Section 162p. 162

PUBLIC INTERNATIONAL LAW COMPENDIUM VOLUME I

(c) have already invested the most resources and effort in

prospecting or exploration.

4. Applicants which are not selected in any period shall

have priority in subsequent periods until they receive a

production authorization.

5. Selection shall be made taking into account the need

to

enhance

opportunities

for

all

States

Parties,

irrespective of their social and economic systems or

geographical

locations so as to avoid discrimination

against any State or system, to participate in activities in

the

Area

and

to

prevent

monopolization

of

those

activities.

6. Whenever fewer reserved areas than non-reserved

areas are under exploitation, applications for production

authorizations with respect to reserved areas shall have

priority.

7. The decisions referred to in this article shall be taken as

soon as possible after the close of each period.

Article 8. Reservation of areas

Each application, other than those submitted by the

Enterprise or by any other entities for reserved areas, shall

cover a total area, which need not be a single continuous

area,

sufficiently

large

and

of

sufficient

estimated

commercial value to allow two mining operations. The

applicant shall indicate the coordinates dividing the area

into two parts of equal estimated commercial value and

submit all the data obtained by him with respect to both

parts. Without prejudice to the powers of the Authority

pursuant to article 17 of this Annex, the data to be

submitted concerning polymetallic nodules shall relate to

mapping, sampling, the abundance of nodules, and their

metal content. Within 45 days of receiving such data, the

Authority shall designate which part is to be reserved

solely for the conduct of activities by the Authority

through the Enterprise or in association with developing

States. This designation may be deferred for a further

period

of

45

days

if

the

Authority

requests

an

independent expert to assess whether all data required

by this article has been submitted. The area designated

shall become a reserved area as soon as the plan of work

for the non-reserved area is approved and the contract is

signed.

Article 9. Activities in reserved areas

1. The Enterprise shall be given an opportunity to decide

whether it intends to carry out activities in each reserved

area. This decision may be taken at any time, unless a

notification pursuant to paragraph 4 is received by the

Authority, in which event the Enterprise shall take its

decision within a reasonable time. The Enterprise may

decide to exploit such areas in joint ventures with the

interested State or entity.

2.

The

Enterprise

may

conclude

contracts

for

the

execution of part of its activities in accordance with

Annex IV, article 12. It may also enter into joint ventures for

the conduct of such activities with any entities which are

eligible to carry out activities in the Area pursuant to

article 153, paragraph 2(b). When considering such joint

ventures, the Enterprise shall offer to States Parties which

are developing States and their nationals the opportunity

of effective participation.

3. The Authority may prescribe, in its rules, regulations

and

procedures,

substantive

and

procedural

requirements

and

conditions

with

respect

to

such

contracts and joint ventures.

4. Any State Party which is a developing State or any

natural or juridical person sponsored by it and effectively

controlled by it or by other developing State which is a

qualified applicant, or any group of the foregoing, may

notify the Authority that it wishes to submit a plan of

work pursuant to article 6 of this Annex with respect to a

reserved area. The plan of work shall be considered if the

Enterprise decides, pursuant to paragraph 1, that it does

not intend to carry out activities in that area.

Article 10. Preference and priority among applicants

An operator who has an approved plan of work for

exploration only, as provided in article 3, paragraph 4(c), of

this Annex shall have a preference and a priority among

applicants for a plan of work covering exploitation of the

same area and resources. However, such preference or

priority may be withdrawn if the operator's performance

has not been satisfactory.

Article 11. Joint arrangements

1. Contracts may provide for joint arrangements between

the contractor and the Authority through the Enterprise,

in the form of joint ventures or production sharing, as well

as any other form of joint arrangement, which shall have

the

same

protection

against revision, suspension or

termination as contracts with the Authority.

2. Contractors entering into such joint arrangements with

the

Enterprise

may

receive

financial

incentives

as

provided for in article 13 of this Annex.

3. Partners in joint ventures with the Enterprise shall be

liable for the payments required by article 13 of this Annex

to the extent of their share in the joint ventures, subject

to financial incentives as provided for in that article.

Article 12. Activities carried out by the Enterprise

1. Activities in the Area carried out by the Enterprise

pursuant to article 153, paragraph 2(a), shall be governed

by Part XI, the rules, regulations and procedures of the

Authority and its relevant decisions.

2. Any plan of work submitted by the Enterprise shall be

accompanied by evidence supporting its financial and

technical capabilities.

Article 13. Financial terms of contracts

1.

In

adopting

rules,

regulations

and

procedures

concerning the financial terms of a contract between the

Authority

and the entities referred to in article 153,

paragraph 2(b), and in negotiating those financial terms

in accordance with Part XI and those rules, regulations

and procedures, the Authority shall be guided by the

following objectives:

(a) to ensure optimum revenues for the Authority from

the proceeds of commercial production;

(b)

to

attract

investments

and

technology

to

the

exploration and exploitation of the Area;

(c)

to

ensure

equality

of

financial

treatment

and

comparable financial obligations for contractors;

(d)

to

provide

incentives

on

a

uniform

and

non-discriminatory basis for contractors to undertake

joint arrangements with the Enterprise and developing

States or their nationals, to stimulate the transfer of

technology thereto, and to train the personnel of the

Authority and of developing States;

(e) to enable the Enterprise to engage in seabed mining

effectively at the same time as the entities referred to in

article 153, paragraph 2(b); and

(f) to ensure that, as a result of the financial incentives

provided to contractors under paragraph 14, under the

terms of contracts reviewed in accordance with article 19

of this Annex or under the provisions of article 11 of this

Annex with respect to joint ventures, contractors are not

subsidized so as to be given an artificial competitive

advantage with respect to land-based miners.

2. A fee shall be levied for the administrative cost of

processing an application for approval of a plan of work in

the form of a contract and shall be fixed at an amount of

$US 500,000 per application. The amount of the fee shall

be reviewed from time to time by the Council in order to

ensure that it covers the administrative cost incurred. If

such administrative cost incurred by the Authority in

processing an application is less than the fixed amount,

the Authority shall refund the difference to the applicant.

3. A contractor shall pay an annual fixed fee of $US 1

million from the date of entry into force of the contract. If

© Compiled by RGL

162 of 192