[Archive Material] — Turkmenistan-Azerbaijan Caspian Dispute – The Legal Position

This report was initially published in September 2009. It is being reproduced here for record.

 

Turkmenistan-Azerbaijan Caspian Dispute – The Legal Position

nCa Report by Tariq Saeedi

Caspian is a matchless body of water, brimming with all kinds of legal questions..

One of the most contested questions in Caspian is the division of the seabed among the littoral states. The talks between Turkmenistan and Azerbaijan broke down last month after Azerbaijan suddenly changed its stance from conciliation to confrontation.

The point of divergence is: How to draw the median line, dividing the shelf in a satisfactory manner between Turkmenistan and Azerbaijan.

At the heart of this question are at least three major oil and gas fields. The way the median line is drawn will determine the legal ownership of these fields.

This is a matter of law. One way to deal with it is through bilateral and multilateral consultations. Another way is to submit the case to a competent court of law, a duly constituted tribunal or any other body of arbitration or reconciliation that enjoys the trust of all the parties of the dispute

Trying a legal case through the court of media, and frolicking recklessly in speculations, are happy and exciting pastimes but their only real outcome is that they complicate the task of the negotiating teams of both sides.

The mangy cats of the fringe media that feed from the dustbin of grants aimed at creating instability in Central Asia and Caucasus, contributed their teeth-and-claws-for-hire without knowing or understanding the issue.

Turkmenistan and Azerbaijan have both maintained composure and dignity. The phone talks between the presidents of the two countries on 3 September resulted in their agreeing to meet, probably twice, this month.

In addition, four of the five heads of Caspian states will meet in Aktau (Kazakhstan) on 13 September to formulate a joint strategy to iron out some of the spiky questions related to Caspian.

Meanwhile, there is the need to look at some legal aspects of division of the Caspian shelf between Turkmenistan and Azerbaijan, and determine as to whose position is tenable under the existing laws.

Both sides seem to lean to some extent on the UNCLOS (UN Convention on the Law of the Sea) to formulate their positions. There is a clear understanding that since the distance between their shorelines is less than 400 nautical miles (about 740 km), the conventional limits of EEZ (Exclusive Economic Zone) cannot be applied, and therefore a median line should be drawn to mark the share of each side.

Azerbaijan wants to take the tip of Absheron peninsula, the semi-submerged bump of land jutting into the sea, as the cardinal point. Turkmenistan says that Caspian is a confined environment, and fairness and commonsense demand that the median line be drawn right through the middle of the sea, equidistant at all points from the main shoreline. Taking the Absheron peninsula into account will distort the median line and violate the principle of proportionality and equitable division.

The application of commonsense – a commodity no so common these days – should be the first step toward establishing the ownership of the disputed fields. Logically, the fields should belong to the country that is nearer to them:

Disputed Fields

Just by looking at the distance from the shoreline of each side, one can see right away that two of the three fields belong to Turkmenistan. The third field – Osman/Chirag – is near the middle and could possibly be a candidate for legal hairsplitting.

However, there are no signs that Azerbaijan is willing to accept this commonsensical approach.

In order to go deeper into the issue, one needs to look at the arguments presented by the Azeri side.

The Azeri side says that the fields in question were developed and managed during the Soviet time by them and therefore they have the ownership right for historical reasons.

This claim has no legal legs.

The organization that managed these fields in Soviet era was called CaspMor NeftGaz (Caspian Sea Oil and Gas). The name itself explains that the organization was related to management of Caspian resources in soviet territory, without assigning any exclusive ownership to Azerbaijan as a component republic of the union.

The reason that CaspMor was based in Baku is rooted in the simple fact that there were, at that time, more oil and gas specialists in Baku than Kranovodsk (now Turkmenbashy) because Baku was into oil business since Nobel’s times. This was purely an administrative arrangement, and hardly any court of law can be expected to accept it as a proof of ownership. Had the intention been to show the ownership of Azerbaijan, the name would have been AzMor instead of CaspMor.

Azerbaijan also says that the tender for exploitation of the fields in question was announced in January 1991 jointly by the USSR ministry of oil and gas industry and the council of ministers of Azerbaijan. The text of the tender says, in part, “[F]our giant oil and gas fields have been discovered in the deep-water section of Azerbaijan in the Caspian Sea.”

This argument must pass some legal tests before being considered in a court of law:

1. Does the text of a hastily and carelessly drafted tender notice constitute a legal instrument for dividing the seabed, keeping in view the fact that none of the treaties or internal laws of the USSR assigned any territorial water limits to the component republics surrounding the Caspian?
2. Was the ministry of oil and gas of the Soviet Union a competent authority to assign territorial limits to the component republics when such decisions were always taken by the politburo or presidium?
3. Should we ignore the established international practice that the right to exploit a hydrocarbon field can, by no means, be interpreted as the right to ownership of that field?

An honest answer to these questions will point in the right direction.

This sums up the pitiably thin portfolio of Azeri arguments for ownership of the disputed fields except for the unreasonable stand that the Absheron peninsula, a bird’s beak that suddenly juts out from an otherwise evenly fractured coastline, should be taken into account when drawing the median line; and we will take care of that too in a minute.

UNCLOS is the only comprehensive legal instrument for dealing with these kinds of disputes. However, Turkmenistan and Azerbaijan are not a party to UNCLOS simply because they are not sure whether they are sitting at the shore of a sea or a lake.

Nevertheless, article 289 of UNCLOS leaves a trapdoor for anyone wanting to use the several platforms for dispute-resolution it provides.

In trying to ascertain Turkmenistan’s ownership of the fields in question, we should first deal with the concept of continental shelf.

The UN Conference on the Law of the Sea 1958, and subsequently the UNCLOS, describe the continental shelf as “the seabed and subsoil of the submarine areas adjacent to the coast but outside the area of the territorial sea, to a depth of 200 meters, or, beyond that limit, to where the depth of the superjacent waters admits of the exploitation of the natural resources of the said areas.”

When trying to use the concept of continental shelf in the present case, we need to miniaturize the scale because we are talking of Caspian, a comparatively small body of water, neither truly sea nor a legitimate lake.

By looking at the depth of water every hundred meters from the water’s edge on both sides, we can see that the continental shelf of Turkmenistan extends nearly two-third of the distance to the opposite shore whereas the Azeri continental shelf ends abruptly except for its northern segment.

The concept of the continental shelf is also linked to the various limits a country can claim for different kinds of rights.

UNCLOS recognizes the right of the coastal nations to claim up to 12 nautical miles of water as territorial sea and up to 200 nautical miles as EEZ. In case of a larger continental shelf, the EEZ can be extended up to 350 nautical miles under certain conditions.

Part VI of UNCLOS (articles 76 to 84) deals with the definition and division of the continental shelf, and management of EEZ (Exclusive Economic Zone).

Para 3 of article 76 explains:

3. The continental margin comprises the submerged prolongation of the land mass of the coastal State, and consists of the seabed and subsoil of the shelf, the slope and the rise. It does not include the deep ocean floor with its oceanic ridges or the subsoil thereof.

Without insisting that the concept of continental shelf should be the sole determinant for division of Caspian bed between Turkmenistan and Azerbaijan, we would like to underline that it must weigh prominently when considering other arguments.

EEZ is the area where a coastal nation has the right to exploit all kinds of biological, natural and mineral resources, including hydrocarbon resources.

Article 74 of UNCLOS is the entry point for dealing with the question of delimitation of EEZ between the states with opposite or adjacent coasts.

Here is the text of article 74:

1. The delimitation of the exclusive economic zone between States with opposite or adjacent coasts shall be effected by agreement on the basis of international law, as referred to in Article 38 of the Statute of the International Court of Justice, in order to achieve an equitable solution.

2. If no agreement can be reached within a reasonable period of time, the States concerned shall resort to the procedures provided for in Part XV.

3. Pending agreement as provided for in paragraph 1, the States concerned, in a spirit of understanding and cooperation, shall make every effort to enter into provisional arrangements of a practical nature and, during this transitional period, not to jeopardize or hamper the reaching of the final agreement. Such arrangements shall be without prejudice to the final delimitation.

4. Where there is an agreement in force between the States concerned, questions relating to the delimitation of the exclusive economic zone shall be determined in accordance with the provisions of that agreement.

This article is closely linked to article 83 that deals with the delimitation of the continental shelf between the states with opposite or adjacent coasts.

Here is the text of article 83:

1. The delimitation of the continental shelf between States with opposite or adjacent coasts shall be effected by agreement on the basis of international law, as referred to in Article 38 of the Statute of the International Court of Justice, in order to achieve an equitable solution.

2. If no agreement can be reached within a reasonable period of time, the States concerned shall resort to the procedures provided for in Part XV.

3. Pending agreement as provided for in paragraph 1, the States concerned, in a spirit of understanding and cooperation, shall make every effort to enter into provisional arrangements of a practical nature and, during this transitional period, not to jeopardize or hamper the reaching of the final agreement. Such arrangements shall be without prejudice to the final delimitation.

4. Where there is an agreement in force between the States concerned, questions relating to the delimitation of the continental shelf shall be determined in accordance with the provisions of that agreement.

We have highlighted the term ‘equitable solution’ in bold Italics in both the articles for the sake of emphasis.

Taken together with the nature of the continental shelf, the principle of equitable solution strengthens Turkmenistan’s case for ownership of the fields in question because Turkmen coastline is considerably longer than the Azeri side. We will stop short of mentioning the exact length of each coastline because hardly any survey charts can be relied on now since the level of water in Caspian has risen by more than two meters during the last thirty years. However, no one can dispute the fact that Turkmenistan’s coastline is longer that Azerbaijan.

Turkmenistan has refrained from pressing this point out of a sense of good neighbourly feelings for all the Caspian states. Nonetheless, a court of law will give due weight to the difference in the length of shoreline.

Precedence in somewhat similar cases shows that the courts tend to prefer the principle of equitable solution over the equidistance rule. Equidistance rule is the method of drawing a median line that is equidistant at all points from both shorelines.

The North Sea Continental Shelf Cases of 1969 compelled the International Court of Justice to opine that overriding consideration in maritime boundary delimitation belongs to equitable results so that each side receives approximately the share of maritime space that is roughly proportional to the length of its coastline. It has been shown case after case that that in confined waters strict adherence to equidistance rule produces inequitable results.

That is why Absheron peninsula cannot be taken into account when drawing the median line. It will distort the median line and violate the principle of equitable solution. This takes care of all the arguments of the Azeri side for its ownership of fields.

The provisions of UNCLOS tend to support the position of Turkmenistan. The question to ask is, how does UNCLOS apply to Caspian when its legal status is still undecided?

Frankly speaking, it doesn’t, on its own.

There are two conduits for connecting UNCLOS with the Caspian question.

The first one is to lean on article 122 of UNCLOS that says:

Enclosed or Semi-Enclosed Seas

Article122

Definition

For the purposes of this Convention, “enclosed or semi-enclosed sea” means a gulf, basin or sea surrounded by two or more States and connected to another sea or the ocean by a narrow outlet or consisting entirely or primarily of the territorial seas and exclusive economic zones of two or more coastal States.

In order to use this article as a boathook to secure Caspian with UNCLOS, one would need to agree that Volga-Don canal system makes Caspian ‘connected to another sea.’

It depends on both sides whether they would like to use this option or not.

In case Azerbaijan agrees to consider Caspian as an ‘enclosed or semi-enclosed sea,’ it would have a hard time explaining as to why it violated almost all the guidelines provided by UNCLOS for countries sharing such a body of water.

Article 123 of UNCLOS says, in part: “States bordering an enclosed or semi-enclosed sea should cooperate with each other in the exercise of their rights and in the performance of their duties under this Convention.”

The other possibility is to use the principles of UNCLOS without acceding to it. It is a solid alternative because regardless of the eventual outcome – whether Caspian is a sea or a lake – the principles of division would be nearly the same.

Several lakes around the world have been divided between the sharing countries on the principles almost in line with UNCLOS. Some examples are: Lake Malawi (between Malawi and Mozambique), Lake Victoria (between Kenya, Tanzania and Uganda), Lake Geneva (between France and Switzerland) and Lake Titicaca (between Bolivia and Peru).

To sum it up, we would like to say that the proximity of most of the disputed fields to Turkmenistan, the principle of equitable solution, the international preference to ignore aberrations such as Absheron peninsula in drawing the median line, when taken together, all support Turkmenistan’s claim for ownership of these fields.

Nevertheless, it appears that the Azeri side planned early on exploiting the fields that were not rightfully theirs. Clause 2 of article 11 of the constitution of Azerbaijan says: Internal waters of the Azerbaijan Republic, sector of the Caspian Sea (lake) belonging to the Azerbaijan Republic, air space over the Azerbaijan Republic are integral parts of the territory of the Azerbaijan Republic.

There are two points worth noting in this text. The first is that in describing Caspian as Sea, putting lake in bracket as alternative definition, Azerbaijan, at some level, recognizes Caspian as a sea and would have known the implications of exploiting the fields it did not own.

The other point is that inclusion of ‘sector of the Caspian Sea (lake) belonging to the AzerbaijanRepublic’ puts the constitutional perimeters ahead of legal realities, a kind of fig leave to cover the extralegal exploitation that was already underway.

The current strategy of Azerbaijan seems to keep siphoning off as much of oil and gas as possible before agreeing to any legal settlement.

While the law is on Turkmenistan’s side, some other factors are not.

UNCLOS is a direct offspring of Truman Proclamation.

The underwater resources were historically treated as a common property until the discovery of offshore oil and the arrival of technology to drill it cost economically.

In 1945, President Harry S Truman, responding to pressure from the domestic oil companies, unilaterally extended the United States jurisdiction over all the natural resources, including the oil and gas resources, on that nation’s continental shelf.

After the WWII, the frenzy to claim ever larger portions of territorial waters by many nations created alarm. On 1 November 1967, ambassador of Malta to the United Nations, Arvid Pardo, called forcefully for “an effective international regime over the seabed and the ocean floor beyond a clearly defined national jurisdiction. . . . It is the only alternative by which we can hope to avoid the escalating tension that will be inevitable if the present situation is allowed to continue.”

It took more than 15 years and combined effort of 160 sovereign states to put together the legal instrument that we know as UNCLOS today.

One cannot ignore the fact that oil majors were the root cause for need of UNCLOS.

Those same multinationals are present in Azerbaijan in large numbers and many of them are deeply involved in some of the disputed fields. They would bend over backward in their effort to protect their own interests and as the perceptions stand today, they might consider that handing of possession to the rightful owner, i.e. Turkmenistan will, will damage their interests.

We would like to mention that for two important reasons it is important for the multinationals to support the just position of Turkmenistan:

In all likelihood, Turkmenistan will not disturb the existing contracts if and when it gets the ownership of the fields in question. The multinationals have no reason to worry on this account. On the other hand, it would actually be highly be beneficial for them because they would get a ready-made entry into Turkmenistan.

The oil reserves in Azerbaijan are on their last legs. Turkmenistan has huge oil and gas reserves and most of them are still untapped. If the western oil majors do some correct thinking at this stage, they would be secure in Caspian for the next several decades.