A Commentary on the Maritime Delimitation Issues in the Croatia v. Slovenia Final Award

I. Introduction

An arbitral tribunal, constituted under the auspices of the Permanent Court of Arbitration, issued its final and unanimous award in the Croatia v. Slovenia case on 29 June 2017. The arbitration concerned a territorial and maritime dispute between Croatia and Slovenia. This post will focus on the maritime delimitation issues. The present post will deal with the Arbitration Agreement of 2009 (“AA”) (II), the Junction Area (III), and the maritime boundary (IV) in turn. The questions of contamination of the proceedings and the annulment of inter-state arbitral awards have caused a series of controversies. These fall outside the scope of this post and have already been dealt with by Alison Ross and Peter Tzeng respectively. These issues were determined by the reconstituted arbitral tribunal in its partial award rendered on 30 June 2016.

II. The Arbitration Agreement of 4 November 2009

The dispute between the Parties was submitted to arbitration in accordance with an Arbitration Agreement signed by the parties on 4 November 2009 in Stockholm (Annex HRLA-75, Final Award), and witnessed by the then Swedish Prime Minister, Fredrik Reinfeldt, since Sweden then held the Presidency of the Council of the European Union (“EU”). The Arbitration Agreement is unique because it is the first intra-state arbitration agreement of its kind to be drafted under the auspices of the EU, despite the fact that this is not the first occasion where an international organisation was involved in such a task. [See for example the signature for specific purposes of the World Bank of the Indus Waters Treaty 1960, between India and Pakistan, although that treaty is much more complex and not just a simple arbitration agreement (see Article IX and Annexure G). See also for example the involvement of the African Union, the UN and a few EU member states in the drafting of the Comprehensive Peace Agreement 2005, which was witnessed by the Minister of Development Co-operation of the Netherlands on behalf of the EU, paving the way for the drafting of the Abyei Arbitration Agreement 2008, which was eventually signed by the government of Sudan and the Sudan’s People’s Liberation Movement Army only. Brooks Daly has written more on the procedural aspects of the Abyei arbitration.]

The brokering of the Arbitration Agreement by the EU is reflected in Article 9, which requires Slovenia to “lift its reservations as regards the opening and closing of negotiation chapters where the obstacle is related to the dispute”. This was an important provision for Croatia’s accession to the EU. It is to be noted that Slovenia had already been a member of the EU for approximately 5 years at the date of signature of the arbitration agreement, as it had acceded to the EU on 1 May 2004. On the other hand, on the date of signature of the Arbitration Agreement, Croatia was on the path to accession, which was to last for another 4 years, as it eventually became an EU member state on 1 July 2013.

There are two other points worth mentioning regarding the 2009 Arbitration Agreement. First, the applicable law as set out in Article 4 is unusual. The “rules and principles of international law” were applicable to determining the course of the maritime and land boundary (Article 3(1)(a)). International law, equity and “the principle of good neighbourly relations in order to achieve a fair and equitable result” were applicable to determining Slovenia’s junction to the High Sea and the regime for the use of the relevant maritime areas (Article 3(1)(b) and (c)). This is probably a rare instance of the principle of good neighbourly relations for the achievement of a “fair and just result” being encountered in a modern Arbitration Agreement. While it is doubtful whether such a principle could count as a “general principle of law recognised by civilized nations” within the meaning of Article 38(1)(C) of the Statute of the International Court of Justice, it might be regarded as similar to a requirement to determine a case ex aequo et bono under Art. 38(2) of the ICJ Statute. The inclusion of this source of “applicable law” is a curious addition, which can probably be explained by the fact that it was a product of negotiations under the auspices of the EU.

The second point worth mentioning regarding the Arbitration Agreement is that one of the tasks of the arbitral tribunal, as per Article 3 (b)-(c), was to determine “Slovenia’s junction to the High Sea” and “the regime for the use of the relevant maritime areas”. This is a peculiar insertion, and apparently led the arbitral tribunal to determine that starting point of the present arbitration was not whether Slovenia should have a junction to the high sea, but rather where the junction would be and what would be the package of rights given to Slovenia over that area. Apparently, the tribunal, determined that Croatia had probably conceded the point of whether there should be a junction area vis-à-vis its territorial sea during the negotiation of the arbitration agreement. The junction area appears to have been Slovenia’s sine qua non to sign the 2009 Arbitration Agreement.

III. The Junction Area

The junction area is by far the most interesting aspect of the final award for law of the sea enthusiasts (dispositif, section IV), although not the first of its kind [see The Treaty on the Redemption of the Sound Dues between Denmark and Sweden, done in Copenhagen on 14 March 1857 in C. Parry, Consolidated Treaty Series Vol. 116, No. 357 (1969)].

Map VII of the Final Award, p. 347

The tribunal gave “freedom of communication” “to all ships and aircraft, civil and military, of all flags or states of registration, equally and without discrimination on grounds of nationality, for the purposes of access to and from Slovenia, including its territorial sea and its airspace” (Section IV (B) (a)). This freedom consists in the “freedoms of navigation and overflight and of the laying of submarine cables and pipelines”, in addition to “other internationally lawful uses of the sea related to these freedoms, such as those associated with the operation of ships, aircraft and submarine cables and pipelines”. And here comes the interesting bit: the freedom of communication “shall not be conditioned upon any criterion of innocence, shall not be suspendable under any circumstances, and shall not be subject to any duty of submarine vessels to navigate on the surface or to any coastal State controls or requirements other than those permitted under the legal regime of the EEZ established by UNCLOS” (emphasis added by the author, Section IV (B) (c)). The freedom of communication looks prima facie unlimited and unconditioned. The words “for the purposes of access to and from Slovenia, including its territorial sea” appears in the first paragraph of the dispositif regarding the junction (Section IV (B) (a)). But the list does not end there.

The dispositif continues. Ships and aircraft exercising the freedom of communication “shall not be subject to boarding, arrest, detention, diversion or any other form of interference by Croatia while in the Junction Area”. Nevertheless, Croatia will remain entitled to adopt laws and regulations applicable to non-Croatian ships and aircraft in the in the Junction Area, giving effect to the generally accepted international standards in accordance with UNCLOS Article 39(2) and (3)” Chapter IV, (B) (f)). When reading this part of the dispositif, one is struck by the absence of any qualifier before the words “ships and aircraft”. One is left wondering: which ships? Of which nationality? All ships or just some? The arbitral tribunal considered that “ships and aircraft of all flags and all kinds, civil and military” were included (para. 1129, final award). So, whatever vessel does not carry the Croatian flag cannot be boarded, arrested detained or diverted or otherwise be interfered with it if it goes through the junction area? Given the potentially broad ramifications the absence of a qualifier could entail, it can only be anticipated that Croatia and Slovenia will negotiate and eventually enter into a bilateral agreement containing more detailed provisions as to the specifics of the usage regime in the junction area. This eventuality is recognised in the award itself (see the reference to “future agreements” in section IV (C), dispositif).

A way to interpret the potentially unconditioned nature of the freedoms of communication in the junction area (section IV(B), dispositif) is that while Croatia maintains sovereignty over the junction area, this area is quite small and the rights the arbitral tribunal granted are only limited to freedom of communication for the purposes of “uninterrupted and uninterruptible access to and from Slovenia, including its territorial sea and airspace”(para. 1123, final award). A final point about the junction area is that nothing in the award affects the IMO Separation Scheme in the northern Adriatic Sea or the rights and obligations arising under EU or international law (section IV (C), dispositif). So, if all else fails these provisions are the default legal regime applicable to the junction area between Croatia and Slovenia.

IV. Maritime Boundary

Now, let’s turn to the boundary in the Bay. Prima facie the arbitral tribunal seems to have given one quarter of the Bay to Croatia and 3 quarters to Slovenia (Section II, dispositif). But, one needs to keep in mind that, in the present case, we are not in a classic international law scenario like that in case between Costa Rica and Nicaragua, for example. Both Croatia and Slovenia are now members of the EU. As such EU law prevails as lex specialis over the general law of the sea regime. This means that the Common Fisheries Policy (“CFP”) of the EU applies between the two states, as per Articles 38-43 of the Treaty on the Functioning of the European Union. It ought to be recalled that the EU is a contracting party to the UNCLOS (Council Decision 98/392/EC of 23 March 1998) and to the 1995 UN Fish Stocks Agreement (Council Decision 96/428/EC of 25 June 1996), as well as to the Agreement to promote compliance with international conservation and management measures by fishing vessels on the high seas of 24 November 1993 of FAO (OJ L 177, 16.7.1996, p. 26). Article 41 of the CFP Regulation 1380/2013 provides that member states in their 12 nautical mile zones should be empowered to adopt conservation and management measures applicable to all EU fishing vessels, provided the Union has not adopted measures specifically addressing conservation and management within the 12 nautical mile zone concerned. The distance across the Bay at its maximum, that is from the tip of Cap Savudrija to Cape Madona is 5 km. Accordingly it does not go beyond 12 nautical miles and it is therefore highly unlikely that Croatian fishermen will suffer from the delimitation of the arbitral tribunal within the territorial sea.

Last but not least, let us examine the boundary outside the territorial sea (dispositif, Section III). The arbitral tribunal, relying on Articles 74(1) and 83(1) of UNCLOS, adopted the three-stage approach espoused by the ICJ in its recent case-law (Maritime Dispute (Peru v. Chile), Judgment, I.C.J. Reports 2014, p. 3 at p. 66, para. 180, citing Maritime, Delimitation in the Black Sea (Romania v. Ukraine), Judgment, I.C.J. Reports 2009, p. 61 at pp. 101-03, paras 115-22; Territorial and Maritime Dispute (Nicaragua v. Colombia), Judgment, I.C.J. Reports 2012, p. 624 at pp. 695-96, paras 190-93). 3 stages: (1) construction of equidistance line, (2) adjustment of the line to take into account special circumstances, (3) disproportionality test. There are no surprises to be found in this section of the arbitral tribunal’s award. The real question for the tribunal in terms of its determination of the maritime boundary was how much effect to give to Cape Savudrija (para. 1007, final award). The arbitral tribunal gave Cape Savudrija half-effect (para. 1014, final award), because the coastal configuration in the present case would produce an “exaggeratedly adverse effect if the strict equidistance line” were to be used, which would in turn exaggerate the “boxed-in” nature of Slovenia’s maritime zone (para. 1011, final award). This finding is in line with a jurisprudence constante and it was predictably applied by the arbitral tribunal (North Sea Continental Shelf cases, I.C.J. Reports 1969, p. 3 at p. 51, paras 89-90; Delimitation of the Maritime Boundary between Guinea and Guinea Bissau, Decision of 14 February 1985, R.I.A.A. Vol. XIX, pp. 149-96, p. 187 at paras 103-04; Dispute Concerning Delimitation of the Maritime Boundary between Bangladesh and Myanmar in the Bay of Bengal, (2012) ITLOS Case No. 16, Judgment of 14 March 2012, paras 292-97).

This approach is also in line with the Continental Shelf Case (France/United Kingdom), R.I.A.A. Vol. XVIII, p. 114, paras 244, where the tribunal considered that the projection of the Scilly Isles into the Atlantic region constituted an element of distortion, which was material enough to justify the delimitation of a boundary other than the strict line envisaged. As such it recognized that the position of the Scilly Isles west-south-west of the Cornish peninsula constituted a “special circumstance” justifying a boundary other than the strict median line (ibid, p. 114, para. 245). Nevertheless, the tribunal considered that this special circumstance did not give it a carte blanche (ibid, pp. 114-5, paras. 245-7), and it gave it half-effect (ibid, p. 117, para. 251). The margin of discretion that international courts and tribunals enjoy when the equidistance line has a cut-off effect was underscored by the ICJ in the Territorial and Maritime Dispute (Nicaragua v. Colombia), I.C.J. Reports 2012, p. 703, para. 215, when it considered that in order to achieve an equitable solution the maritime entitlements of parties should produce their effects in a “reasonable and mutually balanced way”. In conclusion, the arbitral award in Croatia v. Slovenia in so far as the maritime delimitation is concerned is in line with the corpus of international law in this area, as established by a series of cases handled by the ICJ, ITLOS and arbitral tribunals alike.