Legal framework for the interstate cooperation on development and transport of fossil natural resources of the Caspian Sea^†

Abstract

This article focuses on the regulations of the Convention on the legal status of the Caspian Sea (hereinafter as Caspian Sea Convention), which was adopted in 2018. It regulates the development and access to Caspian fossil fuel resources and protects its environment, which are important factors for the sustainable development of the region. The main finding of this article is that the Caspian Sea Convention, having established the maritime zones, has, for the first time ever, recognized the territorial sovereignty of the individual riparian states in the Caspian Sea and defined its territorial scope. After presenting to the riparian states’ their rights and obligations within the newly defined maritime zones, the article analyses the new legal framework for the development and use of the natural resources of the Caspian Sea. It also elaborates on the new legal regime for the transportation of resources by means of vessels and submarine pipelines.

1. INTRODUCTION

The new and universally accepted Development Agenda 2030 and its 17 Sustainable Development Goals (SDGs) provide a clear, concise and broad vision for sustainable development, especially with concern for natural resources, at both the national and global levels.¹ SDG 7 outlines both affordable and clean energy, since it is well known that energy is responsible for 60 per cent of emitted greenhouse gases and, therefore, constitutes an important impact on climate change.² Understanding that the use of natural resources is vital to national and global development, it is, in turn, critical that sustainable development becomes of focus. Concentrated in rather few locations, and either finite in nature—like fossil fuels—or exhaustible, natural resources offer profitable trading opportunities that may also lead national and international competition.³ The sustainable development of natural resources will have significant impacts on the processes of implementation under a number of SDGs⁴ and, therefore, requires careful regulation.

The development ‘of’ and access ‘to’ natural resources, especially those of international dispute, are subjected to interstate cooperation,⁵ concurrent with international law.⁶ Sound international regulation on the development of natural resources offers an important factor for lawful and sustainable access to such natural resources,⁷ which, in turn, is a basis for international cooperation in natural resources.

The legal status of a territory, one that offers such resources like fossil fuels and maintains laws to regulate their use, is of key importance for guarantying sustainable development using such resources. With regard to fossil fuels that are located in maritime areas, as governed by the Law of the Sea, the exploration, allocation and the exploitation of said natural resources are all regulated with regard to both national and international jurisdictions with the common goal of ‘protection’. Sound interstate regulation on the development of natural resources offers an important condition for both lawful and sustainable access to natural resources,⁸ which, in turn, may be a good foundation for international cooperation in natural resources among states. To lessen interstate competition over natural resources, competing states should share their access to natural resources based on the paradigms and mutually agreed principles of international law.

The Caspian Sea is an interesting subject for legal analysis because its legal status has been left unsolved during almost 20 years of interstate negotiations, despite, or maybe because of, the tremendous economic importance of the sea’s natural resources. The Caspian Sea is known for its rich natural resources, as well as its fragile environment, endangered by the energy-driven policies of its riparian states. The Caspian Sea’s fossil fuel deposits are important for international trade because of its abundance. However, until recently, the Caspian Sea’s unclear legal status has negatively impacted trade relations with states from outside of the region over the past two decades. The very name of the Caspian ‘Sea’ does not truly reveal the body of water’s legal status at this very moment. Almost thirty years after the fall of the Soviet Union, and the emergence of a number of independent republics bordering the Caspian Sea, a comprehensive solution for the regulation and accessibility of the Caspian Sea was created. In August 2018, all five riparian nations attended the Convention on the Legal Status of the Caspian Sea (hereinafter as Caspian Sea Convention), ending the long-disputed question of whether or not the Caspian Sea is indeed a ‘sea’ or a lake. In turn, this decision would reveal which set of international regulations should be applied with reference to the Sea’s natural resources, offering new trade opportunities for the exchange of fossil fuels.

This article addresses said uncertainty by asking the question of how the legal status of the Caspian Sea and the regulations of the development and transport of its natural resources are reflected in the newly adopted Caspian Sea Convention. The article addresses this question by examining the Caspian Sea Convention through the lens of the relevant customary provisions of the United Nations Convention on the Law of the Sea (hereinafter, UNCLOS). This study finds that the introduction of maritime zones has given the ultimate recognition of the sovereignty of riparian states in the Caspian Sea, which was never the case before. It has also designed the scope of rights and obligations of the riparian states and other states from outside of the region towards the development and transportation of the Caspian Sea natural resources, especially the fossil fuels, which have a great impact on the development of national economies of the Caspian Sea states. This article focuses on the new regulations regarding the development and transportation of Caspian Sea fossil fuels to allow for the eventual international transportation of said resources.

The article begins with a brief overview of the pre-existing intergovernmental processes, which ultimately led to the adoption of the Caspian Sea Convention. The article presents the status of the convention’s maritime zones and the scope of the territorial sovereignty and sovereign rights of littoral states over the natural resources in said maritime zones. Respectively, the legal requirements, which are necessary for the lawful development of the fossil fuels, were analysed thereafter. The article also presents the legal framework for the use of submarine pipelines for the transport of natural resources.

2. LEGAL UNCERTAINTIES AROUND THE STATUS OF THE CASPIAN SEA IN THE PERIOD FROM THE DISSOLUTION OF THE SOVIET UNION UNTIL TODAY

The adoption of the Caspian Sea Convention on 12 August 2018 is seen as a milestone in the regulatory development of the Caspian Sea, which assumingly strengthens the body of water’s multistate use. Almost 30 years after the Soviet Union’s collapse, and even with the emergence of five independent states thereafter (Azerbaijan, Kazakhstan, Russia, Turkmenistan and Iran), the legal status of the Caspian Sea remained undefined. In fact, only recently have the major differences in the geopolitical and economic interests of the five coastal states been overcome.

The Caspian Sea’s unclear legal status caused uncertainty with regard to territorial restriction, leading to legal uncertainty over the extent of the riparian states’ sovereignty over the Caspian Sea. This uncertainty, in turn, created a legal dilemma regarding the scope of the rights of each of the coastal states to explore and exploit the Sea’s natural resources, mainly comprised of oil and gas. Of additional concern was the general confusion regarding the lawful transportation of said resources. All of this was cause for a lack of ‘security’ and ‘trust’ between the states of the Caspian Sea, creating mass political destabilization. Such a difficult geopolitical situation, as well as the active intervention of dominant international powers, including China,⁹ the USA¹⁰ and the European Union (EU),¹¹ intensified the competition over the region, and its resources, for almost 30 years.

The negotiations over the status of the Caspian Sea commenced during the intergovernmental conference held in Tehran in September and October 1992.¹² The continued talks of all five Caspian states were aimed at reaching a conclusion, and signing an agreement, defining the main issues related to the regulation of the Caspian Sea. The working group, composed of deputy ministers of foreign affairs of all the riparian states, was established as a mechanism to further negotiation processes.¹³ The common goal of ‘finding a consensus’ was the basis for finding a new solution regarding the regulation of the Caspian Sea. The efforts of the working group were successful with the adoption of the Caspian Sea Convention yet has taken 20 years to commence.

The multistate negotiations on the overall status of the Caspian Sea were conducted within two parallel processes with different levels of engagement by the Caspian Sea’s riparian states. First, the mutual negotiations, conducted by the all five riparian states, ended in the conclusion of two agreements, respectively, devoted to environmental protection and security issues in the Caspian region. Regarding the regulation of the Caspian environment, the Framework Convention for the Protection of the Marine Environment of the Caspian Sea was adopted in 2003, followed by four additional protocols in recent years. Also, the Agreement on the Security Cooperation of the Caspian Sea was adopted, which enumerated a number of threats, including terrorism, drug trafficking, piracy, illegal immigration and the illegal exploitation of natural resources.

Simultaneously to the multilateral legislative process, which engages all five riparian states regarding environment and security, the three north Caspian coastal states have been running parallel negotiations on a bilateral basis. More recent negotiations were aimed at dividing the seabed of the Caspian Sea into sectors for exploration and exploitation of natural resources. Here, the conclusion of the so-called North Caspian Agreements, regulating bilateral and trilateral relations between Azerbaijan, Kazakhstan and Russia, became a very controversial political issue, because only three out of the five riparian states of the Caspian Sea were acknowledged. It was not until the adoption of the overall Caspian Sea Convention that the dispute around unilateral actions on behalf of all riparian states came to an end. The new convention clarified the legal status of the Caspian Sea, defining the scope of the sovereign rights and obligations of each of the coastal states over their respective territories of the Caspian Sea. It has successfully settled the dispute of, among others, the development and transportation of the sea’s natural resources by defining the rights and obligations of the riparian states with respect to use of the relevant maritime areas.¹⁴ It will depend on the Convention’s implementation process as to whether or not these regulations will prove effective.

As before mentioned, the Caspian Sea Convention answered the question as to whether or not the Caspian Sea is indeed a ‘sea’ or a lake in a ‘legal’ sense. Modern international law mandates that such a classification be made so as to determine its legal statutes and the regulatory policies that can be enacted to regulate such a body of water. The ‘seas’ are subject to regulation of the Law of the Sea when ‘international lakes’ are subjects of regulation by International Water Law. The difference between the Law of the Sea and International Water Law lies among others in the scope of the sovereignty exercised by the riparian states over these waters. International Water Law regulates ‘objects’, which are usually entirely under the sovereignty of riparian states. Law of the Sea covers waters which are divided into zones, where, in turn, riparian states enjoy diverse levels of sovereignty, including waters, which do not belong to any state’s jurisdiction.

The Caspian Sea Convention defines the Caspian Sea as ‘a “body of water” (emphasis added) surrounded by the land territories of the Parties (Art. 1)’. Acceptance of such a legal definition has allowed the negotiating states to develop an independent set of rules regulating the extent of state sovereignty over the Caspian Sea, including the development of natural resources, maritime transport, the laying of pipelines and any other activities on the Caspian Sea water column, as well as on its seabed and its subsoil. Although, as the reading of its text shows, the Caspian Sea Convention follows the legal framework prescribed in the UNCLOS.¹⁵ Still, one may see extensive deviations from the UNCLOS legal framework in the regulation of the Caspian Sea and its related forms of usage. The difference between the UNCLOS regulations and the Caspian Sea Convention reverts to the fact that Caspian riparian states wanted to develop a specially tailored legal status for the maritime zones of the Caspian Sea. Since there has never been a widely recognized agreement that the Caspian Sea is a ‘sea’ in legal terms and, respectively, that it is mandatory for the riparian states to follow the Law of the Sea provisions when defining the Caspian Sea status, the parties to the Caspian Sea Convention have developed a unique legal setting, which best reflects their current political positions.

3. DELIMITATION OF THE CASPIAN SEA

International Law and regime of maritime delimitation

Maritime delimitation requires a firm legal basis rooted in the Law of the Sea to guarantee the lawfulness of any unilateral act of the coastal states. The Law of the Sea defines the legal status of maritime zones and their territorial scope, which, in turn, reflects the amount of state sovereignty in such zones—from full sovereignty to state’s sovereign rights (the so-called functional rights). All of these zones have diverging legal statuses and, respectively, differ in terms of the regulation of navigation, as well as for laying submarine pipelines, which are of relevance to the scope of this article. Maritime delimitation is a legal act that aims at separating two sovereign or functional maritime areas. It differs from demarcation, which is the technical act to mark a boundary between countries. Only a state, which has a coast and exercises its sovereignty over an adjacent territory, may lawfully claim its rights over maritime zones and enjoy the authority to establish such zones.¹⁶ Only national maritime zones, seaward from land boundaries, which do not exceed internationally recognized maritime borders, can be set up by unilateral, internal regulations.

According to the Law of the Sea, every coastal state may exercise its rights regarding the use of living or non-living resources, both of which must be located within each state’s defined maritime zones. The main legal source for defining the scope of coastal states’ rights, and the territorial extension of maritime zones, is UNCLOS. UNCLOS defines maritime zones using the criteria of geographical distance: (i) Internal Waters (Article 8, UNCLOS); (ii) Territorial Sea (Article 7, UNCLOS); (iii) Contiguous Zone (Article 33, paragraph 2, UNCLOS; (iv) Exclusive Economic Zone (EEZ) (Article 57, UNCLOS); (v) Continental Shelf (Article 76, paragraphs 2 and 77, UNCLOS); and (vi) High Sea (Article 86, UNCLOS). All of these examples serve as a framework to compare and assess the recently adopted regulations for the control of natural resources and the navigation and development of submarine pipelines; both of which being of importance to the scope of this article.

Territorial delimitation and the scope of the state’s sovereignty in the Caspian Sea

The fall of the Soviet Union, and the emergence of various independent states, created the need for the delimitation of the maritime areas between said states. The issue of territorial delimitation, and the related question of the scope of state sovereignty over certain parts of the Caspian Sea, remained points of contention between the states. This contention stemmed from complicated interstate relations dating more than 20 years prior to the fall of the Soviet Union. Resistant attitudes on behalf of both Russia and Iran were, in large part, the reason for such contention. Both of the aforementioned countries were not ready to recognize sovereignty over the Caspian Sea and its natural resources regarding the new countries of Azerbaijan, Kazakhstan and Turkmenistan.¹⁷

Even during the Soviet era, areas of maritime delimitation between the Soviet Union and Iran were not explicitly regulated. It was not until 1933 that the Soviet Union officially recognized and later, in 1954, reaffirmed the extension of the land border between Astara and Hosseingholi over the maritime areas of the Caspian Sea.¹⁸ Later on, in 1970, the Soviet Oil Ministry divided the Soviet part of the Caspian Sea among its four republics: Azerbaijan, Kazakhstan, Russia and Turkmenistan by the middle line using the Astara–Hosseingholi line as its southern boundary. The water column remained in the common use of both riparian states: the Soviet Union and Iran. After the emergence of the new sovereign states in 1991, the boundaries and their delimitation became the subject of intergovernmental negotiations, which ended in the conclusion of the Caspian Sea Convention in 2018.

Parallel with the multilateral negotiations on the status, already at the end of the 1990s, the bilateral and trilateral activities were conducted at the bottom of the Caspian Sea by Russia, Kazakhstan and Azerbaijan to define limits of the seabed sectors to ensure and accelerate the process of development of Caspian natural resources. Therefore, in the period between 1998 and 2004 despite the opposing views expressed by Turkmenistan and Iran, four treaties, and additional protocols, were adopted regarding the use of resources of the northern part of the Caspian Sea. According to the Agreement between Kazakhstan and Russia from 1998,¹⁹ the Caspian Sea’s seabed was divided into sectors and, in its Additional Protocol of 2002,²⁰ the water column was confirmed as being under the common use of the contracting parties. The sectors of the seabed and subsoils were divided according to the equidistance principle (middle line), according to which states’ maritime boundaries should follow a median line equidistant from the land lines of the contracting states. Also, the 2001 agreement between Azerbaijan and Kazakhstan,²¹ and its Additional Protocol from 2003,²² divided the Caspian Sea seabed into sectors between two contracting parties along the middle line. The water column of the Caspian Sea was not regulated. In the 2002 Agreement between Azerbaijan and Russia, two national sectors were established in the North Caspian Sea. The latest agreement was concluded in 2003²³ among Azerbaijan, Kazakhstan and Russia, establishing a tripoint for the final division of the northern part of the Caspian Sea. The tripoint was a point at which boundaries of the three countries met in equal distance from the nearest point of their coastlines from the remaining coastal states, Iran and Turkmenistan. However, all North Caspian agreements revealed the lack of a comprehensive multilateral settlement of the legal status of the Caspian Sea. In turn, its legality was rejected by Iran.²⁴ It based its argument on the Vienna Convention on the Law of Treaties of 1969,²⁵ prescribing that a treaty creates neither obligations nor rights for the third country without its consent. Therefore, the North Caspian agreements remained merely binding for their contracting parties and could not contain any obligations for the remaining Caspian states, Iran and Turkmenistan. The regulations adopted in the North Caspian agreements were unilateral actions undertaken by only some of the states to tackle the urgent economic needs related to the development of the Caspian Sea’s natural resources. Their provisions have been, however, taken over and reconfirmed by the Caspian Sea Convention in its Article 8, which states that the ‘delimitation of the Caspian Sea seabed and subsoil into sectors shall be effected by agreement between States with adjacent and opposite coasts […] to enable those States to exercise their sovereign rights to the subsoil exploitation and other legitimate economic activities related to the development of resources of the seabed and subsoil’.²⁶ Also Art. 20 stresses that ‘This Convention shall not affect rights and obligations of the Parties arising from other international treaties to which they are parties.’

The newly adopted Caspian Sea Convention provisions were not created on their own accords. They took origin from the norms of the Law of the Sea, mainly UNCLOS. Although only Russia and Azerbaijan are parties to UNCLOS, Iran has merely signed, ‘but not ratified’. Along those same lines, Kazakhstan and Turkmenistan are not members. The Caspian Sea Convention has, however, introduced some amendments proving the significant differences between the newly introduced regulations on the maritime zones in the Caspian Sea and the international legal standards adopted in UNCLOS.

First, the Caspian Sea Convention (Article 5) introduces the following maritime zones in the Caspian Sea: Internal Waters, Territorial Waters, Fishery Zones and Common Maritime Space. All of those zones provide different extents of sovereignty to coastal states. The scope of sovereign rights and obligations of the coastal states, in respect to the use of the Caspian Sea, including its waters, seabed, subsoil and natural resources (Article 2), differs in each of these zones.

The zones are to be measured from baselines delimited in accordance with the Caspian Sea Convention (Article 1). Waters on the landward side of the baseline are called Internal Waters and are fully covered under the sovereignty of the coastal state. Within the Internal Waters zone, states exercise ‘absolute sovereignty’, which is equal to the sovereignty on its land territory covering the subsoil and seabed of its zone. Such a definition reflects the regulation of UNCLOS on Internal Waters. According to UNCLOS, Internal Waters are waters on the landward side of the baseline of the Territorial Sea (Article 8, UNCLOS), where the coastal state exercises unlimited sovereignty over the water column and its seabed and subsoil.

Seaward of the baseline exists the Territorial Waters zone. This zone is defined as a belt of sea to which the sovereignty of a coastal state extends (Article 1), covering the water column, as well, to the seabed and subsoil thereof (Article 6). The breadth of the Territorial Waters shall not exceed 15 nautical miles, and the outer limit of the Territorial Waters is considered to border a coastal state (Article 7, paragraph 2). Delimitation of Internal and Territorial Waters between states with adjacent coasts shall be affected by the agreement between those states (Article 7, paragraph 3). Such a regulation is similar to UNCLOS provisions on the Territorial Sea, which is defined as a zone of 12 nautical miles covered by a state’s sovereignty expanding beyond its land territory and Internal Waters (Article 7, UNCLOS) over all activities in the water column, the seabed and the subsoil. The difference is in the breadth of these zones, which UNCLOS defines as 12 nautical miles, and the Caspian Sea Convention as being 15 nautical miles.

The legal status of the Caspian maritime zones concerning both the legal status of the water column and the legal status of the sea bottom below the water column, seaward of the maritime boundaries, carries different names and differs in regulation from the zones foreseen in the Law of the Sea. The legal status of the water column is relevant for the regulation of the transport of natural resources by vessels within and out of the Caspian Sea. The legal status of the bottom of the Caspian Sea below the water column defines the development of the natural resources from the seabed and the subsoil.

It will be reviewed in the following paragraphs below, separately from the status of the water column, because its regulations significantly differ from each other.

In terms of the legal status of the water column in the Caspian Sea, there are two identifiable zones: the Fishery Zone and the Common Maritime Space. The Fishery Zone (up to 10 nautical miles wide) foreseen in the Caspian Sea Convention is defined as a belt of sea where a coastal state holds an exclusive right to harvest aquatic resources (Article 1). The water within this zone is free for the shipment of goods by all Caspian Sea states and, therefore, is of importance to the development of the commercial transport of fossil fuels, and other natural resources, from the Caspian Sea. Coastal states, however, reserve the right in the Fishery Zone to ensure compliance by foreign vessels with its laws and regulations, including boarding, inspection, hot pursuit, detention, arrest and judicial proceedings, in order to exercise exclusive rights to harvest aquatic biological resources as well as for the purposes of conserving and managing such resources (Art. 12 Paragraph 3) . This regulation does not pose a difference to the Law of the Sea standards. UNCLOS, however, does not envision a Fishery Zone as it provides for the so-called EEZ, which in terms of legal regime of fishing can be, by analogy, applied to the Fishery Zone. The EEZ is an area beyond and adjacent to the territorial sea (Article 57, UNCLOS), where the coastal state has a sovereign right for the purpose of exploring and exploiting, conserving and managing the natural resources (Articles 55 and 56, UNCLOS), whether living or non-living. Freedom of the sea, including navigation and the laying of submarine pipelines, applies accordingly (Article 58, UNCLOS). In the exercise of its sovereign rights to explore, exploit, conserve and manage the living resources in the exclusive economic zone, the Coastal State may take such measures, including boarding, inspection, arrest and judicial proceedings (Art 73 paragraph 1). The main difference between the legal status of the EEZ and the Fishery Zone is that, in the Fishery Zone, the coastal state limits its sovereign rights to living resources.

According to the Caspian Sea Convention, a water area located outside of the outer limits of a Fishery Zone is called Common Maritime Space and is open to any type of uses by all the parties to the Convention (Art 1). This zone provides for joint sovereignty of all riparian states over the surface waters (Article 5, Caspian Sea Convention).²⁷ This regime is rather similar to regime of surface waters of international lakes, which, unlike those of seas, can be used by states bordering them.²⁸ The status of this zone is, to some extent, similar to the UNCLOS regulations for the so-called High Sea Zone in terms of its regulation over its water column status. The High Sea includes all parts of the sea, which are placed beyond the limits of national jurisdiction and are not included in the EEZ, the Territorial Sea, or the Internal Waters of a state (Article 33, UNCLOS), with ‘freedom of the sea’ being the main legal principle characterizing the High Sea. This also includes the regulation of navigation, as well as laying submarine cables and pipelines. The Caspian Sea Convention opens the Common Maritime Space to all types of use, including the shipment of natural resources to all coastal states (freedom of sea). The access to this zone is, however, limited merely to the Caspian Sea coastal states, which has an impact on international trade because it excludes vessels of other countries from accessing this zone, and in this way significantly differs from the regulation of the High Sea as provided by the UNCLOS. Another difference between the High Sea regime and the Common Maritime Space is that in the latter, ‘each Party, in the exercise of its soveveign right to the subsoil exploitation [...] of resources of the seabed and subsoil, may take measures in respect of ships of other Parties' (Art. 12 paragraph 3).

The bottom, and the subsoil, of the Fishery Zone and Common Maritime Space is regulated by the legal regime for the development and use of natural resources, as well as the regime of maritime pipelines. According to the Caspian Sea Convention, it shall be shared into sectors. The ‘sector’ is defined by the Caspian Sea Convention as a part of the seabed and subsoil delimited between the Parties for the purposes of subsoil exploitation and other legitimate economic activities in this territory (Article 8, paragraph 1, Caspian Sea Convention). The delimitation of the Caspian Sea seabed, and the dividing of the subsoils into sectors, aims at enabling the coastal states to exercise their sovereign rights to develop subsoil resources within the sectors. Such a policy reflects the legal regime of the Continental Shelf accepted in UNCLOS regarding the development of resources and the laying of submarine pipelines. According to UNCLOS, Continental Shelf is an area of maximal 300 nautical miles or 100 nautical miles from the 2500 metre isobath (Article 76, paragraph 2, UNCLOS), which comprises the seabed and subsoil of the submarine areas that extend beyond its territorial sea where the coastal state exercises exclusive sovereign rights for the purposes of exploring and exploiting the natural resources (Articles 76 and 77, UNCLOS).

The legal regime introduced by the Caspian Sea Convention significantly differs from the legal concept developed in the UNCLOS for the bottom of the maritime zones, which are located outside of the outer limits of the national boundaries of the coastal states and are covered by adjacent waters under common use (High Sea). The bottom of the sea and the subsoil under the High Sea, the so-called Area, remain a common heritage of humanity, free from sovereign rights of the coastal states. The Caspian Sea Convention provides for a significantly different approach to the territories comparable to the so-called ‘Area’ as provided in the UNCLOS. The Caspian Sea Convention divides the bottom, and its subsoil, of Common Maritime Space into sectors, where the coastal states exercise their sovereign rights to develop natural resources (Article 6).

The division of the seabed, and its subsoil, of the Caspian Sea under the Fishery Zone and the Common Maritime Space into national sectors follows the pattern of the North Caspian agreements between Kazakhstan, Azerbaijan and Russia. The sectoral approach to the division of the seabed and subsoil, adopted in the Caspian Sea Convention, may indicate that the division of the bottom of the Caspian Sea undertaken previously in the northern Caspian Sea is now to be officially recognized and accepted by all riparian states. Article 4 of the Caspian Sea Convention states that the parties shall conduct their activities in the Caspian Sea, including exploration and exploitation of the seabed and subsoil resources in accordance with ‘other agreements’, between the parties. Article 8, paragraph 1 states clearly that the Caspian Sea seabed and subsoil are to be delimited into sectors, which shall be affected by ‘agreement’ between states with adjacent and opposite coasts. Further, Article 8 paragraph 4 states the ‘exercise of sovereign rights of a Coastal State under paragraph 1 of this Article must not infringe upon the rights and freedoms of other Parties stipulated in this Convention or result in an undue interference with the enjoyment thereof'. Also the Art. 20 says that ‘This Convention shall not affect rights and obligations of the Parties arising from other international treaties to which they are parties'. One may assume that the future delimitation of the sectors of Turkmenistan and Iran will follow the same pattern of the middle line and the sectors assigned within the North Caspian Agreementes to Azerbajan, Kazakhstan and Russian will remain untased.

4. PIPELINES IN THE CASPIAN SEA

International Law and regime of submarine pipelines

The Law of the Sea provides detailed regulations regarding the regime for laying submarine pipelines, which are an important means of transporting fossil fuels. The regulations included in the UNCLOS serve as the main sources of reference for the understanding of the current international legal framework for the regulation of submarine pipelines.²⁹ The legal regime for submarine pipelines differs depending on whether or not the pipeline crosses the areas of the bottom of the sea, which are under the full or limited sovereignty of coastal state. UNCLOS foresees that, when a foreign pipeline enters the maritime territory or territorial sea of a coastal state, this state has a right to set relevant conditions for the pipelines to be constructed (Article 79, paragraph 4). Beyond the boundaries of the territorial seas, all states enjoy the right to lay submarine pipelines (Article 112, paragraph 1). They need to take note of the pipelines already in place (Article 112, paragraph 2) and, in case of damage or the interruption of existing pipelines, the costs of repairs must be carried by this state (Article 114). However, in the event that pipelines are constructed on the Continental Shelf, the rights of foreign states are further limited by the rights of the coastal state, which exercises their exclusive sovereign rights over these zones. First, the coastal state has a right to take reasonable measures for the exploration of the Continental Shelf and the exploitation of its natural resources, which cannot be infringed upon by the foreign pipeline. Secondly, the coastal state must express its consent for the delineation of the course of the pipeline to be laid on the Continental Shelf (Article 73, paragraph 3). Thirdly, the coastal state is obliged to take reasonable measures for the prevention, reduction and control of pollution from pipelines (Article 79, paragraphs 1 and 2), which grants the right of the coastal state to conduct an inspection and to impose safety standards on the pipelines’ owner (Articles 113–115). Some of these regulations have been successfully adopted by the Caspian Sea Convention to the pipeline regime.

Caspian Sea Convention and the regime of the submarine pipelines

Whereas oil and gas production in the Caspian Sea is increasing on an yearly basis, the expansion of export capacities has been limited³⁰. One of the reasons was the insufficient transfer capacity of the existing pipelines and the lack of a legal basis to build trans-Caspian pipelines. The two oil pipelines, Baku–Novorossiysk³¹ and Baku–Supsa,³² transport oil from Azerbaijan towards the west. Kazakhstan transports its oil through Atyrau to Samara, in Russia, and through the pipeline of the Caspian Pipeline Consortium from the oil field Tengiz to the Russian ports of Novorossiysk and Tuapse on the Black Sea. The oil pipeline Baku–Tbilisi–Ceyhan, which is used to transport oil from Azerbaijan towards Europe, could have been fed by Kazakhstan’s oil field Aktau. However, due to its controversial status as a trans-Caspian pipeline, it was not built to enable to the linkage of the pipeline to that of the Aktau oilfield. The idea of laying a trans-Caspian pipeline has been attempted several times but was never successful, mainly due to Russian opposition rooted in environmental concern.³³

The rich oil and gas deposits of the Caspian Sea are located seaward of the Caspian coast.³⁴ Off-shore and on-shore pipelines are intended to bring the resources towards Western and Eastern customers. Perhaps the greatest initiative in the Caspian Sea Convention has led to a new dimension in establishing a legal framework for the construction of submarine pipelines in the Caspian Sea. The Caspian Sea Convention, which has regulated the delimitation of the marine zones in the Caspian Sea, has clarified the regime of laying the pipelines, as well having acknowledged the rights of the coastal states to build trans-Caspian pipelines. According to Article 14 of the Caspian Sea Convention, the parties may lay submarine pipelines on the bed of the Caspian Sea. This provision was one of the most contested during the entire period of negotiations over the legal status of the Caspian Sea. However, it has been successfully resolved in the new Caspian Sea Convention, which in future can have significant importance for transport of the Caspian resources, especially toward the European markets. This provision reflects the right of the states to lay submarine pipelines in the territories beyond the territorial sea, which, in the Law of the Sea, has been recognized in the regulations of the Continental Shelf and Area (Article 79, paragraph 1, UNCLOS), which can have significant future implications for the transport of Caspian Sea resources towards European countries.³⁵

An important limitation for laying submarine pipelines on the seabed of the Caspian Sea was, however, imposed by the Caspian Sea Convention. According to Article 14, paragraph 2, parties may lay trunk submarine pipelines on the bed of the Caspian Sea, on the condition that their projects comply with environmental standards and requirements embodied in the international agreements to which they are parties. One of such agreements is the Framework Convention for the Protection of the Marine Environment of the Caspian Sea, otherwise known as the Tehran Convention. Relevant protocols from said convention include the Aktau Protocol on Preparedness, Response and Cooperation for the protection of the Caspian Sea from the oil pollution caused by seabed activities, which will be further discussed in more detail. Also the EIA Protocol of 2018, however not yet in force, regulates the possible ecological impact of the underwater pipes in the Caspian Sea. Another important requirement for laying the submarine pipelines on the Caspian Sea seabed is the requirement that states the routes of pipelines shall be determined by agreement with the party, the seabed sector of which is to be crossed by the pipeline (Article 14, paragraph 3). It is a provision which is similar to conditions included in UNCLOS (Article 79, paragraph 3, UNCLOS).

5. NAVIGATION IN THE CASPIAN SEA

International Law and navigation

Maritime shipping is regulated by the International Law of the Sea since maritime vessels operate mainly in areas outside of national jurisdiction. International agreements, which regulate maritime shipping, include two different sets of regulation. The first group, which is of greater importance to the shipping of fossil fuels, regulates the duties and rights among riparian states. The other set of provisions regulates the relations between subjects to private law, which are of less importance for this article.³⁶ The former set of regulations is of relevance for this article, since we focus mainly on the shipping of the fossil fuels. UNCLOS defines separate legal regimes for navigation in the different maritime zones. The legal regime of Internal Waters is similar to the regime of the land territory in terms of navigation and passage. There is no right of innocent passage in the Internal Waters. In the next adjacent zone, known as the Territorial Sea, vessels under the flag of the coastal state, as well as foreign vessels, can exploit the right of navigation and enjoy the right of innocent passage through the Territorial Sea (Article 17, UNCLOS). In the EEZ, the regime of the limited freedom of navigation applies accordingly to the UNCLOS Article 58, paragraph 1, which can be exercised by subjects to the relevant provisions of this convention, including sovereign rights of the coastal states over the resources in its EEZ and other rights related to artificial islands, maritime protection, etc. Beyond the EEZ, the principle of the freedom of the High Sea prevails.³⁷ It includes the freedom of navigation to be exercised by all states with due regard for the interests of other states, which has a clear commercial importance of being an indispensable prerequisite for international trade, free of interference by the third states. The principle of the freedom of navigation does not cover commerce-related questions, but merely defines the scope of the free movement of ships through the maritime zones. The state practice in implementation of the legal principle of freedom of the sea and the freedom of navigation proves that they both shall not be understood in a wide economic sense, but are separated from the guarantees of cargo and harbour access, non-discriminatory treatment, claims to participate international maritime trade on an equitable basis without discrimination.³⁸

Legal framework for navigation in the Caspian Sea

The Caspian Sea has always been used as a route for trading goods that play an important role in developing economic relations between its riparian countries. The Caspian Sea has no natural connection with the oceans, yet the Volga waterway can facilitate maritime traffic from the Caspian Sea through the Volga-Baltic Canal to the Baltic Sea. Since the October Revolution, until the beginning of 1990, the route through the Caspian Sea and the Volga was closed for international transportation.³⁹ According to agreements concluded between the USSR and Iran, only the ships that were merely flying either the flag of the USSR and Iran were only permitted to operate there. After the collapse of the Soviet Union, the Caspian Sea gained major political and economic importance to facilitate international trade between Europe and Asia. Two big projects—the international transport corridor ‘International North-South Transport Corridor’, based on the Russian, Indian and Iranian agreement from 2015,⁴⁰ and recent initiative launched by China, ‘One Belt, One Road’—highlight a significant role of the Caspian Sea in international trade.⁴¹

Until the collapse of the Soviet Union, the rights on navigation of the Caspian Sea were exercised exclusively by Iran and the Soviet Union. These regulations were fixed in the Treaty of Friendship between the USSR and Persia in 1921, which confirmed the unlimited freedom of navigation in the entire Caspian Sea for ships flying the flag of one of these two coastal states (Article 14). This rule was confirmed by subsequent treaties concluded between the USSR and Iran in 1931,⁴² 1935⁴³ and even in the Trade and Navigation Treaty of 1940.⁴⁴ The parties agreed that no extra fees may be charged on any ships of another contracting party. Those two bilateral agreements remained in force after the dissolution of the Soviet Union and remained used to regulate the navigation of the ships of all newly independent Caspian Sea states, including Kazakhstan, Turkmenistan and Azerbaijan.

The newly introduced navigation regime in the Caspian Sea reflects some of the UNCLOS standards on navigation, albeit in a largely modified form. The freedom of the shipping applies, and is acknowledged, beyond outer limits of Territorial Waters, being under national sovereignty (Article 10, Caspian Sea Convention). This freedom shall be, however, exercised in accordance with the Convention’s provision, which imposes significant restrictions on navigation. On the one side, Article 10, paragraph 2 contains provisions on cargo and harbour access, non-discrimination treatment on harbours with regard to fees, charges, etc. In other words, it forbids the flag discrimination practices, which otherwise would take effect in zones under the sovereignty of the coastal states. The principle of national treatment is typical for numerous international agreements, stating that foreign goods and services (and their providers) must not be treated less favourably than domestic ones, which takes its origin from the principle of the freedom of transit.⁴⁵ On the other side, the navigation rights over the Caspian Sea outside of the Territorial Waters of the coastal states are restricted according to Article 12, paragraph 3. It says that

each Party’s, in the exercise of its sovereignty, sovereign rights to the subsoil exploitation and other legitimate economic activities related to the development of resources of the seabed and subsoil, and exclusive rights to harvest aquatic biological resources as well as for the purposes of conserving and managing such resources in its fishery zone, may take measures in respect of ships of other Parties, including boarding, inspection, hot pursuit, detention, arrest and judicial proceedings, as may be necessary to ensure compliance with its laws and regulations.

According to this Article, in both Common Maritime Space, as well as in Fishery Zones, navigation rights may be clearly limited by the coastal states. The reason for justifying recourse to such strong measures of intervention into the navigation of the Caspian Sea may be explained by a state’s sovereign rights over the exploitation of the resources in the sectors extending over the bottom of the Caspian Sea. The application of the measures stipulated in this paragraph needs to be justified. In the event that such restrictive measures over ships are left unjustified, there should be compensation for any losses and damages that occur. Such an approach to the freedom of navigation are not widely known in the international Law of the Sea. UNCLOS allows the Coastal State in EEZ, in the exercise of its sovereign rights to explore, exploit, conserve and manage the living resources in the exclusiveeconomic zone, take such measures, including boarding, inspection, arrestand judicial proceedings (Art. 73 paragraph 1, UNCLOS). On the other side, UNCLOS provides for the freedom of navigation in the High Sea, (Article 87), where such restrictive measures such as boarding, hot pursuit, etc. are outlined merely under narrowly specified circumstances.

Following the standards set up in the UNCLOS, the Caspian Sea Convention does not expand the freedom of navigation to the Territorial Waters (Article 10, paragraph 1). The most shipping routes are located along coastal areas, where riparian states exercise their sovereignty. To allow for international navigation and trade, the Law of the Sea limits the authority of the coastal states in the territorial zones (Article 18, UNCLOS).⁴⁶ Also, Article 11, paragraph 1 of the Caspian Sea Convention allows ‘vessels, flying the flags of the other coastal states, for navigation through territorial waters with a view to traversing those waters without entering internal waters or calling at a roadstead or port facility outside internal waters or proceeds to or from internal waters’. Ships enjoy the right of innocent passage through territorial seas of the riparian states (Article 11, Caspian Sea Convention). Terms and conditions of the innocent passage within the Territorial Waters of the Caspian Sea are comparable with international law standards (Art 17 and followings, UNCLOS). This right, however, has been reserved exclusively for the contracting Caspian states and does not offer to all states as being a standard in the UNCLOS regulations over the territorial sea.

An important issue pertaining to navigation and trade to and from the Caspian Sea is the possibility of transit for the landlocked Caspian Sea countries towards the ocean. Volga, as mentioned before, is the only conceivable waterway that could be used as a transit route from the Caspian Sea. Being an internal water of Russia recognizes Russia’s legal status as a ‘transit state’, through whose territory the transit of persons and goods, what would need to happen (Article 124, UNCLOS). The new Caspian Sea Convention confirms that parties shall have the right of free access from the Caspian Sea to other seas and the Ocean, and back. To that end, the parties shall enjoy the freedom of transit for all their means of transport through the territories of transit parties (Article 10, paragraph 4, the Caspian Sea Convention). However, the terms and procedures for such access shall be determined by bilateral agreements between the parties concerned and the transit parties. According to the Caspian Sea Convention, the transit Parties shall be entitled to take all necessary means to ensure their rights and the possibility to exercise full sovereignty. Such a requirement for earlier approval by the coastal state, or at least the duty of announcing the passage, has never been accepted in the Law of the Sea.⁴⁷ Volga belongs, however, entirely to the Internal Waters of Russia. Russia, therefore, should be recognized as a ‘transit state’ (Article 124, UNCLOS). The Caspian Sea Convention, however, requires Caspian Sea states to conclude separate relevant agreements between the transit party and interested landlocked countries, which are, respectively, Russia, Kazakhstan, Azerbaijan and Turkmenistan.

6. CASPIAN SEA ENVIRONMENT AND ITS REGULATION

Economic activities related to the Caspian Sea threaten its fragile environment. Overexploitation of resources, destruction of habitats and pollution from different sources, including from shipping and the development of seabed resources, as well as pipeline transportation of oil and gas, make the whole picture of the Caspian Sea’s environmental protection very difficult.⁴⁸ In terms of vessel-source pollution, it can happen in the course of maritime transportation during its operational activities due to accidental discharges. Such pollution may include all different types of hazardous materials, including oil and natural gas (which result from accidents at sea), re-ballasting and tank cleaning.

Facing the growing concerns over the poor conditions of the environment of the Caspian Sea, the coastal states have tried to take appropriate measures to prevent further destruction of the ecosystem. The first legal attempt to secure protection of the Caspian environment was the adoption of the ‘Almaty Declaration on Co-operation on the Environmental Protection of the Caspian Sea region’ of 1994. Only in 2003 did Caspian riparian states sign the Framework Convention for the Protection of the Marine Environment of the Caspian Sea, the so-called Tehran Convention⁴⁹ in November 2003. As its name suggests, the Tehran Convention is aimed at the environmental protection of the Caspian Sea. In Article 4, it provides for a general obligation to coastal states to take, individually or jointly, all appropriate measures to prevent pollution of the Caspian Sea and to protect the environment of the Caspian Sea. The Tehran Convention includes principles and procedural regulations to better implement its general conditions on environmental impact assessment, technological and scientific cooperation, monitoring, the exchange of and access to information. The Tehran Convention also includes measures for protection, preservation and restoration of the maritime environment of the Caspian Sea. Its overall obligations aim at preventing, reducing and controlling pollution from different sources like land-based activities, seabed activities, vessels and dumping (Articles 7–10, the Tehran Convention).

The Caspian Sea Convention reconfirms the principles of the protection of the Caspian Sea in Article 3, paragraph 14, referring to the protection of the environment of the Caspian Sea, conservation, restoration and rational usage of its biological resources. It also provides for liability of the polluting party for damage caused to the ecosystem of the Caspian Sea (Article 3, paragraph 13, Caspian Sea Convention). Article 15 is devoted to the states’ obligation to undertake the protection and preservation of the ecological system of the Caspian Sea. Parties are required, jointly or individually, to take all necessary measures to achieve this goal. It also specifically prohibits pollution from pipelines (Article 14, paragraph 2) and vessels in the Territorial Sea (Article 11, paragraph 6). The Caspian Sea Convention reinforces the more detailed provisions of the Tehran Convention, which clearly states that countries shall take all appropriate measures to prevent, reduce and control the pollution of the Caspian Sea from all vessels (Article 9) and seabed activities (Article 8). Such stipulations are reflective of typical international paradigms in this field.

Until today, the four additional protocols to the Tehran Convention have been developed: the 2011 Aktau Protocol⁵⁰ on the Regional Preparedness, Response and Co-operation in Combating Oil Pollution Incidents was adopted on 12 August 2011, and was the only one, until today, which was ratified by all Caspian Sea states. The second one, the ‘Protocol’ for the ‘Protection’ of the ‘Caspian Sea against Pollution’ from ‘Land-Based Sources’ and ‘Activities’, was adopted on 12 December 2012, but has not yet been ratified. The Protocol on Conservation of Biological Diversity (Ashgabat Protocol) was adopted on 30 May 2014, but it is not in force yet. The last protocol on Environmental Impact Assessment in Transboundary Context (EIA Protocol) was adopted in 2018, but has not been yet ratified. Whether or not the Caspian Sea Convention will guarantee an effective legal framework for protecting the Caspian environment remains in question. The answer to such a question solely depends on the efficiency of the ratification process of the remaining ancillary protocols.

For the scope of this article, the regulations concerning pollution from the development of fossil resources and their transport are of the most importance. They are specifically regulated in the Aktau Protocol to the Tehran Convention, which applies to oil pollution caused by seabed activities, as well as to oil pollution from vessels—both of which are the subjects of this research. This Protocol obliges states to jointly develop and establish guidelines for the practical, operational and technical aspects of joint action, as well as a regional mechanism (Article 4). The Caspian Sea Plan concerning Regional Cooperation in Combating Oil Pollution in Cases of Emergency shall be developed to operationalize this Protocol. The Protocol requires states to establish National Systems and Contingency Plans for Combating Oil Pollution Incidents (Article 5) and Pollution Reporting Procedures (Article 7). In case of when assistance to deal with an oil pollution incident is needed, the costs of assistance will be reimbursed among the Parties (Article 10). The EIA Protocol forsees assessment of impact of planed activities listed in the Appendix I, which are likely to cause a transboundary impact on the Caspian environment (Art. 3 paragraph 3). Respectively, the EIA procedure applies for laying of pipelines on the bottom of the Caspain Sea for carring oil, gas and products of their procesing.

7. CONCLUSIONS

Interstate cooperation on the development and transport of natural resources is a key factor to achieving trade in natural resources, which would be conducted according to standards set in the SDGs and Global Development Agenda 2030. Also, the Caspian Sea, with its abundant natural resources—mainly oil and gas—offers an example to prove this assumption. Sustainable development of Caspian Sea resources requires firm legal regulation, which serves as a common ground for cooperation among the coastal states. The status of the maritime territories and the definition of the legal regimes of development and transport of the natural resources is critical to achieving the SDGs. However, as contested since the dissolution of the Soviet Union, the legal status of the Caspian Sea has been clarified with the adoption of the Caspian Sea Convention last year.

The article has proved that the provisions of the Caspian Sea Convention follow the legal standards included in the Law of the Sea, but with significant differences and may be summarized as follows. The riparian states’ sovereignty over the Caspian Sea territory, including over its natural resources, has been recognized. The zones under the full sovereignty of riparian states, named as Internal and Territorial Waters (Articles 7 and 13), have been established. These provisions reflect UNCLOS regulations in Internal Waters and the Territorial Sea. The use of the water column above the seabed sectors has been restricted, contrary to UNCLOS regulations.

The seabed and subsoil beyond these zones have been divided into national sectors to enable riparian states the ability to exercise their sovereign rights over the exploitation of resources (Article 8, paragraph 1), parallel with UNCLOS’ regulation of the Continental Shelf.

Maritime transport on the Caspian Sea, including the transport of fossil fuels, has been regulated in two ways; first, recognizing (exclusive) riparian freedom of navigation beyond the outer limits of the Territorial Waters and to, secondly, lay submarine pipelines. Navigation is traditionally one of the most important regimes of the Caspian Sea. It was once used for transporting all kinds of goods, but nowadays is especially important for the shipping of natural resources, including fossil resources. Navigation was a concern of the earliest interstate legal relations among the Caspian states. Limiting the freedom of navigation, exclusively for ships of the coastal states, remains valid from the days of the Soviet Union and was overtaken in the Caspian Sea Convention. The newly adopted Convention refers to the basic principles of the International Law of the Sea, but varies significantly from its standards, especially when excluding foreign vessels from access to the Caspian Sea.

The Caspian Sea Convention has recognized the riparian states’ rights to lay submarine cables and pipelines on the bed of the Caspian Sea (Article 14), which reflects the standards of the Law of the Sea. The legal regulation of the Caspian submarine pipelines used to be a challenge to interstate cooperation. Nowadays, the Caspian Sea Convention opens a new legal basis for developing new sets of pipelines to deliver fossil fuels to customers out of the Caspian region. There is, however, a great need to seriously consider the environmental constraints related to the possible pollution by the exploited fossil fuels which could, in turn, leak from the pipelines.

The initial regulation over the coastal states’ obligation to protect and preserve the ecosystem of the Caspian Sea was set in the Tehran Convention from 2003. The rules for protection of the maritime environment of the Caspian Sea have been additionally reinforced with the adoption of the Caspian Sea Convention. These provisions, however, are merely of a framework nature, establishing a template for ongoing cooperation on the Caspian Sea. The obligation to prevent, reduce and control pollution, as well as to protect, preserve and restore maritime environment of the Caspian Sea, belongs to the basic regulations of contemporary international law. It still requires, however, further development, as far as the ratification of the three new protocols is concerned, to enable the good implementation of those provisions on the operational level in Caspian Sea activities.

Article 19 of the Caspian Sea Convention offers hope that the Convention will be implemented because of the parties’ ability to establish transparent consultations on an ongoing basis, said efforts to be conducted under the Ministries of Foreign Affairs. The procedures for these consultations’ mechanisms still need to be developed.

Without a doubt, the adoption of the Caspian Sea Convention in 2018 will be recognized as a milestone in the negotiations over the states’ cooperation of the Caspian Sea. Almost 30 years’ worth of intergovernmental strides to develop a legal status and regime for the development of the Caspian Sea’s natural resources, its protection and its transport has commenced and will soon open a new platform for further collaboration. There is great hope that the coastal states will develop their natural resources in a sustainable way and, according to international standards, will welcome the region into the international trade system.

Footnotes