By Dan Fox, on 4 October 2011
Wherever the writ of Western nations has run, so have attempts to impose the Rule of Law. But the Rule of Law has never sat well with other nations, particularly East of Suez, where absolute rights and obligations are not the norm, and where consensual agreements are customary. It is said that Napoleon’s experience in Egypt and interest in Islam may have informed the French Napoleonic Code. In the context of civil law, French jurisprudence distinguishes between contrats de mandat, which are essentially one way agreements mandated by statute or judges, and contrats de société, which are associative, consensual agreements.
Similarly, the joke is that there are as many Sumo wrestlers in the US as there are attorneys in Japan. Anyone who has done business in Japan will know that because trust is assumed, agreements are typically simple and brief. And in Scotland there is, in addition to the existing polar opposite verdicts of Guilty and Not Guilty, a third null or indeterminate verdict of Not Proven.
There are two principal 20th century legal approaches to joint international development of resources:
- International Law (Convention);
- and Common Law (Equity).
(A good example of the Common Law approach is in the North Sea, where rights to production from oil and gas fields are now dealt with through the use of a common law ‘Master Deed‘ agreement. While this is imperfect, it is a great improvement on the complete legal nightmare which preceded it).
There have also been proposals for ‘co-ownership’ between nations. But while Condominium – as it is known – is not unusual, such agreements have typically only been reached in respect of relatively low value bilateral territorial disputes.
Consensual agreement opens up a route to resolving even the most intractable disputes, such as those that arise over the most valuable territories.
The relatively simple – but still intractable – bilateral dispute between Iran and Russia over the Caspian Sea and its resources has, since the end of the USSR, been multiplied by the conflicting claims of what are now five Caspian-littoral nations (including Azerbaijan, Kazakhstan and Turkmenistan). Their claims relate not just to rights on the surface, but to rights in the sea, and, above all, to the rights to what lies under it.
If a 21st century approach to territorial disputes can resolve this Mare’s Nest, then it can probably resolve anything.
A Caspian Partnership
The proposal is that the littoral Caspian nations should form a Caspian Foundation legal entity, and commit to that entity all existing rights in respect of the use, and the fruits of use (usufruct) of the Caspian Sea, and everything on it, in it or under it. The Caspian Foundation would act as custodian or steward and the Caspian nations would have agreed governance rights of veto.
The Caspian Foundation agreement would reflect an agreement between the littoral nations jointly or collectively.
The negative or passive veto right of stewardship is very different from conventional property rights of absolute ownership and temporary use under Condominium. Moreover, it does not confer the active power of control held under common law by a Trustee on behalf of beneficiaries, and the legal complexities and management conflicts which go with that status.
The new term – Nondominium – reflects the fact that no country or combination of countries has the power of dominant control over the relevant territory and resources.
The Caspian Foundation would be a subscriber to a Caspian Partnership framework agreement between the nations; investors of money or money’s worth; and a consortium of service providers.
This Caspian Partnership would not be yet another international organisation, with everything that goes with that. It would not own anything; employ anyone or contract with anyone: it would simply be an associative framework agreement within which Caspian nations self-organise to the common purpose of the sustainable development of the Caspian Sea. Within such a framework agreement a great deal is possible, although expectations may diverge to an extent that even consensual agreement is impossible.
The Caspian Partnership agreement would comprise a master framework agreement within which a myriad of associative agreements between the Caspian littoral nations individually or severally would be registered and evolve organically.
In particular, it is possible to envisage a new ‘pool’ of Caspian oil and gas production which would open up the 21st century direct financing and funding options of Unitisation (ie simply the issue and sale by producers of credits redeemable in payment for gas) which is the key market instrument underpinning the ISRS Resilient Markets initiative.
A Caspian Pool of natural gas production also opens up the possibility of a Caspian ‘balancing point’ spot gas price in just the same way as there is already a virtual national balancing point at which the UK spot natural gas price is set.
Many indigenous peoples, such as American Indians and Australian Aborigines, find it impossible to understand how anyone can own land. Whereas most religious traditions – including Christianity, Islam, and Judaism – were all founded upon a belief that absolute ownership, particularly of land, is God’s alone, and that a tribute should be paid accordingly, such as a tithe.
It is apt to describe this proposal’s approach to the property relationship as Nondominium. Such a collaborative and consensual legal and financial framework for sustainable development and management of international resources is capable of revolutionising international economic relations.