  implemented  by  means 

2. 
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 

The  following  principles  shall  provide  the  basis  for  establishing  rules, 

1. 
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; 

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(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. 

The  provisions  of  Annex  III, article  13, paragraphs  3  to  10, of  the 

2. 
Convention  shall  not  apply. 

With  regard  to  the  implementation  of Annex  III, article  13, paragraph  2, of 

3. 
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 

There  is  hereby  established  a  Finance  Committee.  The  Committee  shall  be 

1. 
composed  of  15 members  with  appropriate  qualifications  relevant  to  financial 
matters.  States  Parties  shall  nominate  candidates  of  the  highest  standards  of 
competence  and  integrity. 

No  two members  of  the  Finance  Committee  shall  be  nationals  of  the  same 

2. 
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 

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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. 

Members  of  the  Finance  Committee  shall  hold  office  for  a  term  of  five 

4. 
years.  They  shall  be  eligible  for  re-election  for a  further  term. 

In  the  event  of  the  death,  incapacity  or  resignation  of a  member  of  the 

5. 
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. 

Members  of  the  Finance  Committee  shall  have  no  financial  interest  in  any 

6. 
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. 

Decisions  by  the Assembly  and  the  Council  on  the  following  issues  shall 

7. 
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. 

Decisions  in  the  Finance  Committee  on  questions  of  procedure  shall  be  taken 

8. 
by  a majority  of  members  present  and  voting.  Decisions  on  questions  of 
substance  shall  be  taken  by  consensus. 

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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. 

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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