When Investment Law Takes Over: Towards a New Legal Regime to Regulate Asia Pacific’s Submarine Cables Boom
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Currently, the main concerns relating to submarine cables are in the perspective of multiple ocean use introduced by UNCLOS. The conflicts between cables and other ocean uses, the overlapping of maritime zones, the legality of exclusion zones around cables, compensation for lost or damaged fishing gear due to cable interactions, legal liability for damaging cables, and unclear jurisdiction and interdepartmental coordination in the cable licensing and regulatory processes are only some of the potential conflicts to be resolved by States.
In particular, with regard to the laying of submarine cables, doubts can be also expressed about the interaction between the interest of coastal States to regulate their maritime spaces and the possibility to lay submarine cables by other States or individuals. Furthermore, in the maritime zones outside of the sovereignty of coastal States, the freedom to lay cable is often opposed to environmental issues as well as the interest to have safe navigation. Laying activities may interfere with the repair of submarine cables as well as navigation for fishing. In addition to this, coastal States often impose taxes on cables laid on the continental shelf or other excessive regulations.24
This lack of precision in the regulations for the laying of submarine cables leads also to enhance the weakness of the measures of protection available in the field.
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As previously stated,25 given the importance of submarine cables to the world economy and to all States, additional measures are necessary to protect cables. The majority of the cable damages are caused by human intervention, but there is no obligation under the UNCLOS on coastal States to adopt laws and regulations to protect submarine cables in the territorial sea. Moreover, even if Article 113 UNCLOS requires States to establish rules on the breaking or injury of cables in the high seas or EEZ by their nationals or by a ship flying their flag, if such break was done wilfully or with negligence, this provision is inadequate, as there is no countermeasure if States do not implement it. Furthermore, it does not deal adequately with the threat as well as theft of cables by terrorists or other voluntary acts.
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In conclusion, these interactions and potential conflicts in the regime applicable to submarine cables regime make further ground arise for the integrated planning and management of activities in ocean and coastal areas.
The scholarship has repeatedly affirmed that such a cooperation and integration of different interests would be best achieved by means of the elaboration of a new international convention. However, it has to be pointed out that disruptions to the integrity of submarine cable systems potentially cost cable companies millions of dollars in repairs and lost revenues from e- commerce and telecommunications.29 In this perspective, rather then spending efforts to negotiate a new Convention on submarine cables, a solution – at least a partial one – can be represented by increasing the cooperation between all actors involved (privates and States) by means of BITs. This would help minimizing the risks of interferences and protect the interests of all the parties involved. As South-East Asia currently represents the most-relevant market for the lay of submarine cables, particular attention in the following analysis will be given to the BITs practice in the region.
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As previously stated,61 [bilateral investment treaties] BITs can only partially solve the problems currently arising in the regime applicable to submarine cables. That is the reason why BITs have been referred to in this article as a “complementary” regime rather than a “substitutive” one. In fact, there are certain areas in which BITs cannot represent a solution. Reference is made in particular to the problem of intentional acts by terrorists aimed at damaging the cables, and issues related to cables laid down outside the sovereign areas of States (i.e. the High Seas). With regard to the former, the matter would be better addressed by international criminal law. BITs can establish the liability of the host State in case due diligence is not exercised in the protection of the cables. However, international terrorism is something beyond the control of States, and definitely something that can hardly be faced just by applying the ‘due diligence’ required by the standards of protection of investment law. With regard to the lay of submarine cables outside the sovereignty of States, it is evident that the lay of submarine cables in these areas cannot be regulated by BITs. Host States cannot be subject to obligations on areas on which they lack sovereignty.
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The inadequacy of the regime provided by the law of the sea to effectively protect submarine cables, the relevance of which in national economies increases as time goes by, is hardly questionable. The UNCLOS, in particular, is a ‘constitutional’ convention, one that needs other instruments to be put in place in order to ensure the effectiveness of most of its provisions. As stated beforehand, BITs can provide only a partial solution to the problem – in other words, they can represent a solution only in those areas where coastal States exercise their sovereignty. In the high seas and in those areas where the sovereignty of a State is limited by the rights and duties of other States, BITs clearly cannot be a suitable solution. However, BITs and investment law in general can nonetheless represent a model worth following to fill the remaining lacunae of the law of the sea in the regime applicable to submarine cables. The lesson to be learned from investment law is that the multilateral approach is not necessarily the most appropriate. In investment law, the bilateral approach has been proven as successful as it allows each State to pursue their interest at the local level by negotiating the level of protection they deem appropriate in a particular State or region for their nationals. BITs could be a suitable instrument to reach effective and constant protection for submarine cables. Alternatively, bilateral or small multilateral treaties could help to solve once and for all the problem of the current inadequacy of the law of the sea in terms of protection of submarine cables.