Agreement Relating to the Implementation of Part XI of the United Nations Convention on the Law of the Sea

SECTION 7. ECONOMIC ASSISTANCE

1. The policy of the Authority of assisting developing countries which
suffer serious adverse effects on their export earnings or economies
resulting from a reduction in the price of an affected mineral or in the
volume of exports of that mineral, to the extent that such reduction is
caused by activities in the Area, shall be based on the following
principles:

(a) The Authority shall establish an economic assistance fund from a
portion of the funds of the Authority which exceeds those necessary to
cover the administrative expenses of the Authority. The amount set aside
for this purpose shall be determined by the Council from time to time,
upon the recommendation of the Finance Committee. Only funds from
payments received from contractors, including the Enterprise, and
voluntary contributions shall be used for the establishment of the
economic assistance fund;

(b) Developing land-based producer States whose economies have been
determined to be seriously affected by the production of minerals from
the deep seabed shall be assisted from the economic assistance fund of
the Authority;

(c) The Authority shall provide assistance from the fund to affected
developing land-based producer States, where appropriate, in cooperation
with existing global or regional development institutions which have the
infrastructure and expertise to carry out such assistance programmes;

(d) The extent and period of such assistance shall be determined on a
case-by-case basis. In doing so, due consideration shall be given to the
nature and magnitude of the problems encountered by affected developing
land-based producer States.

2. Article 151, paragraph 10, of the Convention shall be implemented by
means of measures of economic assistance referred to in paragraph 1.
Article 160, paragraph 2 (1), article 162, paragraph 2 (n), article 164,
paragraph 2 (d), article 171, subparagraph (f), and article 173,
paragraph 2 (c), of the Convention shall be interpreted accordingly.

SECTION 8. FINANCIAL TERMS OF CONTRACTS

1. The following principles shall provide the basis for establishing
rules, regulations and procedures for financial terms of contracts:

(a) The system of payments to the Authority shall be fair both to the
contractor and to the Authority and shall provide adequate means of
determining compliance by the contractor with such system;

(b) The rates of payments under the system shall be within the range
of those prevailing in respect of land-based mining of the same or
similar minerals in order to avoid giving deep seabed miners an
artificial competitive advantage or imposing on them a competitive
disadvantage;

(c) The system should not be complicated and should not impose major
administrative costs on the Authority or on a contractor. Consideration
should be given to the adoption of a royalty system or a combination of
a royalty and profit-sharing system. If alternative systems are decided
upon, the contractor has the right to choose the system applicable to
its contract. Any subsequent change in choice between alternative
systems, however, shall be made by agreement between the Authority and
the contractor;

(d) An annual fixed fee shall be payable from the date of commencement
of commercial production. This fee may be credited against other
payments due under the system adopted in accordance with subparagraph
(c). The amount of the fee shall be established by the Council;

(e) The system of payments may be revised periodically in the light of
changing circumstances. Any changes shall be applied in a
non-discriminatory manner. Such changes may apply to existing contracts
only at the election of the contractor. Any subsequent change in choice
between alternative systems shall be made by agreement between the
Authority and the contractor;

(f) Disputes concerning the interpretation or application of the rules
and regulations based on these principles shall be subject to the dispute
settlement procedures set out in the Convention.

2. The provisions of Annex III, article 13, paragraphs 3 to 10, of the
Convention shall not apply.

3. With regard to the implementation of Annex III, article 13, paragraph
2, of the Convention, the fee for processing applications for approval of
a plan of work limited to one phase, either the exploration phase or the
exploitation phase, shall be US$ 250,000.

SECTION 9. THE FINANCE COMMITTEE

1. There is hereby established a Finance Committee. The Committee shall
be composed of 15 members with appropriate qualifications relevant to
financial matters. States Parties shall nominate candidates of the
highest standards of competence and integrity.

2. No two members of the Finance Committee shall be nationals of the
same State Party.

3. Members of the Finance Committee shall be elected by the Assembly and
due account shall be taken of the need for equitable geographical
distribution and the representation of special interests. Each group of
States referred to in section 3, paragraph 15 (a), (b), (c) and (d), of
this Annex shall be represented on the Committee by at least one member.
Until the Authority has sufficient funds other than assessed
contributions to meet its administrative expenses, the membership of the
Committee shall include representatives of the five largest financial
contributors to the administrative budget of the Authority. Thereafter,
the election of one member from each group shall be on the basis of
nomination by the members of the respective group, without prejudice to
the possibility of further members being elected from each group.

4. Members of the Finance Committee shall hold office for a term of five
years. They shall be eligible for re-election for a further term.

5. In the event of the death, incapacity or resignation of a member of
the Finance Committee prior to the expiration of the term of office, the
Assembly shall elect for the remainder of the term a member from the same
geographical region or group of States.

6. Members of the Finance Committee shall have no financial interest in
any activity relating to matters upon which the Committee has the
responsibility to make recommendations. They shall not disclose, even
after the termination of their functions, any confidential information
coming to their knowledge by reason of their duties for the Authority.

7. Decisions by the Assembly and the Council on the following issues
shall take into account recommendations of the Finance Committee:

(a) Draft financial rules, regulations and procedures of the organs of
the Authority and the financial management and internal financial
administration of the Authority;

(b) Assessment of contributions of members to the administrative
budget of the Authority in accordance with article 160, paragraph 2 (e),
of the Convention;

(c) All relevant financial matters, including the proposed annual
budget prepared by the Secretary-General of the Authority in accordance
with article 172 of the Convention and the financial aspects of the
implementation of the programmes of work of the Secretariat;

(d) The administrative budget;

(e) Financial obligations of States Parties arising from the
implementation of this Agreement and Part XI as well as the
administrative and budgetary implications of proposals and
recommendations involving expenditure from the funds of the Authority;

(f) Rules, regulations and procedures on the equitable sharing of
financial and other economic benefits derived from activities in the Area
and the decisions to be made thereon.

8. Decisions in the Finance Committee on questions of procedure shall be
taken by a majority of members present and voting. Decisions on
questions of substance shall be taken by consensus.

9. The requirement of article 162, paragraph 2 (y), of the Convention to
establish a subsidiary organ to deal with financial matters shall be
deemed to have been fulfilled by the establishment of the Finance
Committee in accordance with this section.

Author: international

Mentioned in these Entries

Agreement Relating to the Implementation of Part XI of the United Nations Convention on the Law of the Sea.