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 the approved date of commencement of commercial production is postponed because of a delay in issuing the production authorization, in accordance with article 151, the annual fixed fee shall be waived for the period of postponement. From the date of commencement of commercial production, the contractor shall pay either the production charge or the annual fixed fee, whichever is greater.
4. Within a year of the date of commencement of commercial production, in conformity with paragraph 3, a contractor shall choose to make his financial contribution to the Authority by either:
(a) paying a production charge only; or
(b) paying a combination of a production charge and a share of net proceeds.
5. (a) If a contractor chooses to make his financial contribution to the Authority by paying a production charge only, it shall be fixed at a percentage of the market value of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract. This percentage shall be fixed as follows:
(i) years 1-10 of commercial production 5 per cent
(ii) years 11 to the end of commercial production 12 per cent
(b) The said market value shall be the product of the quantity of the processed metals produced from the polymetallic nodules extracted from the area covered by the contract and the average price for those metals during the relevant accounting year, as defined in paragraphs 7 and 8.
6. If a contractor chooses to make his financial contribution to the Authority by paying a combination of a production charge and a share of net proceeds, such payments shall be determined as follows:
(a) The production charge shall be fixed at a percentage of the market value, determined in accordance with subpara-graph (b), of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract. This percentage shall be fixed as follows:
(i) first period of commercial production 2 per cent
(ii) second period of commercial production 4 per cent If, in the second period of commercial production, as defined in subparagraph (d), the return on investment in any accounting year as defined in subparagraph (m) falls below 15 per cent as a result of the payment of the production charge at 4 per cent,
the production charge shall be 2 per cent instead of 4 per cent in that accounting year.
(b) The said market value shall be the product of the quantity of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract and the average price for those metals during the relevant accounting year as defined in paragraphs 7 and 8.
(c) (i) The Authority’s share of net proceeds shall be taken out of that portion of the contractor’s net proceeds which is attributable to the mining of the resources of the area covered by the contract, referred to hereinafter as attributable net proceeds.
(ii) The Authority’s share of attributable net proceeds shall be determined in accordance with the following incrementalschedule:
(d) (i) The first period of commercial production referred to in subparagraphs (a) and (c) shall commence in the first accounting year of commercial production and terminate in the accounting year in which the contractor’s development costs with interest on the unrecovered portion thereof are fully recovered by his cash surplus, as follows:In the first accounting year during which development costs are incurred, unrecovered development costs shall
equal the development costs less cash surplus in that year. In each subsequent accounting year, unrecovered development costs shall equal the unrecovered
development costs at the end of the preceding accounting year, plus interest thereon at the rate of 10 per cent per annum, plus development costs incurred in the current accounting year and less contractor’s cash surplus in the current accounting year. The accounting year in which unrecovered development costs become zero for the first time shall be the accounting year in which the contractor’s development costs with interest on the unrecovered portion thereof are fully recovered by his cash surplus. The contractor’s cash surplus in any accounting year shall be his gross proceeds less his operating costs and less his payments to the Authority under subparagraph (c).
(ii) The second period of commercial production shall commence in the accounting year following the termination of the first period of commercial production and shall continue until the end of the contract.
(e) “Attributable net proceeds” means the product of the contractor’s net proceeds and the ratio of the development costs in the mining sector to the contractor’s development costs. If the contractor engages in mining, transporting polymetallic nodules and production primarily of three processed metals,
namely, cobalt, copper and nickel, the amount of attributable net proceeds shall not be less than 25 per cent of the contractor’s net proceeds. Subject to subparagraph (n), in all other cases, including those where the contractor engages in mining, transporting polymetallic nodules, and production
primarily of four processed metals, namely, cobalt, copper, manganese and nickel, the Authority may, in its rules, regulations and procedures, prescribe appropriate floors which shall bear the same relationship to each case as the 25 per cent floor does to the three-metal case.
(f) “Contractor’s net proceeds” means the contractor’s gross proceeds less his operating costs and less the recovery of his development costs as set out in subparagraph (j).
(g) (i) If the contractor engages in mining, transporting polymetallic nodules and production of processed metals, “contractor’s gross proceeds” means the gross revenues from the sale of the processed metals and any other monies deemed reasonably attributable to operations under the contract in accordance with the financial rules, regulations and procedures of the Authority.
(ii) In all cases other than those specified in subparagraphs (g)(i) and (n)(iii), “contractor’s gross proceeds” means the gross revenues from the sale of the
semi-processed metals from the polymetallic nodules recovered from the area covered by the contract, and any other monies deemed reasonably attributable to operations under the contract in accordance with the financial rules, regulations and procedures of the Authority.
(h) “Contractor’s development costs” means:
(i) all expenditures incurred prior to the commencement of commercial production which are directly related to the development of the productive capacity of the area covered by the contract and the activities related thereto for operations under the contract in all cases other than that specified in subparagraph (n), in conformity with generally recognized accounting principles, including, inter alia, costs of machinery, equipment, ships, processing plant, construction, buildings, land, roads, prospecting and exploration of the area covered by the contract, research and development, interest, required
leases, licences and fees; and
(ii) expenditures similar to those set forth in (i) above incurred subsequent to the commencement of commercial production and necessary to carry out the plan of work, except those chargeable to operating costs.
(i) The proceeds from the disposal of capital assets and the market value of those capital assets which are no longer required for operations under the contract and which are not sold shall be deducted from the contractor’s development costs during the relevant accounting year. When these deductions exceed the contractor’s development costs the excess shall be added to thecontractor’s gross proceeds.
(j) The contractor’s development costs incurred prior to the commencement of commercial production referred to in subparagraphs (h)(i) and (n)(iv) shall be recovered in 10 equal annual instalments from the date of commencement of commercial production. The contractor’s development costsincurred subsequent to the commencement of commercial production referred to in subparagraphs (h)(ii) and (n)(iv) shall be recovered in 10 or fewer equal annual instalments so as to ensure their complete recovery by the end of the contract.
(k) “Contractor’s operating costs” means all expenditures incurred after the commencement of commercial production in the operation of the productive capacity of the area covered by the contract and the activities related thereto for operations under the contract, in conformity with generally recognized
accounting principles, including, inter alia, the annual fixed fee or the production charge, whichever is greater, expenditures for wages, salaries, employee benefits, materials, services, transporting, processing and marketing costs, interest, utilities, preservation of the marine environment, overhead and
administrative costs specifically related to operations under the contract, and any net operating losses carried forward or backward as specified herein. Net operating losses may be carried forward for two consecutive years except in the last two years of the contract in which case they may be carried
backward to the two preceding years.
(l) If the contractor engages in mining, transporting of polymetallic nodules, and production of processed and semi-processed metals, “development costs of the mining sector” means the portion of the contractor’s development costs which is directly related to the mining of the resources of the area covered by the contract, in conformity with generally recognized accounting principles, and the financial rules, regulations and procedures of the Authority, including, inter alia, application fee, annual fixed fee and, where applicable, costs of prospecting and exploration of the area covered by the contract, and a portion of
research and development costs.
(m) “Return on investment” in any accounting year means the ratio of attributable net proceeds in that year to the development costs of the mining sector. For the purpose of computing this ratio the development costs of the mining sector shall includeexpenditures on new or replacement equipment in the mining sector less the original cost of the equipment replaced.
(n) If the contractor engages in mining only:
(i) “attributable net proceeds” means the whole of the contractor’s net proceeds;
(ii) “contractor’s net proceeds” shall be as defined in subparagraph (f);
(iii) “contractor’s gross proceeds” means the gross revenues from the sale of the polymetallic nodules, and any other monies deemed reasonably attributable to operations under the contract in accordance with the financial rules, regulations and procedures of the Authority;
(iv) “contractor’s development costs” means all expenditures incurred prior to the commencement of commercialproduction as set forth in subparagraph (h)(i), and all expenditures incurred subsequent to the commencement of commercial production as set forth in subparagraph (h)(ii), which are directly related to the mining of the resources of the area covered by the contract, in conformity with generally recognized accounting principles;
(v) “contractor’s operating costs” means the contractor’s operating costs as in subparagraph (k) which are directly related to the mining of the resources of the area covered by the contract in conformity with generally recognized accounting principles;
(vi) “return on investment” in any accounting year means the ratio of the contractor’s net proceeds in that year to the contractor’s development costs. For the purpose of computing this ratio, the contractor’s development costs shall include expenditures on new or replacement equipment less the original cost of the equipment replaced.
(o) The costs referred to in subparagraphs (h), (k), (l) and (n) in respect of interest paid by the contractor shall be allowed to the extent that, in all the circumstances, the Authority approves, pursuant to article 4, paragraph 1, of this Annex, the debt-equity ratio and the rates of interest as reasonable, having regard to existing commercial practice.
(p) The costs referred to in this paragraph shall not be interpreted as including payments of corporate income taxes or similar charges levied by States in respect of the operations of the contractor.
7. (a) “Processed metals”, referred to in paragraphs 5 and 6, means the metals in the most basic form in which they are customarily traded on international terminal markets. For this purpose, the Authority shall specify, in its financial rules, regulations and procedures, the relevant international terminal market. For the metals which are not traded on such markets, “processed metals” means the metals in the most basic form in which they are customarily traded in representative arm’s length transactions.
(b) If the Authority cannot otherwise determine the quantity of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract referred to in paragraphs 5(b) and 6(b), the quantity shall be determined on the basis of the metal content of the nodules, processing recovery efficiency and other relevant factors, in accordance with the rules, regulations and procedures of the Authority and in conformity with generally recognized accounting principles.
8. If an international terminal market provides a representative pricing mechanism for processed metals, polymetallic nodules and semi-processed metals from the nodules, the average price on that market shall be used. In all other cases, the Authority shall, after consulting the contractor, determine a fair price for the said products in accordance with paragraph 9.
9. (a) All costs, expenditures, proceeds and revenues and all determinations of price and value referred to in this article shall be the result of free market or arm’s length transactions. In the absence thereof, they shall be determined by the Authority, after consulting the contractor, as though they were the result of free market or arm’s length transactions, taking into account relevant transactions in other markets.
(b) In order to ensure compliance with and enforcement of the provisions of this paragraph, the Authority shall be guided by the principles adopted for, and the interpretation given to, arm’s length transactions by the Commission on Transnational Corporations of the United Nations, the Group of Experts on
Tax Treaties between Developing and Developed Countries and other international organizations, and shall, in its rules, regulations and procedures, specify uniform and internationally acceptable accounting rules and procedures, and the means of selection by the contractor of certified independent accountants
acceptable to the Authority for the purpose of carrying out auditing in compliance with those rules, regulations and procedures.
10. The contractor shall make available to the accountants, in accordance with the financial rules, regulations and procedures of the Authority, such
financial data as are required to determine compliance with this article.
11. All costs, expenditures, proceeds and revenues, and all prices and values referred to in this article, shall be determined in accordance with generally recognized accounting principles and the financial rules, regulations and procedures of the Authority.
12. Payments to the Authority under paragraphs 5 and 6 shall be made in freely usable currencies or currencies which are freely available and effectively usable on the major foreign exchange markets or, at the contractor’s option, in the equivalents of processed metals at market value. The market value shall be determined in accordance with paragraph 5(b). The freely usable currencies and currencies which are freely available and effectively usable on the major foreign exchange markets shall be defined in the rules, regulations and procedures of the Authority in accordance with prevailing international monetary practice.
13. All financial obligations of the contractor to the Authority, as well as all his fees, costs, expenditures, proceeds and revenues referred to in this article, shall be adjusted by expressing them in constant terms relative to a base year.
14. The Authority may, taking into account any recommendations of the Economic Planning Commission and the Legal and Technical Commission, adopt rules, regulations and procedures that provide for incentives, on auniform and non-discriminatory basis, to contractors to further the objectives set out in paragraph 1.
15. In the event of a dispute between the Authority and a contractor over the interpretation or application of the financial terms of a contract, either party may submit the dispute to binding commercial arbitration, unless both parties agree to settle the dispute by other means, in accordance with article 188, paragraph 2.
Article 14
Transfer of data
1. The operator shall transfer to the Authority, in accordance with its rules, regulations and procedures and the terms and conditions of the plan of
work, at time intervals determined by the Authority all data which are both necessary for and relevant to the effective exercise of the powers and
functions of the principal organs of the Authority in respect of the area covered by the plan of work.
2. Transferred data in respect of the area covered by the plan of work, deemed proprietary, may only be used for the purposes set forth in this article.
Data necessary for the formulation by the Authority of rules, regulations and procedures concerning protection of the marine environment and safety, other
than equipment design data, shall not be deemed proprietary.
3. Data transferred to the Authority by prospectors, applicants for contracts or contractors, deemed proprietary, shall not be disclosed by the Authority to the Enterprise or to anyone external to the Authority, but data on the reserved areas may be disclosed to the Enterprise. Such data transferred by such persons to the Enterprise shall not be disclosed by the Enterprise to the Authority or to anyone external to the Authority.
Article 15
Training programmes
The contractor shall draw up practical programmes for the training of personnel of the Authority and developing States, including the participation
of such personnel in all activities in the Area which are covered by the contract, in accordance with article 144, paragraph 2.
Article 16
Exclusive right to explore and exploit
The Authority shall, pursuant to Part XI and its rules, regulations and procedures, accord the operator the exclusive right to explore and exploit the
area covered by the plan of work in respect of a specified category of resources and shall ensure that no other entity operates in the same area for
a different category of resources in a manner which might interfere with the operations of the operator. The operator shall have security of tenure in
accordance with article 153, paragraph 6.
Article 17
Rules, regulations and procedures of the Authority
1. The Authority shall adopt and uniformly apply rules, regulations and procedures in accordance with article 160, paragraph 2(f)(ii), and article 162,
paragraph 2(o)(ii), for the exercise of its functions as set forth in Part XI on, inter alia, the following matters:
(a) administrative procedures relating to prospecting, exploration and exploitation in the Area;
(b) operations:
(i) size of area;
(ii) duration of operations;
(iii) performance requirements including assurances pursuant to article 4, paragraph 6(c), of this Annex;
(iv) categories of resources;
(v) renunciation of areas;
(vi) progress reports;
(vii) submission of data;
(viii) inspection and supervision of operations;
(ix) prevention of interference with other activities in the marine environment;
(x) transfer of rights and obligations by a contractor;
(xi) procedures for transfer of technology to developing States in accordance with article 144 and for their direct participation;
(xii) mining standards and practices, including those relating to operational safety, conservation of the resources and the protection of the marine environment;
(xiii) definition of commercial production;
(xiv) qualification standards for applicants;
(c) financial matters:
(i) establishment of uniform and non-discriminatory costing and accounting rules and the method of selection of auditors;
(ii) apportionment of proceeds of operations;
(iii) the incentives referred to in article 13 of this Annex;
(d) implementation of decisions taken pursuant to article 151, paragraph 10, and article 164, paragraph 2(d).
2. Rules, regulations and procedures on the following items shall fully reflect the objective criteria set out below:
(a) Size of areas:The Authority shall determine the appropriate size of areas for exploration which may be up to twice as large as those for exploitation in order to permit intensive exploration operations. The size of area shall be calculated to satisfy the requirements of article 8 of this Annex on reservation of areas as well as stated production requirements consistent with article 151 in accordance with the terms of the contract taking into account the state of the art of technology then available for seabed mining and the relevant physical characteristics of the areas. Areas shall be neither smaller nor larger than are necessary to satisfy this objective.
(b) Duration of operations:
(i) Prospecting shall be without time-limit;
(ii) Exploration should be of sufficient duration to permit a thorough survey of the specific area, the design and construction of mining equipment for the area and the design and construction of small and medium-size processing plants for the purpose of testing mining and processing systems;
(iii) The duration of exploitation should be related to the economic life of the mining project, taking into consideration such factors as the depletion of the ore, the useful life of mining equipment and processing facilities and commercial viability. Exploitation should be of sufficient duration to permit ommercial extraction of minerals of the area and should include a reasonable time period for construction of commercial-scale mining and processing systems, during which period commercial production should not be required. The total duration of exploitation, however, should also be short enough to give the Authority an opportunity to amend the terms and conditions of the plan of work at the time it considers renewal in accordance with rules, regulations and procedures which it has adopted subsequent to approving the plan of work.
(c) Performance requirements:
The Authority shall require that during the exploration stage periodic expenditures be made by the operator which are reasonably related to the size of the area covered by the plan of work and the expenditures which would be expected of a bona fide operator who intended to bring the area into commercial production within the time-limits established by the Authority. The required expenditures should not be established at a level which would discourage prospective operators with less costly technology than is prevalently in use. The Authority shall establish a maximum time interval, after the exploration
stage is completed and the exploitation stage begins, to achieve commercial production. To determine this interval, the Authority should take into consideration that construction of large-scale mining and processing systems cannot be initiated until after the termination of the exploration stage and the
commencement of the exploitation stage. Accordingly, the interval to bring an area into commercial production should take into account the time necessary for this construction after the completion of the exploration stage and reasonable allowance should be made for unavoidable delays in the construction schedule. Once commercial production is achieved, the Authority shall within reasonable limits and taking into consideration all relevant factors require the operator to maintain commercial production throughout the period of the plan of work.
(d) Categories of resources:
In determining the category of resources in respect of which a plan of work may be approved, the Authority shall giveemphasis inter alia to the following characteristics:
(i) that certain resources require the use of similar mining methods; and
(ii) that some resources can be developed simultaneously without undue interference between operators developing different resources in the same area.
Nothing in this subparagraph shall preclude the Authority from approving a plan of work with respect to more than one category of resources in the same area to the same applicant.
(e) Renunciation of areas:
The operator shall have the right at any time to renounce without penalty the whole or part of his rights in the area covered by a plan of work.
(f) Protection of the marine environment:Rules, regulations and procedures shall be drawn up in order to secure effective protection of the marine environment from harmful effects directly resulting from activities in the Area or from shipboard processing immediately above a mine site of minerals derived from that mine site, taking into account the extent to which such harmful effects may directly result from drilling, dredging, coring and excavation and from disposal, dumping and discharge into the marine environment of sediment, wastes or other effluents.
(g) Commercial production:
Commercial production shall be deemed to have begun if an operator engages in sustained large-scale recovery operations which yield a quantity of materials sufficient to indicate clearly that the principal purpose is large-scale production rather than production intended for information gathering, analysis or the testing of equipment or plant.
Article 18
Penalties
1. A contractor’s rights under the contract may be suspended or terminated only in the following cases:
(a) if, in spite of warnings by the Authority, the contractor has conducted his activities in such a way as to result in serious,persistent and wilful violations of the fundamental terms of the contract, Part XI and the rules, regulations and procedures of the Authority; or
(b) if the contractor has failed to comply with a final binding decision of the dispute settlement body applicable to him.
2. In the case of any violation of the contract not covered by paragraph 1(a), or in lieu of suspension or termination under paragraph 1(a), the Authority may impose upon the contractor monetary penalties proportionate to the seriousness of the violation.
3. Except for emergency orders under article 162, paragraph 2(w), the Authority may not execute a decision involving monetary penalties, suspension or termination until the contractor has been accorded a reasonable opportunity to exhaust the judicial remedies available to him pursuant to Part XI, section 5.
Article 19
Revision of contract
1. When circumstances have arisen or are likely to arise which, in the opinion of either party, would render the contract inequitable or make it impracticable or impossible to achieve the objectives set out in the contract or in Part XI, the parties shall enter into negotiations to revise it accordingly.
2. Any contract entered into in accordance with article 153, paragraph 3, may be revised only with the consent of the parties.
Article 20
Transfer of rights and obligations
The rights and obligations arising under a contract may be transferred only with the consent of the Authority, and in accordance with its rules, regulations and procedures. The Authority shall not unreasonably withhold consent to the transfer if the proposed transferee is in all respects a qualified applicant and assumes all of the obligations of the transferor and if the transfer does not confer to the transferee a plan of work, the approval of which would be forbidden by article 6, paragraph 3(c), of this Annex.
Article 21
Applicable law
1. The contract shall be governed by the terms of the contract, the rules, regulations and procedures of the Authority, Part XI and other rules of
international law not incompatible with this Convention.
2. Any final decision rendered by a court or tribunal having jurisdiction under this Convention relating to the rights and obligations of the Authority
and of the contractor shall be enforceable in the territory of each State Party.
3. No State Party may impose conditions on a contractor that are inconsistent with Part XI. However, the application by a State Party to contractors sponsored by it, or to ships flying its flag, of environmental or other laws and regulations more stringent than those in the rules, regulations and procedures of the Authority adopted pursuant to article 17, paragraph 2(f), of this Annex shall not be deemed inconsistent with Part XI.
Article 22
Responsibility
The contractor shall have responsibility or liability for any damage arising out of wrongful acts in the conduct of its operations, account being taken of contributory acts or omissions by the Authority. Similarly, the Authority shall have responsibility or liability for any damage arising out of wrongful acts in the exercise of its powers and functions, including violations under article 168, paragraph 2, account being taken of contributory acts or omissions by the contractor. Liability in every case shall be for the actual amount of damage.
ANNEX IV. STATUTE OF THE ENTERPRISE
Article 1
Purposes
1. The Enterprise is the organ of the Authority which shall carry out activities in the Area directly, pursuant to article 153, paragraph 2 (a), as wellas the transporting, processing and marketing of minerals recovered from the Area.
2. In carrying out its purposes and in the exercise of its functions, the Enterprise shall act in accordance with this Convention and the rules, regulations and procedures of the Authority.
3. In developing the resources of the Area pursuant to paragraph 1, the Enterprise shall, subject to this Convention, operate in accordance with sound
commercial principles.
Article 2
Relationship to the Authority
1. Pursuant to article 170, the Enterprise shall act in accordance with the general policies of the Assembly and the directives of the Council.
2. Subject to paragraph l, the Enterprise shall enjoy autonomy in the conduct of its operations.
3. Nothing in this Convention shall make the Enterprise liable for the acts or obligations of the Authority, or make the Authority liable for the acts
or obligations of the Enterprise.
Article 3
Limitation of liability
Without prejudice to article 11, paragraph 3, of this Annex, no member of the Authority shall be liable by reason only of its membership for the acts
or obligations of the Enterprise.
Article 4
Structure
The Enterprise shall have a Governing Board, a Director-General and the staff necessary for the exercise of its functions.
Article 5
Governing Board
1. The Governing Board shall be composed of 15 members elected by the Assembly in accordance with article 160, paragraph 2(c). In the election
of the members of the Board, due regard shall be paid to the principle of equitable geographical distribution. In submitting nominations of candidates
for election to the Board, members of the Authority shall bear in mind the need to nominate candidates of the highest standard of competence, with
qualifications in relevant fields, so as to ensure the viability and success of the Enterprise.
2. Members of the Board shall be elected for four years and may be re-elected; and due regard shall be paid to the principle of rotation of
membership.
3. Members of the Board shall continue in office until their successors are elected. If the office of a member of the Board becomes vacant, the Assembly shall, in accordance with article 160, paragraph 2(c), elect a new member for the remainder of his predecessor’s term.
4. Members of the Board shall act in their personal capacity. In the performance of their duties they shall not seek or receive instructions from any government or from any other source. Each member of the Authority shall respect the independent character of the members of the Board and shall
refrain from all attempts to influence any of them in the discharge of their duties.
5. Each member of the Board shall receive remuneration to be paid out of the funds of the Enterprise. The amount of remuneration shall be fixed by
the Assembly, upon the recommendation of the Council.
6. The Board shall normally function at the principal office of the Enterprise and shall meet as often as the business of the Enterprise may require.
7. Two thirds of the members of the Board shall constitute a quorum.
8. Each member of the Board shall have one vote. All matters before the Board shall be decided by a majority of its members. If a member has a conflict of interest on a matter before the Board he shall refrain from voting on that matter.
9. Any member of the Authority may ask the Board for information in respect of its operations which particularly affect that member. The Board shall endeavour to provide such information.
Article 6
Powers and functions of the Governing Board
The Governing Board shall direct the operations of the Enterprise. Subject to this Convention, the Governing Board shall exercise the powers necessary to fulfil the purposes of the Enterprise, including powers:
(a) to elect a Chairman from among its members;
(b) to adopt its rules of procedure;
(c) to draw up and submit formal written plans of work to the Council in accordance with article 153, paragraph 3, and article 162,
paragraph 2(j);
(d) to develop plans of work and programmes for carrying out the activities specified in article 170;
(e) to prepare and submit to the Council applications for production authorizations in accordance with article 151, paragraphs 2 to 7;
(f) to authorize negotiations concerning the acquisition of technology, including those provided for in Annex III, article 5, paragraph 3(a), (c) and (d), and to approve the results of those negotiations;
(g) to establish terms and conditions, and to authorize negotiations, concerning joint ventures and other forms of joint arrangements referred to in Annex III, articles 9 and 11, and to approve the results of such negotiations;
(h) to recommend to the Assembly what portion of the net income of the Enterprise should be retained as its reserves in accordance with
article 160, paragraph 2(f), and article 10 of this Annex;
(i) to approve the annual budget of the Enterprise;
(j) to authorize the procurement of goods and services in accordance with article 12, paragraph 3, of this Annex;
(k) to submit an annual report to the Council in accordance with article 9 of this Annex;
(l) to submit to the Council for the approval of the Assembly draft rules in respect of the organization, management, appointment and dismissal of the staff of the Enterprise and to adopt regulations to give effect to such rules;
(m) to borrow funds and to furnish such collateral or other security as it may determine in accordance with article 11, paragraph 2, of this
Annex;
(n) to enter into any legal proceedings, agreements and transactions and to take any other actions in accordance with article 13 of this Annex;
(o) to delegate, subject to the approval of the Council, any non-discretionary powers to the Director-General and to its committees.
Article 7
Director-General and staff of the Enterprise
1. The Assembly shall, upon the recommendation of the Council and the nomination of the Governing Board, elect the Director-General of the Enterprise who shall not be a member of the Board. The Director-General shall hold office for a fixed term, not exceeding five years, and may be re-elected for further terms.
2. The Director-General shall be the legal representative and chief executive of the Enterprise and shall be directly responsible to the Board for the conduct of the operations of the Enterprise. He shall be responsible for the organization, management, appointment and dismissal of the staff of the Enterprise in accordance with the rules and regulations referred to in article 6, subparagraph (l), of this Annex. He shall participate, without the right to vote, in the meetings of the Board and may participate, without the right to vote, in the meetings of the Assembly and the Council when these organs are
dealing with matters concerning the Enterprise.
3. The paramount consideration in the recruitment and employment of the staff and in the determination of their conditions of service shall be the
necessity of securing the highest standards of efficiency and of technical competence. Subject to this consideration, due regard shall be paid to the
importance of recruiting the staff on an equitable geographical basis.
4. In the performance of their duties the Director-General and the staff shall not seek or receive instructions from any government or from any other source external to the Enterprise. They shall refrain from any action which might reflect on their position as international officials of the Enterprise responsible only to the Enterprise. Each State Party undertakes to respect the exclusively international character of the responsibilities of the Director-General and the staff and not to seek to influence them in the discharge of their responsibilities.
5. The responsibilities set forth in article 168, paragraph 2, are equally applicable to the staff of the Enterprise.
Article 8
Location
The Enterprise shall have its principal office at the seat of the Authority. The Enterprise may establish other offices and facilities in the territory of any
State Party with the consent of that State Party.
Article 9
Reports and financial statements
1. The Enterprise shall, not later than three months after the end of each financial year, submit to the Council for its consideration an annual report
containing an audited statement of its accounts and shall transmit to the Council at appropriate intervals a summary statement of its financial position
and a profit and loss statement showing the results of its operations.
2. The Enterprise shall publish its annual report and such other reports as it finds appropriate.
3. All reports and financial statements referred to in this article shall be distributed to the members of the Authority.
Article 10
Allocation of net income
1. Subject to paragraph 3, the Enterprise shall make payments to the Authority under Annex III, article 13, or their equivalent.
2. The Assembly shall, upon the recommendation of the Governing Board, determine what portion of the net income of the Enterprise shall be retained as reserves of the Enterprise. The remainder shall be transferred to the Authority.
3. During an initial period required for the Enterprise to become self-supporting, which shall not exceed 10 years from the commencement of commercial production by it, the Assembly shall exempt the Enterprise from the payments referred to in paragraph 1, and shall leave all of the net income
of the Enterprise in its reserves.
Article 11
Finances
1. The funds of the Enterprise shall include:
(a) amounts received from the Authority in accordance with article 173, paragraph 2(b);
(b) voluntary contributions made by States Parties for the purpose of financing activities of the Enterprise;
(c) amounts borrowed by the Enterprise in accordance with paragraphs 2 and 3;
(d) income of the Enterprise from its operations;
(e) other funds made available to the Enterprise to enable it to commence operations as soon as possible and to carry out its
functions.
2. (a) The Enterprise shall have the power to borrow funds and to furnish such collateral or other security as it may determine. Before making a public sale of its obligations in the financial markets or currency of a State Party, the Enterprise shall obtain the approval of that State Party. The total amount of
borrowings shall be approved by the Council upon the recommendation of the Governing Board.
(b) States Parties shall make every reasonable effort to support applications by the Enterprise for loans on capital markets and from international financial institutions.
3. (a) The Enterprise shall be provided with the funds necessary to explore and exploit one mine site, and to transport, process and market the minerals recovered therefrom and the nickel, copper, cobalt and manganese obtained, and to meet its initial administrative expenses. The amount of the said funds, and the criteria and factors for its adjustment, shall be included by the Preparatory Commission in the draft rules, regulations and procedures of the Authority.
(b) All States Parties shall make available to the Enterprise an amount equivalent to one half of the funds referred to in subparagraph (a) by way of long-term interest-free loans in accordance with the scale of assessments for the United Nations regular budget in force at the time when the assessments are
made, adjusted to take into account the States which are not members of the United Nations. Debts incurred by the Enterprise in raising the other half of the funds shall be guaranteed by all States Parties in accordance with the same scale.
(c) If the sum of the financial contributions of States Parties is less than the funds to be provided to the Enterprise under subparagraph (a), the Assembly shall, at its first session, consider the extent of the shortfall and adopt by consensus measures for dealing with this shortfall, taking into account the
obligation of States Parties under subparagraphs (a) and (b) and any recommendations of the Preparatory Commission.
(d) (i) Each State Party shall, within 60 days after the entry into force of this Convention, or within 30 days after the deposit of its instrument of ratification or accession, whichever is later, deposit with the Enterprise irrevocable, non-negotiable, non-interest-bearing promissory notes in the amount of the share of such State Party of interest-free loans pursuant to subparagraph (b).
(ii) The Board shall prepare, at the earliest practicable date after this Convention enters into force, and thereafter at annual or other appropriate intervals, a schedule of the magnitude and timing of its requirements for the funding of its administrative expenses and for activities carried out by the Enterprise in accordance with article 170 and article 12 of this Annex.
(iii) The States Parties shall, thereupon, be notified by the Enterprise, through the Authority, of their respective shares of the funds in accordance with subparagraph (b), required for such expenses. The Enterprise shall encash such amounts of the promissory notes as may be required to meet the expenditure referred to in the schedule with respect to interest-free loans.
(iv) States Parties shall, upon receipt of the notification, make available their respective shares of debt guarantees for the Enterprise in accordance with subparagraph (b).
(e) (i) If the Enterprise so requests, State Parties may provide debt guarantees in addition to those provided in accordance with the scale referred to in subparagraph (b).
(ii) In lieu of debt guarantees, a State Party may make a voluntary contribution to the Enterprise in an amount equivalent to that portion of the debts which it would otherwise be liable to guarantee.
(f) Repayment of the interest-bearing loans shall have priority over the repayment of the interest-free loans. Repayment of interest-free loans shall be in accordance with a schedule adopted by the Assembly, upon the recommendation of the Council and the advice of the Board. In the exercise of this function the Board shall be guided by the relevant provisions of the rules, regulations and procedures of the Authority, which shall take into account the paramount importance of ensuring the effective functioning of the Enterprise and, in particular, ensuring its financial independence.
(g) Funds made available to the Enterprise shall be in freely usable currencies or currencies which are freely available and effectively usable in the major foreign exchange markets. These currencies shall be defined in the rules, regulations and procedures of the Authority in accordance with prevailing
international monetary practice. Except as provided in paragraph 2, no State Party shall maintain or impose restrictions on the holding, use or exchange by the Enterprise of these funds.
(h) “Debt guarantee” means a promise of a State Party to creditors of the Enterprise to pay, pro rata in accordance with the appropriate scale, the financial obligations of the Enterprise covered by the guarantee following notice by the creditors to the State Party of a default by the Enterprise. Procedures for
the payment of those obligations shall be in conformity with the rules, regulations and procedures of the Authority.
4. The funds, assets and expenses of the Enterprise shall be kept separate from those of the Authority. This article shall not prevent the Enterprise from making arrangements with the Authority regarding facilities, personnel and services and arrangements for reimbursement of administrative expenses paid by either on behalf of the other.
5. The records, books and accounts of the Enterprise, including its annual financial statements, shall be audited annually by an independent auditor appointed by the Council.
Article 12
Operations
1. The Enterprise shall propose to the Council projects for carrying out activities in accordance with article 170. Such proposals shall include a formal written plan of work for activities in the Area in accordance with article 153, paragraph 3, and all such other information and data as may be required from time to time for its appraisal by the Legal and Technical Commission and approval by the Council.
2. Upon approval by the Council, the Enterprise shall execute the project on the basis of the formal written plan of work referred to in paragraph 1.
3. (a) If the Enterprise does not possess the goods and services required for its operations it may procure them. For that purpose, it shall issue invitations to tender and award contracts to bidders offering the best combination of quality, price and delivery time.
(b) If there is more than one bid offering such a combination, the contract shall be awarded in accordance with:
(i) the principle of non-discrimination on the basis of political or other considerations not relevant to the carrying out of operations with due diligence and
efficiency; and
(ii) guidelines approved by the Council with regard to the preferences to be accorded to goods and services originating in developing States, including the
land-locked and geographically disadvantaged among them.
(c) The Governing Board may adopt rules determining the special circumstances in which the requirement of invitations to bid may, in the best interests of the Enterprise, be dispensed with.
4. The Enterprise shall have title to all minerals and processed substances produced by it.
5. The Enterprise shall sell its products on a non-discriminatory basis. It shall not give non-commercial discounts.
6. Without prejudice to any general or special power conferred on the Enterprise under any other provision of this Convention, the Enterprise shall exercise such powers incidental to its business as shall be necessary.
7. The Enterprise shall not interfere in the political affairs of any State Party; nor shall it be influenced in its decisions by the political character of the State Party concerned. Only commercial considerations shall be relevant to its decisions, and these considerations shall be weighed impartially in order to carry out the purposes specified in article 1 of this Annex.
Article 13
Legal status, privileges and immunities
1. To enable the Enterprise to exercise its functions, the status, privileges and immunities set forth in this article shall be accorded to the Enterprise in the territories of States Parties. To give effect to this principle the Enterprise and States Parties may, where necessary, enter into special agreements.
2. The Enterprise shall have such legal capacity as is necessary for the exercise of its functions and the fulfilment of its purposes and, in particular,
the capacity:
(a) to enter into contracts, joint arrangements or other arrangements, including agreements with States and international organizations;
(b) to acquire, lease, hold and dispose of immovable and movable property;
(c) to be a party to legal proceedings.
3. (a) Actions may be brought against the Enterprise only in a court of competent jurisdiction in the territory of a State Party in which the Enterprise:
(i) has an office or facility;
(ii) has appointed an agent for the purpose of accepting service or notice of process;
(iii) has entered into a contract for goods or services;
(iv) has issued securities; or
(v) is otherwise engaged in commercial activity.
(b) The property and assets of the Enterprise, wherever located and by whomsoever held, shall be immune from all forms of seizure, attachment or execution before the delivery of final judgment against the Enterprise.
4. (a) The property and assets of the Enterprise, wherever located and by whomsoever held, shall be immune from requisition, confiscation, expropriation or any other form of seizure by executive or legislative action.
(b) The property and assets of the Enterprise, wherever located and by whomsoever held, shall be free from discriminatory restrictions, regulations, controls and moratoria of any nature.
(c) The Enterprise and its employees shall respect local laws and regulations in any State or territory in which the Enterprise or its employees may do business or otherwise act.
(d) States Parties shall ensure that the Enterprise enjoys all rights, privileges and immunities accorded by them to entities conducting commercial activities in their territories. These rights, privileges and immunities shall be accorded to the Enterprise on no less favourable a basis than that on which they
are accorded to entities engaged in similar commercial activities. If special privileges are provided by States Parties for developing States or their commercial entities, the Enterprise shall enjoy those privileges on a similarly preferential basis.
(e) States Parties may provide special incentives, rights, privileges and immunities to the Enterprise without the obligation to provide such incentives, rights, privileges and immunities to other commercial entities.
5. The Enterprise shall negotiate with the host countries in which its offices and facilities are located for exemption from direct and indirect taxation.
6. Each State Party shall take such action as is necessary for giving effect in terms of its own law to the principles set forth in this Annex and shall inform the Enterprise of the specific action which it has taken.
7. The Enterprise may waive any of the privileges and immunities conferred under this article or in the special agreements referred to in paragraph 1 to such extent and upon such conditions as it may determine.
ANNEX V. CONCILIATION
SECTION 1. CONCILIATION PROCEDURE
PURSUANT TO SECTION 1 OF PART XV
Article 1
Institution of proceedings
If the parties to a dispute have agreed, in accordance with article 284, to submit it to conciliation under this section, any such party may institute the proceedings by written notification addressed to the other party or parties to the dispute.
Article 2
List of conciliators
A list of conciliators shall be drawn up and maintained by the Secretary-General of the United Nations. Every State Party shall be entitled to nominate four conciliators, each of whom shall be a person enjoying the highest reputation for fairness, competence and integrity. The names of the persons so nominated shall constitute the list. If at any time the conciliators nominated by a State Party in the list so constituted shall be fewer than four, that State Party shall be entitled to make further nominations as necessary.The name of a conciliator shall remain on the list until withdrawn by the State Party which made the nomination, provided that such conciliator shall continue to serve on any conciliation commission to which that conciliator has been appointed until the completion of the proceedings before that commission.
Article 3
Constitution of conciliation commission
The conciliation commission shall, unless the parties otherwise agree, be constituted as follows:
(a) Subject to subparagraph (g), the conciliation commission shall consist of five members.
(b) The party instituting the proceedings shall appoint two conciliators to be chosen preferably from the list referred to in article 2 of this Annex, one of whom may be its national, unless the parties otherwise agree. Such appointments shall be included in the notification referred to in article 1 of this Annex.
(c) The other party to the dispute shall appoint two conciliators in the manner set forth in subparagraph (b) within 21 days of receipt of the notification referred to in article 1 of this Annex. If the appointments are not made within that period, the party instituting the proceedings may, within one week of the expiration of that period, either terminate the proceedings by notification addressed to the other party or request the Secretary-General of the United
Nations to make the appointments in accordance with subparagraph (e).
(d) Within 30 days after all four conciliators have been appointed, they shall appoint a fifth conciliator chosen from the list referred to in article 2 of this Annex, who shall be chairman. If the appointment is not made within that period, either party may, within one week of the expiration of that period, request the Secretary-General of the United Nations to make the appointment in accordance with subparagraph (e).
(e) Within 30 days of the receipt of a request under subparagraph (c) or (d), the Secretary-General of the United Nations shall make the necessary appointments from the list referred to in article 2 of this Annex in consultation with the parties to the dispute.
(f) Any vacancy shall be filled in the manner prescribed for the initial appointment.
(g) Two or more parties which determine by agreement that they are in the same interest shall appoint two conciliators jointly. Where two or more parties have separate interests or there is a disagreement as to whether they are of the same interest, they shall appoint conciliators separately.
(h) In disputes involving more than two parties having separate interests, or where there is disagreement as to whether they are of the same interest, the parties shall apply subparagraphs (a) to (f) in so far as possible.
Article 4
Procedure
The conciliation commission shall, unless the parties otherwise agree, determine its own procedure. The commission may, with the consent of the
parties to the dispute, invite any State Party to submit to it its views orally or in writing. Decisions of the commission regarding procedural matters, the
report and recommendations shall be made by a majority vote of its members.
Article 5
Amicable settlement
The commission may draw the attention of the parties to any measures which might facilitate an amicable settlement of the dispute.
Article 6
Functions of the commission
The commission shall hear the parties, examine their claims and objections, and make proposals to the parties with a view to reaching an amicable settlement.
Article 7
Report
1. The commission shall report within 12 months of its constitution. Its report shall record any agreements reached and, failing agreement, its conclusions on all questions of fact or law relevant to the matter in dispute and such recommendations as the commission may deem appropriate for an amicable settlement. The report shall be deposited with the Secretary-General of the United Nations and shall immediately be transmitted by him to the parties to the dispute.
2. The report of the commission, including its conclusions or recommendations, shall not be binding upon the parties.
Article 8
Termination
The conciliation proceedings are terminated when a settlement has been reached, when the parties have accepted or one party has rejected the recommendations of the report by written notification addressed to the Secretary-General of the United Nations, or when a period of three months
has expired from the date of transmission of the report to the parties.
Article 9
Fees and expenses
The fees and expenses of the commission shall be borne by the parties to the dispute.
Article 10
Right of parties to modify procedure
The parties to the dispute may by agreement applicable solely to that dispute modify any provision of this Annex.
SECTION 2. COMPULSORY SUBMISSION
TO CONCILIATION PROCEDURE
PURSUANT TO SECTION 3 OF PART XV
Article 11
Institution of proceedings
1. Any party to a dispute which, in accordance with Part XV, section 3, may be submitted to conciliation under this section, may institute the proceedings by written notification addressed to the other party or parties to the dispute.
2. Any party to the dispute, notified under paragraph 1, shall be obliged to submit to such proceedings.
Article 12
Failure to reply or to submit to conciliation
The failure of a party or parties to the dispute to reply to notification of institution of proceedings or to submit to such proceedings shall not constitute a bar to the proceedings.
Article 13
Competence
A disagreement as to whether a conciliation commission acting under this section has competence shall be decided by the commission.
Article 14
Application of section 1
Articles 2 to 10 of section l of this Annex apply subject to this section.
ANNEX VI. STATUTE OF THE INTERNATIONAL
TRIBUNAL
FOR THE LAW OF THE SEA
Article 1
General provisions
1. The International Tribunal for the Law of the Sea is constituted and shall function in accordance with the provisions of this Convention and this
Statute.
2. The seat of the Tribunal shall be in the Free and Hanseatic City of Hamburg in the Federal Republic of Germany.
3. The Tribunal may sit and exercise its functions elsewhere whenever it considers this desirable.
4. A reference of a dispute to the Tribunal shall be governed by the provisions of Parts XI and XV.
SECTION 1. ORGANIZATION OF THE TRIBUNAL
Article 2
Composition
1. The Tribunal shall be composed of a body of 21 independent members, elected from among persons enjoying the highest reputation for fairness and integrity and of recognized competence in the field of the law of the sea.
2. In the Tribunal as a whole the representation of the principal legal systems of the world and equitable geographical distribution shall be assured.
Article 3
Membership
1. No two members of the Tribunal may be nationals of the same State. A person who for the purposes of membership in the Tribunal could be regarded as a national of more than one State shall be deemed to be a national of the one in which he ordinarily exercises civil and political rights.
2. There shall be no fewer than three members from each geographical group as established by the General Assembly of the United Nations.
Article 4
Nominations and elections
1. Each State Party may nominate not more than two persons having the qualifications prescribed in article 2 of this Annex. The members of the
Tribunal shall be elected from the list of persons thus nominated.
2. At least three months before the date of the election, the Secretary-General of the United Nations in the case of the first election and the Registrar of the Tribunal in the case of subsequent elections shall address a written invitation to the States Parties to submit their nominations for members of the Tribunal within two months. He shall prepare a list in alphabetical order of all the persons thus nominated, with an indication of theStates Parties which have nominated them, and shall submit it to the States Parties before the seventh day of the last month before the date of each election.
3. The first election shall be held within six months of the date of entry into force of this Convention.
4. The members of the Tribunal shall be elected by secret ballot. Elections shall be held at a meeting of the States Parties convened by the Secretary-General of the United Nations in the case of the first election and by a procedure agreed to by the States Parties in the case of subsequent elections. Two thirds of the States Parties shall constitute a quorum at that meeting. The persons elected to the Tribunal shall be those nominees who obtain the largest number of votes and a two-thirds majority of the States Parties present and voting, provided that such majority includes a majority of the States Parties.
Article 5
Term of office
1. The members of the Tribunal shall be elected for nine years and may be re-elected; provided, however, that of the members elected at the first election, the terms of seven members shall expire at the end of three years and the terms of seven more members shall expire at the end of six years.
2. The members of the Tribunal whose terms are to expire at the end of the above-mentioned initial periods of three and six years shall be chosen
by lot to be drawn by the Secretary-General of the United Nations immediately after the first election.
3. The members of the Tribunal shall continue to discharge their duties until their places have been filled. Though replaced, they shall finish any proceedings which they may have begun before the date of their replacement.
4. In the case of the resignation of a member of the Tribunal, the letter of resignation shall be addressed to the President of the Tribunal. The place
becomes vacant on the receipt of that letter.
Article 6
Vacancies
1. Vacancies shall be filled by the same method as that laid down for the first election, subject to the following provision: the Registrar shall, within one month of the occurrence of the vacancy, proceed to issue the invitations provided for in article 4 of this Annex, and the date of the election shall be fixed by the President of the Tribunal after consultation with the States Parties.
2. A member of the Tribunal elected to replace a member whose term of office has not expired shall hold office for the remainder of his
predecessor’s term.
Article 7
Incompatible activities
1. No member of the Tribunal may exercise any political or administrative function, or associate actively with or be financially interested in any of the operations of any enterprise concerned with the exploration for or exploitation of the resources of the sea or the seabed or other commercial use of the sea or the seabed.
2. No member of the Tribunal may act as agent, counsel or advocate in any case.
3. Any doubt on these points shall be resolved by decision of the majority of the other members of the Tribunal present.
Article 8
Conditions relating to participation of members in a particular case
1. No member of the Tribunal may participate in the decision of any case in which he has previously taken part as agent, counsel or advocate for one of the parties, or as a member of a national or international court or tribunal, or in any other capacity.
2. If, for some special reason, a member of the Tribunal considers that he should not take part in the decision of a particular case, he shall so inform
the President of the Tribunal.
3. If the President considers that for some special reason one of the members of the Tribunal should not sit in a particular case, he shall give him
notice accordingly.
4. Any doubt on these points shall be resolved by decision of the majority of the other members of the Tribunal present.
Article 9
Consequence of ceasing to fulfil required conditions
If, in the unanimous opinion of the other members of the Tribunal, a member has ceased to fulfil the required conditions, the President of the Tribunal shall declare the seat vacant.
Article 10
Privileges and immunities
The members of the Tribunal, when engaged on the business of the Tribunal, shall enjoy diplomatic privileges and immunities.
Article 11
Solemn declaration by members
Every member of the Tribunal shall, before taking up his duties, make a solemn declaration in open session that he will exercise his powers impartially and conscientiously.
Article 12
President, Vice-President and Registrar
1. The Tribunal shall elect its President and Vice-President for three years; they may be re-elected.
2. The Tribunal shall appoint its Registrar and may provide for the appointment of such other officers as may be necessary.
3. The President and the Registrar shall reside at the seat of the Tribunal.
Article 13
Quorum
1. All available members of the Tribunal shall sit; a quorum of 11 elected members shall be required to constitute the Tribunal.
2. Subject to article 17 of this Annex, the Tribunal shall determine which members are available to constitute the Tribunal for the consideration
of a particular dispute, having regard to the effective functioning of the chambers as provided for in articles 14 and 15 of this Annex.
3. All disputes and applications submitted to the Tribunal shall be heard and determined by the Tribunal, unless article 14 of this Annex applies, or the parties request that it shall be dealt with in accordance with article 15 of this Annex.
Article 14
Seabed Disputes Chamber
A Seabed Disputes Chamber shall be established in accordance with the provisions of section 4 of this Annex. Its jurisdiction, powers and functions
shall be as provided for in Part XI, section 5.
Article 15
Special chambers
1. The Tribunal may form such chambers, composed of three or more of its elected members, as it considers necessary for dealing with particular
categories of disputes.
2. The Tribunal shall form a chamber for dealing with a particular dispute submitted to it if the parties so request. The composition of such a chamber shall be determined by the Tribunal with the approval of the parties.
3. With a view to the speedy dispatch of business, the Tribunal shall form annually a chamber composed of five of its elected members which may hear and determine disputes by summary procedure. Two alternative members shall be selected for the purpose of replacing members who are unable to participate in a particular proceeding.
4. Disputes shall be heard and determined by the chambers provided for in this article if the parties so request.
5. A judgment given by any of the chambers provided for in this article and in article 14 of this Annex shall be considered as rendered by the
Tribunal.
Article 16
Rules of the Tribunal
The Tribunal shall frame rules for carrying out its functions. In particular it shall lay down rules of procedure.
Article 17
Nationality of members
1. Members of the Tribunal of the nationality of any of the parties to a dispute shall retain their right to participate as members of the Tribunal.
2. If the Tribunal, when hearing a dispute, includes upon the bench a member of the nationality of one of the parties, any other party may choose
a person to participate as a member of the Tribunal.
3. If the Tribunal, when hearing a dispute, does not include upon the bench a member of the nationality of the parties, each of those parties may
choose a person to participate as a member of the Tribunal.
4. This article applies to the chambers referred to in articles 14 and 15 of this Annex. In such cases, the President, in consultation with the parties, shall request specified members of the Tribunal forming the chamber, as many as necessary, to give place to the members of the Tribunal of the nationality of the parties concerned, and, failing such, or if they are unable to be present, to the members specially chosen by the parties.
5. Should there be several parties in the same interest, they shall, for the purpose of the preceding provisions, be considered as one party only. Any doubt on this point shall be settled by the decision of the Tribunal.
6. Members chosen in accordance with paragraphs 2, 3 and 4 shall fulfil the conditions required by articles 2, 8 and 11 of this Annex. They shall participate in the decision on terms of complete equality with their colleagues.
Article 18
Remuneration of members
1. Each elected member of the Tribunal shall receive an annual allowance and, for each day on which he exercises his functions, a special allowance, provided that in any year the total sum payable to any member as special allowance shall not exceed the amount of the annual allowance.
2. The President shall receive a special annual allowance.
3. The Vice-President shall receive a special allowance for each day on which he acts as President.
4. The members chosen under article 17 of this Annex, other than elected members of the Tribunal, shall receive compensation for each day on which they exercise their functions.
5. The salaries, allowances and compensation shall be determined from time to time at meetings of the States Parties, taking into account the workload of the Tribunal. They may not be decreased during the term of office.
6. The salary of the Registrar shall be determined at meetings of the States Parties, on the proposal of the Tribunal.
7. Regulations adopted at meetings of the States Parties shall determine the conditions under which retirement pensions may be given to members of
the Tribunal and to the Registrar, and the conditions under which members of the Tribunal and Registrar shall have their travelling expenses refunded.
8. The salaries, allowances, and compensation shall be free of all taxation.
Article 19
Expenses of the Tribunal
1. The expenses of the Tribunal shall be borne by the States Parties and by the Authority on such terms and in such a manner as shall be decided at
meetings of the States Parties.
2. When an entity other than a State Party or the Authority is a party to a case submitted to it, the Tribunal shall fix the amount which that party is to
contribute towards the expenses of the Tribunal.
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