Unless the Pacific Island states were properly briefed about the benefits and pitfalls of deep-sea mining investment by foreign companies, they could risk their sovereignty over the oceans and may even face enormous legal battles with potential for unaffordable claims made against them by these companies.
This was stated by the Vice Chancellor of the University of Fiji, Professor Shaista Shameem in response to a seminar by eminent law academic, Professor Jane Kelsey at the University last week.
The seminar, “Undermining Sovereignty: De-Risking the Pacific from Investor-State Dispute Settlement in Deep Sea Mining.” was hosted by the University of Fiji Journalism and Media Press Club. Professor Kelsey said Pacific countries were facing difficult decisions as governments and companies sought greater access to resources on the ocean floor. However, while some Pacific states had adopted moratoriums on deep-sea mining, others were partnering in exploration and had shares in companies that had invested in mining precious metals and other materials.
Professor Kelsey said the risks went beyond environmental and social impacts and could extend to legal agreements that restricted governments from changing laws, taxes, permits and other regulatory requirements.
She said Investor-State Dispute Settlement, or ISDS, could allow foreign investors to bring claims against governments through international arbitration rather than domestic courts.
Professor Kelsey said this could create a “regulatory chill”, where governments backed away from measures in the public interest because of the threat of costly legal action.
“A threat by an investor to bring a dispute, or even officials warning a government that if you do something you could face a dispute, may get the government to back off from doing something that is absolutely essential,” she said.
She said the average ISDS claim in 2023 was about US$1.1 billion, a significant risk for smaller Pacific economies.
Professor Kelsey said Pacific states could be exposed through bilateral investment treaties, contracts with mining companies, sponsorship agreements linked to the International Seabed Authority and domestic seabed mining legislation.
She identified Fiji among Pacific countries with domestic legislation containing similar investor protections and international arbitration provisions.
The University of Fiji Head of Corporate Services and former Tuvalu Finance Minister Mr Seve Paeniu said deep-sea mining remained one of the most controversial issues in the Pacific.
He said some Pacific states supported a moratorium until environmental, social and economic impacts were better understood, while others saw deep-sea mining as a possible new source of revenue.
Mr Paeniu said Tuvalu had previously been approached over deep-sea mining but the government in which he served later decided to stop the permit application process.
“We felt that there was insufficient scientific information available to enable us to move forward on deep-sea mining,” he said.
Professor Kelsey said governments needed to carefully review legal arrangements before commercial deep-sea mining advanced further.
She said stronger safeguards were needed to protect governments’ ability to regulate in the public interest.
The lecture formed part of The University of Fiji’s Press Club series, which brings together academics, policymakers, media and the wider public to discuss major national and regional issues.
