Statement by the Federal Republic of Germany – ISA 29th Session, Part I

Thema c discussion on Environmental Compensa on Fund

Delivered on 26 March 2024



(a) What kind of damage is to be compensated?
    The ECF should cover any and all environmental damage, as prescribed under Article
      235, but subject of course to the scope and limitations as laid out in UNCLOS, in
      existing and future rules, regulations and procedures of the Authority, and in light of
      the views expressed in the 2011 Advisory Opinion.
    As per our previous written submissions, Germany is of the opinion that the
      Environmental Compensation Fund should cover not only damage arising from
      unlawful or negligent action but should also cover accidents and unanticipated
      damage arising from lawful activities. As Germany noted in relation to DR 18.bis, we
      support a strict liability regime for activities in the Area, as was highlighted by the
      Seabed Disputes Chamber in its Advisory Opinion and as is commonplace in other
      international liability regimes.

(b) How will the funds and any interest generated be managed and by whom?

      We will need some further time to develop a position on the question how and by
       whom the Environmental Compensation Fund should be managed. We will listen
       carefully to initial views by other delegations. At this stage, it seems obvious to us
       such a fund should not be managed by the Secretariat or the Finance Committee,
       and it is likely that an external fund manager would be more appropriate.
      In any case, Germany sees it as important that the rules and procedures for the Fund
       must be established before the approval of the first exploitation contract and not
       only before the start of commercial production. The simple explanation is that the
       Contractor, as well as the LTC and the Council, need to know the financial
       requirements for the fund when assessing an applicant’s capabilities and financial
       resources. Without knowing how much a Contractor will have to pay into the Fund,
       the LTC will not be able to assess whether the applicant has sufficient financial
       resources. We therefore suggest that the Council could request the Finance
       Committee to start drafting rules of procedure for the Environmental Compensation
       Fund, once the Council has agreed on the broad parameters for the Fund.

(c) Who is to be compensated?

      The ISA should certainly be compensated through the ECF but we suggest that any
       State should also be able to access the Fund, given that the protection of the marine
       environment in areas beyond national jurisdiction is an obligation owed to the
       international community at large. That means, any State or the ISA can bring a case

against a Contractor causing environmental damage. Consequently, any such actor
       needs to have access to compensation from the Contractor that has been found
       liable. If the Contractor cannot pay, the Environmental Compensation Fund is
       available as a last resort.
      We will need further time to study the implications of the Fund covering damage to
       non-state actors, third parties and other users of the marine environment that are
       affected by activities in the Area. We will listen closely to the views of others on this
       matter.

(d) The standard of proof that will be required to access the fund

      Germany supports a strict liability regime, similar to that used for liability funds in
       other regimes. Strict liability provides for a simple regime of the ECF without the
       need for determining standards of proof. In general, liability should be channeled to
       the actor who is in the best position to minimize the risk of damage and accidents.
       For deep seabed mining, that is the Contractor. In other international regimes, this
       principle of channeling liability to the operator is commonplace and often paired
       with strict liability. Examples for this combination can be found in the IMO’s
       Convention on Civil Liability for Oil Pollution Damage, the UN Principles on the
       Allocation of Loss in the Case of Transboundary Harm, in EU law, as well as in UNEP
       Guidelines and other instruments.
      In any case, Germany believes that access to the ECF is only possible after the
       Council has considered the particular case and decided that such access is
       appropriate, and if so, to what extent.

(e) What happens if there is damage to the environment before the money is paid?

      The Regulations should ensure that this situation does not occur. That is why DR 56
       should require the Contractor to pay into the ECF before starting any activities in the
       Area under an Exploitation Contract. The Authority needs to ensure funds are
       available in the ECF before activities begin that might cause environmental harm.

(f) What elements should be addressed in the Regula ons and what parts should be
covered in the Standard and Guidelines, or in rules and procedures of the fund?

      We suggest to first focus Council discussions on the parameters of the ECF before
       determining which details are retained in the Regulations and which ones can be
       moved to Standards or Guidelines. At present, we do not appear to have sufficient
       clarity on the purpose, scope, management, and funding of the ECF. We suggest to
       address this question at a later stage.