Southeast Asia´s Offshore Petroleum Resources and the Law of the Sea

Abstract

Property rights tend to influence incentives and behaviour. Different structures of property rights lead to different cost-reward structures, and thereby imply different outcomes of the decision process. The prevailing system of property rights defines the position of each individual with respect to the utilization of scarce resources, the norms of behaviour that must be observed, and the cost of nonobservance. For centuries citizens of the world had common ownership of the sea beyond national waters and rights over its resources were exercised according to the ability of each decision unit (whether this be person, firm, or nation) to exploit them. The only resources over which nations exercised preemptive rights were, until the post World War II years, generally those within the three-mile stretch of waters bordering the coastlines of nation.1 Developments in science, technology, and resource requirements of the world have resulted in changing property rights over the resources of the sea. Traditional rights under the fundamental doctrine of the freedom of the seas, propounded by the Dutch lawyer Hugo Grotius (whose interest in maritime legal problems arose out of Dutch-Portuguese conflicts in the Straits of Malacca), have been rendered obsolete and meaningless. A now oft-cited quotation is the call by then UN Maltese Ambassador Arvid Pardo in 1967 for the declaration of the seabed and the ocean floor beyond the present limits of jurisdiction as a common heritage of man kind. This call came as result of encroachments in alarming proportions by coastal states on others' rights to parts of the sea that had been traditionally regarded as commonly owned. Economic needs and objectives have introduced qualitative changes in the law of the sea that, as the Burmese delegate to the Third Law of the Sea Conference described, are resource-prompted and resource-oriented. (Third United Nations Law of the Sea Conference, Official Records, Vol. II, p. 224.) Every legal definition that affects development and use of resources has an economic aspect. Our interest in the Law of the Sea problem in this paper centres on the development of the offshore petroleum resources of Southeast Asia. Demand