International Legal Framework for Regulation of

Offshore Activities in the Adriatic Sea: Liability and

Compensation

Mitja Grbec
What is offshore?
Offshore: means situated in the territorial sea, the
Exclusive Economic Zone (EEZ) or the continental
shelf of a state within the meaning of UNCLOS.

Continental Shelf: the seabed and subsoil of the

submarine areas that extend beyond its territorial
sea throughout the natural prolongation of its land
territorry to the outer edge of the continental margin, or
a distance of 200 nm from the baselines where the
outed edge of the continental margin does not extend up
to that distance (ipso facto-no need for a specific
declaration)
 EEZ (Part V of UNCLOS)
Article 55
Specific legal regime of the exclusive economic zone
The exclusive economic zone is an area beyond and adjacent
to the territorial sea, subject to the specific legal regime
established in this Part, under which the rights and jurisdiction
of the coastal State and the rights and freedoms of other States
are governed by the relevant provisions of this Convention
(UNCLOS)
Article 57
Breadth of the exclusive economic zone
The exclusive economic zone shall not extend beyond 200
nautical miles from the baselines from which the breadth of the
territorial sea is measured.
 Functional jurisdictions?
… b) jurisdiction as provided for in the relevant
provisions of this Convention with regard to:
(i) the establishment and use of artificial islands,
installations and structures;
(ii) marine scientific research;
(iii) the protection and preservation of the marine
environment;
c) other rights and duties provided for in this Convention.

The EEZ is a resource and non resource zone

(important functional jurisdictions of the costal state)!
 MEDITERRANEAN GEOGRAPHY & LOS
 There are no points in the Mediterranean where the coasts
of two States are more than 400 nmi apart.
 The limited maritime space available also means that almost
every extension of jurisdiction creates new neighbours
and triggers the need for delimitation of actual or potential
zones of sovereign rights and/or jurisdiction with adjacent and
opposite States.
 Due the proximity between Mediterranean States, the
extension of jurisdiction by one coastal State, in most cases,
affects the interests of more than just another
neighbouring State (e.g. Central Mediterranean).
 No space in the Mediterranean Sea for an outer continental
shelf (Article 76 of UNCLOS), nor for an ‘International
Area’ (Part XI of UNCLOS).
Enclosed or semi-enclosed sea (Part IX UNCLOS)?

Article 122 (UNCLOS)

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.
 Mediterranean & Adriatic as juridical (semi)
enclosed seas?
Both the Mediterranean and the Adriatic are classified, on
the basis of Part IX of UNCLOS (Article 122), as legal
enclosed or semi-enclosed seas.

Both seas are surrounded by more than one State, are

linked to another sea or ocean through a narrow outlet
(or outlets) and, in case of proclamation of EEZs or other
zones of jurisdiction, their surface would not just
primarily, but most likely entirely be made up of EEZs
and/or other jurisdictional zones of the surrounding
States.
Article 123 (UNCLOS)

Cooperation of States bordering enclosed or semi-enclosed seas:

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.
To this end they shall endeavour, directly or through an
appropriate regional organization...:

(a) to coordinate the management, conservation, exploration and

exploitation of the living resources of the sea;….
Article 123 (UNCLOS - continued)

…..(b) to coordinate the implementation of their rights and

duties with respect to the protection and preservation of
the marine environment;
(c) to coordinate their scientific research policies and
undertake where appropriate joint programmes of scientific
research in the area;
(d) to invite, as appropriate, other interested States or
international organizations to cooperate with them in
furtherance of the provisions of this article.
……
The classification of the Mediterranean and Adriatic as
‘juridical’ enclosed or semi-enclosed seas brings with it an
enhanced requirement for its coastal States to cooperate in
the implementation of their rights and duties under
UNCLOS with particular emphasis (but not limited...) on the
areas of cooperation expressly referred to in Article 123.

Is there an obligation to co-operate with regard to offshore

exploration and exploitation within the Adriatic Sea?

Liability and compensation?

 Adriatic Sea
 Due to its relatively long and narrow shape, the Adriatic is deeply
indented into the European mainland and linked to the rest of the
Mediterranean Sea (Ionian Sea) only through the Strait of Otranto

 The Adriatic marine environment is extremely sensitive and

represents an almost unique ecosystem (...slow exchange of waters
through the strait of Otranto)

 Its living resources can be generally qualified as ‘highly diversified,

with numerous species but low abundance’ which makes the
Adriatic’s ecosystem particularly vulnerable.

 The political map of the sub-region still represents a division

between EU Members States and other States. Important to note
that all Adriatic member States aspire to join the EU (importance of
EU acquis).
Adriatic (Offshore)

 Due to the geographical characteristics of the Adriatic

and the Mediterranean in general, it is almost certain
that even an incident of much lower proportions than
the one experienced in the Gulf of Mexico would have
a devastating effect on the Adriatic marine
environment and its coastal zones,
…..and would most likely affect the territories
and/or zones of jurisdiction of more than one
Adriatic State.
 International Legal Framework for Regulation of
Offshore Activities in the Adriatic: L&C
 No global convention applicable (IMO-no compelling need
for the adoption of a global treaty, Art. 235 UNCLOS),

 Barcelona System (i.e. ‚“Offshore Protocol“, in force

since 2011, but ratified so far (only) by Albania, Slovenia
and EU),

 EU law (i.e. Directive 2013/30/EU on the safety of offshore

oil and gas operations, Directive 2004/35/EC on
environmental liability with regard to the prevention and
remedying of environmental damage-ELD), applicable to
the three Adriatic EU member States (CRO, SI, IT)

 National legislations of Adriatic States?

 UNCLOS
Article 235 (Responsibility and liability)
(2). States shall ensure that recourse is available in accordance with
their legal systems for prompt and adequate compensation or
other relief in respect of damage caused by pollution of the marine
environment by natural or juridical persons under their jurisdiction.
(3). With the objective of assuring prompt and adequate compensation
in respect of all damage caused by pollution of the marine environment,
States shall cooperate in the implementation of existing
international law and the further development of international
law relating to responsibility and liability for the assessment of
and compensation for damage and the settlement of related disputes,
as well as, where appropriate, development of criteria and procedures for
payment of adequate compensation, such as compulsory insurance or
compensation funds.
Barcelona System: Liability & Compensation
Barcelona Convention (ratified by Adriatic States)

Article 16 of the (framework, 2005) Barcelona

Convention
The Contracting Parties undertake to cooperate in
the formulation and adoption of appropriate rules
and procedures for the determination of liability
and compensation for damage resulting from the
pollution of the marine environment in the
Mediterranean Sea Area.
2008 of the Guidelines for the Determination of Liability and
Compensation for Damage Resulting from Pollution of the Marine
Environment in the Mediterranean Sea Area

- Adopted at the 15th Meeting of the State parties to the Barcelona

Convention in 2008 (UNEP(DEPI)/MED.IG.17/10, 18 January
2008, p. 133.
...While not having a legally binding character per se, these
Guidelines are intended to strengthen cooperation among the
Contracting Parties for the development of a regime of
liability and compensation for damage resulting from pollution
of the marine environment in the Mediterranean Sea Area and to
facilitate the adoption by the Contracting Parties of relevant
legislation…
 2008 Mediterranean Guidelines…
 The Parties opted for a soft-law instrument, therefore for
the voluntary unification of their provision in the
field of liability and compensation through the
incorporation into their national legislation of a set of
provisions for damage resulting from pollution of the
Mediterranean, based as much as possible on the
provisions of the Guidelines.
 The latter are of general nature and may be applied to all
areas of marine pollution covered by the Barcelona
System, with the exception of those which have been
already regulated at the international level (e.g. by the CLC
and FUNDS Conventions, the Bunkers Convention, HNS...)
..continued..
It should be noted that liability for damage covered by the
Guidelines, which covers also environmental damage, is
channelled on the operator.
The liability of the latter is strict, although States may
establish limits of liability on the basis of international treaties
or relevant domestic legislation.

For the purposes of these Guidelines ‘environmental

damage’ means a [measurable] adverse change in a natural or
biological resource or [measurable] impairment of a natural or
biological resource service which may occur directly or
indirectly.’
2008 Guidelines (continued..)

 The parties to the Barcelona Convention for the time being could
not however agree to the inclusion in the Guidelines of a set of
provisions regarding the requirement of a compulsory
insurance, nor on the establishment of a ‘Mediterranean
Compensation Fund’, but instead left this question open for
the future.

 Guideline K, para. 18: ‘The Contracting Parties, after a

period of five years from the adoption of these Guidelines,
may, on the basis of an assessment of the products available
on the insurance market, envisage the establishment of
a compulsory insurance regime
 Offshore Protocol (Barcelona Convention)
- Adopted in 1994, entry into force on 24 March 2011 (ratified
so far in the Adriatic by Albania + the EU),

- the Offshore Protocol is a comprehensive document

covering areas such as licensing of operators, contingency
planning, mutual assistance in cases of emergency,
transboundary pollution and monitoring within the entire
Mediterranean Sea, including the continental shelf ……

- One of the most criticized provision of the Offshore Protocol

has been the ‘channelling of liability’ on operators and the
requirement for them to ‘have and maintain insurance cover
or other financial security in order to ensure compensation
for damages caused by the activities covered by the Protocol’
 Offshore Protocol (Barcelona Convention)

Article 27

LIABILITY AND COMPENSATION

1) The Parties undertake to cooperate as soon as possible

in formulating and adopting appropriate rules and
procedures for the determination of liability and
compensation for damage resulting from the activities dealt
with in this Protocol, in conformity with Article 16 of the
Convention.

How soon is as soon as possible?

Offshore Protocol (Art.27)
2. Pending development of such procedures, each Party:….
 (a) Shall take all measures necessary to ensure that
liability for damage caused by activities is imposed
on operators, and they shall be required to pay prompt
and adequate compensation;
 (b) Shall take all measures necessary to ensure that
operators shall have and maintain insurance cover or
other financial security of such type and under such
terms as the Contracting Party shall specify in order
to ensure compensation for damages caused by the
activities covered by this Protocol.
Offshore Protocol (Art. 27)
…Art. 27 reflects, one of the basic principles of contemporary
environmental law, the ‘polluter pays principle’…

It is peculiar that the delegations of EU and France at the time of

the adoption of the Offshore Protocol expressed a ‘reservation
pending consideration’ centred exactly on Article 27(2) of the
Protocol imposing the mentioned two requirements upon
operators

Although entering into force in 2011, the Offshore Protocol

has been so far ratified (only) by the EU (following the 2010
Gulf of Mexico dissaster) and Albania, Cyprus, Lebanon,
Libya, Morocco, Syria, Turkey...)
EU Law (Offshore: Liability and Compensation)

 Offshore protocol to the Barcelona Convention

 Directive 2013/30/EU on the safety of offshore oil and gas
operations and amending
 Directive 2004/35/EC on environmental liability with regard
to the prevention and remedying of environmental damage-
(ELD-Environmental Liability Directive)

Environmental damage (ELD):

- Damage to protected species and natural habitats, which is
any damage that has significant adverse effects on reaching or
maintaining the favourable conservation status of such habitats
or species…
 Directive 2013/30/EU on the safety of offshore
oil and gas operations
Amends the ELD by extending the scope of “water damage”
definition to cover “marine waters” under Directive 2008/56/EC
(Marine Strategy Framework Directive-extension of the geographical
scope of application to zones of sovereign rights and jurisdiction)

…..(a) waters, the seabed and subsoil on the seaward side of the baseline from
which the extent of territorial waters is measured extending to the outmost
reach of the area where a Member State has and/or exercises jurisdictional
rights, in accordance with the Unclos (...)

(b) coastal waters as defined by Directive 2000/60/EC, their seabed and their
subsoil, in so far as particular aspects of the environmental status of the marine
environment are not already addressed through that Directive or other
Community legislation..
…strict liability for Environmental damage (licensee)

Art. 7
Without prejudice to the existing scope of liability relating to
the prevention and remediation of environmental damage
pursuant to Directive 2004/35/EC, Member States shall
ensure that the licensee is financially liable for the
prevention and remediation of environmental damage
as defined in that Directive, caused by offshore oil and gas
operations carried out by, or on behalf of, the licensee or the
operator.

What about compulsory insurance?

What about civil liability (pure and/or consequential loss)?
 Art. 4 (3) of the Directive

 Member States shall ensure that the licensing authority does not
grant a licence unless it is satisfied with evidence from the
applicant that the applicant has made or will make
adequate provision, on the basis of arrangements to be
decided by Member States, to cover liabilities potentially
deriving from the applicant’s offshore oil and gas
operations. Such provision shall be valid and effective from the
start of offshore oil and gas operations.
 Member State shall require applicants to provide, in an
appropriate manner, evidence of technical and financial
capacity and any other relevant information relating to the area
covered by the licence and the particular stage of offshore oil and
gas operations.
 ………..
 Art. 4 (3) of the Directive
 Member States shall facilitate the deployment of
sustainable financial instruments and other arrangements
to assist applicants for licences in demonstrating their
financial capacity pursuant to the first subparagraph.

 Member States shall, as a minimum, establish procedures for

ensuring prompt and adequate handling of compensation
claims including in respect of compensation payments for
trans-boundary incidents.

 The Member States shall require the licensee to maintain

sufficient capacity to meet their financial obligations
resulting from liabilities for offshore oil and gas operations.
 Conclusions

In order to protect the potential victims of oil pollution deriving from

offshore drilling in the Adriatic (including for example the extremely
important tourism sector), it would seem imperative for all Adriatic
States to impose the liability on operators and particularly to ensure
that they have adequate insurance (financial) cover.

It is therefore suggested that (all) Adriatic States should ratify the Offshore
Protocol to Barcelona Convention and endeavour to cooperate in the
implementation of its provisions, with a special emphasis on Article 27
regulating liability and compensation.
 Conclusions

….Adriatic States could endeavour to cooperate in the drafting of a

unified set of provisions (legislation) channelling the liability for
such type of pollution on the operator (strict liability) and
providing furthermore for exceptions and limits of liability and the
requirement for compulsory insurance on offshore operators
exploiting the Adriatic seabed and subsoil.

Regional arrangement based on new IMO Gudelines?