Wednesday, June 5, 2024

154 - UNCLOS - The United Nations Convention on the Law of the Sea AND Nordstream

UNCLOS

The United Nations Convention on the Law of the Sea was adopted in 1982. It lays down a comprehensive regime of law and order in the world's oceans and seas establishing rules governing all uses of the oceans and their resources.

Article 58 

Rights and duties of other States in the exclusive economic zone 

1. In the exclusive economic zone, all States, whether coastal or land-locked, enjoy, subject to the relevant provisions of this Convention, the freedoms referred to in article 87 of navigation and overflight and of the laying of submarine cables and pipelines, and 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 compatible with the other provisions of this Convention.

2. Articles 88 to 115 and other pertinent rules of international law apply to the exclusive economic zone in so far as they are not incompatible with this Part.

3. In exercising their rights and performing their duties under this Convention in the exclusive economic zone, States shall have due regard to the rights and duties of the coastal State and shall comply with the laws and regulations adopted by the coastal State in accordance with the provisions of this Convention and other rules of international law in so far as they are not incompatible with this Part. 

Article 59 

Basis for the resolution of conflicts regarding the attribution of rights and jurisdiction in the exclusive economic zone In cases where this Convention does not attribute rights or jurisdiction to the coastal State or to other States within the exclusive economic zone, and a conflict arises between the interests of the coastal State and any other State or States, the conflict should be resolved on the basis of equity and in the light of all the relevant circumstances, taking into account the respective importance of the interests involved to the parties as well as to the international community as a whole.

Jurisdiction related:





CASE NS 1

Nord Stream AG, the operator of the Nord Stream 1 and 2 pipelines, 
filed a lawsuit in February 2024 at London’s High Court 
against insurers Lloyd’s Insurance Company, Arch Insurance (EU) DAC, 
and others, seeking over €400 million for damages 
from the September 26, 2022, explosions.


CASE NS 2

Unknown, no data available.


***


I. NORDS STREAM AG CASE

Legal implications if the UK if found to be the perpetrator

The company estimates total repair costs (dewatering, stabilizing, repairing, and replacing lost gas) at €1.2 billion to €1.35 billion. The insurers deny coverage, arguing the damage falls under “war risk” exclusions, suggesting it was “more likely than not” caused by a government actor.

The case, as currently defined, is a commercial insurance dispute under English law, governed by the policies’ terms and the High Court’s jurisdiction over contractual claims. Nord Stream seeks payment under its primary and excess all-risk policies, treating the explosions as insurable events, while the insurers counter that sabotage tied to geopolitical conflict voids coverage.

The commercial dispute might become a bargaining chip in broader UK-EU-Russia tensions, with the UK’s alleged act redefining it as a test of accountability.


1. Redefining the Case: From Contract to Tort or State Responsibility

Current Definition: A contractual dispute over insurance coverage, governed by English law principles (e.g., Insurance Act 2015, policy interpretation). Nord Stream AG must prove the explosions are covered “all-risk” events; insurers must justify exclusions.

UK Perpetrator Scenario: If evidence emerged implicating the UK, the case could expand beyond contract law:

Tort Claim: Nord Stream AG could amend its claim to allege tortious interference or negligence by the UK, a third party to the contract. This would require proving the UK’s actions directly caused the uninsured loss, shifting focus from policy terms to liability.

State Responsibility: Internationally, the UK could face claims under customary international law for unlawful interference with infrastructure in Denmark’s exclusive economic zone (EEZ), where the blasts occurred. Nord Stream AG, as a Swiss entity with Western shareholders, could push its home states (Switzerland, Germany) to pursue this, though the London case remains commercial.

Impact on Definition: The High Court case might split into parallel tracks: (1) the original insurance dispute, with insurers arguing a government act (UK’s) triggers exclusions, and (2) a potential third-party claim against the UK, complicating jurisdiction and evidence.


2. Insurers’ Defense and the ‘Government Actor’ Argument

Current Stance: Insurers assert the explosions were “more likely than not” government-ordered, invoking war-risk exclusions. They haven’t named a perpetrator, relying on Swedish and German findings of explosive traces to imply sabotage tied to the Russia-Ukraine conflict.

UK Implication - If the UK were proven responsible:

Strengthens Defense: The insurers’ exclusion argument gains traction—a UK military or intelligence operation could be framed as an “act of war” or “hostile act,” even if not formally declared. English courts have upheld such exclusions broadly (e.g., Pan American v. Aetna, 1974, on terrorism).

Legal Risk for Insurers: Naming the UK could expose them to political pressure or discovery demands from Nord Stream AG, forcing disclosure of any UK-insurer communications. This is unlikely unless concrete evidence (e.g., leaks, German probe findings) surfaces.

Case Evolution: The insurers might pivot to demand UK government intervention or indemnification, turning a private dispute into a quasi-public one.


3. Nord Stream AG’s Position and Corporate Structure

Multinational Leverage: With 49% Western ownership, Nord Stream AG could rally German, Dutch, and French shareholders to pressure their governments if the UK were implicated. This could escalate the case diplomatically, though the High Court claim remains shareholder-agnostic.

Swiss Neutrality: As a Swiss entity, Nord Stream AG might seek Swiss diplomatic protection against the UK under international law, separate from the London case. This wouldn’t alter the commercial claim but could influence settlement talks.

Nord Stream 2 AG’s Role: If Nord Stream 2 damages dominate repair costs, Nord Stream AG might face challenges proving its standing to claim them, given Nord Stream 2 AG’s separate ownership. The UK scenario wouldn’t change this but could spotlight Gazprom’s 100% control of Nord Stream 2 AG, fueling insurer arguments of Russian state involvement.

Case Definition Shift: Nord Stream AG might reframe its claim to emphasize sabotage by a NATO member (UK), arguing it’s not a “war risk” between Russia and Ukraine, but a distinct act—potentially covered under all-risk policies.


4. Jurisdictional and Procedural Implications

High Court Limits: The Commercial Court’s jurisdiction is contractual; it can’t adjudicate UK state liability directly without the UK as a party. Nord Stream AG would need a separate action (e.g., tort claim) or join the UK as a third party, requiring evidence and UK consent to waive immunity.

State Immunity: Under the UK State Immunity Act 1978, the UK enjoys immunity for sovereign acts (e.g., military operations) unless deemed commercial. Sabotage wouldn’t qualify, likely barring direct High Court action against the UK.

Evidence Hurdle: Proving UK involvement would rely on classified data (e.g., MI6, Royal Navy records). The German investigation’s August 2024 warrant for a Ukrainian suspect suggests no UK link yet; shifting this narrative would need leaks or whistleblowers—beyond Nord Stream AG’s current reach.

Case Recharacterization: The dispute could stall in the High Court, pushing Nord Stream AG to international forums (e.g., UNCLOS arbitration) if the UK’s role were confirmed.


5. International Law Overlay

UNCLOS Violation: The blasts occurred in Denmark’s EEZ. If the UK acted, it might breach UNCLOS Article 87 (freedom of the high seas, including pipeline laying) or Article 113 (intentional damage to cables/pipelines). Denmark or affected states could claim jurisdiction, sidelining the London case.

State-to-State Action: Switzerland or Germany, protecting Nord Stream AG’s interests, could sue the UK at the International Court of Justice (ICJ). This wouldn’t redefine the High Court case but could pressure a settlement.

Case Impact: The commercial dispute might become a bargaining chip in broader UK-EU-Russia tensions, with the UK’s alleged act redefining it as a test of accountability.



***

II. NORDS STREAM 2 AG CASE

Legal implications if the UK if found to be the perpetrator


Nord Stream 2 AG: A private entity incorporated in Switzerland, fully owned by Gazprom, a Russian state-controlled company (51%+ owned by Russia).

International Law Lens: The definitions hinge on attribution, intent, target, location, and consequences, assessed under jus ad bellum (law governing the use of force), UNCLOS (maritime law), and state responsibility principles.



***

POSSIBLE FUTURE DEVELOPMENTS

Scenarios Under International Law


UK Denies Involvement: Claims rogue actors or misattribution. Russia seeks ICJ adjudication, alleging UK state responsibility (ILC Art. 8—control over actors). Outcome hinges on evidence; sabotage label persists absent proof.

UK Admits Covert Act: Frames it as countering Russian aggression (e.g., Ukraine war). Russia claims "armed attack"; UK counters it’s not against Russia directly (Swiss entity). UNSC deadlock ensues—saboteurs face no legal reckoning.

Overt UK Military Strike: Declared as preemptive defense (Art. 51). Russia escalates to "act of war" or "casus belli," retaliating militarily. NATO "could" invoke collective defense (Art. 5), risking wider conflict. "Armed attack" becomes operative. 

The Article 5 may not apply IF the UK stroke first.


***

TORF CLAIM

What is a "Tort Claim"?

A tort claim is a legal action under civil law where one party (the claimant) seeks compensation or remedy from another party (the defendant) for a wrong or harm caused by the defendant’s actions, rather than a breach of contract. "Tort" comes from the French word for "wrong," and in English law (which governs the Nord Stream case in London), it covers civil wrongs like negligence, trespass, or intentional damage. Unlike criminal law, which punishes offenders (e.g., jail time), tort law focuses on making the victim whole—usually through monetary damages.

Key elements of a tort claim
  1. Duty: The defendant owed a legal duty to the claimant (e.g., not to harm their property).
  2. Breach: The defendant breached that duty (e.g., by acting negligently or intentionally).
  3. Harm: The claimant suffered damage (e.g., financial loss, physical destruction).
  4. Causation: The breach directly caused the harm.

How "Tort Claim" Applied in the Nord Stream Context
In my analysis, I suggested that if the UK government were proven to have destroyed the Nord Stream pipelines, Nord Stream AG (the claimant in the High Court case) could expand its lawsuit beyond the original insurance dispute against Lloyd’s and Arch Insurance. Here’s how a tort claim fits:Original Case: Nord Stream AG sued its insurers for €400 million, claiming the explosions were covered under their "all-risk" policies. This is a contractual dispute—it’s about whether the insurance policies apply, governed by the terms agreed between Nord Stream AG and the insurers.

Hypothetical UK Perpetrator: If evidence showed the UK caused the explosions, Nord Stream AG could pivot to a tort claim against the UK as a third party, arguing that the UK’s actions directly caused their uninsured losses (e.g., €1.2–1.35 billion in repair costs). 

This shifts the focus from "Did the insurers owe us money?" to "Did the UK wrongfully harm us?"