The new Convention on the Legal Status of the Caspian Sea: New Opportunities and New Challenges
A new legal regime for the Caspian Sea
Since the dissolution of the Soviet Union at the beginning of the 1990s, the legal status and the division of the Caspian Sea and its resources between its five coastal States (Azerbaijan, Iran, Kazakhstan, the Russian Federation, and Turkmenistan) has remained unresolved. Before 1991, the Caspian Sea had only two coastal States – the Soviet Union and Iran. They treated it as a lake and defined its legal status and their cooperation in the Caspian Sea by several bilateral agreements.
However, the new coastal States could not agree on the regime and on the division of the Caspian Sea. Some of them claimed that the Caspian Sea was subject to the rules of the international law of the sea and of the United Nations Convention on the Law of the Sea (UNCLOS). Others considered that this body of water was a shared lake and that the coastal States needed to determine the legal status of the waters and the subsoil of the Caspian Sea between themselves. Iran, for instance, always considered the Caspian Sea to be a condominum over which all the coastal States jointly exercised sovereignty, including the right to an equal share in its abundant natural resources.
The Convention on the Legal Status of the Caspian Sea (the Convention) has now settled these longstanding difficulties by determining a sui generis regime for the Caspian Sea. The Convention was signed by the five coastal States (the Parties) on 12 August 2018. It will enter into force once all signatories have ratified it.
The Convention defines the legal status of the waters, the seabed, and the subsoil of the Caspian Sea. It regulates the use of natural resources and the airspace over the sea. The new regime for the Caspian Sea under the Convention constitutes a compromise. It establishes sovereign and exclusive rights for each of the coastal States in their respective “territorial waters” and seabed and subsoil “sectors”. But it also recognizes far-reaching liberties for the common use of the Caspian Sea by all of the coastal States.
Key issues addressed by the Convention
The key issues covered by the Convention concern the legal status of the waters, the seabed and the subsoil, demarcation, natural resources, fisheries and navigation. Some issues are left to be determined by further bilateral or multilateral agreements between the coastal States.
The Convention reserves all rights over the Caspian Sea and its resources to the five coastal States. It excludes access to and the use of the Caspian Sea by third States.
The waters of the Caspian Sea are divided into three zones: territorial waters, fishery zones and the “common maritime space”. The territorial waters extend from the baseline (i.e., the coastline or simplified straight lines along the coast) up to 15 nautical miles. They are subject to the sovereignty of the coastal State. The Parties’ respective fishery zones extend to a belt of a further 10 nautical miles adjacent to the territorial waters, in which each State has exclusive rights over the aquatic biological resources. The delimitation of territorial waters and fishery zones between the respective States shall be determined by agreement with due regard to the principles and norms of international law. No such delimitation agreement has been concluded so far between the coastal States.
The waters located beyond the Parties’ respective fishery zones (i.e., beyond a maximum of 25 nautical miles from the coasts) are part of the “common maritime space”. It is open for use by all Parties.
Click here to see a sketch map depicting these three zones.
Exploitation of seabed and subsoil
The Convention confirms the entitlement of each coastal State to sovereign rights for the exploration and exploitation of the seabed and subsoil within its respective sector of the seabed beyond the territorial waters. Thus, the entire seabed and subsoil, as well as the respective resources, of the Caspian Sea are divided between the five coastal States.
The Convention resolves one of the greatest uncertainties for investments in exploration and exploitation activities in the Caspian Sea. Rather than exercising their rights in the Caspian Sea jointly, each coastal State has exclusive sovereign rights over its share of the seabed and the subsoil. Each coastal State may thus issue licenses for the exploration and exploitation of the natural resources, notably oil and gas, as some of the Caspian States have already done in the past.
However, the Convention does not delimit the Parties’ respective sectors. Such delimitation is left to bilateral or multilateral agreements between the Parties, with due regard to “the generally recognized principles and norms of international law”. Before the conclusion of the Convention, Russia, Kazakhstan and Azerbaijan had already concluded agreements for the delimitation of their respective seabed sectors, and for establishing some rules for the joint development of cross-boundary deposits (these agreed seabed delimitations are depicted in the sketch map available here). Iran and Turkmenistan constantly objected to the conclusion of such agreements in the absence of the determination of the Caspian Sea regime. Although the Convention does not specifically mention the pre-existing bilateral and trilateral agreements delimiting the seabed, the uncertainties surrounding these agreements seem to be removed by the specific provisions of the Convention authorising and directing the coastal States to conclude delimitation agreements.
Further, the Convention grants the coastal States the exclusive right to install artificial islands, or to authorise their construction, on the seabed in their respective sectors. The coastal States also enjoy the right to lay submarine cables and pipelines, provided that the respective routes are determined by agreement with the contracting State or States whose sector of the seabed would be crossed. Consequently, the laying of pipelines on the seabed does not require the approval of all the other coastal States. Thus, the Convention may facilitate pipeline projects that were previously stalled due to the ambiguity surrounding the Caspian Sea’s status, and will likely encourage the development of future projects. For instance, the Trans-Caspian Pipeline – the submarine pipeline from Turkmenistan to Azerbaijan, connecting pipelines bringing oil and gas to Europe – opposed by Russia and Iran, may now go ahead, provided, however, the project complies with the applicable environmental standards.
The Caspian Sea is not only known for its rich hydrocarbon resources but also for its valuable fish resources: sturgeon (the primary resource for caviar production) makes fishing an important activity in the sea.
The Convention establishes a comprehensive fisheries regime. Each contracting State has the exclusive right to harvest in its fishery zone.
For the exploitation of the biological resources in the “common maritime space”, the Convention establishes a jointly managed regime. The total allowable catch will be determined and divided into national quotas established by the Parties. In the event that a State cannot use its quota fully, it may grant such harvesting rights to the other Member State(s), but not to third States.
The Convention guarantees freedom of navigation for ships flying flags of the coastal States beyond the territorial waters of the other coastal States. Importantly, the Convention reserves navigation, as well as entry into and exit from the sea to ships flying the flag of coastal States.
The passage through territorial waters and access to internal waters or to port facilities is subject to conditions and limitations, and can be refused, for instance, in case of prejudice to good order and the security of the coastal State or wilful and serious pollution. For access to ports in the Caspian Sea and the use of port facilities, commercial ships flying the flags of the contracting States enjoy the same treatment as national ships of the Party in whose territory the port is located.
The Convention further regulates navigation of warships, submarines and other underwater vessels. Importantly, it prohibits the presence of armed forces not belonging to any of the five coastal States.
The outright exclusion of the military vessels of third States has wider implications, such as ensuring, for instance, that NATO States are not able to deploy ships or troops in the Caspian Sea.
Transit to the High Seas
Beyond the question of the legal status of the Caspian Sea, the Convention also regulates passage to and from the Caspian Sea. It recognises the rights of all the Parties to access other seas and the ocean freely from the Caspian Sea, and to access for the Parties from other seas and the ocean to the Caspian Sea. This right of access may be exercised through freedom of transit by all means of transport through the territories of transit parties. As a matter of geography, only Russia and Iran can be such transit parties, bordering respectively the Black Sea, the Baltic Sea, the White Sea (as well as all the other seas along Russia’s northern coast), the Pacific Ocean, and the Persian Gulf. The three other contracting States are “landlocked” other than their access to the Caspian.
The actual modalities for the exercise of the transit rights are subject to bilateral agreements between the respective Parties or, absent such agreement, to the legislation of the transit parties. Transit parties can also take all necessary measures in order to ensure that transit does not infringe their legitimate interests. Potentially, this provision could result in far-reaching limitations on the right of transit.
This transit regime, which mirrors to some extent the transit rights of landlocked States under UNCLOS, is likely to improve the connection between the Caspian Sea and other seas and the ocean. In particular the rivers and artificial waterways of the Unified Deep Water System of European Russia (a system of inland waterways in Russia) connect the Black Sea, the Baltic Sea and the White Sea through the Volga river to the Caspian Sea. Of course, these waterways are entirely under the control of Russia.
Protection of the ecological system and biodiversity
The Parties to the Convention also undertake to protect the ecological system and biodiversity of the Caspian Sea. The Convention requires the contracting States to take necessary measures to ensure such protection and to prohibit any activity damaging the biodiversity of the Caspian Sea.The environmental protection of the Caspian Sea has long been on the agenda of the coastal States. In 2003, all five coastal States entered into the 2003 Tehran Framework Convention on the Protection of the Marine Environment of the Caspian Sea and elaborated under this Framework Convention several additional protocols, in particular the 2011 Aktau Protocol on Oil Pollution Incidents. The obligations and procedures agreed upon need to be taken into account for the future development of the Caspian Sea and, in particular, for the exploration and exploitation of its hydrocarbon resources. On 20 July 2018, the State Parties to the Tehran Convention signed a protocol on Environmental Impact Assessment in a Transboundary Context that adds significant obligations and procedural requirements for evaluating the likely impact of a proposed activity on the marine and land environment, including obligations of notification, exchange of information and consultation.
The implementation of those obligations is expected to have consequences for existing and future projects in the Caspian Sea, including submarine cables and pipeline projects, hydrocarbons extraction and fishing activities.
All disputes between the contracting States regarding the interpretation and application of the Convention are to be resolved through consultations and negotiations. If negotiations fail, a dispute is to be resolved “through other peaceful means provided for by international law”, at the discretion of the Parties. Rather than providing for binding arbitration or other means of adjudication, the Convention leaves it in the hands of the Parties to mutually agree on an appropriate dispute resolution mechanism and forum. However, the provisions of the Convention do not provide a solution in case the disputing parties cannot agree on a dispute resolution procedure. In practice, this may mean that disputes are not resolved.
No dispute resolution method is available to private parties under the Convention. The rights granted under the Convention concern the inter-State relationship only. Nevertheless, questions related to the delimitation of the seabed, the exploitation and use of shared resources or the environmental issues might come up in disputes between States and private investors. Such investment disputes may be submitted to dispute resolution mechanisms otherwise available to the investor under investment protection instruments.
The text of the Convention is available here.
Dr Daniel Müller is avocat at the Paris bar and an associate in the international arbitration group of Freshfields Bruckhaus Deringer.
Ketevan Betaneli is a knowledge lawyer in the international arbitration group of Freshfields Bruckhaus Deringer.