Article 82 of UNCLOS: The day of reckoning approaches

Abstract

Article 82 of the United Nations Convention on the Law of the Sea (UNCLOS) obligates coastal states to make payments to the international community in respect of the exploitation of non-living resources of the extended continental shelf beyond 200 nautical miles. Payments are to begin at the rate of 1 per cent in the sixth year of production, increasing by 1 per cent per year to a maximum of 7 per cent in the twelfth year. The payments are to be made through the International Seabed Authority to parties identified by the Authority “on the basis of equitable sharing criteria, taking into account the interests and needs of developing States, particularly the least developed and land-locked among them.” To date, Article 82 has not been triggered. Recent petroleum discoveries beyond 200 nautical miles off Canada's east coast, however, have the potential for commercial development and may well be the first in the world to trigger Article 82. If so, Canada's approach to the implementation of Article 82 could be precedent-setting, with significant implications for the international offshore industry and for potential recipients of required payments. The implementation of Article 82 presents many issues. The most significant is: Who will bear the cost of satisfying the coastal state's obligation: the coastal state or industry? Several other issues with practical implications for industry arise from specific elements of Article 82. The goal of this article is to identify and generate discussion of the issues within industry, with a view to contributing to their resolution by government.