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SCHOOL OF LAW
The Legal Framework for the Sustainable
Development of Iraqi Oil and Gas:
A Study in Particular Reference to the Kurdistan Region, and with Special
Emphasis on the New Delhi Declaration
A
PhD Thesis
By
KHALID I. AL-SALEEM
L.L.B. Mosul University-Iraq
L.L.M. Baghdad University-Iraq
The thesis is submitted in partial fulfilment of the requirements for the award of the
degree of Doctor of Philosophy of the University of Portsmouth.
January 2015
ii
Abstract
Iraq’s liberation from the Saddam regime after a few decades of oppression signalled
national transition to peace and stability. The entire world had its eyes fixed on Iraq as a model
for newly liberated nation states. Even though Iraq was liberated from authoritarian rule, but it
has yet to be liberated from its socio-economic woes. Decades of neglect at the hands of a
military dictatorship, newly found ethnic and sectarian divides and now a regional cum
international jihadist agenda threaten to tear Iraq apart. The true underlying cause of Iraq’s
problems is socio-economic divide – precipitated at both domestic and international levels, and
manifested as ethnic and sectarian conflicts. The only real solution to Iraq’s woes is to capitalise
on the oil and gas resources, in such a fashion that they provide socio-economic dividends with a
hope of conserving the environment for future generations.
The idea of sustainable development is auspicious in terms of consequences yet elusive in
terms of implementation. Iraq’s domestic problems and international pressure groups are creating
an environment where sustainable development is a hard-to-realise goal. Moreover, the ever-
changing definition of sustainable development and the concept’s credibility poses its own
dynamic undercurrents. The greatest hope at sustainable development for Iraq’s situation is to
shape and implement a legislated framework through public participation, responsible legislation
along the lines of globally accepted sustainable development principles. This research aims to
provide various options for a legal framework for sustainable development keeping in view
Iraq’s peculiar circumstances. The various challenges confronting Iraq on domestic, regional and
international forums for sustainable development are discussed at length, and legal solutions are
iii
provided through an examination of international practice, stakeholder views and emerging best
practices.
iv
Table of Contents
Thesis Title ................................................................................................... i
Abstract ....................................................................................................... ii
Table of Content……………………….…………………...………………………….iv
Dedication……………………………………………….…………………………….....xii
Declaration………………………………………………………………………...….....xiii
List of Figures…………………………………………………………………………...xiv
List of Abbreviations………………………………………………………………….…xv
Table of Cases…………………………………………………………….………...…...xxi
Table of International Treaties, Declarations, Plans and Legislations..……………….xxiii
Chapter One – Introduction
1.1. Statement of Aims ............................................................................................. 1
1.2. Scope of the Study ............................................................................................. 3
1.3. Research Question ............................................................................................. 5
1.4. The Concept of “Sustainable Development” ..................................................... 7
1.5. “Sustainable Development” as Reposed in International Law .......................... 8
1.6. Application of Sustainable Development Principles to Oil & Gas Resources 12
1.7. Core issues in the Iraqi Oil and Gas Regulatory Framework .......................... 15
v
1.8. Gaps in Iraqi Law ............................................................................................ 16
1.9. Description of Gaps in Research Literature .................................................... 19
1.10. Original Contribution and Importance of the Study ........................................ 21
1.11. Research Design .............................................................................................. 24
1.12. Data Description .............................................................................................. 27
1.13. Data Collection Methods ................................................................................ 28
1.14. Choice of Analysis........................................................................................... 34
1.15. Expected Outcomes ......................................................................................... 34
1.16. Conclusion ....................................................................................................... 35
Chapter Two – Background to the Sustainable Development Concept
2.1. Introduction ..................................................................................................... 37
2.2. Evolution of the Concept of Sustainable Development ................................... 40
2.2.1. The Impact of Malthusians on the Development of Sustainability .............. 40
2.2.2. The 1972 Stockholm Conference on the Human Environment ................... 42
2.2.3. Brundtland Commission on Environment and Development ...................... 47
2.2.4. UN Conference on the Environment and Development............................... 53
2.2.4.1 The Rio Declaration on Environment and Development ................................ 55
2.2.4.2 Agenda 21 ........................................................................................................ 56
2.2.4.3 UN Commission on Sustainable Development ............................................... 58
vi
2.2.4.4 Analysis of the Overall Meaning of the 1992 Rio
Summit…………………………………………………………………………...………………58
2.2.5 The Kyoto Protocol as a Special Case of Sustainable Development
Policy…...………………………………………………………………………………………..67
2.2.6 New Millennium Summit, Johannesburg Summit and ILA New Delhi
Declaration……. ................................................................................................................... 72
2.2.7 The current progress on sustainable development ....................................... 80
2.3. Conceptual basis of sustainable development ................................................. 86
2.3.1. Conceptual dimensions of sustainable development .................................... 86
2.3.2. The approaches of environmental philosophy to sustainable development 889
2.4. How Sustainable is the Concept of Sustainable Development? ...................... 96
2.5. Conclusion ....................................................................................................... 98
Chapter Three – Gauging Sustainable Development and the Applicable
Legal Frameworks
3.1. Introduction ................................................................................................... 103
3.2. Defining Sustainable Development ............................................................... 104
3.2.1 Sustainable Development: The Legal Perspective ............................................. 105
3.3. Legal Frameworks for Sustainable Development ......................................... 113
3.4. New Delhi Declaration (2002) ...................................................................... 122
vii
3.4.1. Principle One: The duty of States to ensure sustainable use of natural resources
………………………………………………………………………….....123
3.4.2. Principle Two: The principle of equity and the eradication of poverty ..... 126
3.4.3. Principle Three: The principle of common but differentiated responsibilities
…………………………………………………………………………….130
3.4.4. Principle Four: Precaution regarding human health, natural resources and
ecosystems ……………………………………………………………………………136
3.4.5. Principle Five: The principle of public participation and access to
information and justice ....................................................................................................... 139
3.4.6. Principle Six: The principle of good governance ....................................... 143
3.4.7. Principle Seven: The principle of integration ............................................ 145
3.5. Synthesis of New Delhi Declaration Principles ............................................ 147
3.6. Examples of Practices for Sustainable Development of Oil and Gas Resources
………………………………………………………………………………148
3.7. Iraq’s need for Sustainable Development of Oil and Gas Resources ............ 151
3.8. From Legal Evolution of Sustainable Development to Iraq’s Legal
Frameworks for Oil and Gas Sustainable Development ......................................................... 153
3.9. Conclusion ..................................................................................................... 154
Chapter Four – International Legal Aspects of Iraq’s Oil and Gas
Sustainable Development
4.1. Introduction ................................................................................................... 156
viii
4.2. Evolution of International Petroleum Agreements ........................................ 157
4.2.1. Concession Agreements .................................................................................... 157
4.2.2. Profit Sharing ................................................................................................. 158
4.2.3. Risk Service Agreements (RSA) ................................................................... 159
4.2.4. Production Sharing Agreements (PSA) ......................................................... 160
4.3 Learning from IPA Structure and their Application to Iraq .......................... 163
4.4 Iraq’s Bilateral and Multilateral Investment Treaties .................................... 165
4.4.1. Sustainable Development and Investment Treaties ................................... 165
4.4.2. Iraq’s Take on BITs and MITs ................................................................... 167
4.5. Political Bearing on Petroleum Production and Pricing ................................ 169
4.5.1. External Political Factors ........................................................................... 169
4.5.2. Internal Political Factors ............................................................................ 171
4.6. The Triple Bottom Line versus the Petro Curse ............................................ 176
4.7. Contract Clauses from Iraqi Oil and Gas Contracts ...................................... 181
4.7.1. Joint Management Committees ................................................................ 182
4.7.2 Transforming Horizons.................................................................................. 185
4.7.3 Environmental Objectives for Sustainable Development .............................. 188
4.7.4 Community Development and Economic Development Perspectives .......... 189
ix
4.8. Legal Arrangement Challenges to Sustainable Oil and Gas Development in
Iraq …………………………………………………………………………….191
4.9. Conclusion ..................................................................................................... 197
Chapter Five – The Constitutional Divide – Federation versus
Kurdistan: Differentiated Legal Approaches
5.1. Introduction ................................................................................................... 202
5.2. Split between KRG and Iraq’s Federal Government ..................................... 203
5.2.1. The Ethnic Perspective ............................................................................... 203
5.2.2. The Impact of Military Governance ........................................................... 205
5.2.3. The Post Saddam Reign of Mistrust Federation versus Kurdistan – Legal
Embodiment of Mistrust ..................................................................................................... 207
5.2.4. Policy Dilemmas ........................................................................................ 211
5.3. Federation versus Kurdistan – Legal Character of the Split Speculated
Regional Involvement ............................................................................................................. 212
5.3.1. Violation of Legal Norms and its Consequences ....................................... 213
5.3.2. Constitutional Manoeuvres by the Federation ........................................... 214
5.3.3. Oil and Gas Laws ....................................................................................... 221
5.3.4. KRG’s Take on Oil and Gas Laws ............................................................. 222
5.3.5. Differences in Awarded Contracts ............................................................. 224
5.4. Environmental Concerns ............................................................................... 229
x
5.4.1. Structure of Environmental Legislation ..................................................... 232
5.4.2. Drawbacks and Loopholes of Environmental Legislation ......................... 233
5.5. International Legal Implications of Iraq’s Investment Situation ................... 241
4.6. Conclusion ..................................................................................................... 243
Chapter Six – Catalysts and Inhibitors to Iraqi oil and gas Sustainable
Development
6.1. Introduction ................................................................................................... 246
6.2. International Legal Arrangements ................................................................. 247
6.2.1. International Soft Law Instruments for Sustainable Development ............ 247
6.2.2. Extractive Industries Transparency Initiative (EITI) ................................. 247
6.2.2.1. EITI Requirements…………………………………………..……..248
6.2.2.2. EITI Observations and Legal Hurdles………………………….249
6.2.2.3. Critique on EITI Assessment……………………………….…..253
6.2.2.4. EITI – Silver Lining to a Dark Cloud……………………….….256
6.2.3. Energy Charter .............................................................................................. 257
6.2.4. International Energy Infrastructure and Sustainable Development ........... 260
6.2.5. Climate Change Legal Frameworks for Sustainable Development ........... 262
6.2.6. Climate Change Conventions in the Iraqi Context..................................... 263
6.3. Human Rights Legal Arrangements .............................................................. 268
6.3.1. International Human Rights Instruments Implications for Iraq ................. 272
xi
6.3.2. Global Perspectives on Sustainable Development Sponsored by Corporate
Umbrella ……. ................................................................................................................. 274
6.3.3.Ruggie’s “Protect, Respect, Remedy” Framework’s Implications for Iraq ........ 275
6.4. Iraq’s National Legal Arrangements ............................................................. 283
6.4.1. Integrated National Energy Strategy Report (INES) ................................... 284
6.5. Petro-Dollar Curse Evaluation ....................................................................... 287
6.6. Conclusion ..................................................................................................... 290
Chapter Seven – Conclusions and Recommendations
7.1. Conclusions ................................................................................................... 292
7.2. Recommendations ......................................................................................... 295
Bibliography ............................................................................................. 298
Appendix ………………………………………………………………………..……341
xii
Dedication
This thesis is dedicated to:
My supervisor, Professor. A. F. M. Maniruzzaman, for the guidance, direction, and pearls of
wisdom, but more importantly, for putting up patiently with panic attacks, constant barrages of
emails and questions while providing amazingly timely feedback, and offering encouragement
precisely when needed and also providing me with invaluable materials without which it would
have been impossible to produce this piece of work.
My dearest wife, whose patient love, infinite support and encouragement was, in the end, what
made this thesis possible.
My beloved kids: Rebin, Yara and Lara, whom I cannot force myself to stop loving.
xiii
Declaration
Whilst registered as a candidate for the above degree, I have not been registered for any other
research award. The results and conclusions embodied in this thesis are the work of the named
candidate and have not been submitted for any other academic award.
Word Count:77,910 Words
Khalid I. Al-Saleem
xiv
List of Figures
Figure 1. Sustainable Development Triangle…………………………………………….……....87
Figure 2 - Sustainability and its three pillars as defined by Han (2012)………………….…….106
Figure 3 - Balancing priorities in Iraq would remain essential to ensuring the sustained growth of
its oil and gas resources…………………………………………………………………..…….234
Figure 4 - Reconciliation differences between company payments and government revenues as
tabulated by EITI for Iraq………………………………………………………………………251
xv
List of Abbreviations
ACP
ADR
African, Caribbean and Pacific
Alternative Dispute Resolution
46
281
AGI Africa Growth Initiative 149
BIT Bilateral Investment Treaty 2
BP
CAFTA-
DR
British Petroleum
Dominican Republic-Central America-United States Free Trade Agreement
151
282
C-SAR Centre for Strategic Analyses and Research 149
CBDR Common But Differentiated Responsibilities 134
CDM Clean Development Mechanism 262
CER Certified Emission Reductions 263
CETA Canada Free Trade Agreement 64
CNG
CNPC
Compressed Natural Gas
China National Petroleum Corporation
267
15
CPA Coalition Provisional Authority 3
CSD United Nations Commission on Sustainable Development 58
DDA Doha Development Agenda 74
xvi
EBRD European Bank for Reconstruction and Development 53
EC European Commission 45
ECOSOC Economic and Social Council 77
EIA Environmental Impact Assessment 238
EITI
EC
Extractive Industries Transparency Initiative
Energy Charter
245
257
EPA Environmental Protection Agency 152
EPRC Economic Policy Research Centre 149
EU European Union 64
FMEA Failure Modes Effectiveness Analysis 138
FOGL Federal Oil and Gas Law 18
FSC Iraqi Federal Supreme Court 219
GABS Global Alliance for Building Sustainability 76
GEF Global Environmental Facility 62
GHG Green House Gas 69
GNP Gross National Product 57
GWP Global Water Partnership 76
HC Host Country 158
xvii
HDI
HGAs
Human Development Index
Host Government Agreements
181
260
HSE Health, Safety and Environment 151
ICC International Chamber of Commerce 220
ICJ International Court of Justice 65
IDS Institute of Development Studies 73
IEC International Energy Charter 258
IEI
IGAs
Iraq Energy Institute
Inter-Governmental Agreements
210
260
IISD International Investment Law and Sustainable Development 165
ILA
INES
International Law Association
Integrated National Energy Strategy
25
284
IOC International Oil Company 158
IPA International Petroleum Agreements 157
IPIECA
ISDS
International Petroleum Industry Environmental Conservation Association
Investor-State Dispute Settlement
150
280
ISIS Institute for Science, Innovation and Society 70
ISIS Islamic State of Iraq and the Levant 172
xviii
ITUC International Trade Union Confederation 69
IUCN International Union for Conservation of Nature 50
JOC Joint Operating Company 184
JMC Joint Management Committees 182
JPOI Johannesburg Plan of Implementation 77
KEPCO Kurdish Exploration and Production Company 196
KIPPRA Kenya Institute for Public Policy and Analysis 149
KNOC Kurdish National Oil Company 196
KRG
LATF
Kurdistan Regional Government
Legal Advisory Task Force
4
260
LNG Liquefied Natural Gas 267
LPG Liquefied Petroleum Gas 267
mbd
MDGs
million barrels per day
Millennium Development Goals
1
72
MNC Multinational Company 178
MoO Ministry of Oil 18
NAFTA North American Free Trade Agreement 63
NGO non-governmental organization 67
xix
NOC National Oil Company 182
OECD Organization for Economic Cooperation and Development 10
OPEC Organization of Petroleum Exporting Countries 169
PCLD Petroleum Contracts and Licensing Directorate 249
PSA Production Sharing Agreement 160
PSC Production Sharing Contract 186
RSA
SADC
Risk Sharing Agreement
South African Development Committee
159
166
SOMO State Organization for Marketing of Oil 214
STAMP Sustainability Assessment and Measurement Principles 83
TAL Transition Administrative Law 207
TSC Technical Service Contracts 239
TTIP Trans-Atlantic Trade and Investment Partnership 64
UDHR Universal Declaration of Human Rights 271
UNCSD United Nations Commission on Sustainable Development 48
UNECE United Nations Economic Commission for Europe 46
UNDP United Nations Development Programme 176
UNEP United Nations Environmental Program 44
xx
UNESCO United Nations Educational, Scientific and Cultural Organisation 45
UNFCCC United Nations Framework Convention on Climate Change 266
UNGA United Nations General Assembly 77
UNGP United Nations Guiding Principles on Business and Human Rights 276
UNSD United Nations Sustainable Development 56
USAID
USTR
US Agency for International Development
United States Trade Representative
18
282
WCED World Commission on Environment and Development 10
WFP World Food Program 154
WIPO World Intellectual Property Organizations 167
WSSD World Summit on Sustainable Development 12
WWF World Wildlife Fund 50
WTO World Trade Organization 62
xxi
Table of Cases
1. Bulankulama v The Secretary, Ministry of Industrial Development [2000] 7(2) South
Asian Environmental Law Reporter 1 (Sri Lankan Supreme Court)
2. Certain Phosphate Lands in Nauru (Nauru v Australia) [1993]ICJ Rep. 322
3. CME Czech Republic BV v Czech Republic, UNCITRAL [2001]
4. CMS Gas Transmission Co v Republic of Argentina, ICSID Case No ARB/01/8 [2007]
5. Continental Casualty Co v Republic of Argentina, ICSID Case No ARB/03/09 [2009]
6. Corfu Channel Case (United Kingdom v Albania), [1949] ICJ Rep. 4
7. Excalibur Ventures LLC v Texas Keystone Inc & Ors (Rev 1) [2013] EWHC 2767
(Comm)
8. Gabickovo – Nagymaros Project (Hungary v Slovakia) [1997] ICJ Rep 7
9. - - Separate Opinion of Vice president Weeramantry.
10. Hatton & Others v. UK [2003] App no 36022/97, 37 EHRR 28
11. Iraq’s FSC decision no 74/Federal [2012]
12. Iron Rhine (“Ijzeren Rijn”) Railway (Belgium v Netherlands), Permanent Court of
Arbitration May 24 [2005] 27 RIAA (2005) 35
13. Island of Palmas (or Miangas) Case (United States v. The Netherlands) [1928] PCA 2
U.N. Rep. Int'l Arbitral Awards 829
14. Legal consequences of the construction of a wall in the Occupied Palestinian, advisory
opinion[2004] ICJ Rep 131
15. Legality of the Threat or Use by a State of Nuclear Weapons in Armed Conflict, Advisory
opinion [1996] ICJ Rep 226
xxii
16. Maritime Delimitation (Denmark v Norway) [1993] ICJ Rep 38
17. Pulp Mills on the River Uruguay ( Argentina v. Uruguay) [2010]ICJ Rep 14
18. - - Request for the Indication of Provisional Measures, ( Argentina v. Uruguay) Order of
13 July 2006[2006] ICJ Rep 135
19. Ronald S Lauder v Czech Republic, UNCITRAL [2001]
20. Shehla Zia and others v WAPDA, Case no 15-K of [1992] (Pakistan Supreme Court)
21. Shrimp Turtle case United States - Import Prohibition of Certain Shrimp and Shrimp
Products, Recourse to Article 21.5 by Malaysia,15 June [2001], WTO Doc.
WT/DS58/RW
22. Trail Smelter Arbitration (United States v. Canada) Arbitral Trib., 3 U.N. Rep. Int’l Arb.
Awards 1905 (1941)
xxiii
Table of International Conventions, Declarations, Plans, Reports
and Legislations
1. Action Plan on Climate Change, Canada (2000)
2. Agreement Amending the Fourth ACP-EC Convention of Lomé (1989)
3. Agreement between Japan and the Republic of Iraq for the Promotion and Protection of
Investment (7 June 2012)
4. Agenda 21(1992)
5. Brundtland Report 1987 for sustainable development
6. Conservation of Oil Wealth Law No. (84) of 1985, Iraq
7. Constitution of Iraq (2005)
8. Convention Concerning the Protection of the World Cultural and Natural Heritage,
UNESCO(1972)
9. Convention on Long-range Transboundary Air Pollution, UNECE (1979)
10. Convention on the Conservation of European Wildlife and Natural Habitats(1979)
11. Council Decision on the conclusion of the Convention on the conservation of migratory
species of wild animals (Bonn Convention) (1982)
12. Crude Oil Pipeline Agreement between The Government of the Turkish Republic and
The Government of the Iraqi Republic. ( 17 June 1975)
13. Declaration on Human Rights and Economic, Declaration from the Paris Economic
Summit (1989)
xxiv
14. Directives for negotiation on the Transatlantic Trade and Investment Partnership between
the European Union and the United States of America(2013)
15. Doha Ministerial Declaration (2001)
16. Environment Protection and Improvement Law No. (8) of 2008, KRG
17. Environment Protection and Improvement Law No. (27 ) of 2009, Iraq
18. European Energy Charter(1991)
19. Energy Charter Treaty (1994)
20. Hague Declaration on the Environment(1989)
21. ICJ Statute(1945)
22. International Energy Charter Draft (2014)
23. Investment Policy Framework for Sustainable Development, UNCTAD (2012)
24. International Panel on Climate Change Synthesis Report (2014)
25. Iraqi Fourth National Report to the Convention on Biological Diversity (2010)
26. Iraqi Industry Transparency Initiative Report (2011)
27. Iraqi Integrated National Energy Strategy Report (2014)
28. Johannesburg Declaration, UN(2002)
29. Johannesburg Plan of Implementation(2002)
30. Kyoto Protocol (1997)
31. Law of Governorates not Incorporated into a Region No. (21) of 2008, Iraq
32. Millennium Development Goals(2000)
33. New Delhi Declaration of Principles of International Law Relating to Sustainable
Development (2002)
34. North American Free Trade Agreement (1993)
xxv
35. Oil and Gas Law No. (22) of 2007, KRG
36. Project Deign Document for Al-Shaheen Oil Field, Qatar
37. Rio Declaration on Environment and Development, UN(1992)
38. Resolution on Permanent Sovereignty over natural resources, UN(1962)
39. SADC Model Bilateral Investment Treaty Template (2012)
40. Stockholm Declaration of the UN Conference on the Human Environment(1972)
41. Transitional Administrative Law 2004, Iraq
42. UN Framework Convention on Climate Change (1992)
43. UN Convention on Biological Diversity (1992)
44. United Nations Convention to Combat Desertification in Countries Experiencing Serious
Drought and/or Desertification, Particularly in Africa(1994)
45. UN Development Assistance Framework, Iraq 2015-2019
46. World Conservation Strategy: Living Resource Conservation for Sustainable
Development( 1980)
1
Chapter One
Introduction
1.1. Statement of Aims
The oil and gas reserves of Iraq are enormous, and the economy is highly dependent on
its oil and gas resources. According to the World Bank, Iraq’s oil and gas sector contributes to
about 65% of its GDP, over 90% of public revenues, and most of its foreign exchange earnings1.
This sector is considered to be central to Iraq’s fiscal position and critical to the Iraqi economy.
At that, Iraq has 115 billion barrels of proven oil reserves and with current oil production at the
rate of about four million barrels per day (mbd) by 20132, and planned increases to six mbd by
20173.
The problem lies in straddling the balance between compliance with environmental
commitments and the maximisation of resources in order to revitalise a lagging economy.
Although the need for new legal and policy guidelines for the sustainable development of the
country’s petroleum resources is widely recognised among the Iraqis, due to the ongoing
1 World Bank (2010), Iraq Commits to Transparency in Oil & Gas Sector, a sector, para.1
<http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSDNET/0,,contentMDK:22463411~menuPK:64885113
~pagePK:64885161~piPK:64884432~theSitePK:5929282,00.html> accessed 25 November 2011.
2 Sinan Salaheddin, ‘Iraq eyes 29% boost in oil production in 2014’,
<http://www.usatoday.com/story/money/business/2013/06/12/iraq-targets-45-million-barrels-2014/2415427/>> accessed
1 November 2014.
3 Christophe M. Blanchard, Iraq: Oil and Gas Legislation, Revenue Sharing, and U.S. Policy. Congressional Research
Service, paper No. 7-5700. (2009) 1 <http://fpc.state.gov/documents/organization/128333.pdf > accessed 25 November
2011.
2
political debates, the effective solution has not been found so far. Given the alarming state of
environmental degradation, a protracted period of policy-crafting may no longer be tenable.
The primary aim of this study is to explore how the concept of “sustainable development”
can be transposed into and implemented within Iraqi domestic law concerning oil and gas
resources, with the end in view of proposing an effective national framework in accordance with
international legislative regulations in the area of environmental sustainable development.
Accordingly, the objectives of the study are:
1. To clarify the concept of ‘sustainable development’ in the use of petroleum resources and
examine how it is transposed into Iraqi law and policy, and interpreted and implemented
by the state actors;
2. To assess and analyse the relevant provisions of the bilateral investment treaties (BITs),
regional investment treaties or any multilateral investment treaties and the international
oil and gas contracts to which Iraq is a party in order to see how they have reflected
international sustainable development law principles or what prospects there are and to
make any recommendation if necessary in light of recent developments elsewhere.
3. to examine the constitutional provisions to see how international law principles of
sustainable development are reflected in them and how that also bears on the resource
sharing between the Iraqi federal government and the Kurdistan region?
4. To assess the laws, legal and institutional organizations for the sustainable development
of Oil and Gas in Iraq and the Kurdistan Region.
3
1.2. Scope of the Study
This study focuses on the regulatory framework governing the sustainable development
of Iraqi oil and gas with particular reference to the Kurdistan region. It does not seek to do a
broad sweep of the theoretical contours of sustainable development – rather, it wishes to focus on
how it is applied and reflected in the particular context of Iraq; i.e., oil and gas resources and its
regulatory framework.
It is widely known that from 1975 to 2003, the Iraqi oil and gas industry was entirely
state-operated. However, as Blanchard points out, during this time the infrastructure suffered
from the negative effects of war, international sanctions, a lack of investment and technology,
and, in some cases, mismanagement4. After the collapse of the Saddam’s Regime in 2003, a new
Iraqi authority started to put into place plans to develop the oil and gas industry as the sector
critical for the national economy5. Although the new Iraqi Constitution of 2005, clearly states
that oil and gas are exclusively owned by the Iraqi people in all regions (Article 111) implying
that the management of these resources is a federal responsibility; the Kurdistan Regional
4 Blanchard (n 3) 1.
5 After 2003, the Coalition Provisional Authority (CPA) under Paul Bremer was hesitant to impose any meaningful, long-
term Changes on the Iraqi oil and gas regime, but stories surfaced late spring and early summer 2003. See Rex J Zedalis,
The Legal Dimensions of Oil and Gas in Iraq (Cambridge University Press, USA 2009)60. Furthermore on 22 of May
2003, UN Security Council has decided to lift economic sanctions imposed against Iraq since 1990 , see para.10 of
resolution 1483 S/RES/1483(2003)
<http//daccessods.un.org/doc/UNDOC/GEN/No3/368/53/PDF/N0336853.pdf/openElement> accessed 29 December
2011.
4
Government (KRG) has opposed these and other related statements, interpreting the Federal
Constitution in order to pursue its own Regional Oil and Gas Law and policies6. KRG claims:
Under the country’s constitution, oil and gas management is primarily a regional right,
and the main features of this Law are in line with Iraq’s draft oil law. …The Law not only
affords the Kurdistan Region a clear and transparent legal structure for negotiations with
investors; but it also benefits the rest of Iraq as, consistent with the Constitution, the law requires
the Kurdistan Region to share revenues from oil, and gas development with the Federal
Government in Baghdad7.
Such disagreement between national and regional interpretations of the Iraqi Oil and Gas
Law entailed the current situation when in spite of lengthy debates of economists’ and politicians
the common integrated and harmonised solutions in development and use of national oil and gas
resources are not still found. At the same time, Al-adhadh emphasises that the model of
hydrocarbon resources’ regulations at a regional level is extremely dangerous for the future of
the Iraqi petroleum industry and the national economy as a whole. Al-adhadh warns:
If [such regional law] is adopted as a model for other governments, then, evidently, no national strategy for the optimum development of Oil Extraction Industry would be possible in Iraq. The obvious consequence here is that a major dimension of rationality to use depletable natural resource, (oil and gas), for sustainable development is knocked down; dimming the economic
6 K.K. Al-adhadh, Optimization Policies for the Management of the Iraqi Oil Extraction Industry.Research paper,
delivered at (the International Conference on the Oil and Gas Policies in Iraq. Paris, France, February 25-28, 2008) 7
<http://www.iraqistudies.org/English/conferences/2008/papers/alAdhadh.pdf > accessed 30 December 2011.
7 Special Report Prepared by Strategic Media,The Kurdistan Region: A Bright Future in the Other Iraq, 8 <
http://www.foreignaffairs.com/files/attachments/kurdistan.pdf > accessed 30 December 2011.
5
future of all Iraqi people including the Kurds themselves, even if they were to split in a separate state8.
Meanwhile, Richardson & Wood point out that any today’s environmental law should
have an impact on sustainability, helping to move countries, regions and societies toward
“ecologically sustainable patterns of production and consumption”9. Sustainability as a set of
established practices, in its turn, has an impact on environmental law, causing alterations and
development of new doctrines and legal mechanisms. At that, in 2009, Iraq passed the
Environmental Law that many believed to be a ground-breaking piece of legislation in Iraq in
that it introduced the concept of “environmental impact assessments” in Iraqi domestic law and
introduced stiff penalties for pollution and other acts of non-compliance10. The reality, however,
is that these regulations have largely remained paper commitments – unable to be implemented
to any effective degree.
1.3. Research Question
The following research question will guide my research:
How is the concept of “sustainable development” articulated, interpreted and implemented in
Iraqi domestic law and regulatory framework with respect to the Oil and Gas resources?
8 Al-adhadh (n 6) 7.
9 Richardson, B. J. & Wood, S. Environmental law for sustainability: A reader. (Hart Publishing, Oxford 2006) 13.
10 Thomas W. Donowan, ‘Analysis: Iraqi legal regime protects environment’,
<http://www.iraqoilreport.com/business/companies/analysis-iraqi-legal-regime-protects-environment-5318/> accessed on
2 November 2014.
This law available online at < http://www.oil.gov.iq/en/index.php?name=News&file=article&sid=265> accessed on 7
November 2014.
6
The following sub-questions shall likewise be answered:
1. To what extent Iraqi laws, policies and regulations concerning oil and gas take into
account principles of sustainable development?
2. What are the legal and policy obstacles that hinder sustainable development for Iraqi
oil and gas resources, at the international, national and regional level?
3. What are the Legal Arrangement Challenges to Sustainable Oil and Gas Development
in Iraq
4. To what extent are Iraq’s international environmental commitments met in the oil and
gas industry?
5. What policy and legal recommendations can be made towards a national framework
that takes into account both profitability requirements and commitments to
sustainable development?
7
1.4. The Concept of “Sustainable Development”
A central concept in this research is ‘Sustainable development’ which is seen as the goal
for the development of petroleum resources.
In this study, I use the Brundtland Commission definition of Sustainable development,
which is defined as “development that meets the needs of the present without compromising the
ability of future generations to meet their own needs”11. According to Sands the definition
“contains within it two concepts ; the concept of ‘needs’ ,in particular the essential needs of the
world’s poor and the idea of limitations imposed, by the state of technology and social
organization, on the environment’s ability to meet present and future needs”12. This means that
all different parts of a process of exploration and exploitation of natural resources, including
investments, technological innovations and institutional changes should be in harmony, ensuring
current and future potential to meet human needs and requirements. The concept of sustainable
development with regard to the oil and gas industry is of particular importance because these
natural resources are non-renewable resources. Arscott considers sustainable development in the
oil and gas industry as:
“Carefully balancing, social, economic and environmental capital in a continuously changing world. The oil and gas industry’s role in sustainable development should be to meet the needs of the global society for oil and gas at a reasonable cost, safely and with
11 Brundtland Report 1987 for sustainable development, UN Documents, Our Common Future, Chapter 2: Towards
Sustainable Development. Report of World Commission on Environment and Development. Para.1 <http://www.un-
documents.net/ocf-02.htm> accessed 30 December 2011.
12 Philippe Sands, Principles of International Environmental Law (2edn Cambridge University Press New York 2003) 252-
253.
8
minimal impact on the environment until suitable alternative energy sources are available”13.
It is important to keep in mind that in spite of that economic growth is considered to be a
powerful means of improvement of human well-being, economic development must be limited
by the bounds of what is ecologically sustainable. This is because environment not only provides
the resources for economic activity, but also ensures ecological conditions for the life of humans.
This is also important from the perspective of the danger that lies ahead for the global climate
change caused by the development and use of fossil fuel14. So, ecology is of the same great
importance as the economy.
1.5. “Sustainable Development” as Reposed in International Law
Sustainable development is widely recognised as “the golden rule of our civilisation in
the 21st century” and was placed high on the international agenda by the Brundtland Commission
in 198715, The concept is primarily based upon the values and ethics shared in today’s
interdependent world, aiming to provide an integration of environmental protection, economic
development and social justice (including human rights) at international, national and regional
levels.
13 L. Arscott ‘Sustainable Development in the Oil and Gas Industry’ (2004) 126(1) Journal of Energy Resources
Technology 1-5.
14 IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change, p 46. Available on line at
<http://www.ipcc.ch/pdf/assessment-report/ar5/syr/SYR_AR5_FINAL_full.pdf> accessed 20 January 2015
15 Nico Schrijver, The Evolution of Sastainable Development in International Law: Inception, Meaning and Status
(Martinus Nijhoff Puplishers Leiden Boston 2008) 33.
9
At the international level, the concept of sustainable development is applied as global
policy and as an essential part of the international environmental law16. While at the national
level, governments of many countries address the concept, introducing specific national
strategies for sustainable development, organising various intergovernmental offices and
independent advisory boards, as well as issuing national environmental legislations that contain
the sustainability principle. At the same time, (Boer et al) emphasise that principles and norms,
which are intended for the whole nation, are often more effective when they are used at regional
levels. (Boer et al) distinguish two particular strategies to deal with regional issues related to
sustainable development. The first one is “to deal comprehensively with environmental problems
within a specific region” while the second one is to develop “specific regional conventions which
address a certain sectoral issue17”, for example, marine pollution or hazardous wastes.
Undoubtedly, a regional regime dealing with oil and gas resources refers to this second type
environmental law regimes. (Boer et al) believe that such regional initiatives are extremely
helpful for reinforcing the global environmental law, yet allowing protecting and preserving
regional environments for states’ interests. It is also important to note that regional and national
policies and legislations related to sustainable development should be consistent with the
16 K Bosselmann, The Principle of Sustainability: Transforming Law and Governance. (Aldershot, Ashgate Publishing
2008) 24.
17 Boer, B., Ramsay, R. & Rothwell, D. International Environmental Law in The Asia Pacific (Kluwer Law International
London, 1998) 19.
10
principle of equitable use, taking into account the needs of other states, especially those that may
be affected as a result of a development activity18.
The World Commission on Environment and Development explain the concept of
sustainable development as “a process of change in which the exploitation of resources, the
direction of investments, the orientation of technological development and institutional change
are all in harmony and enhance both current and future potential to meet human needs and
aspirations”19. Today the concept of sustainable development is widely adopted by major
international organisations, such as the United Nations, the World Bank, the World Trade
Organisation, the Organisation for Economic Cooperation and Development (OECD). In parallel
to an increasing number of international legal documents related to sustainable development, a
number of national and regional laws and conventions also adapt the concept and use specific
indicators to measure their progress towards sustainable development. So, for example,
Germany, Norway, Australia, Argentina, and New Zealand declare sustainable development as a
key objective of the states and incorporate sustainable development into their national laws.
However, the reaction of some other countries, in particular, developing countries, to the concept
is not so positive. Voigt believes that the reason is in that these countries, having plentiful stocks
18 ibid 20.
19 Brundtland Report 1978 ( n 11) para 15
11
of natural resources, want to remain free to choose their own development strategy and direction,
while sustainable development regulations imply certain limitations to that20.
Nevertheless, despite the concept of sustainable development still remaining
controversial and being considered by some experts as ill-defined21, it is increasingly recognised
and accepted by the world community. This fact is confirmed by the appearance of numerous
standards, legal mechanisms and enforcement techniques, developed by international institutions
and national governments, which give convincing proofs of consolidation and proper
implementation of the concept.
Generally speaking, nowadays sustainable development is associated with the “policies
of economic liberalisation which have proven their success in both generating the necessary
incentives for prosperity by investment and trade and their ability in generating both resources
and expectations for enhanced environmental quality22”. At that, some principles guiding to
sustainable development can be identified: corporate profitability, resource depletion,
competitive and properly regulated and taxed markets, and reasonable and differentiated
regulation.23
20 Christina Voigt, Sustainable Development as a Principle of International Law: Resolving Conflicts Between Climate
Measures and WTO Law (Martinus Nijhoff Publishers and VSP 2009) 4.
21 See For example Marie-Claire C Segger & Ashfaq Khalfan, Sustainable Development Law: Principle, Practice,
Prospects (London: Oxford University Press 2004) 19.
22 Thomas W Walde, Natural Resources and Sustainable Development: From “Good Intentions” to “Good
Consequences”. In: Nico Schrijver, & F Weiss (eds.) International Law and Sustainable Development: Principles and
Practice (Leiden, Koninklijke Brill NV 2004) 138.
23 ibid.
12
1.6. Application of Sustainable Development Principles to Oil and Gas
Resources
The nature of the concept of sustainability makes it difficult to coordinate and monitor
the implementation of sustainable development in the formulation of effective policy24. The
International Law Association at its meeting in New Delhi in 2002 offered a set of seven
Principles of International Law Relating to Sustainable Development as a definitive tool to
inform the formulation of policy and potentially legal arrangements. The New Delhi Declaration
can be viewed as a result of efforts of many experts and political leaders from all corners of the
worlds, which have been undertaken during the last several decades. The document presents
seven principles of international law on sustainable development, which have been already
presented in the Brundtland Report and the 1992 Rio Declaration, and reaffirmed by the WSSD.
These principles are:
1. The duty of States to ensure sustainable use of natural resources;
2. The principle of equity and the eradication of poverty;
3. The principle of the precautionary approach to human health, natural resources and ecosystems;
4. The principle of public participation and access to information and justice;
5. The principle of good governance;
6. The principle of common but differentiated obligations;
24 Maja Goepel, Formulating Future Just Policies: Applying the Delhi Sustainable Development Law Principles, Sustainability
2010, 2, 1694-1718< http://www.mdpi.com/2071-1050/2/6/1694/ > accessed 5 April 2012.
13
7. The principle of integration and interrelationship, in particular in relation to human rights and
social, economic and environmental objectives.
The Principles serve as legal norms in “binding international treaties, forming part of
international law and policy in the field of sustainable development, providing normative context
for best policies and laws in the field, as well as in Local Agenda 21 initiatives and national
sustainable development strategies”. Today it is widely recognised that these common principles
can be applied differently in dependence on the political, economic, environmental, cultural and
legal context of countries, but, nevertheless, they provide a reliable framework for developing
criteria for assessment and selection of best international, national or local policies or laws in
relation to sustainable development25.
The implications of these principles on petroleum resources can mean according to S.
Agrawal26:
“maximizing the benefit of petroleum resources without causing ecological imbalance
and some requisites need to be followed like to use petroleum resources to benefit present and
future generations, to consume an appropriate wise, rational and prudent manner.”
As this research viewing these principles in relation to the sustainable development of
petroleum resources, in particular, and seeking to help policy and law-makers, to evaluate or
25 Nico Shrijver, ‘The New Delhi Declaration: Principles of International Law Related to Sustainable Development’ in Marie
Claire Cordonier Segger and Christopher Gregory Weeramantry, Sustainable Justice: Reconciling Economic, Social and
Environmental Law (Martinus Nijhoff Publishers 2005) 549.
26 Shobhit Agrawal. How Future Conscious are the Oil Czars?
<http://www.ogbus.ru/eng/authors/ShobhitAgrawal/ShobhitAgrawal_1.pdf> accessed 3 January 2012.
14
draft new laws and policies carefully, and to ensure they have taken into account important
principles. Therefore these principles will be examined to explore to what extent they are
reflected and implemented in Iraqi law and regulatory framework of oil and gas resources:
Since the Iraqi constitution stipulates in Article 112/2 that the federal government with
regional and governorates’ together will “develop the oil and gas wealth in a way that achieves
the highest benefit to the Iraqi people” this arises out of Iraqi recognition that state sovereignty
over petroleum resources confers the capacity to develop its resources, which according to the
UN Resolution on Permanent Sovereignty over natural resources “must be exercised in the
interest of their national development and of the well-being of the people of the state
concerned.27” Incorporated in the principles of sustainable development is the concept of driving
highest benefit for Iraqi people. Thus, the Iraqi Government accepts its responsibility to develop
its petroleum resources in a sustainable manner to ensure economic benefit and social
development for its people. Therefore in this thesis I will analyse whether this can be achieved
under the legal and regulatory system of oil and gas resources, and discuss alternatives that could
improve the ability of Iraqi law and policy maker to secure the sustainable development of
petroleum resources.
27 United Nations, ‘Resolution on Permanent Sovereignty over natural resources’, Art 1
<http://www.un.org/ga/search/view_doc.asp?symbol=A/RES/1803(XVII)>
15
1.7. Core Issues in the Iraqi Oil and Gas Regulatory Framework
Harris et al consider that three domains of sustainable development (environmental, industrial
and societal) are “inter-related parts of the modern Iraqi nation”28. The environmental domain
relates to Iraq’s water resources; the industrial domain – to Iraq’s oil and gas resources; and the
societal domain - to Iraq’s demographic resources. Current Iraqi resources, both water and
petroleum, are sufficient to sustain the country into the near future.
The flip side, however, is that the oil and gas development in Iraq and Kurdistan
region has opened access to large, underdeveloped areas and has led to severe social costs29. A
need has arisen for a safer and successful management program requiring a long-term
commitment to on- the ground assessment and substantial interaction with non-governmental
organizations (NGOs), local stakeholder, financial institutions, etc. The national government
holds the ultimate responsibility for determining culturally appropriate development plans,
overseeing operations and protecting the human and legal rights of their citizens. Consistent with
28 Ronald A Harris, Bilal Haciogullari , Alaa Shams, & Sinan A Abood, Lines in the Sand: Sustainable Development in
Iraq. Paper is presented at the 27 Annual ESRI International User Conference, 15-22 June 2007, San-Diego, California,
6, <http://proceedings.esri.com/library/userconf/proc07/papers/papers/pap_1729.pdf > accessed 29 December 2011.
29 For instance, despite its apparent successes the China National Petroleum Corporation ( CNPC) had faced with
resentments from local communities in both Alahdab and Halfaya oilfield. These local concerns according to Jiyad “are
related to variety of issues such as land compensation, employing local people, increased pollution, road accidents among
others. Also, domestic politics has its role as the conflict between local governing councils and central government erupts
now and then. Additionally, Alahdab site was raided by gunmen assaulting both Iraqi and Chinese employees and
stealing money and computers.
See Ahmed M. Jiyad, China and CNPC are consolidating further their positions in Iraq petroleum sector,
<http://www.iraq-businessnews.com/2013/12/03/china-consolidates-position-in-iraqi-petroleum-sector> accessed 6
December2013.
16
this, today’s Iraqi government strives to strengthen the concept of sustainable development in the
national legislation, consolidating hydrocarbon resources through the central headquarters in
Baghdad. Such policy is controverted and opposed by the Kurdistan Regional Government
(KRG), which wants to see the region free, rich and independent. According to Maseel, “there is
a wide recognition among Iraqis of the importance of oil and gas revenue for the Iraqi economy
and development. Most groups see the need for new legal and policy guidelines for the
development of the country's oil and natural gas resources”30. However, Iraq's Council of
Representatives (parliament) has not yet considered the proposed legislation due to ongoing
political discord and general political instability. There are strong differences on key issues
between Iraqi critics and supporters of various proposed solutions. These include the appropriate
role and powers of federal and regional authorities in regulating oil and gas development; the
conditions and degree of potential foreign participation in the oil and gas sectors; and proposed
formulas and mechanisms for equitably sharing oil and gas revenue31.
1.8. Gaps in Iraqi Law
Simultaneously, there are strong disagreements on the related discussions about the
administrative status of the oil-rich city of Kirkuk, and proposed amendments to articles of Iraq's
constitution that outline federal and regional oil and gas rights32.
30 Muhammed A Mazeel, Iraq Constitution: Petroleum Resources Legislation and International Policy (disserta Verlag,
Hamburg, 2010) 1-2.
31 ibid.
32 ibid.
17
However, Maseel is not certain whether the proposed oil and gas legislation and ongoing
interim efforts to develop Iraq’s energy resources will support harmony or create deeper political
tension33. While, Zedalis offers “speculative comments on some of the likely oil and gas legal
scenarios in the event that comprehensive federal legislation on the subject never fully takes root
or Iraq itself devolves into either a nation in name only, or several distinct and separate
governing units or countries”34.
It is worth noting that the former Iraqi Prime Minister Nouri Al-Maliki in his Weekly
Address, after Iraqi general election on 7 of May 2014, announced that:
“the Iraqi people as a whole made their choice when voted on the constitution, and the constitution stipulates in Article one, that Iraq is a federal republic, and accordingly, the right of self-determination ended up here, everybody decided that his destiny is within this state, within the Democratic Federal Republic of Iraq governed by this Constitution…..The other obligations of the new parliament are to pass the important laws as the Oil and Gas Law to solve the problems that we are experiencing in the field of oil production, and secondly the formation of Supreme Council for Petroleum , that will be in charge of charting the general oil policy in production , consumption and export” 35
Al-adhadh explains the current situation in the Iraqi oil and gas industry, by imperfection
of the current Iraqi Constitution, which has two inconclusive Articles, namely the Article (110),
which “specifies the exclusive duties or powers of the Federal Government” and the Article
(121), which “bestows legal, executive and judicial powers upon regions, …and grant them the
right to amend or override any Federal Law”. That is why Kurdistan has its own Regional Oil
33 ibid.2
34 Zedalis, (n 5) 244-317.
35 see <http://www.pmo.iq/press/2014/5/7052014s.htm> accessed 8 of May 2014.
18
and Gas Law, according to which investment and production sharing agreements are being
signed at the present time. USAID emphasises that a strong legal basis is necessary for the Iraqi
Government in order to “provide a strong framework of guiding principles”36. However, the
Federal Oil and Gas Law (FOGL) is still on hold. Jiyad considers that such a state of affairs is
profitable for both the Federal Ministry of Oil (MoO) and KRG – in the absence of the federal
hydrocarbon law each of them can sign a number of contracts in its own way37.
Many experts are uneasy about the situation and suggest different ways of resolving it. In
this regard, Al-adhadh considers that38:
1. The fundamental Constitution must be amended to incorporate a clear-cut
provision, stating that the operation and management of the oil and gas resources
are a federal responsibility.
2. Provision for relevant mechanisms of regional coordination and transparent
consultation, between the Federal Government and the KRG and all other
Governorates, especially the oil producing ones, must be included.
3. Revision of the KRG Oil and Gas Law must be carried out to incorporate a
mechanism for coordination and consultation with the Federal Government, and
to eliminate all provisions that militate against the principles of achieving
36 US Agency for International Development (USAID). Options for Developing a Long Term Sustainable Iraqi Oil
Industry(2003) 35 . Available from: <http://www.platformlondon.org/carbonweb/documents/Bearing_Point_Iraq_oil.pdf
>accessed 1 January 2011.
37 Ahmed Mousa Jiyad, Iraqi Federal Oil and Gas Law Revisited. Energy & Geopolitical Risk, (2011)2 (1), 6
<http://www.iraq-enterprise.com/oillaw/jiyad2011.doc>accessed 1 January 2012.
38 Al-adhadh, (n 6)10-11.
19
“Optimum” regional and national development of a unified and democratic
country.
4. Set-up all the necessary institutions, required to carry out, efficiently, oil and gas
operations and policies.
Jiyad adds that the new FOGL should be “clear, well phrased, coherent and consistent
to the extent that it put an end to the different interpretation of the related clauses and provisions
of the constitution. It is vital that the new FOGL uphold the two core principles of collective
ownership and best interests of the Iraqi people enshrined in the Constitution”39.
1.9. Description of Gaps in Research Literature
The literature review has revealed that the literature bears the distinct lack of exploring
the legal and regulation issues of sustainable development of oil and gas in Iraq. There is a lack
of research into Iraq and the Kurdistan Region that concerns the sustainable development of oil
and gas. To date, there is no discussion as to whether the laws, both domestic and international,
are sufficient enough and capable of ensuring the sustainable development of Iraqi oil and gas. In
addition, no study has examined the clear need for a national legal framework and strategy of
sustainable development in the use of petroleum resources in Iraq, as well as a need for legal and
institutional mechanisms for international partnerships and investment capital attraction. This
research will attempt to bridge this gap. For instance when one focuses on literature materials
such as the ones stated below, you get to figure out the gap that they create. To begin with, Rex
J. Zedalis’ book on International Energy Law: rules governing future exploration,
39 Jiyad, (n 37) 14.
20
exploitation, and use of renewable resources, it does not state on how the energy resource in
Iraq can be tapped easily and for better economic advantage. The book only focuses on other
natural sources of energy, while it overlooks the need to improve those sources of energy that are
already being harnessed, even in his recent book, The Legal Dimensions of Oil and Gas in Iraq
2009, Zedalis does not pay attention to sustainable development of Iraqi oil and gas rather
examines current and future legal principles designed to govern oil and gas activity in Iraq.
The book by Malcolm Dowden entitled Climate Change and Sustainable Development:
law, policy and practice, mentioned the effect of climate change on the strategy of sustainable
development. Allan Boyle and David Freestone book International law and sustainable
development Past Achievements and Future Challenges notes the successes that sustainable
development has and the challenges that it has faced. The book International Law and
Sustainable Development: Principles and Practice by Nico Schrijver, and Friedl Weiss discuss
sustainable development in sectors of foreign and international trade.
In the paper written by Iraqi oil expert Ahmed M. Jiyad, entitled Federal Petroleum
Policy in Iraq: Feasibility and Challenges. Although, he examines the basic premises which a
national petroleum policy in Iraq should, in the normative, take into consideration, but he did not
strategize on how to ensure sustainable development principles for oil and gas in Iraq.
The above-mentioned literature bears the distinct lack of exploring the issues of
sustainable development of oil and gas in Iraq. The proposed study is set to fill in the void.
21
1.10. Original Contribution and Importance of the Study
Indeed, the literature on legal aspects of sustainable development from a global
perspective is vast and multi-faceted. However, the literature is more limited to legal regulatory
formwork of Iraq’s oil and gas sustainable development. Therefore, there is much that still needs
to be written and much space for original contribution and inquiry. This research, aims to make
its own modest original contribution to the discourse in at least three ways:
1. Whilst there already are existing works that look at Iraq’s oil and gas resources in the
context of sustainable development, there is scarce information or research that focuses
upon the equally compelling imperative of Iraq to profit from its resources and use these
resources towards maximum resource efficiency through assuring and implementing
principles of sustainable development as a definitive tool to inform the formulation of
policy and potentially legal arrangements. This research therefore will differ from the
work of Jiyad’s and R Zedalis , by analysing the legal framework that governs Iraq’s oil
and gas resources with the end in view of finding a cohesive balance between
incorporating environmentally-sound and ecologically-safe principles and meeting Iraq’s
energy and efficiency targets.
2. Secondly, this research is an attempt to explore the explicit usage and interpretation of
the concept of “sustainable development” in Iraqi law comprehensively, and how the
international concept is being viewed and filtered through a country (Iraq’s) domestic
frame of analysis and how it informs Iraq’s policy and legal framework. It looks at the
historical evolution of the concept of sustainable development and how it has evolved. It
looks not only at how” sustainable development” has shaped Iraqi legislation and policy
22
orientation, but also at how “sustainable development” has been shaped and re-shaped by
the complex contextual landscape that is Iraq.
3. Thirdly, this research is possibly the first attempt at examining the viability of
“sustainability” vis-à-vis sustainable development. This is important given differing and
competing interpretations of sustainable development in Iraq between the Federation and
the KRG. Moreover, the framework of implementing Iraq’s current environmental
legislation remains to be clarified as well. This is how it will go beyond the work of Jiyad
(2008) which, whilst presenting a compelling and comprehensive examination of the
surface tensions between sustainable development and industry issues, did not discuss the
evolving policy tensions between national and regional state apparatuses. The friction
between national and regional jurisdiction, as manifested in this research by the
contestations between Iraqi national government and the Kurdistan region, is tackled at
some length here: What are the implications of these power contestations for the future of
the Iraqi oil and gas industry? What are the problems that stand to arise as a result of
these contestations? How are these issues to be resolved in a manner that does not
compromise both future prospects for economic advantage and international
commitments to sustainable development?
These are the areas of inquiry that this research will delve into in the course of its
discussion and whilst it does not claim to be able to come up with definitive answers it aims to
arrive at some initial conclusions that can trigger policy review and, it is hoped, legal and policy
reforms for the country of Iraq and to provide some informed and well-tested guide for various
stakeholders, policy makers and politicians in their efforts for a well-balanced reform in law and
23
policy on sustainable development of petroleum resources for the greater benefit of Iraq as a
nation and its people as a whole. Indeed, these are critical for the national economy of Iraq in
terms of creating conditions for the effective management of Iraqi oil and gas industry in
accordance with modern international policies of sustainable development.
Taking into consideration the current context of the Iraqi economy and society, it is
possible to presume that such management should involve all interested parties, including the
entire Iraqi people, who should be considered the true owners of natural resources of the country,
and national and international investors, who should gain considerable benefits, not only in terms
of revenues, but also in regard to sustainability of sources of income.
24
1.11. Research design
To achieve the specified aims and objectives of this research, the thesis has been
organized into seven chapters, each dealing with certain topics related to the aims and objectives,
leading towards the final analysis and recommendations.
Chapter One: Introductory Chapter
This Chapter introduces the thesis statement, background of the study, existing literature
review, objectives and the scope, importance and justification, research questions, and
additionally describes the methodology that will be used, general structure of the research and
finally the contribution made to the field of knowledge.
Chapter Two: Background to the Sustainable Development Concept
This chapter is a historical background overview of the concept of sustainable
development, the evolution of sustainable development and deals with the philosophical and
theoretical dimensions of the subject. This overview, will be made on the basis of the existing
academic and professional literature, provides useful information regarding the research in hand
and helps to define the ways and concepts of reaching sustainable development in the oil and gas
industry through different perspectives.
Chapter Three: Gauging Sustainable Development and the Applicable Legal Frameworks
This chapter will explore how sustainability is defined, and the sustainable development
concept will be explored as a definitive tool in policy making and implementation through legal
arrangements such as those provided by the New Delhi Principles. This chapter will provide for
25
various legal roadmaps that rely on legislation, legal institutions and other legal means to
sponsor sustainable development such as the work by International Law Association’s (ILA)
Committee on the Legal Aspects of Sustainable Development. The major sustainable
development aims under the New Delhi proposals will be explored such as economically,
socially and environmentally friendly laws; promotion of equity and eradication of poverty;
management of risk to human health and ecological systems; public participation and access to
information and good governance. Moreover, it will be analysed how sustainable development
can be implemented in Iraq’s case to encourage social rights, human rights, environmental
aspects, etc. when developing oil and gas resources.
Chapter Four: International Legal Aspects of Iraq’s Sustainable Development
This chapter will look into various forms of international petroleum agreements to
observe how they have been implemented throughout the world and in Iraq’s case. Given the fact
that Iraq changed regimes, the international petroleum agreements binding it internationally also
changed. International petroleum agreements would be discussed only in enough detail to allow
an appreciation of how they apply in Iraq’s case, so as to discover how governmental priorities
have shifted in the Saddam, post-Saddam and the Kurdistan Regional Government’s friction with
the federal government regimes. This chapter will also look into how political factors, both
external and internal, tend to affect petroleum agreements, especially, in the context of the
friction between the Kurdistan Regional Government and the federal Iraqi government. This
chapter will then explore the environmental clauses of Iraqi petroleum agreements and ascertain
its bearing on community development and economic development targets. Lastly, the chapter
26
will look into the various legal challenges that sustainable development of oil and gas resources
face in Iraq at present.
Chapter Five: The Constitutional Divide – Federation versus Kurdistan
This chapter will investigate Iraq’s constitution and domestic laws in order to see how oil
and gas development has been made a federal prerogative. Materials will be sourced from
various federal and regional Iraqi agencies responsible for overseeing oil and gas development.
Major emphasis will be placed on Federal Oil and Gas Law (FOGL) along with legal aspects of
documents produced by The Federal Ministry of Oil (MoO), The Ministry of Natural Resources
of the Kurdistan Regional Government (KRG) and other allied government agencies. Moreover,
the role of the New Delhi principles will be explored in depth in fashioning Iraq’s domestic laws
for sustainable development in the oil and gas sector. The issues that drive Kurdistan and the
Iraqi Federation apart will be explored along with factors that could serve as bridges in
stabilising the volatile relationship. The application of New Delhi Principles to create a legally
sustainable relationship will also be looked into detail.
Chapter Six: Catalysts and Inhibitors to Iraqi oil and gas Sustainable Development
This chapter will list out various kinds of legal arrangements at local, regional, national
and international levels that catalyse or inhibit the sustainability of Iraq’s oil and gas sector
development. In addition, this chapter will explore how different legal domains interact to either
augment or discourage the sustainable development of the oil and gas sector. The various
dimensions of the Kurdistan and Iraqi federation relationship vis-à-vis oil and gas exploitation
arrangements will be explored in order to solicit factors for a legally sustainable framework.
27
Options presented for Iraq’s sustainable development in the oil and gas sector will be explored to
bring out the legal character of such options in the wider context of Iraq.
Chapter Seven: Conclusions and Recommendations
This chapter will provide various recommendations to move in the direction of a legal
framework to support sustainable oil and gas development in Iraq with particular emphasis on
the Kurdistan region. The contention would be to create recommendations that prompt and aid
policy reviews in Iraq to allow sustainability to emerge in Iraq’s and Kurdistan’s contention on
oil and gas development. The emphasis of such ideas will remain fixed at legal regulatory
frameworks rather than on other legal solutions. Ideas presented in this chapter will not be
designed to be absolute solutions but rather as markers in the right direction. In addition, this
chapter will serve as the conclusion to the research.
1.12. Data Description
The purpose of this research is to examine the legal regulations of Iraqi oil and gas
resources to explore to what extent it consist of principles of international sustainable
development law. To carry out this goal the study will be based on the critical analysis and
appraisal of the laws, regulations, the legal procedural and efforts made by Iraqi federal and
regional governments compared to the international efforts to implement sustainable
development in the field of oil and gas.
As research deals with qualitative data it involves both the use of Semi-structured
interviews and documentation analysis, all transcripts of interviews will be reduced to and
transferred into documentary form. Nevertheless, most of the primary sources well be in the
28
documentary form in material produced by the Iraqi Federal Government (The Federal Ministry
of Oil ), Kurdistan Regional Government (The Ministry of Natural Resources ) and other federal
and regional ministries and agencies involved(such as Federal Environment Ministry and KRG
Environment Protection and Improvement Board ), consisting of written reports, plans, policies,
programs, proposal, news clippings, and other articles appearing in the mass media including
online and government publications. As well as Content analysis of both historical and modern
international and regional conventions, treaties texts, investment treaties, international petroleum
development agreements with oil companies), and conferences agenda on sustainable
development, beside existing Iraqi federal and regional laws and regulations and the proposed
legislations concerning oil and gas development.
1.13. Data Collection Methods
This research will use doctrinal methods, by analysing the legal rules under Iraq’s
regulatory framework for the sustainable development of oil and gas resources. It is worth
mentioning here that Iraq has mixed legal system of civil law based on the French civil code and
religious laws covering personal status, marriage, divorce, and other family relations.
This research will also, look at the rules that govern state apparatuses in Iraq and
Kurdistan and surface issues and points of incoherence within these rules. Paul Chynoweth
defines the Doctrinal Legal Research as follows:
“Doctrinal legal research is concerned with the formulation of ‘legal doctrines’ through the analysis of legal rules. Within the common law jurisdictions, legal rules are to be found within statutes and cases (the sources of law) but it is important to appreciate that they cannot, in themselves, provide a complete statement of the law in any given situation. This can only be
29
ascertained by applying the relevant legal rules to the particular facts of the situation under consideration.”40
Doctrinal and Empirical methods will be used in this study to complement each other
because they are critical in formulating concrete arguments for legal reforms. These two methods
are governed by a code of ethics which protect societal and individual interests in the research
process. Doctrinal research will involve in-depth and complex analysis of existing legal doctrines
and laws in Iraq and Kurdistan region governing oil and gas resources. This type of research will
be insightful in understanding how current legislation has been developed and applied while, at
the same time, suggesting the necessary reforms needed.
In order to meet the research objectives, the doctrinal method will be complemented by
a qualitative approach. In such type of research, the emphasis on collection and interpretation of
data is more in words rather than quantification. It allows orientating research to the generating
of theory rather than theory’s testing, presuming that a social reality is a “constantly shifting
emergent property of individuals’ creation”41.
The use of multiple qualitative research methods will aid in achieving comprehensive and
accurate information. It is assumed that any bias inherent in any data source, interviewees or
method will be neutralized when combined with other information sources, thus, creating more
accurate findings. Use of multiple methods helps come up with complementary or diverging
40 Paul Chynoweth, Legal Research., p 29 available online at
<http://www.sps.ed.ac.uk/__data/assets/pdf_file/0005/66542/Legal_Research_Chynoweth_-_Salford_Uni..pdf >
Accessed 10 April 2012.
41 A. Bryman and E. Bell, Business Research Methods (2
ndedn, Oxford University Press, Oxford 2007) 28.
30
opinions. New perspectives and contradictions also emerge adding breadth and scope to a study.
Therefore, several qualitative methods will be used as follows:
1- Literature review: can be defined as “a carefully crafted summary of the recent studies
conducted on a topic that includes key findings and methods researchers used while
making sure to document the sources”42. This method is used for re-analysis of secondary
data, or data, “that have already been collected for some other purpose”43. In this research
generally accessible data sources are used for the literature review – research reports and
papers, articles in professional and legal magazines, books, governmental documents, and
trusted internet resources.
2- Document analysis is an indispensable research tool. It is vital in pursuing a doctrinal
method of research. Documentation analysis method will be used to collect data about oil
and gas development legislations and policies in Iraq, in general, and the Kurdistan
Region in particular. Document analysis is important because, in most cases, it is relevant
to a study topic and the information takes many forms. It is a valuable tool because it can
be used to augment and corroborate information from different sources. It can also
provide contradictory information prompting further inquiry, thus, leading to more valid
evidence. The following documents will be analyzed: laws, jurisprudence, administrative
orders, policy documents, statement by policy actors and stakeholders.
42 W. L. Newman, Basics of Social Research: Qualitative and Quantitative Approaches. (2
ndedn. Pearson Education,
Boston 2007) 7041.
43 M. Saunders, P. Lewis, & A. Thornhill, Research methods for business students (Pearson Education, Harlow 2009) 256.
31
3- Semi-structured in-depth interview will be used in order to gain in-depth information
(explanations, interpretations, opinions) on the area of the study44. In such type of
interviews “the researcher wants to know specific information which can be compared
and contrasted with information gained in other interviews” 45 or sources. The primary
advantage of in-depth interviews is “they provide much more detailed information than
what is available through other data collection methods, such as surveys. They may also
provide a more relaxed atmosphere in which to collect information - people may feel
more comfortable having a conversation with you about their program as opposed to
filling out a survey”46.
On one hand, a certain degree of structure is needed to ensure that principal thematic
issues of the research topic are covered, on the other hand considerable flexibility is considered
as important to perceive interviewees’ beliefs and attitudes comprehensively. Bryman outlines a
typical form of an interview as consisting of an introductory part (“warm-up”), the core part with
asking questions and recording answers (“grand tour”), the “cool-down” part with providing the
opportunity to the interviewee to add further information, and the final part before leaving an
44 See Chapter Five sections three and four.
45 C Dawson, Practical research methods: A user-friendly guide to mastering research.(Oxford 2002) 28.
46 Carolyn Boyce & Palena Neale, Conducting in-depth interviews: A guide for designing and conducting in-depth
interviews for evaluation input. (, Pathfinder International, Watertown 2006)
3<http://www.pathfind.org/site/DocServer/m_e_tool_series_indepth_interviews.pdf> accessed 2 January 2012
32
interview with common courtesies like thanking the respondent for the time and input
(“closure”)47.
Since the interviews are not intended as the main method of this research, therefore the
sample of interviewees is limited. Nonetheless, the composition of the sample has been selected
carefully, in order to represent the whole spectrum of Iraqi oil and gas legal perspectives, as well
as to avoid “biased” responses due to the institutional or political background of the respondents
and to reflect the variety of interviewed sample, interviews will be conducted in an appropriate
way, mostly face to face, and some of the target interviewees are the following:
1- Government officials at the national level, and at the regional level;
2- Lawmakers (MPs) in both central and regional parliaments.
3- Stakeholders who engage the processes of government including advocates; activists and
other individuals working in the oil and gas industry,
4- Academic experts.
The focus of these interviews will be gleaning information from the participants
regarding Iraqi petroleum legislation and policy. The data which is obtained, and their
observations, interpretations and opinions on the data will be gathered and the primary method of
analyzing the interviews will be “qualitative data analysis” which, according to Bryman, “is
47 A Bryman, Social Research Methods. (Oxford University Press, Oxford 2001).
33
probably the most prevalent approach to the qualitative analysis of documents”48. Clarifying, he
states49:
“An approach to documents that emphasize the role of the investigator in the construction of the meaning of and in texts. There is an emphasis on allowing categories to emerge out of data and on recognizing the significance for understanding the meaning of the context in which an item being analysed (and the categories derived from it) appeared.”
The interviews will be geared towards clarifying the regulatory issues surrounding the
sustainable development of Iraqi oil and gas.
Nevertheless, the interviews carried out in connection with this thesis, and the questions
asked of the interviewees were designed to test the provisional hypotheses in this work at an
evolving stage. Because of the need to preserve the confidentiality of the participants in this
process, and the uneven character of the sample and results, the interview material was not used
as a base for the final conclusions of this thesis. It did, however, provide the researcher with
useful insights and some additional questions for further study, and in these respects the process
was useful in finalising the thesis. Subject to these limitations, it has been referred to in the final
text.
48 Mayring, P. (2000) Qualitative content analysis, Forum: Qualitative Social Research [On-line Journal], 1(2), Art. 20.
Available at< http://www.qualitative-research.net/fqs-texte/2-00/2-00mayring-e.htm >accessed 30 March , 2012].
49 Alan Bryman, Quantitative and qualitative research: further reflections on their integration. In Julia Brannen
(Ed.), Mixing methods: qualitative and quantitative research (Brookfield: Avebury 1992) 57-78.
34
1.14. Choice of analysis
As the researcher will make use of both primary and secondary data in this research for
critical analysis, it will help him to reach reliable outcomes. First I will make use of theoretical
data to have an understanding of the research topic at hand. This helps to clarify the base of the
research at initial stages. Based on the theoretical discussion, I will formulate the idea to collect
data through semi-structured interviews and documents analysis also through more search in
various online and offline sources. For secondary data collection, I will refer to a wide range of
internet sources. Google search engine was used to collect the data. However, I will not be
limited to Google search engine only, and also making use of Lycos, MSN search engines, etc.
The data from various books, magazines, journals, etc. will be of immense use for this study,
which the researcher will collect as per the requirement.
1.15. Expected Outcomes
The researcher strongly hopes that the study will contribute to and support positive
change to existing Iraqi laws and regulations of oil and gas to be consistent with the principles of
international law of sustainable development through, either, amending it or issuing new laws, or
regulations. This study will also assist in understanding the constituents of sustainable
development, and how these changes and amendments will help to develop Iraqi oil and gas
resources.
This research will benefit law and policy makers in Iraq especially the Kurdistan region.
In order to attain sustainable development, legislation constitutes an integral part in the
development process and cannot be isolated from it. It will particularly be helpful in taking
35
appropriate actions in relation to legal regulation towards sustainable development of oil and gas
resources.
The study will help to understand better ways and methods of resolving current
problems between central and regional governments over legal issues related to oil and gas
sustainable development.
In addition, this study through examining the regulations concerning sustainable
development on the international level and showing what lessons Iraq has got to learn from these
for its legal regulation of sustainable development of oil and gas resources, the government of
Iraq, international oil companies and international financial institutions and donor countries will
be able to draw upon this study for their understanding of the relevant issues of the day and
future decision-making process and legal regulation concerning Iraqi oil and gas as there is a
paucity of study on the subject so far.
Thus, this thesis is expected to aid the Iraqi legal regime concerning sustainable
development at large by providing a firm basis for legislative change.
Finally, the study is also helpful for researchers who are going to conduct further research
in the area of regulation of sustainable development in the use of petroleum resources.
1.16. Conclusion
The Iraqi government has not recognized so far, any of the major issues that cause
conflicts among the three major political groups, including the Kurdistan Regional Government
(KRG). None of the major issues have been solved, including that in the oil and gas legislations.
However, without a mutually acceptable agreement at the federal and regional levels of the Iraqi
36
government “passage of hydrocarbon framework and revenue sharing laws may not adequately
ensure equitable distribution or contribute to political reconciliation or economic growth”50. Iraq
today has important prerequisites for becoming a significant player in the world energy market,
these prerequisites are, for example, such as “geographical proximity, availability of needed
regional infrastructure and the magnitude of petroleum resources”51.
Due to climate change, there has to be a way in which there will be sustained
development of oil and gas resources despite these changes in the climate. Global warming is
mainly caused by the burning of fossil fuels. This implies that the exploitation and exploration of
oil and gas will further result in more global warming. The legal regulation to be laid down for
sustainable development of oil and gas have, therefore, to put into consideration the changes in
climate and their effect on the resources in question.
Therefore, achieving sustainable development of oil and gas resources in Iraq requires
deep legal and institutional, structural changes and new legislative measures regulating oil and
gas resources52.
In other words, one may conclude that there is a clear need for the new national
legislation for sustainable development in the exploration and exploitation of petroleum
resources in Iraq, as well as a need for new legal and institutional mechanisms for international
partnerships and attraction for foreign investment in the oil and gas sector.
50 Blanchard (n 3) 1.
51 Jiyad (n 37) Para 2.
52 B Dalal-Clayton and S Bass, Sustainable Development Strategies: A Resource Book (Earthscan Publications London
2002) 27.
37
Chapter Two
Background to the Sustainable Development Concept
2.1. Introduction
During the last decades, the idea of sustainability has become a major environmental
policy supported by many national governments and international organisations53. One of the
most comprehensive descriptions of the notion of sustainability was made by The International
Institute for Sustainable Development, which claimed that sustainability is based on “the
persistence of certain necessary and desired characteristics of people, their communities and
organisations, and the surrounding ecosystem over a very long period of time (indefinitely)”54. In
order to achieve progress toward sustainability, it is necessary to improve and maintain both
human and ecological systems providing their welfare, but not one at the expense of the other.
Thus, the idea clearly expresses interdependent relationships between people and the world
around them. Institute of Advanced Studies of the United Nations University asserts that:
“Few global issues have been attracting more attention in recent years than those associated with sustainable development, on which impinge such considerations as the growing world population, mushrooming urbanisation, expanding rates of consumption, climate change, biodiversity, and the adverse social and economic effects these factors are having on the populations of
53 Benjamin D. Haskell and Bryan G. Norton and Robert Constanza, ‘Introduction: What Is Ecosystem Health and Why
Should We Worry About It?’ in Robert Constanza and Bryan G Norton and Benjamin Haskell (eds), Ecosystem Health:
New Goals For Environmental Management (Island Press 1992).
54 Peter Hardi and Terrence Zdan, ‘Assessing Sustainable Development: Principles in Practice’ (1997) IISD, 8
<http://www.iisd.org/pdf/bellagio.pdf> accessed 10 October 2011.
38
the developing and developed world as they impact the health of mankind and the environment.”55
The relationship between mankind and the environment had started in the distant past
when human beings lived in a complete symbiosis with nature. Over the centuries, people
worked for their needs without any concern about the environmental protection and
conservation. In course of time, mastery of humans over nature has been increasing until it has
culminated in the industrial revolution in 19-20th centuries. Such prominent characteristic
features of that time as a material-intensive way of production, the vast expansion of
intercontinental trade and fast growth of population caused a considerable environmental
damage56. The impact of industrialization on nature can be well illustrated as follows57:
“A vast acceleration of forest cutting, mining, land development, and fishing began. Industrialised societies saw forests disappearing to fuel the factories, mass migrations of people moving to cities to work in factories, and clouds of pollution hanging over the cities. ...The environment was turned into a site of economic competition between the various industrialised nations...”
The first reaction of the society to environmental problems was a reactive approach that
is characterised by clean-up activities mainly58. However, since the early 1960s, environmental
problems have been eventually recognised as a political issue, which demands proactive
55 United Nations University / Institute of Advanced Studies, ‘The Sustainable Future of the Global System: Endeavours
from Rio to Johannesburg’ (2003) <http://www.ias.unu.edu/binaries/SFGSReport.pdf> accessed 10 October 2011.
56 John Pezzey, ‘Sustainability: An Interdisciplinary Guide’ (1992) 1 Environmental Values 321.
57 Louis P. Pojman and Paul Pojman, Environmental Ethics: Readings in Theory and Application (6
th edn, Cengage
Learning 2011) 1.
58 Mohan Munasinghe, Environmental Economics and Sustainable Development (The World Bank 1993)
39
measures. Nowadays it is widely recognised that a healthy environment is essential to sustainable
development. More and more economists, state officials and researchers understand that
economic policy, based on using of forests, water, soils and other critical natural resources,
without taking appropriate account of its current state and future development, is not wise and
successful. Thus, the more proactive approach to resource usage is being taken, ensuring
“continuing improvements in the present quality of life at a lower intensity of resource use,
thereby leaving behind for future generations an undiminished or even enhanced stock of natural
resources and other assets”, which refers to the concept of sustainable development59.
This chapter represents a historical background overview of the concept of sustainable
development, describing the process of the evolution of the concept from the initial ideas
concerning sustainability in environment, to the today’s more comprehensive and profound
understanding of sustainable development as a “specific call to prioritize improvements in the
well-being of the very worst-off now and in the future”60. In addition, on the basis of the existing
academic and professional literature, this chapter makes an overview of the philosophical and
theoretical dimensions of the sustainable development. Therefore, the chapter helps to
understand the nature of sustainable development and to define ways in which the sustainable
development in the modern oil and gas industry could be achieved.
59 World Commission on Environment and Development (WCED), Our Common Future (OUP 1987). See more
alternative definitions of sustainable development in Pezzey (n.56)
60 Bac Dorin Paul, ‘A History of the Concept of Sustainable Development: Literature Review’ (2008) XVII (II) The Annals
of the University of Oradea 579
40
2.2. Evolution of the concept of sustainable development
2.2.1. The impact of Malthusians on the development of sustainability
Although the well-defined concept of sustainable development has been developed as a
result of a series of environmental conferences and summits during the last half of the 20th
century, the first questions concerning the role of nature in human life and the impact of
civilisation’s evolution on the condition of natural resources on the Earth emerged more than 200
years ago. Environmentalism has been undergoing development since the mid-nineteenth century
to balance the roles of humans and their impacts on the natural environment. The central
contention has largely been to produce a workable balance such that humans benefit from the
environment without inculcating long-term damage to the environment61. Over time
environmentalism has grown to assume the dimensions of sustainability as a distinct concept
altogether62.
In 1798 famous English scholar, demographer and economist Thomas Robert Malthus
(1766-1834) wrote An Essay on the Principle of Population, in which he alarmed that the growth
of population will eventually lead to starvation in the world because food production develops at
a much slower pace comparing with a rate of population’s growth. Malthus argued:
“…population when unchecked, increased in a geometrical ratio and subsistence for man in an
arithmetical ratio”.63 Today the population has increased from one billion (that it was in 1798) to
61 Andy Reynolds, A Brief History of Environmentalism, Channel 4 (2002).
62 Marco Armiero and Lise Sedrez, A history of environmentalism: Local struggles, global histories (Bloomsbury Press
2014)
63 Peter P Rogers and Kazi F Jalal and John A Boyd, An Introduction to Sustainable Development (Earthscan 2008) 20.
41
more than six billion, now about seven billion, but the heat debate about how to feed the
population is still being continued.
In 1972 in the famous book ‘The Limits to Growth’ the issues of depletion of non-
renewable natural resources were represented and discussed on the basis of the result of the
simulation with using of a computer model64. According to the results, the global collapse would
be unavoidable, due to the growth of population and industrial capital under constraints of food
and non-renewable resources. Another famous American Environmental analyst, Lester Brown
(a founder of the World Watch Institute and the Earth Policy Institute, both of which deal with
the use of natural resources in global scale) wrote a large number of books and articles,
discussing causes and effects of exhausting the world’s fossil fuel reserves. In his latest book
‘Plan B 3:0 Mobilising to Save Civilisation’ published in 2008, Brown makes the conclusion:
“Over the last few decades, the world has accumulated a growing number of unresolved problems... As the stresses from these unresolved problems accumulate, weaker governments are beginning to break down, leading to what are now commonly referred to as failing states. Failing states are an early sign of a failing civilisation”65.
Although most of the Malthusians’ predictions are not borne out nowadays, there are no
doubts that their ideas and cautions serve as significant reminders, a kind of ‘alarm bells’, to the
society and authorities of all levels – they warn about inevitable and fatal consequences for the
planet Earth in case if the current production and consumption trends will be continued.
64 Donella H Meadows, The Limits to Growth: A Report for the Club of Rome’s Project on the Predicament of Mankind
(Universe Book 1972).
65 Lester R Brown, Plan B 3:0 Mobilising to Save Civilisation (The Earth Policy Institute 2008) 6.
42
Evidently, they played an important role in further development of the global environmental
policy as a whole, and of the concept of sustainable development in particular.
2.2.2. The 1972 Stockholm Conference on the Human Environment
The environmental movement emerged and began developing at first in Europe and
North America. For the first time, the international community, concerned with issues of ethics
and policy of global environment, met in Stockholm in 1972 at the United Nations Conference
on the Human Environment. The Conference was preceded by a complex preparatory process,
which ensured the agreement upon the most of discussed issues among a large number of
countries.
The impacts of the Stockholm Conference cannot be overestimated because it was the
first conference, the agenda of which contained exclusively questions related to the environment.
The Conference has attracted representatives of about 113 states and 19 international
organisations from the world66, which for the first time have determined a link between
environment and development: “...although in individual instances there were conflicts between
environmental and economic priorities, they were intrinsically two sides of the same coin”.67
The Conference adopted three non-binding instruments: a resolution on institutional and
financial arrangements, a Declaration68 containing 26 Principles “to inspire and guide the
66 Paul (n 60) 577.
67 John Vogler, ‘The International Politics of Sustainable Development’ in Giles Atkinson and Simon Dietz and Eric
Neumayer (eds), Handbook of Sustainable Development (Edward Elgar Publishing 2007) 432.
68 Stockholm Declaration of the UN Conference on the Human Environment (16 June 1972) UN Doc A/Conf 48/14/Rev.1,
11 ILM 1461.
43
peoples of the world in the preservation and enhancement of the human environment”69, and an
Action Plan containing 109 recommendations in six main subject areas as follows70:
(a) Planning and management of human settlements for environmental quality;
(b) Environmental aspects of natural resources management;
(c) Identification and control of pollutants of broad international significance;
(d) Educational, informational, social and cultural aspects of environmental issues;
(e) Development and environment; and
(f) International organisational implications of action proposals.
Analysing the meaning of the Stockholm Conference one can agree that71:
“Stockholm … facilitated means toward international concepts of national sovereignty… There were significant elements of innovation in (1) the redefinition of international issues, (2) the rationale for co-operation, (3) the approach to international responsibility, and (4) the conceptualisation of international organisational relationships.”
69 Louis B Sohn ‘The Stockholm Declaration on the Human Environment’ (1972) 14 (3) HARVARD INTL LAW J 423
70 United Nations Environment Program (UNEP), ‘Report of the U.N. Conference on the Human Environment’ (1992)
A/CONF.48/14
71 Lynton Keith Caldwell, International Environmental Policy: From the Twentieth to the Twenty-First Century (3
rd edn,
Duke UP 1996) 63, 68
44
From a perspective of environmental international law, significant developments were
also produced in regard to recommendations for the creation of new institutions and the
establishments of co-ordinating mechanisms amongst existing institutions (containing in the
Action Plan), the definition of a framework for future actions to be taken by the international
community (containing in the Recommendations), and the adoption of a set of general guiding
principles (containing in the Principles)72.
The major result of the Stockholm Conference was the creation of the United Nations
Environmental Program (UNEP) with the great mission: “To provide leadership and encourage
partnership in caring for the environment by inspiring, informing, and enabling nations and
peoples to improve their quality of life without compromising that of future generations”73.
Another significant achievement was the adoption of the Principle 21, or the principle of “good
neighbourliness”, which claims that74:
“States shall cooperate to develop further the international law regarding liability and
compensation for the victims of pollution and other environmental damage caused by activities
within the jurisdiction or control of such States to areas beyond their jurisdiction.”
72 Sands( n 12)35
73 Paul (n 60) 577.
74 UNEP, ‘Declaration of the United Nations Conference on the Human Environment’ (1972)
<http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=97&ArticleID=1503&l=en> accessed 10
October 2011
45
Thus, one can make a conclusion that the Declaration of the Stockholm Conference
established the basic rules of international environmental law, which need not be formulated any
more in the forms of declarations of rights and duties of states, but rather can convey the feeling
of the international community concerning achievement of certain common objectives by
applying common tools and in accordance with commonly agreed guidelines. The whole period
of the 1970s was notable due to the significant efforts of international environmental
organisations and other non-governmental institutions, which strived to address environmental
issues at all levels – from local to global ones: new sources of international environmental
obligation were developed (e.g. acts of these organisations); new environmental norms were
established by treaties; new techniques for implementing environmental standards, such as an
assessment of environmental impact or access to information, were developed; as well as the
formal integration of environment and development was implementing, in particular in regard to
international trade and development assistance.
Moreover, the Conference was followed by important international and regional
developments, including the adoption of the 1980 World Conservation Strategy75, creation of EC
environmental protection rules76, and the creation of an Environment Committee at the OECD77.
75 International Union for Conservation of Nature and Natural Resources (IUCN), ‘World Conservation Strategy: Living
Resource Conservation for Sustainable Development’ (1980) <http://data.iucn.org/dbtw-wpd/edocs/WCS-004.pdf>
accessed 10 October 2011.
76 United Nations Educational, Scientific and Cultural Organisation (UNESCO), ‘Convention Concerning the Protection of
the World Cultural and Natural Heritage’ (1972) 550-72 <http://whc.unesco.org/archive/convention-en.pdf> accessed 10
October 2011.
77 Organisation for Economic Co-operation and Development (OECD), International Environmental Issues and the OECD
1950-2000: An Historical Perspective (OECD Publishing 2000) 38.
46
Other notable regional developments included multilateral treaties dedicated to the protection of
all migratory species78; the protection of habitats79; the prevention of transboundary air
pollution80; and rules on environmental co-operation and behaviour in a compact on development
assistance between developed and developing countries.81
All of these achievements in the development of international law were clearly inspired
and advanced by the Stockholm Conference’s general tone and results.
In the meantime, there were a number of critics, who considered that the Stockholm
Conference was not much effective. Some of them argued that the main objective of the
Conference was an attempt to find acceptable trade-offs between environment and development
rather than to establish appropriate liaisons between two of them.82 Others emphasised that the
Conference “was limited in its effectiveness because environmental protection and the need for
development, especially in developing countries, were seen as competing needs and thus were
78 Council of the European Communities (EC Council), ‘Council Decision on the conclusion of the Convention on the
conservation of migratory species of wild animals (Bonn Convention)’ [1982] Ch 10 Web <http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31982D0461:EN:HTML> accessed 10 October 2011.
79 Council of the European Communities (EC Council), ‘Convention on the Conservation of European Wildlife and
Natural Habitats’ (1979) Ch 10 <http://conventions.coe.int/treaty/en/treaties/html/104.htm> accessed 10 October 2011
(Berne Convention).
80 United Nations Economic Commission for Europe (UNECE), ‘Convention on Long-range Transboundary Air Pollution’
(1979) Ch 7 <http://www.unece.org/env/lrtap/lrtap_h1.html> accessed 10 October 2011 (Geneva Convention).
81 African, Caribbean and Pacific Group of States (ACP Group), ‘Agreement Amending the Fourth ACP-EC Convention of
Lome’ (1989) Ch 19 <http://www.acpsec.org/en/conventions/lome4_e.htm> accessed 10 October 2011.
82 Patricia W Birnie, ‘The law of the sea and the united nations conference on environment and development’ in Elisabeth
Mann-Borghese (ed), Ocean Yearbook (University of Chicago Press 1993) 77.
47
dealt with in a separate, uncoordinated fashion”83. It was also noted that the Conference has not
managed to integrate environmental concerns into concrete policies and development plans84.
Nevertheless, the Stockholm UN Conference on the Human Environment was the first
important step toward the establishment and further development of international environmental
law. “Having accepted the responsibility for the preservation and improvement of the human
environment, the international community [has found] in the Stockholm Declaration a source of
strength for later, more specific actions”85.
Thus, to the beginning of the 1980s the international law has experienced a significant
inducement to the development in two new perspectives - environmental protection and
sustainable development. These areas not only “pose some of the most interesting challenges to
international law-making”, but also offer “innovative solutions to some of the systemic problems
of the international legal order”86.
2.2.3. Brundtland Commission on Environment and Development
In 1983, the UN General Assembly established the World Commission on Environment
and Development. Later the Commission has become widely known as the Brundtland
Commission, named in honour of its Chair, Gro Harlem Brundtland, an influential social
83 Ross Prizzia, ‘Sustainable Development in an International Perspective’ in Khi V Thai and Dianne Rahm and Jerrell D
Coggburn (eds), Handbook of Globalisation and the Environment (CRC Press 2007) 20.
84 Paul (n 60)
85 Sohn ( n 69) 515.
86 Alan E Boyle and David Freestone, ‘Introduction’ in Alan E Boyle and David Freestone (eds), International Law and
Sustainable Development: Past Achievements and Future Challenges (OUP 2001) 1.
48
democratic politician. The Commission worked about four years, consulting with different expert
bodies and organising public events around the world. Finally, in 1987, the Commission
published the Brundtland Report, entitled Our Common Future87, which is widely acknowledged
as the major important contribution that the Commission has made to the development of
environmental policy. The Report was intended to inspire the world community to make urgent
progress toward economic development but under conditions of rational exploitation of natural
resources and saving the environment.
The main intention of the 1987 Brundtland Report is declared in its foreword: “What is
needed now is a new era of economic growth – growth that is forceful and at the same time
socially and environmentally sustainable”88. The Report grasped many achievements made at the
Stockholm Conference, advising “qualitative development must replace quantitative growth in
achieving sustainable development”89.
Moreover, the Report provided the most famous and “politically significant”90 definition
of sustainable development, namely that: “sustainable development is development that meets
the needs of the present without compromising the ability of future generations to meet their own
87 Brundtland Report 1987( n 11)
88 United Nations Commission on Sustainable Development (UNCSD), ‘Framing Sustainable Development: The
Brundtland Report – 20 Years On’ (2007) 1
<http://www.un.org/esa/sustdev/csd/csd15/media/backgrounder_brundtland.pdf> accessed 10 October 2011.
89 Prizzia (n 83) 20.
90 Paul (n 60) 577.
49
needs”91. This “classic” definition ties the process of sustainable management of natural
resources to two conceptual frameworks:
1. The basic needs of human beings – for food, clothing, shelter, and jobs – must be met.
And this primarily involves “paying attention to the largely unmet needs of the
world’s poor, which should be given overriding priority.”
2. The limits to development should be considered not as absolute, it depends upon
present states of technology and social organisation; upon that how they impact on
natural resources and on the ability of the Earth biosphere to absorb the effect of
human activities. It is undoubtedly that technology and social organisation can and
should be managed in order to overcome the limits and to ensure new possibilities for
economic growth92.
In order to understand the approach better it is useful to have an idea of the political and
social context existing at that time. As stated above, after the 1972 Stockholm Conference the
world community was well aware of the severity of environmental problems. Moreover, new
anxiety in regard to climate change, ozone exhaustion and biodiversity reducing has appeared.
But even so the environmental problems still were not in the world political agenda. The
economy of poor countries has been experiencing stagnation, collapse in commodity prices and
debt crisis, what contributed to the extension of poverty and environmental degeneration. In
addition, the continuing Cold War entailed serious national security concerns. All these
91 WCED (n 59) 43.
92 Don Hinrichsen, Our Common Future: A Reader's Guide (Earthscan Publication 1987) 7.
50
conditions have influenced on the desire of the Commission to introduce the concept of
sustainable development as a bridging concept, which could be able to unite diverse and often
controversial interests of different countries93. Nitin Desai, a senior adviser to the Brundtland
Commission and a key draftsman of the Report, says94:
“…the report came at a time when the oil shocks of the seventies, droughts in Africa, concerns about tropical forests, the depletion of the ozone layer and several other problems were posing great challenges to policy at every level, and it offered a way of looking at these problems in a holistic way. …The main long-term impact of the report is that we can no longer talk of economic and environmental policy in separate compartments”.
At that, it should be mentioned that the concept of sustainable development was not
coined by the Brundtland Commission - it was first approved in the World Conservation
Strategy, adopted by three international non-governmental organisations - the International
Union for Conservation of Nature (IUCN), The United Nations Environment
Programme (UNEP) and the World Wildlife Fund (WWF) - in 198095. However, the World
Conservation Strategy was designated mainly for the conservation of natural resources and
ecological sustainability. Far broader political, economic and social meaning the concept of
sustainable development has received in the Brundtland Report.
The key findings of the Report were endorsed by the UN General Assembly as follows96:
93 James Meadowcroft, ‘Sustainable Development: A New(ish) Idea for a New Century?’ (2000) 48 Political Studies 370.
94 UNCSD (n 88) 1.
95 Neil Carter, The Politics of the Environment: Ideas, Activism, Policy (2
nd edn, CUP 2007).
96 UN Doc. GA A/Res/42/187 of 11 December 1987 para.5.
51
“…[T]he critical objectives for environment and development must include preserving peace, reviving growth and changing its quality, remedying the problems of poverty and the satisfaction of human needs, addressing the problem of population growth and conserving and enhancing the resource base, reorienting technology and managing risk, and merging environment and economic decision-making.”
After the publishing of the Brundtland Report, it has become clear that environmental
concerns should be embedded in all aspects of policies at both international and local levels. Yet,
it was also clear that sustainable development can be achieved only as a result of significant
shifts in the methods of environmental protection management97:
“…[S]ustainable development is not a fixed state but ‘a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations’.”
As there are a lot of supporters of the Report, there are also a lot of critics, they argue
primarily about unwarranted optimism and vagueness of the discussion of sustainability, as it
was suggested by the Report. For example, there is an opinion that “probably …in order to be
accepted, the discussion had to be optimistic, but given the facts, it was necessary to be vague
and contradictory in order not to appear to be pessimistic”98. Or even more straightforward:
“Mrs. Brundtland provided a slogan behind which first world politicians with green electorates to
97 Hinrichsen (n 92) 7.
98 Albert A Bartlett, Reflections on Sustainability, Population Growth, and the Environment (Springer 2006) 22.
52
appease, and third-word politicians with economic deprivation to tackle, could unite. The
formula was, of course, vague, but the details could be left for later”99.
One of the most disputable issues (which still causes heated discussions and controversies
concerned the development for countries in accordance with their particular needs. Voigt
explains100:
“While developing countries want to remain free to choose their own development strategy and direction, sustainable development would imply certain limitations. As developing countries pointed out meeting essential needs depends on achieving full growth potential in places where such needs are not being met. Sustainable development was thus primarily perceived as imposing limitations on developed countries only while not interfering with the choice of developing countries on which development path to follow. It was seen as hypocritical of developed countries as long as many of the former fail to rein in their own unsustainable practices.”
Despite the critique, the fact remains – the concept of sustainable development on a
global scale was developed and widely popularised by the Brundtland Commission. Since the
Brundtland Report sustainable development has become a global policy that could not be
ignored. The notion of sustainable development has been adopted by the majority of national
governments, international agencies and non-governmental organisations.
Among examples of the most important documents in which the concept had been
included prior 1992 there are the 1989 Declaration of the G7 Paris Summit,101 the 1989 Hague
99 Tony Brenton, The Greening of Machiavelli: The Evolution of International Environmental Politics (Royal Institute of
International Affairs/Earthscan 2004) 129.
100 Voigt( n 20) 16.
101 28 ILM (1989) 1292, 15-16 July 1989.
53
Declaration on the Environment,102 the 1990 Agreement establishing the European Bank for
Reconstruction and Development (EBRD),103 the 1990 Bergen Declaration of the UN Economic
Commission for Europe104.
The legal dimension of the Report (namely the Chapter 12 on legal and institutional
change) impelled international policy-makers to consider sustainable development as one of the
key objectives and at the same time responsibilities at all levels105. This, in its turn, caused a
considerable advancement of international law and policy. As it will be shown in the next
sections of this chapter, since the “Our Common Future” report the concept has been embraced
by a number of major international, national and regional legal documents, as well as many
economic, environmental and social challenges were addressed in international tribunals from
the perspective of sustainable development.
2.2.4. UN Conference on the Environment and Development
In the summer of 1992, the UN Conference on the Environment and Development was
organised in Rio de Janeiro, Brazil, aimed “to elaborate strategies and measures to halt and
102 28 ILM (1989) 1308, 11 March 1989
103 29 ILM (1990) 1077, 29 May 1990
104 UN Doc. A/CONF.151/PC/10, 6 August 1990
105 Our Common Future Chapter 12, para. 17: “Environmental protection and sustainable development must be an integral
part of the mandates of all agencies of governments, of international organizations, and of major private-sector
institutions. These must be made responsible and accountable for ensuring that their policies, programmes, and budgets
encourage and support activities that are economically and ecologically sustainable both in the short and longer terms.
They must be given a mandate to pursue their traditional goals in such a way that those goals are reinforced by a steady
enhancement of the environmental resource base of their own national community and of the small planet we all share.”
<http://www.un-documents.net/ocf-12.htm> accessed 8 October 2011
54
reverse the effects of environmental degradation in the context of increased national and
international efforts to promote sustainable and environmentally sound development in all
countries.”106 The Conference was also called as the Earth Summit or the Rio Summit, and it
marked the 20th anniversary of the 1972 Stockholm Conference. The Rio Summit has become an
unprecedented event in history of development of environmental policy, gathering of 114 heads
of state, 10 000 representatives from 178 countries and 1 400 non-governmental organisations
and bodies represented by additional thousands of participants.
The Rio Summit, giving the momentum of the Brundtland Report, “laid the foundations
for the global institutionalisation of sustainable development.”107 Speaking more specifically, the
Summit, “connecting Environment and Development, was indicative of North–South bargaining
at the UN, in which demands for international action on the environment were set against claims
for additional development aid and technology transfer.”108 The Rio Declaration, Agenda 21 and
the Commission on Sustainable Development are considered to be the key outputs of the Rio
Conference, having a major impact on further progress in environmental international law; thus,
it is useful to discuss meaning of each of them in more details.
106 Pamela Chasek, ‘The story of the UNCED process’ in Bertram Irwin Spector and Gunnar Sjostedt and I William
Zartman (eds), Negotiating International Regimes: Lessons Learned from the United Nations Conference on Environment
and Development (Graham and Trotman 1994) 45.
107 John Drexhage and Deborah Murphy, Sustainable Development: From Brundtland to Rio 2012 (UN Headquarter,
International Institute for Sustainable Development 2010) 8.
108 Paul (n 60) 578.
55
2.2.4.1 The Rio Declaration on Environment and Development
The Rio Declaration contains 27 principles of sustainable development, from which the
Principle 7 sets out “common but differentiated responsibilities” in global environmental
protection for all countries:
States shall co-operate in a spirit of global partnership to conserve, protect and restore the
health and integrity of the Earth's ecosystem. In view of the different contributions to global
environmental degradation, States have common but differentiated responsibilities. The
developed countries acknowledge the responsibility that they bear in the international pursuit of
sustainable development in view of the pressures their societies place on the global environment
and of the technologies and financial resources they command.109
With respect to the development of international environmental law, the Rio Declaration
has had significant influence, particularly, thanks to three factors: 110
1. The language of the Rio Declaration (as distinct from the 1972 Stockholm
Declaration) is primarily obligatory – the most of principles start with the instruction
‘States shall...’ rather than ‘States should’, what is undoubtedly can be interpreted as a
potential basis for their further elaboration in form of legislative norms.
2. All 27 principles constitutes a single whole, a ‘package deal’, which was negotiated
and adopted by the Conference through consensus, thus, the Declaration has been
called: “a text of uneasy compromises, delicately balanced interests, and dimly
109 Drexhage and Murphy (n 107) 8.
110 Boyle and Freestone (n 86)
56
discernible contradictions, held together by the interpretative vagueness of classic
UN-ese.”111 Some of the principles meet the interests of developed states, such as
Principle 4 (integration of environmental protection and development), Principle 10
(public participation), 15 (the precautionary approach), and 17 (environmental impact
assessment). While others were more important for developing states, such as
Principle 3 (right to development), Principles 6 (special needs of developing states)
and 7 (common but differentiated responsibility), mentioned above, Principles 5
(poverty alleviation) and 9 (capacity building).112 At that, the package-deal character
of the document is proved by the clear coherence of principles.
3. Finally, the Declaration represents a real consensus between developed and
developing countries about the necessity of mutually agreed norms of international
environmental law. Establishing for the first time the commonly accepted
international principles of law and policy of sustainable development the document
gained a universal significance around the world.
2.2.4.2 Agenda 21
In Agenda 21 the commitment of many countries around the world to sustainable
development was clearly formulated.113 Agenda 21 contains 40 chapters, which define a set of
111 Ileana M Porras, ‘The Rio Declaration: A New Basis for International Cooperation’ in Philippe Sands (ed), Greening
International Law (Earthscan Publications 1993) 23
112 Boyle and Freestone (n 85) 2.
113 United Nations Sustainable Development (UNSD), ‘Agenda 21’ (1992)
<http://www.un.org/esa/sustdev/documents/agenda21/english/Agenda21.pdf> accessed 10 October 2011
57
actions related to the social and economic dimensions of sustainable development, conservation
and environmental management at all levels (local, national and global), namely there were such
themes as: “quality of life, efficient use of natural resources, protection of the global commons,
management of human settlements, and sustainable economic growth.”114
One of the important achievements of the document was recognition of the fact that the
model of sustainable development is not appropriate while severe poverty takes place in several
parts of the world along with standards of living based on irrational using of natural resources in
other parts.
The Agenda 21 also defines means of implementation of actions stated in the document
and the role of major concerned parties, for example, in regard to developed countries, the
document sets out: “...developed countries reaffirmed their previous commitments to reach the
accepted UN target of contributing 0.7 percent of their annual gross national product (GNP) to
official development assistance and to provide favourable access to the transfer of
environmentally sound technologies, in particular to developing countries.”115
Thus, it is evidently that in order to implement Agenda 21, governments should develop
their own national sustainable development strategies.
114 Prizzia (n 83) 21.
115 Drexhage and Murphy (n 107) 8.
58
2.2.4.3 UN Commission on Sustainable Development
One more achievement of the Rio Summit was the creation of the United Nation
Commission on Sustainable Development (CSD)116. The Commission was completely in charge
to implement and follow up Agenda 21; its activity involved communications with different non-
governmental and inter-governmental bodies and launching various programmes related to
fostering sustainable development around the world. By the middle of 1990s, the most of
developed countries have had sound national strategies in the sustainable development area. At
the 1997 New York Earth Summit, the CSD introduced a new agenda, aimed primarily at poverty
alleviation and over-consumption. The new sustainable development agenda was intended to
speed up the implementation of Agenda 21.
2.2.4.4 Analysis of the overall meaning of the 1992 Rio Summit
The 1992 Rio Summit is considered as extremely successful, mostly at the level of public
awareness on the problems of global environmental protection.
The Rio Summit was very successful from a standpoint: it had the world’s attention and
active engagement and attendance by virtually every national leader. Its challenges lay in two
areas: first, too much of an emphasis on the “environment pillar” in the negotiations and
secondly, all too little implementation of goals established under Agenda 21, particularly those
related to development aid and cooperation.117
116 United Nation Commission on Sustainable Development web-site, <http://www.un.org/esa/sustdev/csd.htm> accessed
10 October 2011
117 Drexhage and Murphy (n 107) 8.
59
After the Rio Summit the unprecedented number of public interest and private sector
interest groups, as well as non-governmental organisations has appeared what indicated a
formation of fundamentally new approach in collaboration and public participation in global
international affairs. It is important to note that although sustainable development was widely
recognised as the unifying principle for the Rio Summit, actually there was significant
disagreement concerning its broad interpretation and implications.118 A number of observers
pointed out that too vague understanding of the concept, while being useful to have meaning in
various national and local contexts and cultures, from the perspective of international legislation
it “lacks precision” 119 and leads to “diverse …irreconcilable and contradictory decisions.”120
Taking the Brundtland Commission’s definition of sustainable development as a basis,
the Rio Summit focused mostly on developing of suitable approaches and providing guidance in
implementation sustainable development. The Commission noted that “implementing the
principles of equity and living within ecological limits can only be accomplished if social,
political and economic systems have the flexibility to be redirected toward sustainability as well
118 Prizzia (n 83).
119 Marie- Claire Cordonier Segger, ‘Canadian and U.K. Approaches to Sustainable Development in International
Ttrade Law’ in Christopher P.M.Waters (ed), British and Canadian Perspectives on International Law (Martinus
Nijhoff Publishers and VSP 2006) 227
120 Voigt (n 20) 18.
60
as integrated with each other and the environment.”121 Such integration seems to be the main
challenge toward sustainable development.
The requirement of integration is assigned in the Principle 4 of the Rio Declaration:
“environmental protection shall constitute an integral part of the development process and
cannot be considered in isolation from it,”122 although it also can be found in Agenda 21, for
example in Chapter 8 ‘Integrating environment and development in decision-making’: “The
overall objective [of the programme area] is to improve or restructure the decision-making
process so that consideration of socio-economic and environmental issues is fully integrated, and
a broader range of public participation assured.”123 The requirement of integration was further
implemented in subsequent agreements and declarations, and in 1997 it was well considered by
the International Court of Justice in the Gabcikovo-Nagymaros Project (Hungary v. Slovakia):
“Owing to new scientific insights and to a growing awareness of the risks for mankind ...of pursuit of [the] interventions at an unconsidered and unabated pace, new norms and standards have been developed, set forth in a great number of instruments during the last two decades. Such new norms have to be taken into consideration, and such new standards given proper weight, not only when States contemplate new activities but also when activities begun in the past. This need to reconcile economic development with protection of the environment is aptly expressed in the concept of sustainable development.” 124
121 Prizzia (n 82) 21.
122 Boyle and Freestone (n 85) 10.
123 UNSD (n 112) Ch.8 A.8.3.
124 [1997] ICJ Rep 7 para140.
61
It is clear that the purpose of Principle 4 is to ensure the international decision-making
with regard to environmental requirements, and it is also fundamental for the concept of
sustainable development as a whole.
It is worth admitting that the Rio Declaration has not addressed several important matters,
such as animal rights or the preservation of natural heritage. It was not also dealing with
environmental crimes and environmental damages. In addition, Boyle and Freestone stresses out
that Principle 12 on trade policy and Principle 16 on the ‘polluter pays’ are expressed in non-
obligatory terms, suggesting “a rather weaker commitment on these economic issues than
developed states would have liked to see.”125 There was a diffused opinion that “with the absence
of a binding treaty and clear definitions, an important opportunity was lost”126 during the Rio
Conference.
Nevertheless, the Rio Declaration is generally recognised as a highly significant positive
step in the development of international environmental law - “a system of international
environmental law has emerged, rather than simply more international law rules about the
environment.”127 The last principle of the Rio Declaration, Principle 27, is specifically intended
for further development of international law in the area of sustainable development. It
125 Boyle and Freestone (n 85) 11.
126 Kalus Bosselmann, The Principle of Sustainability: Transforming Law and Governance (Ashgate Publishing
2008) 37.
127 David Freestone, ‘The Road from Rio: International Environmental Law after the Earth Summit’ (1994) Journal
of Environmental Law 6 193.
62
revolutionary promoted a huge burst in increasing the interest in sustainable development and
caused systematic activities of states in management of its environment and natural resources at
the highest political levels around the world.
Many international organisations, e.g. the United Nations (with its Commission on
Sustainable Development (CSD) and the UN Environmental Program (UNEP)), the World Bank
(with its Sustainable Development Unit), the World Trade Organization (WTO), the Global
Environmental Facility (GEF), the Organisation for Economic Co-operation and Development
(OECD), the Arctic Council, the World Water Forum, the African Union, and many others have
adopted the concept and developed special measures toward sustainable development.128
In the area of international treaty law a great number of multilateral agreements and non-
binding documents considered the concept in specific contexts and from different perspectives,
particularly, the international climate regime as well as the world trade law demonstrated a high
level of commitment to sustainable development. Such documents as the UN Framework
Convention on Climate Change (with the 1997 Kyoto protocol129), the 1992 Convention on
Biological Diversity,130 the 1994 Energy Charter Treaty,131 the North American Free Trade
128 Voigt (n 20) 19.
129 UN Kyoto Protocol to the United Nations Framework Convention on Climate Change [2002] OJ L130/4
130 UN Convention on Biological Diversity [1993] OJ L309/3
131 34 ILM (1995) 360, Article 19.1: “In pursuit of sustainable development and taking into account its obligation
under those international agreements concerning the environment to which it is a party, each Contracting Party shall
strive to minimize in an economically efficient manner harmful environmental impacts….”
63
Agreement (NAFTA),132 the 1994 Marrakesh Agreement Establishing the World Trading
Organisation (WTO)133 and many others give evidences of wide-spread acceptance of sustainable
development.
At regional and national levels, the concept of sustainable development has become also
widely recognised. This can be confirmed, for example, by the 1997 Treaty of Amsterdam,
which changed the earlier EC Treaty and the 1992 Maastricht Treaty on the European Union.
Now the achievement of sustainable development has been declared a fundamental objective of
the European Union:
“The Community shall have as its task, by establishing a common market and an economic and monetary union and by the implementing common policies or activities …to promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement of the quality of the environment, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.”134
In addition, international legislation, such as through treaties and conventions has also
started to assume the tinge of sustainability as a key concept. The notion is not limited alone to
132 32 ILM (1993) 289 and 605, Preamble: “Promote sustainable development”.
133 33 ILM (1994) 15, Preamble: “allowing for the optimal use of the world’s resources in accordance with the objective of
sustainable development”.
134 OJEC, C325 24.12.2002 Consolidated Version of the Treaty Establishing the European Community/ 325/40
64
manufacturing but also to global trade and its facilitation135. In a similar fashion, the negotiations
for the Trans-Atlantic Trade and Investment Partnership (TTIP) and the EU-Canada Free Trade
Agreement (CETA) espoused sustainability as a key concept indicating the expanding scope of
sustainability as a part of international trade legislation136.
The acceptance of the sustainable development concept by States throughout the world is
confirmed by numerous references in national law as well. Many countries have established
political and legal systems taking sustainable development as a top national priority. For
example, German Basic Law announces that a key objective of Germany is the state’s
responsibility toward future generations to “protect the natural foundations of life and animals by
legislation and, in accordance with law and justice, by executive and judicial action, all within
the framework of the constitutional order.”137 Without a doubt, it could be referred to the
constitutionalisation of sustainable development in the German law.138 The laws of Norway,
Australia, Argentina, New Zealand,139 as well as of Canada and UK140 should be mentioned
135 European Commission, ‘EU and Canada strike free trade deal’ 18 October 2013, <
http://trade.ec.europa.eu/doclib/press/index.cfm?id=973> accessed on 4 November 2014.
136 Council of the European Union, ‘Directives for negotiation on the Transatlantic Trade and Investment Partnership
between the European Union and the United States of America’ 9 October 2014, <
http://data.consilium.europa.eu/doc/document/ST-11103-2013-DCL-1/en/pdf> accessed on 5 November 2014.
137 Deutscher Bundestag, Basic Law for the Federal Republic of Germany, October 2010, Article 20a, <https://www.btg-
bestellservice.de/pdf/80201000.pdf> accessed 10 October 2011
138 Voigt (n 20) 23.
139 ibid 23-24.
140 Segger (n 119) 227-228.
65
among other national legislations, where the concept of sustainable development has been
incorporated explicitly shortly after the Rio Summit.
The concept also had a significant impact on international judicial decisions. For
example, such cases of the International Court of Justice (ICJ) as 1993 Maritime Delimitation
(Denmark v Norway)141, 1996 Legality of the Threat or Use of Nuclear Weapons142, 1997
Gabcikovo-Nagymaros (Hungary v Slovakia)143 were discussed from the perspective of
sustainable development. In the Advisory Opinion to the UN General Assembly on the Legality
of the Threat or Use of Nuclear Weapons the Court said:
“… [T]he environment is not an abstraction, but represents the living space, the quality of life and the health of human beings, including generations unborn. The existence of the general obligation of States to ensure that activities within their jurisdiction and control respect the environment of other States or of areas beyond national control is now part of the corpus of international law relating to the environment.” 144
In the Judgment concerning the Gabčikovo-Nagymaros Project, the Court’s opinion was
elaborated further. Sands notes that, in this case, the Court emphasised at least three important
aspects: First, the fact that it invokes “sustainable development” at all, indicates that the term has
a legal function. Second, “sustainable development” is a “concept” and not a principle or a rule.
And third, as a “concept” it has both a procedural/temporal aspect (obliging the parties to “look
afresh” at the environmental consequences of the operation of the plant) and a substantive aspect
141 [1993] ICJ Rep 38.
142 [1996] ICJ Rep 226.
143 [1997] ICJ Rep 78.
144 [1996] ICJ Rep Adv Opinion of 8 July 1996, para. 29.
66
(the obligation of result to ensure that a “satisfactory volume of water” be released from the by-
pass canal into the main River..).145It enabled the judge Weeramantry to declare that the principle
of sustainable development requires treating ‘development’ and ‘environment’ equally, in a
balanced way, in order to ensure avoiding “a state of normative anarchy”, as well as that
sustainable development now is “a part of modern international law by reason not only of its
inescapable logical necessity, but also by reason of its wide and general acceptance by the global
community.” 146 Later, in 2005, this was proved again in the case of the Arbitration Regarding
the Iron Rhine (“Ijzeren Rijn”) Railway (Belgium v Netherlands), where the Tribunal, balancing
environmental protection and socio-economic development, refers to the notion of sustainable
development:
“[e]nvironmental law and the law on development stand not as alternatives but as mutually reinforcing, integral concepts, which require that where development may cause significant harm to the environment, there is a duty to prevent, or at least mitigate such harm. ... This duty, in the opinion of the Tribunal, has now become a principle of general international law. This principle applies not
145 Philippe Sands, ‘International Courts and the Concept of “Sustainable Development”’ (1999) 3 Max Planck
Yearbook of United Nations Law 389, 393
146 Gabčikovo-Nagymaros Project case (Hungary v Slovakia) [1997] ICJ Rep 7, Separate opinion of Vice President
weeramantry p 95
67
only in autonomous activities but also in activities undertaken in implementation of specific treaties between the Parties.” 147
These and other international judicial cases demonstrated clearly that when economic,
environmental and even social development norms intersect, the concept of sustainable
development can serve as a normative base helping to provide an integrated and balanced
decision. Summarising all reasoning presented above, one can make a conclusion that to the
beginning of the new millennium sustainable development has become one of the key objectives
of international law related to economic, environmental and social development both at the
global and regional levels148 as well as at the national level especially developed countries.
2.2.5 The Kyoto Protocol as a Special Case of Sustainable Development Policy
Not all initiatives following the Rio Summit have been adopted with equal commitment.
This can be explained by the fact that passed multilateral agreements did not reflect “the
processes and realities in countries, where multiple stakeholders – including government,
businesses, and non-governmental organisations (NGO) – need to be engaged in action.”149
There were also the differences in political, economic and social conditions in countries, which
147 Permanent Court of Arbitration: In the Arbitration Regarding the Iron Rhine ("Ijzeren Rijn") Railway, between
the Kingdom of Belgium and the Kingdom of the Netherlands (May 24, 2005) at 59, 114, Award of the Arbitral
Tribunal, online: Permanent Court of Arbitration <http://www.pcacpa.org/ENGLISH/RPC/BENL/BE-
NL%20Award%20240505.pdf>.
148 Segger and Khalfan (n 21)281 – 294; Duncan French, International Law and Policy of Sustainable Development
(Manchester UP 2005) 168 - 211.
149 Drexhage and Murphy (n 107) 8.
68
impact on their commitment to sustainable development. Generally, environmental degradation
is most devastating for the poor and most vulnerable, who often depend on natural resources for
their incomes and have few possibilities for substituting other assets. This is especially the case,
in the long run, where growth policies focus on accumulation, investment, and economic
growth150. In this sense it is useful to discuss the case of the protocol of the 1997 Kyoto
conference on climate change, which, complying the United Nations Framework Convention on
Climate Change, was aimed to promote a reduction of the emission of greenhouse gases.
It is widely acknowledged that current unsustainable use practices related to climate
change lead to serious degradation of natural resources such as land, forests, biodiversity, water
and others. The Protocol has appeared as one of the results of a series of legally binding events
on specific sustainable development problems, which were held in parallel to the global
environmental policy-making activities following the Rio Summit. Climate change was added to
the list of factors that hamper the progress of achieving the ecologic, economic and social
objectives that define sustainable development. So, the Kyoto commitment of many countries to
develop national targets for reduction of greenhouse gases is considered as one more important
Rio Earth Summit’s outcome, influencing international environmental law significantly.
The Protocol set up guidelines and rules regarding the extent to which a participating
industrialized country should reduce its emissions of six greenhouse gases – carbon dioxide,
methane, nitrous oxide, chlorofluorocarbon, hydrofluorocarbons and perfluorocarbons. 151 As a
150 Prizzia (n 83) 21.
151 UN Kyoto Protocol to the United Nations Framework Convention on Climate Change [2002] OJ L130/4
69
result of complex, controversial discussions of the Kyoto conference’s parties, the protocol was
finally accepted as a trade-off; only 84 countries signed the document, demonstrating the
intention to ratify it. Moreover, several of them, including US, were reluctant to follow the
prescriptions later. Further the number of participating parties of the Protocol has increased to
about 200, but such major producers of greenhouse gases as US and China were always beyond
the Protocol’s framework.
Today, on the threshold of 2015, climate change is still considered as a complex problem
that impacts on such global issues as poverty, population growth, resource management and
sustainable development. The need to reduce greenhouse gas emissions (GHG) remains the
major response to climate change, and different measures to mitigate of climate change are
discussed at numerous international meetings. At the same time, the principle of common but
differentiated responsibilities takes on special significance, as it becomes recognised that
“developed and developing nations alike have a responsibility to act in achieving overall
reductions of GHG emissions in the atmosphere.”152
It is important to note that, while the Kyoto Protocol was recognised by many politicians
and scholars as an important mechanism of the global environmental policy-making activities, it
was criticised a lot, because, according to the opinion of many other commentators, the Kyoto
approach was based upon misunderstanding of the nature of the ‘climate change’ paradigm. They
suggest viewing climate change as a ‘wicked’ problem, which comprises “open, complex and
152 International Trade Union Confederation (ITUC), ‘Resolution on Combating Climate Change through Sustainable
Development and Just Transition’ (2010) 2CO/E/6.10 Para.6 < http://www.ituc-
csi.org/IMG/pdf/2CO_10_Sustainable_development_and_Climate_Change_03-10-2.pdf> accessed 10 October 2011
70
imperfectly understood systems” and demands “profound understanding of their integration in
social systems, their irreducibly complexity and intractable nature”: 153
It is just one part of a larger complex of such conditions encompassing population,
technology, wealth disparities, resource use, etc. Hence, it is not straightforwardly an
‘environmental’ problem either. It is axiomatically as much an energy problem, an economic
development problem or a land-use problem, and may be better approached through these
avenues than as a problem of managing the behaviour of the Earth’s climate by changing the way
that humans use energy. 154
The recent events in a field of combating global climate change confirm these opinions;
moreover they well demonstrate how differences in political, economic and social conditions in
countries influence their commitment to sustainable development. In December 2011, at the
same time when a legal deal, aimed to cut GHG emissions by 2015 and to set up new regime by
2020, replacing the Kyoto Protocol, was negotiating at the UN Climate Change Conference
(COP17) in Durban, South Africa; Canada announced its withdrawal from the Kyoto protocol.
As Peter Kent, the Canadian environment minister, said:
“The Kyoto Protocol does not cover the world’s largest two emitters, the United States and China, and therefore cannot work.
153 Institute for Science, Innovation and Society (ISIS), University of Oxford, ‘The Hartwell Paper: A New Direction for
Climate Policy’ (2010) 15 <http://eprints.lse.ac.uk/27939/1/HartwellPaper_English_version.pdf> accessed 14 December
2011
154 ibid. 16.
71
It’s now clear that Kyoto is not the path forward to a global solution to climate change.” 155
In addition, Kent said that the withdrawal will save Canada $14bn in penalties for not
achieving the targets of the Kyoto protocol, and that signing Kyoto was “one of the previous
government’s biggest blunders”.156 It should be mentioned that earlier Canada was one of the
most active supporters of the Kyoto protocol; in 2000 the Government of Canada issued the
Action Plan on Climate Change that describes cost-effective measures allowing providing one-
third of the way to its Kyoto target.157 Yet, in the course of time, the policy of Canada in regard
to the global climate change problems has changed cardinally, as one can see.
Besides, it is worth saying that last year Japan and Russia (also significant players in the
field of international global environmental policy) claimed about their unwillingness to accept
new Kyoto commitments too.
The example of the Kyoto protocol (as an approach to solving the climate change
problem) is a significant demonstration of the complexity of the concept of sustainable
development158. It becomes clear that the concept should be understood as comprising and
balancing various aspects, such as human welfare, economic efficiency, social development,
155 The Guardian, ‘Canada pulls out of Kyoto protocol’ The Guardian (London 13 December 2011)
<http://www.guardian.co.uk/environment/2011/dec/13/canada-pulls-out-kyoto-protocol> accessed 14 December 2011
156 ibid.
157 Government of Canada, ‘Action Plan 2000 on Climate Change’ (2000)
<http://publications.gc.ca/collections/Collection/M22-135-2000E.pdf> accessed 14 December 2011
158 International Bar Association, ‘Presidential Task Force on Climate Change Justice and Human Rights’ <
http://www.ibanet.org/PresidentialTaskForceCCJHR2014.aspx> accessed on 6 November 2014.
72
environment protection and political interests. This means that the concept of sustainable
development is a multi-dimensional one.
Besides, current initiatives related to sustainable developments should have a long-term
perspective, preventing unwanted consequences. In addition, global cooperation among countries
around the world is necessary.
2.2.6 New Millennium Summit, Johannesburg Summit and ILA New Delhi
Declaration
The beginning of the new millennium in the field of sustainable development has been
marked by the UN Millennium Declaration, which was adopted by a number of world leaders at
the 2000 Millennium Summit. In compliance to the Rio Declaration and Agenda 21's statements,
189 countries were committed to support a new partnership, aiming to achieve a number of
“targets for addressing extreme poverty in its many dimensions - income poverty, hunger,
disease, lack of adequate shelter, and exclusion – while promoting gender equality, education,
and environmental sustainability.”159 These targets were called the Millennium Development
Goals (the MDGs), the timeframe for most of them was set as the year 2015. The MDGs are
remarkable because they have appeared as a practical expression of the principle of equilibrium
between the economic, social and environmental aspects of the sustainable development,
elaborated in the 2000s.
159 Millennium Project, ‘About Millennium Development Goals’ (2006) Para. 1,2 available online at
<http://www.unmillenniumproject.org/goals/index.htm> accessed 10 October 2011.
73
There are eight MDGs intended to free people from extreme poverty and multiple
deprivations, in particular in poorest countries. Among the MDGs the Goal 7 is specifically
related to environmental sustainability and has three targets: (1) integration of the principle of
sustainable development into country policies and programs and reversing the loss of
environmental resources; (2) significant reducing the proportion of people without sustainable
access to safe drinking water and basic sanitation; and (3) significant improvement in the lives of
at least 100 million slum dwellers. 160
Nowadays, despite that the Millennium Declaration and Goals were supported by many
countries with big enthusiasm, progress towards achievement the MDGs is unequal. MDGs 2011
Progress Chart well demonstrates that today, after 10 years and with 2015 deadline looming,
some countries (mainly in the Latin America and Caribbean region) have managed to reach
almost all assigned goals, while others (in particular in Oceania, Central, Southern and Western
Asia) have little progress or have not any progress at all in regards to many targets. The Goal 7 is
found as the most unachieved. 161 There is a real doubt that several objectives will not be met by
2015. As a consequence, there are now heated debates concerning the necessity of reconsidering
of the MDGs and adoption of a new target-based system of sustainable development.162
160 ibid.
161 UN Department of Economic and Social Affairs, ‘Millennium Development Goals: 2011 Progress Chart’ (2011)
<http://mdgs.un.org/unsd/mdg/Resources/Static/Products/Progress2011/11-
31330%20(E)%20MDG%20Report%202011_Progress%20Chart%20LR.pdf> accessed 14 December 2011
162 Institute of Development Studies (IDS), ‘After 2015: Rethinking Pro-Poor Policy’ (2009)
<http://www.ids.ac.uk/files/dmfile/IF9.1.pdf> accessed 14 December 2011
74
Another prominent event in the field of sustainable development happened in 2001, when
in the context of the ‘Doha Development Agenda (DDA)’ at the WTO meeting in Qatar, the trade
ministers of the WTO Member States discussed the Ministerial Declaration, in which they
reaffirmed their commitment to the sustainable development concept.163 The commitment was
confirmed by a number of reports of the WTO Panel and Appellate Body, which addressed the
concept of sustainable development in world trade law.164 A good example of such commitment
is also the Sustainable Development Strategy of Canada,165 which declares that international
trade “provides each country with an opportunity to better utilize its resources through engaging
in specialisation and maximizing its comparative advantage.”166 In this document, Canada
considers that trade provides economic efficiency, which, in its turn, supports economic growth,
greater productivity and higher income – all of these contribute to sustainable development, as a
163 Doha Ministerial Declaration [2001] WT/MIN (01)/DEC/1, para.6: “We strongly reaffirm our commitment to the
objective of sustainable development. We are convinced that the aims of upholding and safeguarding an open and non-
discriminatory multilateral trading system, and acting for the protection of the environment and the promotion of
sustainable development can and must be mutually supportive.”
<http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm>
164 For example, United States - Import Prohibition of Certain Shrimp and Shrimp Products, Recourse to Article 21.5 by
Malaysia (15 June 2001), WTO Doc. WT/DS58/RW. See also Markus Gehring and Marie- Claire Cordonier Segger,
Sustainable Development in World Trade Law (Kluwer Law International, The Hague 2005)
165 Canada, Department of Foreign Affairs, Sustainable Development Strategy 2004-2006: Agenda 2006 (DFAIT, Ottawa
2005)
166 ibid, at Goal 2.
75
result.167 At that the key task of International Trade Canada is defined as “promoting all three
pillars of sustainable development in [Canadian] bilateral, regional and multilateral relations.” 168
Then, ten years after the remarkable 1992 Rio Summit, another world gathering took
place in Johannesburg, South Africa. This was the 2002 World Summit on Sustainable
Development (WSSD), which helped to re-energise governmental commitments towards
sustainable development:
Thirty years ago, in Stockholm, we agreed on the urgent need to respond to the problem of
environmental deterioration. Ten years ago, at the United Nations Conference on Environment
and Development, held in Rio de Janeiro, we agreed that the protection of the environment and
social and economic development are fundamental to sustainable development, based on the Rio
Principles. …The Johannesburg Summit has also confirmed that significant progress has been
made towards achieving a global consensus and partnership among all the people of our planet. 169
It is widely acknowledged that the Johannesburg Summit was a landmark in fostering the
partnership between the UN, businesses, governments and non-governmental organisations and
in accumulating resources in order to address effectively global environment, health and poverty
problems. The Johannesburg Declaration was important as it emphasises the need for states to
focus on the development and implementation of more sustainable development policies and
167 ibid.
168 ibid.
169 UN Department of Economic and Social Affairs, ‘Johannesburg Declaration on Sustainable Development “From our
origins to the future” (2002) Para. 8,10
<http://www.un.org/esa/sustdev/documents/WSSD_POI_PD/English/POI_PD.htm> accessed 10 October 2011
76
programmes, particularly in partnership with civil society and business community. Partnership
for sustainable development is reputed as the significant complementary outcome of WSSD; it is
understood as a number of voluntary, multi-stakeholder actions aimed at providing sustainable
development.
In May 2003 the Commission on Sustainable Development (CSD) reaffirmed that “these
partnerships contribute to the implementation of intergovernmental commitments.”170 Since the
WSSD, the Secretariat of the CSD constantly lists all activities and processes related to initiating
different forms of partnership for sustainable development. On 1 April 2008 there were 98 CSD-
registered partnerships for sustainable development focused their activities both on global issues
(such as Global Alliance for Building Sustainability (GABS), Global Water Partnership (GWP),
or The Johannesburg Climate Legacy) and on locally specific problems (e.g. Mineral Resources
and Sustainable Development in Africa, Promotion of Sustainable Development in the Lake
Victoria Basin, Strategic Partnership for Mobilizing Civil Society to Combat Land Degradation
and Poverty in Southern Africa and so on). 171
Another major goal of the WSSD was to evaluate the progress in the achievement of the
Rio conference’s goals and to design new ways of implementation of the global sustainable
development strategy. Some of delegates and observers emphasised that the sustainable
development paradigm was influenced severely by the rising of another important paradigm –
170 UN Conference on Sustainable Development, ‘Partnership for Sustainable Development’ (2011)
<http://www.uncsd2012.org/rio20/index.php?menu=36> accessed 10 October 2011
171 UN Department of Economic and Social Affairs, ‘Summaries of CSD registered partnerships for sustainable
development - CSD 16-17 implementation cycle’ (2008) DESA/DSD/2008/1
77
globalisation, which entails liberalisation of international market, reducing trade and other
national economic barriers, minimisation of the market regulations, and as a consequence, leads
to inability of developing countries to play freely on markets, and to intensification of social and
economic concerns.172
The Johannesburg Plan of Implementation (JPOI) has become the most significant result
of that Summit as it helps to continue the idea of the “increasing importance of the
socioeconomic pillars of sustainable development”173, which appeared at the 1992 Rio
Conference and was developed at the 2000 Millennium Summit. In practice, it means
achievement of good balance between three dimensions of sustainable development in national
SD strategies, namely between economic, environmental and social objectives for both present
and future generations. In particular, it set in place a new institutional infrastructure for
sustainable development, organised at three levels. The first level comprises the UN General
Assembly (UNGA), the Economic and Social Council (ECOSOC), and the UN Commission on
Sustainable Development (UN CSD), mentioned above, and a number of other international
organisations. At the second level, there are various regional and sub-regional institutions and
bodies (such as the UN Regional Commissions), including regional development banks. And the
172 Pamela Chasek and David Leonard Downie and Janet Welsh Brown, Global Environmental Politics (5
th edn, Westview
Press 2010)
173 Paul (n 60) 579.
78
third level comprises different national actors, such as governments’ ministries and local
authorities174.
The major outcomes of the Summit influenced the overall international policy-making
process profoundly, as they were focused not only on economic and environmental issues, but
the social and human rights aspects of sustainable development were recognised and confirmed
in Johannesburg. Today, many national strategies are still focused for the most part on
environmental issues (e.g. Denmark or Australia), considering the economic aspect (UK,
Canada) and virtually neglecting the social aspect. However, more and more countries (e.g.
Belgium, New Zealand and Sweden) start to develop their sustainable development strategies
considering all three pillars in the overall policy-making.175
The specific meaning of the Johannesburg Summit was in that it was more focused on
practical, technical aspects of implementation of sustainable development, rather than on
formulation of general principles.
The most current important principles, supporting the concept of sustainable development
were also provided in 2002 by the New Delhi Declaration of Principles of International Law
Relating to Sustainable Development, adopted at the 70th Conference of the International Law
Association (ILA). The main idea of the New Delhi Declaration is that sustainable development
174 Marie- Claire Cordonier Segger and Rajat Rana, ‘Selecting Best Policies and Law for Future Generation’ (2008)
<http://www.worldfuturecouncil.org/fileadmin/user_upload/papers/Best_Policy_Principles080508.pdf> accessed 10
October 2011
175 OECD, ‘Good Practices in the National Sustainable Development Strategies of OECD Countries’ (2006) 16
<http://www.oecd.org/dataoecd/58/42/36655769.pdf> accessed 10 October 2011
79
has become widely accepted as a global objective.176 At the same time, while the international
community strives to apply principles of sustainable development, such as the principle of
sustainable use or equity, it should understand that particular decisions and practical solutions
should differ between countries in dependence on their contextual conditions. Yet, it is desirable
that a certain degree of coherency between different policies and projects should be provided in
order to ensure coordination and persistency of unified efforts.
The particular importance of the New Delhi Declaration is also in that it emphasises
clearly the necessity to integrate human rights into the concept of sustainable development,
assuming that human rights law is a third main source of the law on sustainable development
along with international environmental law and the international law on development. 177 Later in
2003 the relationship between sustainable development and human rights was supported again by
the UN Commission on Human Rights:
“[The Commission] reaffirms that peace, security, stability and respect for human rights and fundamental freedoms, including the right to development, as well as respect for cultural diversity are essential for achieving sustainable development and ensuring that sustainable development benefits all.” 178
176 ILA Res. 3/2002, ‘New Delhi Declaration of Principles of International Law Relating to Sustainable Development’
(2002) 2
177 Antoinette Hildering, International Law, Sustainable Development and Water Management (Eburon Academic
Publishers 2004) 35; International Bar Association, ‘Presidential Task Force on Climate Change Justice and Human
Rights’ < http://www.ibanet.org/PresidentialTaskForceCCJHR2014.aspx> accessed on 6 November 2014.
178 UN Commission on Human Rights, Resolution 2003/71 ‘Human rights and the environment as part of sustainable
development’, para 1 .
80
In addition, several important decisions by the European Court of Human Rights
caused the ongoing debate around the question where human rights and sustainable
developmental issues overlap, e.g. as in Hatton & Others v. UK179, or in the notion of the
International Court of Justice’s Advisory Opinion. 180
Another important point of the New Delhi Declaration, supported by principles, was its
motivation to the active interaction between States, international, governmental and non-
governmental organisations, social groups, and individuals – all participants of multilateral
process of sustainable development.
2.2.7 The Current Progress on Sustainable Development
Thus, the overview of the historical process of evolution of the sustainable development
concept demonstrates that, increasingly, environmental problems have become extremely
important for the modern society. Moreover, economic, environmental and social concerns are
integrated now in the sustainable development concept, influencing the decision-making process
at all levels – ethical, social, economic, political, and scientific.
179 [2003] App no 36022/97, 37 EHRR 28, para 122: “Environmental protection should be taken into consideration by
Governments in acting within their margin of appreciation and by the Court in its review of that margin, but it would not
be appropriate for the Court to adopt a special approach in this respect by reference to a special status of environmental
human rights”
180 [2004] GA RES ES–10/15, UNGAOR, 10
th special session, 27
th Plen Mtg, UN Doc A/RES/ES–10/15, para 134: “[t]o
sum up, the Court is of the opinion that the construction of the wall and its associated régime…impede the exercise by
the persons concerned of the right to work, to health, to education and to an adequate standard of living as proclaimed in
the International Covenant on Economic, Social and Cultural Rights and in the United Nations Convention on the Rights
of the Child”
81
However, there are also notable difficulties in implementing sustainable development.
This is still considered as a big problem.181 Evidently, sustainable development is a complex and
challenging concept, and constant systemic changes are needed in order the concept could be
implemented successfully, influencing on economy, politics, and lifestyle of citizens. In order to
understand better how the current principles of the concept can be applied one should consider
several important decisions of international courts and tribunals, which give the examples of
solving the current disputes with relevance to sustainable development.
The case concerning Pulp Mills on the River Uruguay (Argentina v. Uruguay) 182 can be
particularly mentioned in this regard. In this case, Argentina complained that the pulp mills at the
River Uruguay would cause environmental damage both to the river and to Argentina itself. The
ICJ, reflecting the ILA New Delhi Declaration principle of sustainable use of natural resources,
claimed that to ensure sustainable use of the River Uruguay the balance between economic
development and environmental protection is needed. Analysing the relationship between the
procedural and the substantive obligations in regard to the River Uruguay, the Court emphasises:
“…[T]he present case highlights the importance of the need to ensure environmental protection of shared natural resources while allowing for sustainable development; …account must be taken of the need to safeguard the continued conservation of the river environment and the rights of economic development of the riparian States.” 183
181 Dambisa Moyo, Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa. (Farrar, Straus and
Giroux 2010)
182 [2006] ICJ Rep, Request for the Indication of Provisional Measures, Order of 13 July 2006
183 ibid. para 80.
82
At that, the Court argued that “the particular way in which economic development and
the protection of the environment may be reconciled has to be decided by the Parties
themselves.” 184 Thus, the Court would not consider sustainable development as an operative rule
of international law, using which it is possible to make decisions concerning the legality or
illegality of State behaviour. Rather the Court suggested establishing a system of co-operation
between Argentina and Uruguay in order to come to an agreement and to prevent damage to the
River Uruguay on a mutual basis.
The concept of sustainable development was further discussed and elaborated at the 2010
Hague Conference of International Law Association, where the special group International Law
in Sustainable Development has held its working sessions.185 Today this conceptual framework
has provided several important outcomes, which can be presented as follows:
1. Acceptance of sustainable development as a guiding principle, mainly because of its
flexibility, which allows adopting the concept to the purposes of different
stakeholders. Current understanding of the concept presumes that “sustainable
development is continued economic growth made more environmentally sensitive in
order to raise living standards globally and break the link between poverty and
environmental degradation.”186
184 ILA, ‘The Hague Conference. International Law on Sustainable Development Report’ (2010) 10 <http://www.ila-
hq.org/en/events/index.cfm/eid/3E742AC9-D8E6-4505-8B3A2028FD1FB8D9/event_type/A994F2F9-8D4B-48F8-
BE12D6297E6B1828> accessed 10 October 2011
185 ibid.
186 Drexhage and Murphy (n 107) 10.
83
2. Progress on sustainable development metrics, indicators, which aim “to reflect a
broader understanding of what constitutes progress, and seek to refine the
conceptualisation of wealth, capital, and development.”187 Examples of these metrics
are the UN’s Human Development Index, the WWF’s Nature’s Living Planet Index,
and others. (188) The Organisation for Economic Co-operation and Development
(OECD) together with the International Institute for Sustainable Development
suggested the Bellagio STAMP (Sustainability Assessment and Measurement
Principles), which provide measurement progress toward sustainability in accordance
with the OECD’s Measuring the Progress of Societies program.189
3. Improvement in partnering with stakeholders. Since the establishment of the UN
Commission on Sustainable Development (CSD) different civil society organisations
(non-governmental, business, and others) can now participate in the decision-making
processes related to sustainable development issues.
4. Evidences in progress in achievement sustainable development, which can be
illustrated by a number of legislative initiatives in developing countries, as well as by
a growing acknowledgement of the value of ecosystem services to society and
business.
187 ibid 11.
188 The UN Guidelines and Methodologies in Indicators of Sustainable Development can be seen here
<http://www.un.org/esa/sustdev/natlinfo/indicators/guidelines.pdf > accessed 10 October 2011
189 OECD, ‘Measuring the Progress of Societies program web-site’, available online at
<http://www.oecd.org/dataoecd/55/3/44117539.pdf> accessed 10 October 2011
84
Recent years were marked by the global financial crisis, the ongoing dissent on a climate
regime (and the following reform of alliances between developed and developing countries), the
changes of dynamic within North-South relations (e.g. the transformation G-8 into the G-20 or
the rise of BRIC (Brazil, Russia, India and China)), the Iraq’s war, as well as by the numerous
natural disasters (such as earthquakes, flooding and tsunami) and technogeneous catastrophes
(such as the Deepwater Horizon oil spill in the Gulf of Mexico or the Fukushima Daiichi nuclear
disaster in Japan). According to ILA:
“[all of this highlights] both the enormous strain on already stretched resources and governance capacity of vulnerable peoples, and the importance of international endeavour and support. These developments, both individually and cumulatively, all seem to indicate that ‘old’ certainties can no longer be presumed and that the international order is continually being reshaped to take into account changing trends and political relations.” 190
It becomes evident that new effective democratic and accountable international and
multilateral institutions, which will ensure such benefits as peace, security, stability, freedom,
cultural diversity, respect for human rights and many others ones, related to sustainable
development, are extremely required.191
190 ILA (n 184) 2.
191 UN Economic Commission for Africa, ‘Sustainable Development Report on Africa: Five-Year Review of the
Implementation of the World Summit on Sustainable Development Outcomes in Africa (WSSD+5)’ (2008) 146
<http://www.uneca.org/eca_resources/publications/books/sdra/front.pdf> accessed 10 Oct 2011
85
Another point of current debates is that, despite the longstanding history of the concept of
sustainable development, international environmental law is still underdeveloped192. At the same
time, as we see above, today the concept of sustainable development is one of the fundamental
principles of international law, which impacts the legal system profoundly. According to
Bosselmann,
“… Like the ideas of justice and human rights, sustainability can be seen as an ideal for civilization both at national and international level. When accepted as a recognized legal principle, sustainability informs the entire legal system, not just environmental laws or not just at the domestic level. …For sustainable development to become the overarching paradigm in law and governance, its conceptual core, i.e. the principle of sustainability, needs to be (re-)discovered, explained, defined and applied.” 193
Thus, today the key problem of sustainable development remains to find new ways,
methods and norms for effective balancing between various interests, as the EU Council said:
“Unsustainable trends in relation to climate change and energy use, threats to public health, poverty and social exclusion, demographic pressure and ageing, management of natural resources, biodiversity loss, land use and transport still persist and new challenges are arising.” 194 The most critical task in this area remains “the integration of these elements and objectives within the scope of the concept.” 195
192 International Bar Association, ‘Presidential Task Force on Climate Change Justice and Human Rights’ <
http://www.ibanet.org/PresidentialTaskForceCCJHR2014.aspx> accessed on 6 November 2014.
193 Bosselmann (n 125) 4.
194 The EU Council (2006) 10117/06, Annex: Renewed EU Sustainable Development Strategy, 2
195 Voigt (n 20 ) 33.
86
2.3 Conceptual basis of sustainable development
2.3.1 Conceptual dimensions of sustainable development
As the concept of sustainable development becomes a buzzword, the society becomes
more aware about services, which are provided by the environmental assets, as well as about
consequences of the degradation of these assets for mankind at present and in future.
Munasinghe distinguishes three main types of services to human society, which the
environmental assets do provide196: (1) “The natural resource base provides essential raw
materials and inputs which support human activities”; (2) “The environment serves as a sink to
absorb and recycle (often at little or no cost to society) the waste products of economic activity”;
(3) “The environment provides many other generalised services ranging from simple amenities to
irreplaceable life support functions (e.g., stabilisation of the global climate or filtering out of
harmful ultraviolet rays by the stratospheric ozone layer)”. Thus, one can say that human
activities should be considered as a part of an open, dynamic socioeconomic system embedded in
the global ecosphere; and an enormous growth of socioeconomic system during recent decades
has overloaded natural capabilities of the ecosystem, both in local and in global scale. Taking
into account that the ecosphere is finite, the unbounded, thoughtless, material-intensive economic
growth is not sustainable, especially in the long-term outlook.197 By the 1980s, it has become
evidently that degradation of the environment is one of the pivotal barriers to successful
development. So, along with economic objectives (which can be generally described by the
196 Munasinghe (n 58) 1.
197 Robert Goodland and Herman Daly and Salah El Serafy, Environmentally sustainable economic development: building
on Brundtland. World Bank Environment Paper 46 (World Bank 1991)
87
concepts of efficiency, growth and stability), protection of the environment has become one of
the main objectives of sustainable development (see the right side of Figure 1). It is also widely
acknowledged that in addition to the environmental roots, the concept of sustainable
development is also based upon the experience of economic development. In the beginning of
1970s, with the appearance of growing number of poor in the developing countries, it has
become clear that the economic policy, which was earlier focused on economic output and
efficiency mainly, is no more adequate, so, far greater efforts are required in order to improve the
situation, balancing income distribution between countries. Thus, the development paradigm has
been emerged, where social (or distributional) objective is considered as separate but no less
important objective in comparing with economic efficiency.198 The left side of Figure 1
illustrates social objectives of sustainable development.
198 Munasinghe (n 58)
ECONOMIC:
• Efficiency
• Growth
• Stability
ENVIRONMENTAL:
• Resilience /
Biodiversity
• Natural resources
• Pollution
SOCIAL:
• Empowerment
• Inclusion /
Consultation
• Government
Intra-generational equity
Targeted relief /
Employment
Valuation
Internalisation
Inter-generational equity
Popular participation
Poverty Equity
88
Figure 1. Sustainable Development Triangle199
Therefore, the concept of sustainable development includes three dimensions: economic,
social and ecological. Thus, it is possible to encompass three approaches to sustainability, as it is
shown in Figure 1.
Each of the approaches has different objectives:
• the economic approach is aimed mainly at the improvement of quality of human life
through increasing consumption of services and goods.
• the environmental approach views protection of the integrity and resilience of ecological
systems, as well as their biodiversity;
• and the social approach focuses on the development of human relationships and
strengthening of social values and institutions.
Thus, based upon the sustainable development triangle, one can agree that: “sustainable
development requires (i) opportunities for improving economic, social and ecological systems;
and (ii) increases in adaptive capacity. Expanding the set of opportunities for system
improvement will give rise to development, while increasing adaptive capacity will improve
resilience and sustainability.”200 As a consequence, the new term “sustainomics” has been coined
199 Mohan Munasinghe, Analysing the Nexus of Sustainable Development and Climate Change: An Overview (OECD
2003) 8
200 Munasinghe (n58)
89
as “a transdisciplinary, integrative, comprehensive, balanced, heuristic and practical framework
for making development more sustainable.”201
Obviously, in order that sustainomics can be promoted effectively, new approaches and
innovation policies are needed, which help to shift away from global, public programmes to
more focused environmental, technological and social initiatives, sponsored by public/private
partnership. At that the role of new institutions, which are able to provide integration of
economic, social and environmental objectives at each level of policy development and decision-
making, is increasing substantially. As it is emphasised by OECD, “[i]t also underscores the
importance of: (i) credible mechanisms for reporting the outcomes of policy decision and for
fostering accountability of results; (ii) coherence across government departments and levels of
governments; and (iii) a transparent and inclusive approach to decision-making, so as to confront
conflicting interest and points of view and to address policy trade-offs when these arise.”202
2.3.2 The approaches of environmental philosophy to sustainable development
The problems, which constitute the “environmental crisis” (including human
overpopulation, pollution, resource depletion, destruction of ecology, degradation of nature and
so on), should be viewed as consequences of a fundamental undervaluation of significance of
nature in human life, as well as of excluding nature from a system of human moral norms,
concerns and values. In order to address these issues, a number of philosophical presuppositions
201 Mohan Munasinghe, ‘Sustainomics and sustainable development’ in Cutler J Cleveland (ed), Encyclopedia of Earth
(Environmental Information Coalition, National Council for Science and the Environment 2007) Basic Framework para 4
202 OECD Observer, ‘Sustainable development: Critical issues’ [September 2001] available online at
<http://www.oecd.org/dataoecd/29/9/1890501.pdf> accessed 10 October 2011
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have been approached, resulting in the development of a new scientific branch - environmental
philosophy.
Ethics is a theory of moral obligation, and environmental ethics tries to answer the
questions related to understanding moral significance and value of nature, particularly in terms of
its significance for human needs. The key discussions in the current stream of environmental
philosophy consider the ability of environmental ethics to be defensible and, as a consequence,
whether environmental ethics should be considered as a necessary part of a green political
theory.
Environmental ethics deals with the moral relations between humans and nature; the
principles, which govern these relations, determine duties, obligations and responsibilities of
humans to the natural environment of our planet. The central problem of environmental ethics
can be defined as “the problem of constructing an adequate theory of intrinsic value for
nonhuman natural entities and for nature as a whole.”203 While environmental ethics itself is
described as “the system of moral principles by which human treatment of natural ecosystems
and their wild communities of life ought to be guided.”204
The key concept in environmental philosophy and ethics is value, and scholars
distinguish three kinds of value, although the distinctions between them are rather vague: 205
203 J Barid Callicott, ‘Intrinsic Value, Quantum Theory, and Environmental Ethics’ (1985) Environmental Ethics 7 257
204 Paul W Taylor, Respect for Nature: A Theory of Environmental Ethics (25
th Anniv.Edn, Princeton UP 2011) 9
205 Carter (n 95) 15.
91
• Instrumental value is the value which something has for someone as a means to an
end which they desire.
• Inherent value is the value something has for someone, but not as a means to a further
end. In other words, it is something which a person finds valuable in itself.
• Intrinsic value is simply the value which something has. No appeal need be made to
those for whom it has value. It simply is valuable and is so independently of anyone
finding it valuable.
Different understanding of value leads to the so-called anthropocentric-ecocentric
dichotomy in the approaches within environmental philosophy.
Anthropocentrism is defined as “a way of thinking that regards humans as the source of
all value and is predominantly concerned with human interests.”206 In other words,
anthropocentrism denotes that humans are positioned at the centre of the universe, independently
from nature, and their needs and interests have the highest priority. Based on the belief that only
humans have the capacity to feel pain, misery or pleasure and the capacity to think and to reason,
anthropocentrism claims that only humans have intrinsic value; while the rest of living organism
is of instrumental value – “it has value and deserves moral consideration only in so far as it
206 ibid 14.
92
enhances human well-being.”207 This means that non-human nature – animals, plants, any other
living creatures – is only a ‘storehouse of resources’ for the satisfaction of human needs. 208
Thus, anthropocentrism justifies environment protection, considering consequences,
which makes sense for humans – for example, it claims that lead must be removed from petrol
because it harms the health of humans. The human-centered approach in environmental
protection is mainly based upon consideration that all people oblige not to allow deterioration of
the nature because each generation should guarantee healthy and secure conditions for the life of
future generations. In addition, each generation has a duty to think about integrity and
replenishing (or conservation) of natural resources in order to ensure that future generations will
be able to benefit from these resources. “It would be unfair of us – to destroy the world’s natural
wonders and leave only ugly trash heaps for others to contemplate.”209 Thus, one can see that,
grounding on human needs and interests alone, it is possible to develop a quite comprehensive
whole of norms and standards regulating relationships between people and nature.
However, there are a lot of environmentalists who insist that measures, provided from an
anthropocentric point of view only, are not sufficient in order to support a strong environmental
ethics: “...we have been too gentle and uncritical of it in the past, and it has grown ugly and
dangerous. Humanism itself …must now be protected against its own excesses.”210
207 ibid 15.
208 Robyn Eckersley, Environmentalism and Political Theory: Toward an Ecocentric Approach (State University of New
York Press 1992) 26
209 Taylor (n 204) 11.
210 David Ehrenfeld, The Arrogance of Humanism (OUP, Oxford 1981) xiv
93
So, the development of a non-anthropocentric, or ecocentric ethics (as a dimension of the
overall environmental ethics), is considered as one of the major tasks of the modern
environmental policy. Ecocentrism can be defined as “a mode of thought that regards humans as
subject to ecological and systems laws and whose ethical, political and social prescriptions are
concerned with both humans and non-human.”211 Ecocentrism argues that non-human beings
also have intrinsic value, and their values differ in accordance with their biological species and
categories. Such argument rejects the ‘anthropocentric chauvinism’ and distinguishes ecologism
from other politics.212 One of the key features of ecologism is that “humans will always be the
distributor of value, but they are not necessary the only bearers of value.”213
From 1970 to the early 1990s, anthropocentric-ecocentric dichotomous discussions
dominated environmental ethics in a search of the answer to the query – “where to draw the
crucial line between those beings that are morally considerable and those that are morally
irrelevant.”214 The focus on these dichotomies led to a conflict between environmental
philosophers and environmental economists, not allowing any integration of their discourses –
economists argue that all values are values of consumers (i.e. human beings), while
environmental ethicists wish to expand moral consideration, including interests of non-
211 Carter (n 95) 14.
212 Eckersley (n 208)
213 Carter (n 95) 36.
214 Bryan G Norton, ‘Ethics and sustainable development: an adaptive approach to environmental choice’ in Giles
Atkinson and Simon Dietz and Eric Neumayer (eds.) Handbook of Sustainable Development (Edward Elgar Publishing
2007) 27
94
humans.215 In the given context it is worth mentioning the viewpoint that is referred to as
environmental pragmatism and deals with environmental action concerned with real-world
problems rather than abstract theoretical questions about kinds of value nature:
“Pragmatic metaphysics emphasises those qualities of the world that are grasped by active experience with the world: pluralism, indeterminacy, change and the primacy of relations. ...Pragmatic value theory focuses on what is good for a particular organism in its environment, thus acknowledging a plurality of values. Pragmatic ethics is thus the systematic understanding of these values in all their multiplicity, complexity and indeterminacy.” 216
Some scholars consider that pragmatism complements the search for sustainable
development as it is a forward-looking philosophy, which defines responsibility within the whole
community of inquirers, moreover, in the long term.217 Nowadays there are a number of
commentators who distinguish even more perspectives in environmental philosophy. The
following comprehensive typology of perspectives is suggested and in my view: 218
• Shallow perspectives, such as ‘resource conservationism’ and ‘preservationism’.
These theories are concerned about environmental protection, but they remain
subordinate to other human interests (e.g. anthropocentric perspective). In the view of
these perspectives humans are the sole items of value, that is why the shallow
perspectives are considered to be based on the Sole Value Assumption.
215 Bryan Norton and Ben A. Minteer, ‘From Environmental Ethics to Environmental Public Philosophy: Ethicists and
Economists, 1973-2010’ in Tom Tietenberg and Henk Folmer (eds), International Yearbook of Environmental and
Resource Economics 2002/2003 (Edward Elgar Publishing 2002) 373
216 Andrew Light and Eric Katz, Environmental Pragmatism (Routledge 1996) 7
217 Norton (n 214)
218 Carter (n 95) 17.
95
• Intermediate perspectives suggest including certain non-human entities and extending
moral consideration, although the categories included, and the reasons for extension
differ between different perspectives. A large part of environmental philosophy falls
within this category, for example, moral extensionists or ethical holists.219 In the view
of these perspectives human interests or values are considered to be always high than
the value of members of non-human species, so the intermediate perspectives are
considered to be based on the Greater Value Assumption.
• Ecocentric perspectives rethink ethical positions around a non-human-centered
attitude to the environment, rejecting both the Sole and Greater Value Assumptions.
In the view of these perspectives value is intrinsically contained in the ecosphere as a
whole rather than in humans or individual entities, so value exists independently of
humans. Today deep ecology is accepted as the foremost ecocentric position,
although there are some other prominent ‘deep’ perspectives, e.g. ‘transpersonal
ecology’.
Distinguishing features of different perspectives in environmental philosophy
(especially of ecologism) have made a huge impact in the reappraising of the human-nature
relationship – humans are no more considered to be at the top ethical hierarchy, moreover,
humans are considered to have serious obligations for the protection of the rest of natural world:
“Expansion of the moral sphere beyond the human to the nonhuman is based on the ‘ought’ and
219 Carter (n 95)
96
other ideals that regulate human action in line with the principle of their impact on the
environment.”220
Nevertheless, according to opinions of many scholars, it is quite fruitless to search for a
pure non-anthropocentric perspective. Today there are a number of theories, which can
contribute successfully and constructively to the development of environmental ethics, guiding
the behaviour of humans towards the health and sustainable environment.
2.4 How sustainable is the concept of sustainable development?
The concept of sustainable development has come a long way, but sadly its
implementation has not. Sustainable development is widely understood and interpreted, but its
implementation in letter and spirit remains limited. A lack of implementation of sustainable
development and the absence of benefits that would have accrued from such implementation
have meant that the veracity of sustainable development has come under criticism in recent
years. One major cause is the apparent misunderstanding of the concept of sustainable
development that is overwhelmingly interpreted as an environmental phenomenon than anything
else. Even the more modern interpretation and criticisms of sustainable development tend to take
it as a largely environmental solution221. It is clear from the Brundtland Commission’s Report
that the concept of sustainable development was built around inter-generational parity based on
220 Hugh P McDonald, John Dewey and Environmental Philosophy (State University of New York Press 2004) 157
221 Jorge E Vinuales, ‘The rise and fall of sustainable development’ [2013] RECIEL 22, 1-20; Hugh Wilkins, ‘The
integration of the pillars of sustainable development: A work in progress’ [2008] JSDLP 4(2), 163-188; Gail E
Henderson, ‘Rawls and sustainable development’ [2011] JSDLP 7(1), 1-31.
97
the ability to meet generational needs222. The needs of generations depend not merely on
environmental priorities but on being able to deal with the socio-economic aspects of the
equation too.
It is with this premise that the United Nation’s ‘three pillar’ approach has emerged over
time. This approach tends to equate the environment, social development and economic
development to create the common framework for sustainable development223. In more recent
years, this three-pronged approach has been fused with the fourth pillar of culture to ascertain
what sustainable development is composed of224. The transformation of the concept of
sustainable development from the Brundtland Commission’s findings to the United Nations
three- pillar approach and now the addition of the fourth pillar, indicate strongly that the concept
of sustainable development is yet under constant evolution. The consistent evolution of
sustainable development and its use by diplomats as a wish list for the future225 has meant that
sustainable development has failed to take root globally as a means of achievement.
Another notable aspect of sustainable development as a concept is its enshrinement in
vague international legal frameworks to warrant its implementation. International legal
222 Brundtland Report (n 11)
223 G Atkinson, S. Dietz, and E. Neumayer, Handbook of Sustainable Development (London: Edward Elgar Publishing
2009).
224 Agenda 21, ‘Cultural Policies and Sustainable Development’ [2010] available online at
<http://agenda21culture.net/index.php/16-official-documentation-all/agenda-21-culture-all/437-cultural-policies-and-
sustainable-development>.
225 Vinuales (n 221) 1-20.
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frameworks such as the Millennium Development Goals, New Delhi Principles on Sustainable
Development, Ruggie’s Principles on Human Rights, etc. as well as numerous other measures
are available but their limits for implementation have yet to be clarified226. Additionally,
sustainable development is being treated as yet an experimental field where various forms of
legal theory are being applied to examine their efficacy227. Whereas the need of the hour is
effective implementation, the reality is far different. Diplomats and international legal experts are
at play with the very concept of sustainable development in an effort to exert their stance on the
concept. However, it would be far better if the concept were allowed to evolve on its own and if
it were allowed to pronounce its own balance through bilateral treaties and other such legal
arrangements, that would qualify the limits of the concept of sustainable development.
2.5 Conclusion
The history of the sustainable development concept shows that although its three key
aspects and the necessity to balance them have been recognised by human society for many
centuries, the idea of inclusion of the concept into international law resolutions at different levels
has been developed quite recently. The process of such inclusion was difficult; many decisions
have not been provided in full measure or even have failed.
It is extremely important that discussions around the concept have provoked a
process of significant changes, causing the various societal components (such as technologies,
226 Vinuales (n 221)1-20; Wilkins (n 221)163-188; Henderson (n 221)1-31.
227 Henderson (n 221) 1-31.
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institutions, investment, behaviour of producers and consumers, extraction and usage of
resources) operating in conformity with ecological systems’ needs and requirements.
Nowadays, almost every country in the world (particularly from developed ones) is
committed to the statements of international environmental policy and principles of sustainable
development. But, nevertheless, as one can see from the discussion above, sustainable
development is still a rather ambiguous concept, which is often misunderstood and contested.
Such vague position plays both positively (as it allows uniting under the same concept a great
number of political and economic interests) and negatively (as it provokes the criticism and
misunderstanding). That is why, from our point of view, politicians and decision-makers are still
unable to turn the concept into practical actions and policies.
At the same time, the vagueness of the meaning of sustainable development led to
a highly politicized process of “different interests with different substantive concerns trying to
stake their claims in the sustainable development territory.”228 As a consequence, the concept is
often defined by some stakeholders so that to serve their own interests, for example, poor and
developing countries claim the necessity to for global redistribution of wealth around the world,
while rich countries consider sustainability is more about economic growth, stabilisation of
population levels, maintaining profit levels, etc.229
One can agree that in order to meet the requirement to develop sustainably, effectively
and on a global scale, the great efforts are required on the part of both national governments and
228 John S. Dryzek, The Politics of the Earth: Environmental Discourses (OUP 1997) 124
229 ibid.
100
international organisations.230 The major necessary step is needed – the creation of a more
equitable global economic order. In addition, the serious elaborations and changes in
international environmental law are necessary in order to achieve the sustainable development.
Thus, it becomes clear that more prosperous and secure global future depends today upon
new understanding of behaviour’s norms and new forms of legislation at all levels and all areas
of human activity. Lessons of history teach us that science, technology, and society co-evolve
and will continue to co–evolve and that this evolution will be heavily influenced by technology
transfers from developed to developing countries and governments’ funding priorities. As a
result of such cooperation, co-evolution and technology transfer, new possibilities arise, giving
more chances to achieve a good balance between economic prosperity and environmental health.
Making a conclusion, one can say that the current shift in the global sustainable
development policy requires the following actions:231
1. Taking sustainable development out of the environment “box” and considering wider
social, economic, and geopolitical agendas.
2. Fundamentally shifting how we develop and evaluate the health of economies, using a
“Sustainable Economy” as a framework.
3. Moving to actual implementation, with real accountability.
4. Encouraging transparency and accountability in actions.
230 Hinrichsen (n 92) 8.
231 Drexhage and Murphy (n 107) 20.
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5. Using partnerships between government, business and civil society to identify and test
new approaches, and to scale up promising approaches.
6. Effectively communicating sustainable development successes, policies, and learning.
It is also important to note that societal development demands a supportive global system,
which ensure that development moves “away from being simply a mechanistic (and exclusively)
nationalistic process of change, primarily driven by economic factors, to the pedestal …of an
international human rights. … [Then] development as a process of entitlement, which all
individuals should benefit from and which a diverse range of actors have a duty to fulfil, would
seem as the perfect clarion call for global solidarity.”232
A number of international bodies (including the World Bank, the World Future Council,
etc.) works successfully today to address challenges to ‘our common future’ by providing with
various policy solutions, which help decision-makers to issue international agreements, as well
as national and regional policy frameworks, supporting future justice, “a concept integrating
intergenerational equity with intergenerational equity.” 233
This chapter has examined the concept of sustainable development including its evolution
and the various perspectives used to qualify sustainable development. However, it must be
realised that sustainable development would remain little more than a lofty principle if it could
not be implemented for the benefit of affected people and their environment. The next chapter
will look into the various legal arrangements, at both national and international levels, that could
232 ILA (n 184)
233 Goepel (n 24) 1695.
102
be utilised in order to make sustainable development more of a reality than a mere
environmentalist principle.
103
Chapter Three
Gauging Sustainable Development and the Applicable Legal
Frameworks
3.1. Introduction
The concept of sustainability has been evolving over time234 and has assumed a number
of different dimensions today. Contemporary sustainability has taken up environmental, social,
political, economic as well as cultural aspects. It has also been suggested that sustainability
should ideally be one of the basis for all human activities235. The emerging applicability of
sustainability has meant that sustainability has begun to take significant place in legal domains.
Human relationships are defined under laws in order to provide them with greater sanctity.
Sustainability has increasingly begun to assume such legal dimensions since it is fast becoming a
large part of human relationships for environmental, economic, social, cultural and other forms
of collective benefit.
The concept of sustainability in legal terms is as yet still young and has many loose ends
in its discourse. Although sustainability has been defined in relatively similar manners by a
number of different legal instruments, but its interpretation has differed from one situation to the
other. This chapter will look into how sustainable development is being defined in an
increasingly dynamic legal context. Sustainable development for oil and gas in Iraq will be
234 Larry Rockwood, Ronald Stewart and Thomas Dietz, Foundations of Environmental Sustainability (New York: Oxford
University Press 2008) 176
235 Virginie Barral, ‘Sustainable Development in International Law: Nature and Operation of an Evolutive Legal Norm’
[2012] European Journal of International Law 23(2) 377-400
104
explored in relation to legal instruments and various case laws. Furthermore, the role of
sustainable development as a tool in policy making will be looked into with special reference to
the New Delhi Declaration (2002) and its principle aims and objectives. The various aspects
espoused under the New Delhi Declaration, and its evolution will be traced in detail to allow for
a countenance of how these guidelines apply to sustainable development on economic, social and
environmental fronts simultaneously. The contention will be to assess how these guidelines can
be implemented in Iraq’s case to sustainably develop its oil and gas resources.
3.2. Defining Sustainable Development
Broadly put sustainability can be seen as the capability of any system to continue in its
present state of affairs as such. There has been much emphasis placed on sustainability in recent
years, given the rapid pace at which human developments are threatening future prospects.
Sustainability has been under scrutiny since it is becoming clear that human activities have the
potential to offset current solutions to produce failures. Although sustainability has long been
seen in the context of biological systems, but its use has been gaining currency in application to
human systems too236.
When applied to human systems, sustainable development assumes the dimensions of
ecology, politics, economics, society, culture among others. The application of sustainable
development to human systems is aimed at balancing environmental issues with economic needs
236 Ronald Wright, A Short History of Progress (Toronto: Anansi 2004)
105
as well as social equity and justice237. The contention is to produce human systems that are
capable of continuing in a state of balance such that demands are met without affecting future
prospects for continuum. Historically, human settlements have been subject to sustainable
development concerns from the earliest times. Human history makes it abundantly clear that
civilisations tend to cease to exist when faced with a crisis that is handled using unsustainable
means. Human developments show that certain swaths of population succeeded and took on
larger sizes but eventually died out when their modes of consumption became unsustainable238.
In contrast, other human developments tend to live on since they were able to confront crises
using sustainable means so that their systems endured in a state of continuum. The recent global
emphasis on sustainable development arrives from concerns that human systems, along with
biological systems, would not be able to sustain themselves given the current modes of
consumption and replenishment239.
3.2.1. Sustainable Development: The Legal Perspective
The outgrowth of sustainable development from the parent concept of sustainability can
be traced back to the report by World Commission on Environment and Development (WCED)
which was also known as the Brundtland Report240. The Commission saw sustainable
237 Mark Roseland, ‘Sustainable community development: integrating environmental, economic and social objectives’
Progress in Planning 54(2) (Pergamon 2000) 73-132
238 Wright(n 236)
239 Graham M Turner, ‘A comparison of the limits to growth with 30 years of reality’ [2008] Global Environmental Change
18, 397-411
240 Drexhage and Murphy(n 107)
106
development as any forms of development that takes place without affecting the capability of
future generations to provide for themselves at least at the same levels241. Over time, sustainable
development has grown comparable to sustainability given that it assumes similar dimensions.
On the other hand, the United Nations has taken onto a standard definition for sustainable
development using a ‘three pillar approach’. According to the United Nations, sustainable
development relies on the convergence of242:
- economic development;
- social equity;
- environmental protection.
The convergence of these pillars and their resulting sustainable framework can be
highlighted better using the diagram presented below by Han (2012). As the diagram below
illustrates, the United Nation’s method of dealing with sustainable development deals with the
portfolios of society, economics and the environment alike243.
Figure 2 - Sustainability and its three pillars as defined by Han (2012)
241 Charles Smith and Gareth Rees, Economic Development (2
nd edition, Basingstoke: Macmillan 1998)
242 Drexhage and Murphy(n 107)
243 Dawei Han, Concise Environmental Engineering (Venus Publishing Aps 2012)
107
In contrast to the United Nations “three pillar approach”, there are multiple other
perspectives on sustainable development especially when posited in legal realms. For example, it
has been suggested that sustainable development and the law have no common ground since
sustainable development is more of a political objective244. A leading example is the problem of
dealing with fisheries vis-à-vis sustainable development. Protection of the ecosystem is more of a
political function than a legal function. The nation-state framework and its dealings with
fisheries make it evident that this problem is treated through political boundaries rather than
using a comprehensive legal framework between nation states245.
However, such a perspective on sustainable development’s legal ramifications is overly
simplified since the inclusion of sustainable development in both national and international law
is undeniable in the modern day246. Even though, the internalization of sustainable development
in the law is undeniable but citing a unified approach is still not a possibility. Certain quarters see
sustainable development as a legal norm that does not have a legal nature in itself. Instead, it has
been argued that the legal focus should be on principles that allow the achievement of
sustainable development247.
244 Barral, (n 235)377-400
245 Maria Ivanova ‘Environment: the Path of Global Environmental Governance – Form and Function in Historical
Perspective’ in Ayre and Callaway, Governance for Sustainable Development: A Foundation for the Future (London:
Earthscan 2005) 45-72
246 J Sathaye, A Najam, C Cocklin, T Heller, F Lecocq, J Llanes-Regueiro, J Pan, G Petschel-Held , S Rayner, J Robinson,
R Schaeffer, Y Sokona, R Swart, H Winkler ‘Sustainable Development and Mitigation’ in Climate Change 2007:
Mitigation (Cambridge: Cambridge University Press 2007)
247 Barral, (n 235)377-400
108
In contrast to this approach, another group argues that sustainable development is
altogether another differentiated branch of international law248. This view is advanced by the
rapid development of sustainable development as an essential element of instruments under
international law. It is argued that the presence of sustainable development in instruments such
as the Agreement Establishing the World Trade Organization (1995) and various European
Union laws indicates the independent legal character of sustainable development. In addition,
sustainable development has begun to feature in decisions provided by the International Court of
Justice (ICJ) as well as the Appellate Body of the WTO. This practice can be dated back to the
nineties, and its consistency proves that sustainable development has a burgeoning legal
character249. However, the contention that sustainable development is a branch of international
law violates the idea that it has been incorporated into national and regional legal instruments
and decisions. For example, Green House Gas Emission laws and their compliance were ensured
in India by the state’s highest court on a national level250. This indicates that seeing sustainable
development as international law alone makes little sense given its increasing role in regional
and national law.
248 Schrijver, The Evolution of Sastainable Development in International Law ( n 15)
249 Shrijver and Weiss (n 22)
250 W Chandler, R Schaeffer, D Zhou, P R Shukla, F Tudela, O Davidson and S Alpan-Atamer, Climate change mitigation
in developing countries: Brazil, China, India, Mexico, South Africa and Turkey (Washington DC: Pew Center on Global
Climate Change 2002)
109
A final perspective on sustainable development in the legal realm arises from Lowe’s
ideas that sustainable development is an “interstitial norm”251. Lowe’s perspective holds the
greatest weight among other contemporary perspectives since sustainable development, and its
legal implications are in a process of configuring themselves in the modern day. Various legal
instruments have been issued in order to deal with sustainable development such as the
Stockholm Declaration, the Rio Conference, the Johannesburg Conference as well as various
other United Nations instruments on climate change and sustainable development. However,
almost all of these instruments provide for vague reasoning in the conduct of legal exercises. For
example, the United Nations Framework Convention on Climate Change provides for the right to
sustainable development but fails to provide modalities to do so. It has to be recognized that
human interaction with the environment needs to be managed through a set of “equitable, strong
and effective laws” so that sustainability can be achieved252. The current instruments of national
and international law tend to fail when it comes to their usage for encouraging sustainable
development given the vagueness and ambiguity present inherently253.
One feasible solution to this situation is presented by the various judgments on legally
contested issues most notably concerning environmental, economic, social, political, cultural and
251 Vaughan Lowe, ‘Sustainable Development and Unsustainable Arguments’ in A Boyle and D Freestone, International
Law and Sustainable Development: Past Achievements and Future Challenges (Oxford: Oxford University Press 1999)
19-37
252 J Sathaye, A Najam, C Cocklin, T Heller, F Lecocq, J Llanes-Regueiro, J Pan, G Petschel-Held , S Rayner, J Robinson,
R Schaeffer, Y Sokona, R Swart, H Winkler ‘Sustainable Development and Mitigation’ in Climate Change 2007:
Mitigation (Cambridge: Cambridge University Press 2007)
253 D Zaelke, D Kaniaru and E Kruzikova, Making Law Work: Environmental Compliance and Sustainable Development
(INECE 2005)
110
human rights considerations. It must also be kept in mind that such judgments can be considered
from regional, national and international levels to provide feasible solutions. However, there
needs to be a word of caution. Judgments do tend to provide a clearer guideline than opinio juris
but cannot be taken to provide holistic solutions for a variety of problems. In this connection, the
Gabcikovo – Nagymaros254 case is often related given its judgment and the implications arising
from it. Paragraph 140 of the judgment makes it clear that:
“Throughout the ages, mankind has, for economic and other reasons, constantly interfered with nature. In the past, this was often done without consideration of the effects upon the environment. Owing to new scientific insights and to a growing awareness of the risks for mankind – for the present and future generations – of pursuit of such interventions at an unconsidered and unabated pace, new norms and standards have been developed, set forth in a great number of instruments during the last two decades. Such new norms have to be taken into consideration, and such new standards given proper weight, not only when States contemplate new activities but also when activities begun in the past. This need to reconcile economic development with protection of the environment is aptly expressed in the concept of sustainable development.”
The decision of the Court makes it abundantly clear that the disputing parties are under
an economic arrangement that must be honored while placing emphasis on environmental
protection. Hence, this makes it highly evident that economic development aims must be
reconciled with environmental protection objectives. Such positions are vaguely present in legal
instruments since such provisions fail to provide what sets of environmental laws need to be
complied with. Additionally, the judgment makes it clear that the principles of sustainable
development apply not merely to new developments but also to past actions by human beings, as:
254 Gabcikvo Nagymaros Project (Hungary v Slovakia) [1997] ICJ Rep. 7, p60
111
“…not only when States contemplate new activities but also when continuing with
activities begun in the past.”
However, a major limitation of this judgment is its emphasis on economic development
and environmental protection only255 but it must be realized that this judgment still provides
greater clarity than most other legal instruments such as those created under the auspices of the
United Nations. In a similar manner, in the Pulp Mills Case256, the judgment made it clear that
since no pollution had resulted from the creation of the Pulp Mill by Uruguay, so no
environmental laws had been breached. Hence, Argentina’s request to dismantle the pulp mill
was rejected since it would interfere with the principle of balancing economic development and
environmental protection257 that had been found under the Gabcikovo – Nagymaros case258. In
both instances of disputes, it must be realized that the principle of balancing economic
development and environmental protection was considered foremost over other legal
instruments, but even then this principle was not provided with a customary nature259. Instead,
this principle has been espoused as more of a general objective that must be met with during
such transactions to ensure greater legal security by the parties in agreement.
255 Alan Boyle and David Freestone, International Law and Sustainable Development: Past Achievements and Future
Challenges (Oxford: Oxford University Press 1999) 20
256 Pulp Mills on the River Uruguay, ICJ Judgment, 20 April 2010, available online at < http://www.icj-
cij.org/docket/files/135/15877.pdf>
257 ibid, para 177
258 ibid, para 76
259 Barral, (n 235)387
112
This position is also affirmed by the award under the Iron Rhine case260 where it was
affirmed that economic development and environmental protection need to be balanced
simultaneously. The award makes it clear that it is the duty of the parties to ensure that the
environment is not damaged or if necessary, the environmental damage should be as little as
possible. More importantly, the award espouses such a principle as “a principle of general
international law” 261 providing it with an affirmed legal nature but not yet a customary
character. The same can be said of the Shrimp-Turtle case262 where the settlement fell short of
establishing customary status for the deciding principle espousing environmental protection.
An argument against the customary status of sustainable development principles in legal
frameworks has to do with state practice. A notion can attain the status of customary legal
practice in international law when states tend to practice the notion in question263. Moreover,
practice alone cannot lead to the formation of customary law and a subjective element (opinin
juris) is needed to establish a new rule of international law264, a sense of obligations (i.e. whether
260 Arbitration regarding the Iron Rhine Railway between the Kingdom of Belgium and the Kingdom of Netherlands, 27
RIAA (2005) 35 at paragraph 59
261 ibid
262 United States – Import prohibition of certain shrimp and shrimp products, WT/DS58/AV/R, 1998, paragraphs 128-130
263 Alan Boyle and David Freestone(n 254)
264Article 38(1)(b) of the ICJ statute presents the two traditional elements of international customary law:
1. The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall
apply:
a. international conventions, whether general or particular, establishing rules expressly recognized by the contesting states;
b. international custom, as evidence of a general practice accepted as law;
The statue available online at :<http://www.icj-cij.org/documents/index.php?p1=4&p2=2&p3=0&#CHAPTER_II>
113
a certain behaviour is considered as legally obligatory or not) may be manifested by various
means, including state’ declarations, resolutions of international organizations, international
treaties and decisions of international tribunals265 . However, sustainable development has not
been made part of a majority of international instruments. As the case law demonstrates,
sustainable development is more of a judicial enforcement than a part of voluntary state practice.
In the instance of the Gabcikovo – Nagymaros case or the Pulp Mills case, environmental
protection laws were part of the written covenants between the parties but there was little
attention paid to such instruments. Instead, the major focus remained on the economic prospects
of the disputes. This point to the idea that state practice is not as yet strongly focused on
sustainable development but instead international tribunals have a greater focus on sustainable
development. Among the other ramifications of this perspective, an important facet is that opinio
juris seems to arise more readily out of international awards and tribunal judgments rather than
from written international legal instruments. Previous research also seems to converge on this
perspective with regard to sustainable development under legal frameworks266.
3.3. Legal Frameworks for Sustainable Development
A number of different steps have been taken over the years to deal with the future of
mankind vis-à-vis sustainable development and sustainability. The first step in this direction can
be seen as the Stockholm Declaration (1972) that settled the need for global cooperation to deal
with sustainability and the future of the planet. Since the Stockholm Declaration was the first
265 Andrea K. Bjorklund, August Reinisch, International Investment Law and Soft Law (published by Edward Elgar
publishing 2012)18
266 Barral, (235)388; Boyle and Freestone (n 255)
114
step in this regard, there are hardly any specific sets of aims and objectives espoused. Instead, the
Stockholm Declaration can be seen as a set of broad aims and objectives geared to provide
direction without providing any normative positions.
The Stockholm Declaration was followed on by the Rio Declaration (1992) that provided
a total of twenty-seven principles to guide mankind into developing a sustainable future. The
elements of the Rio Declaration can be seen as more specific than that of the Stockholm
Declaration but broad nonetheless. Again, no specific directions were settled in order to deal
practically with sustainable development under the umbrella of local and international law. It
must be taken to note that the Rio Declaration was a great leap from the Stockholm Declaration,
but the issue of practical implementation was still left open267.
The role of international law as a framework to expand on the issues of sustainability and
sustainable development has grown considerably in recent times. Nations can be seen as
executing an increasing number of treaties concerning sustainable developmental goals based on
both regional and global concerns such as:
- United Nations Framework Convention on Climate Change268;
- United Nations Convention on Biological Diversity269;
267 Gunther Handl, 'Declaration of the United Nations Conference on the Human Environment' (United Nations )
<http://untreaty.un.org/cod/avl/ha/dunche/dunche.html> accessed 2nd June 2013. For the analysis of the overall meaning
of the 1992 Rio summit see section (2.2.4.4) pp 58-67
268 United Nations, United Nations Framework Convention on Climate Change (31 ILM 849 1992)
269 United Nations, United Nations Convention on Biological Diversity (31 ILM 822 1992)
115
- Convention to Combat Desertification in Those Countries Experiencing Serious Drought
and / or Desertification, particularly in Africa270.
The World Summit has created enough momentum to ensure that major stakeholders
such as States and other major players could be expected to live up to expectations. Such
stakeholders are bound by good faith attempts so that they can deal with their far-reaching
commitments. Moreover, the legislative end of the international law and sustainability has begun
to be compounded by legal decisions from courts that unequivocally provide sustainable
development goals as part of their judgements. Various cases and advisory opinions of the
International Court of Justice (ICJ) can be quoted in support of these ideas such as: Gabcikvo -
Nagymaros Project271, Advisory Opinion on the Legality of the Use by a State of Nuclear
Weapons in Armed Conflict272, Certain Phosphate Lands in Narau273 and United States – Import
Prohibition of Certain Shrimp and Shrimp Products274.
In terms of the advisory opinion regarding the use of nuclear weapons by a state during
an armed conflict, the ICJ made it clear that nuclear weapons posed irrecoverable damage to the
environment. The concept of sustainable development was developed further under the subject
270 ILM, Convention to Combat Desertification in Those Countries Experiencing Serious Drought and / or Desertification,
particularly in Africa (33 ILM 1328 1994)
271 Gabcikvo Nagymaros Project (Hungary v Slovakia) [1997] ICJ Rep. 7; Jessica Howley, ‘The Gabcikovo-Nagymaros
Case: The Influence of the International Court of Justice on the Law of Sustainable Development’ [2009] Queensland
Law Student Review 2(1) 1-19
272 Advisory Opinion [1996] ICJ Rep. 226 at 438
273 Certain Phosphate Lands in Nauru (Nauru v Australia) (1993) ICJ Rep. 322
274 WTO Doc WT/DS58/AB/R
116
advisory opinion considering that any acts of war were essentially unsustainable since they
affected sustainable development directly in terms of damage to the environment and human
health. In the words of the advisory opinion275:
“…[T]he use of nuclear weapons would be a serious danger to future generations.
Ionizing radiation has the potential to damage the future environment, food and marine
ecosystem, and to cause genetic defects and illness in future generations.”
The advisory opinion also cites the Rio Declaration on Environment and Development by
quoting276:
"Warfare is inherently destructive of sustainable development. States shall therefore
respect international law providing protection for the environment in times of armed conflict and
co-operate in its further development, as necessary."
The advisory opinion makes it clear that the use of nuclear weapons is prohibited during
times of armed conflict under international law since their use tends to endanger sustainable
development. This occurs on account of environmental degradation and irreparable damage to
human health. Hence, the advisory opinion utilises the environmental and social aspects to define
sustainable development though the economic aspect is arguable irrelevant and absent.
On another note, the dimensions assumed under the Certain Phosphate Lands in Narau
case are altogether different. It is notable that the case was brought to the ICJ by Narau and
Australia but the decision could not be reached since both parties withdrew in favour of an
275 Advisory Opinion [1996] ICJ Para 35
276ibid, para 27; Rio Declaration, Principle 24
117
outside settlement. However, the charges brought about by Narau against Australia need
consideration. The sheet of charges brought against Australia was extensive but the sixth charge
is of importance in terms of sustainable development277:
“… the principle of general international law that a State which is responsible for the administration of territory is under an obligation not to bring about changes in the conditions of the territory which will cause irreparable damage to, or substantially prejudice, the existing or contingent legal interest of another State in respect of that territory.”
The wording of the accusation is vague much like other juristic material on sustainable
development. The accusation is open to interpretation but can be seen closely worded to
environmental interests. The issue of irreparable damage also moves in the direction of inter
generational equity278 that has also been espoused under the New Delhi Declaration Principles
and other matter on sustainable development. Again, it is notable that this case tends to develop
the concept of sustainable development in lieu of the environment and society.
In contrast, the United States – Import Prohibition of Certain Shrimp and Shrimp
Products case presents a different set of circumstances and a differentiated judgement. The
United States had modified local laws to curtail imports of shrimps and turtles that were caught
through unsustainable means. The new set of import laws required the use of devices that
reduced catch significantly and hence ensured sustainability of shrimps and turtles. However,
this position was contested by states exporting such products to the United States since they
277 Certain Phosphate Lands in Narau, Preliminary Objections, Judgement ICJ Reports 1992, 243-244.
278 Rajendra Ramlogan, Sustainable Development: Towards a Judicial Interpretation (Martinus Nijhoff Publishers 2010)
129.
118
viewed this as an economic embargo. The judgement cited Article XX of the GATT agreement
arguing that trade rules should be279:
“… in accordance with the objective of sustainable development.”
This case has often been cited to support environmental ramifications under international
law. However, the economic impacts are of the greatest importance since the United State’s
position was upheld citing sustainable development concerns. In contrast to previously discussed
cases, this particular issue furthers the concept of sustainable development by rejecting economic
gains over environmental objectives. The depletion rates of shrimps and turtles were considered
unsustainable, and so legal cover was provided to measures designed to curtail such practices.
Hence, it could be surmised that sustainable development consists essentially of environmental,
social and economic concerns such that environmental concerns overrule the other objectives.
Additionally, it must be noted that the concepts carried by sustainable development are
appearing in greater numbers than before before various tribunals and courts globally such as:
- Bulankulama v. The Secretary, Ministry of Industrial Development280;
- Shehla Zia and others v. WAPDA281.
In Bulankulama v. The Secretary, Ministry of Industrial Development, the local residents
of Sri Lanka acted to protect a local phosphate deposit against a government development
279 Marrakesh Agreement Establishing the World Trade Organization, Article XX
280 Bulankulama v The Secretary, Ministry of Industrial Development (2000) 7(2) South Asian Environmental Law
Reporter 1 (Sri Lankan Supreme Court)
281 Shehla Zia and others v WAPDA, Case no 15-K of 1992 (Pakistan Supreme Court)
119
scheme. It was argued that the phosphate deposits were responsible for allowing agriculture to
flourish in Sri Lanka. The removal of such phosphate deposits was considered to promote
unsustainable development since their replenishment would not be possible at the proposed rates
of extraction. In turn, this was expected to affect agriculture for current, as well as future
generations. The prospect of environmental degradation and intra-generational equity was
utilised in order to refuse the extraction of phosphate from the proposed site by the Sri Lankan
Supreme Court. In a comparable manner, the case of Shehla Zia and others v. WAPDA highlights
the concern for balancing economic development with sustainable development concerns. The
issue at hand was the construction of a grid station in a residential neighbourhood that was
deemed to endanger human health and well-being. It was argued that building such dangerous
installations in residential areas could lead to loss of human life. The court agreed with such a
position and argued that282:
“… a method should be devised to strike balance between economic progress and prosperity and to minimise possible hazards … a policy of sustainable development should be adopted.”
In essence, the court’s approach signalled the use of the precautionary approach to
economic development. In this particular case, economic development needs not be balanced
against social or environmental purposes. However, the danger present to human life is deemed
enough to warrant the implementation of sustainable development policies.
There is little arguing the fact that certain legal principles are already exerting considerable
force in the context of sustainable development. Such principles can be seen as deriving
282 ibid.
120
from declarations as well as international statements that can be treated as soft law instruments.
It could be expected that such principles would be able to aid the resolution of conflicts and
provide for a balanced and moderated approach to legal integration of the environment, the
society and the law concerning these and other elements.
In light of the legal materials presented above, it is clear that sustainable development as
such has become a normative part of national and international law since long. However, the
implementation of sustainable development law has remained problematic and rather vague over
time. Efforts such as the Stockholm Declaration and the Rio Declaration, among other such
efforts, have provided a roadmap but failed to provide for a singular flexible framework that
could be used in more than one situation. It has to be realised that principles espoused by legal
instruments and judgements may not be able to fit all situations adequately283 so a flexible
solution with a singular unity in principle was required. Problems posed by sustainable
development are not quantitative in nature and hence need to be treated qualitatively such that a
holistic approach is available to incorporate various legal principles while not shying out on
economic, environmental and social issues.
Earlier legal instruments provided for vague guidelines such as the Rio Declaration’s idea
that developing and underdeveloped nations need to be treated on different grounds from
developed nations since poverty levels are different. However, the manners in which such
assessments are to be performed to be equitable and legally acceptable to people around the
world have not been prescribed. It was felt that there was a need to deal with governance based
283 Goepel(n 24)1694-1718
121
processes in framing the law. This kind of a focus was required to deal with creating laws,
growing on existing laws, implementing such a body of laws, ensuring adequate participation
while ensuring accountability and finally achieving the intended objectives of sustainable
development. What needs to be realised is that sustainable development is not possible without
the confluence of environmental, economic, social, political, cultural and other objectives that
are espoused in a flexible legal framework.
The need for an integrated yet flexible platform provided for the work by The
International Law Association Committee on the Legal Aspects of Sustainable Development that
lead to the New Delhi principles. It has been argued that the New Delhi Declaration is the most
feasible legal framework that integrates other principles to provide for achieving sustainable
development objectives284. Moreover, the New Delhi Declaration also presents greater normative
clarity than previous instruments such as the Stockholm Declaration, the Brundtland
Commission Report, the Rio Declaration, the Johannesburg Plan of Implementation, etc.285 but is
still a soft law instrument. It has to be kept in mind that the principles espoused under the New
Delhi Declaration are not holistic or exhaustive by any account. Moreover, some principles
require further establishment or modification before they could be treated as customary parts of
284 Marie- Claire Cordonier Segger, ‘Significant Developments in Sustainable Development Law and Governance: A
proposal’ [2004] Natural Resources Forum 28, 61-74. Food and Agriculture Organization, International Law and
Sustainable Development since Rio – Legal Trends in Agriculture and Natural Resource Management (Rome: FAO
2002). Marie -Claire Cordonier Segger, Ashfaq Khalfan, M Gehring and M Toering, ‘Prospects for Principles of
International Sustainable Development Law after the WSSD: Common but Differentiated Responsibilities: Precaution
and Participation’ [2003] Review of European Communication on International Environmental Law 12, 54-68
285 Goepel (n 23)1694-1718
122
the law. Even so, the New Delhi Declaration’s principles are increasingly being used to form
treaties and international law to support sustainable development. This is also true of local
initiatives and agendas that are relying on these principles to ascertain the direction for
sustainable development. In essence, the New Delhi Declaration is more of a success than its
predecessors without being an exhaustive and holistic solution.
It was not until the New Delhi Declaration (2002) that a set of specific measures came
into being that provided specific directions and guidelines to implement international and local
laws to protect the environment and provide for mankind’s future sustainably. This section will
explore the New Delhi Sustainable Development Law Principles as one of the primary legal
instruments to provide solutions for Iraq’s oil and gas development in a sustainable fashion.
3.4. New Delhi Declaration (2002)
The major principles espoused by the New Delhi Declaration can be listed simply as
below286:
1. The duty of States to ensure sustainable use of natural resources;
2. The principle of equity and the eradication of poverty;
3. The principle of common but differentiated responsibilities;
4. The principle of the precautionary approach to human health, natural resources and
ecosystems;
5. The principle of public participation and access to information and justice;
6. The principle of good governance;
286 Cordonier and Khalfan, Sustainable Development Law (n 21)
123
7. The principle of integration and interrelationship, in particular in relation to human rights
and social, economic and environmental objectives.
The New Delhi Declaration’s principles are discussed in detail below in order to
elaborate how they apply to sustainable development and legal traditions.
3.4.1. Principle One: The duty of States to ensure sustainable use of natural resources
The Rio Declaration (1992) brings out an interesting contrast of ideas between state
sovereignty and sustainability under Principle Two of the said declaration. According to
Principle Two, states are responsible for not causing damage to any form of the environment not
present in their jurisdiction such as another State’s environment. However, any State has the
capability to exploit its own natural resources and environment pursuant to its internal
development and environmental policies. Under this principle, States have been given sole
objectivity on their own environment but are still bound to respect the environment of other
States. Hence, it could be surmised that such rights to development and the environment
provided to States are not absolute. Therefore, States are bound by Principle Two of the Rio
Declaration such that they are not to cause any damage to other State’s environment while
pursuing their own sets of policies. In more practical terms, it is often difficult to establish any
causal links between damage to the global environment and action(s) taken by any State(s) that
cause such damage. The negative obligation carried in this idea to the management of shared
resources tends to exert that natural resources should be utilised in a sustainable manner by all
involved.
In recent years, the importance of both managing and protecting the natural resources in
order to bolster social and economic development was given high priority at the World Summit
124
on Sustainable Development (2002)287. One potent example of this principle in action is the
United Nations Framework Convention on Climate Change (1992) that provides that States must
work together to minimise climate change while working within their legal bounds. Economic
and social developments are not sidelined in this principle, but both economic and social
developments have been made subservient to the central principle of respecting other State’s
rights to the common resource base. Article 3(4) of the subject legal instrument stipulates that the
involved parties have a duty to promote sustainable development.
It has been argued that states are bound by their duties under international law, taking
into note their permanent sovereignty on the issue of natural resources. The duties of states in
such circumstances and bounds can be labelled as288:
- The state is bound to protect the indigenous people’s right to derive benefit from natural
resources and the ensuing development in their exploitation. In this context, the
indigenous people refer to the present generation and the future generations;
- The state is to care for the environment, which includes concern for areas beyond the
jurisdiction of the State, such that sustainable development can be pursued to ensure a
continuum of production and consumption.
States are under obligation to treat and respect the rights of other states in their
jurisdiction under the international law principle of integrity and inviolability under the case of
287 United Nations, ‘Johannesburg Summit 2002’ accessed 15 July 2013, available online at <
http://www.johannesburgsummit.org/html/basic_info/basicinfo.html>
288 Nico Schrijver, Permanent Sovereignty over Natural Resources: Balancing Rights and Duties (Cambridge: Cambridge
University Press 1997)
125
peace and war. The issue of environmental damage to other States through the actions within the
jurisdiction of another State are treated as a State’s duty to protect the rights of other States289.
All states are bound to not allow their territory to be used for acts inimical to the rights of other
State(s)290. The duty of one State to protect the rights of other State(s) on its territory is
considered as customary international law as noted under the recent Iron Rhine Arbitral
Award291.
The application of the current principle under discussion is not without its intricacies.
Legal instruments require that certain stipulations be met for the application of the current
principle, but it may not be possible to meet out all stipulations practically. One potent example
is the stipulation regarding the resources in dispute between two parties. International law
requires that the resources being disputed should not be purely domestic resources. The
contentious resources must have an international or at least a transnational aspect to them.
Similarly, another contentious issue is how the sustainable use of resources is defined. All
different kinds of natural resources end up with their own sustainable use as well as their
definition of sustainability. A number of other queries also intervene in qualifying the specifics
relating to this issue. The character of the specific natural resource being discussed needs
massive deliberation along with the agreed uses of such a natural resource. Likewise, the issue of
natural resource use in a sustainable manner requires massive deliberation to decide which
289 Trail Smelter Arbitration (United States v. Canada) Arbitral Trib., 3 U.N. Rep. Int’l Arb. Awards 1905 (1941)
290 Corfu Channel Case (United Kingdom v Albania), (1949) ICJ Rep 4 at 22; Island of Palama (or Miangas) case, Perm.
Ct. Arb. (1928), 2 U.N. Rep. Intl. Arb. Awards 829
291 United Nations, ‘Iron Rhine Arbitral Award’ <legal.un.org/riaa/cases/vol_XXVII/35-125.pdf> accessed 7 November
2014.
126
modes of use are sustainable and which are not. Another contentious area is in deciding when a
State is allowed to object to the use of natural resources by another State in a sustainable or
unsustainable manner. Given that all of the above-mentioned areas can be decided upon, the
lynchpin of decision-making i.e. science and its application needs to be looked into. It needs to
be deliberated how, when and where science can be applied to decide on areas of contention
given that science is not always able to make accurate predictions concerning various problems
in the environmental realm.
The application of this principle cannot be limited based on the practical challenges that
confront it. Instead, this principle needs to be applied so that States can provide solutions for the
various rights and duties under this principle. It is pertinent to note that States can settle the rates
of usage of natural resources as a method to manage the sustainable use of resources. This would
allow the settlement of baselines through trial and error to induce sustainable use of natural
resources. Monitoring teams composed of different nationals could be introduced in order to
monitor how such programmes are progressing and what the learned outcomes are.
3.4.2. Principle Two: The principle of equity and the eradication of poverty
One of the more important principles of the New Delhi Declaration is the provision of
equity and the eradication of poverty. In recent years, this principle has emerged in a number of
different international legal instruments such as sustainable international law, environmental law,
human rights, economic, legal rights, etc. The standard understanding of equity and poverty
eradication arises from the definition for sustainable development espoused by the World
Commission on Environment and Development. It has been suggested that the greatest priority
of the world should be providing for the needs of the world’s poorest sections in order to bolster
127
sustainable development in the longer run292. Additionally, the World Summit on Sustainable
Development strongly advocated and promoted the principle of equity and poverty eradication
for the world’s people. It must be taken to note that unless social and economic disparities are
not removed, it will not be possible to envision and achieve a world that lives by sustainable
practices.
It is worth mentioning that the Johannesburg Plan of Implementation also provided great
attention to the eradication of poverty in order to encourage sustainable development. The
provision of equity for earth’s people is comparable to providing for indigenous people as
espoused in the first principle of the Delhi Declaration. Equity is not a concept localised to the
current generation. Instead, the provision of equity spans the current generation and the future
generations. Therefore, the States respecting the current principle need to take into account the
long-term developmental goals in order to ensure a sustainable future for incoming generations.
The principle of equity and eradication of poverty has been espoused on many other
occasions. The keystone in the concept is the provision of equity for inter-generational
dimensions so that the future generations are able to provide for themselves. The basic
contention is to provide for mankind currently such that it does not devolve the ability of future
generations to provide for themselves with the same kind of comparable effort. Human
generations must be able to gain common good from the common heritage of mankind for the
greater good of both human beings and their wider environment293.
292 World Commission on Environment and Development, Our Common Future (Oxford: Oxford University Press 1987)
293 Emmanuel Agius, Future Generations and International Law (London: Earthscan Publications 1998)
128
There has been an emerging realisation that human activity has been causing irreversible
changes to the common environment of mankind. There is also the realisation that human beings
would bring about such changes that would lead to massive disturbances in the overall
environment. In turn, such changes could trigger or lead to an eventual collapse of the human
environment and hence the humanity itself. The safety and well-being of future generations have
been questioned based on such concerns especially in the aftermath of the Brundtland
Commission Report that floated these ideas. The Report held that current human designs in the
context of human progress, achieving human ambitions and providing for human beings are
leading to unsustainable practices. Additionally, such concerns are available in both rich and
poor segments of the world’s population alike. The overriding concern is that human beings are
exacerbating the current situation of natural resources drain such that it would not be possible to
maintain such levels of extraction in the future. The fear that future generations would have to go
without certain heavily drained natural resources is already causing much alarm around the
world. Water, for example, is already in a state of scarcity around the world, and there are
concerns that there may be warfare in the future for the control of water resources.
The Brundtland Commission held that current human generations are profligate in their
designs since they are not accountable to future generations. In particular, it has been expressed
that future generations do not have the right to vote and hence enjoy no political power.
Similarly, there is no fiscal power available to future generations in the current time. The current
generations can choose to do as they please since there is no accountability towards future
generations or their needs. Since the decisions of the current generations cannot be challenged,
there is little fear in doing what the current generations are doing. However, it must also be borne
129
in mind that the inconsiderate behaviour of the current generations is limiting the options
available to future generations at a rapid rate294.
Another allied concept is that of the intra-generational equity that must be created to
ensure sustainability. Inter-generational equity refers to the provision of equity between
generations while intra-generational equity refers to the provision of equity between members of
the current generation. When referring to intra-generational equity, the members of the entire
human race are considered at both domestic and global levels. At this point in time, the lack of
intra-generational equity has led to an asymmetric distribution of resources around the globe.
Consequently, certain nations and peoples have more resources than others such that both
opposite ends of the spectrum are contributing the most to environmental degradation. The
nations and peoples with the most resources are endangering the environment with their
opulence while the nations and peoples with the least resources are endangering the environment
with their attempts at survival. In ideal terms, intra-generational equity ought to provide equally
for everyone around the globe but this may not be practically possible.
Instead, it has been proposed that for the first phase of creating intra-generational equity,
it would be advisable to provide everyone around the globe with the bare minimum necessities of
life. These necessities include food, shelter, access to education and health services as well as the
right to socially organise. It must be realised that in recent years there has been a growing
awareness in both rich and poor nations that unless the global equity is not ensured, there is no
real way forward to achieve sustainable development.
294 World Commission on Environment and Development(n 292)
130
Moreover, there has been an increasing drive towards protecting future generations and
their rights which can be seen reflected in international treaties. A leading example is the United
Nations Framework Convention on Climate Change, which provides that the involved parties
should protect against climate change in order to benefit both present and future generations.
This idea has in turn been based on the principle of equity between present and future
generations295.
3.4.3. Principle Three: The principle of common but differentiated responsibilities
The idea of common but differentiated responsibilities floated out of the idea of the
common heritage of mankind and was first espoused at the Rio Declaration. Under Principle
Seven of the Rio Declaration, it was made clear that States had common but differentiated
responsibilities based on the levels that they endangered sustainable development and the amount
of technological prowess they direct. The overall concept of common but differentiated
responsibilities can be seen to evolve from the concepts of common heritage of mankind and the
principle of equity under the international law. It must be taken to note that in historical terms,
various nations have burdened the global environment differently. The more developed nations
are more responsible for global environmental changes than, the less developed nations.
Moreover, it also has to be realised that different states have different circumstances and hence
different capabilities to deal with environmental problems. States can be clearly differentiated in
terms of their technical and economic capabilities to deal with the global environmental
295 United Nations, United Nations Framework Convention on Climate Change, Article 3(1)
131
dilemma. Therefore, all States have the common responsibilities of dealing with environmental
problems but clearly they have differentiated capacities to do so296.
When this principle is looked into practically, it entails at least two levels of
responsibilities onto States around the world. The primary concern of this principle is for all
States around the globe to take part in efforts to deal with current environmental dilemmas. The
secondary concern of this principle is that differing environmental and other standards should be
installed onto States that reflect their ground circumstances and their capabilities to deal with
environmental problems. In this connection, it is important to mention that the Rio Declaration
made it abundantly clear that the imposition of standards should be cognisant of the context in
which they are being applied. It was affirmed that the more environmentally challenged nations
ought to be given greatest priority for recovery. Moreover, it was also noticed that certain States
are imposing and demanding the imposition of standards that are too costly to certain other
States based on considerations of social and economic costs. It was also realised that the greatest
affected States from such standards were developing nations297.
The Johannesburg Plan of Implementation (JPOI) also includes the principle of common
but differentiated responsibilities especially in context of developing nations. It is worth
mentioning that the principle of common but differentiated responsibilities is espoused in the
introduction of the plan. Moreover, JPOI provides for specific areas and concrete measures
296 D French, ‘Developing States and International Environmental Law: The Importance of Differentiated Responsibilities’
[2000] International and Comparative Law Quarterly 49 (35)
297 Rio Declaration, Principles 6 and 11
132
where the aforementioned responsibilities exist for various States. The major priorities
demarcated by the JPOI in context of common but differentiated responsibilities are:
- Unsustainable production and consumption;
- Energy mixes;
- Greenhouse gases;
- Air pollution;
- Implementation mechanisms.
In addition, international treaties that have espoused sustainable development objectives
through development and finance have also been taken into account. It must also be realised that
the principle of common but differentiated responsibilities was bolstered and expanded upon by
the World Summit on Sustainable Development in more than one way298.
The JPOI was also significant since it promoted both the principle of common but
differentiated responsibilities, but it also espoused other principles that were based on this
principle. The various principles under JPOI taking into account common but differentiated
responsibilities were:
- Augmenting cooperation between States;
- Unsustainable production and consumption;
- Trans national air pollution;
- Energy usage;
298 Cordonier, Khalfan, Gehring and Toering, ‘Prospects for Principles of International Sustainable Development Law
after WSSD (n 283)54
133
- Climate change.
Another significant aspect of the JPOI is its call to recognise the principle of common but
differentiated responsibilities in implementing various other international agreements such as
Agenda 21. Hence, it could be surmised that the application of common but differentiated
responsibilities is not confined to environmental problems alone but applies equally to other
areas such as equity provision and poverty eradication.
Similarly, the United Nations Framework Convention on Climate Change makes use of
the principle of common but differentiated responsibilities. Moreover, it advocates that
environmentally endangered nations ought to be given priority along with consideration for their
circumstances. The practical manifestation comes from the agreement in the form that reporting
requirements are different for various States given their economic and technical capabilities.
The need of the hour is to create mechanisms that allow international means to finance
various international treaties on sustainable development. One relevant example is the Global
Environmental Facility (GEF) that is aimed at fiscally and technically facilitating the attempts of
various States to comply with various international treaties. The basic contention behind the GEF
is to provide various forms of financial grants that are aimed at sustainable development through
the creation of environmentally sound technologies. The major treaties espoused by the GEF
include:
- United Nations Framework Convention on Climate Change;
- United Nations Convention on Biological Diversity;
- United Nations Convention to Combat Desertification.
134
The principle of common but differentiated responsibilities (CBDR) seems lofty yet fails
to achieve much given the inherent conflicts of interest espoused by the ideal. It has been argued
that certain risks engulf all nation states299 but there is little in terms of specific legal instruments
under the CBDR principle to place responsibility or to enforce such responsibility. By principle,
the responsibility to uphold the environment is common to all mankind300 but state practice
proves otherwise. For instance, the United Nations Framework Convention on Climate Change
espouses that more developed nations take onto more responsibility but this has never been
enforced and the major contributors to GHGs such as the United States and China are in open
violation of such principles. This tends to discount the credibility of the CBDR principle to a
great extent.
Another major criticism levelled against CBDR is the demarcation of differentiation.
Arguably, differentiation could result if rights and obligations are differentiated or if the
distribution of resources is realigned 301. It has been suggested that differentiation would allow
developing nations to assume the burden of environmental regulation just enough to continue
with their developmental goals 302 but reason suggests otherwise. The various methods to share
the fiscal burden of financing GHG reduction indicate that developing nations would have to pay
299 Christopher D Stone, ‘Common but Differentiated Responsibilities in International Law’ [2004] The American Journal
of International Law 98(2), 276-301
300 French(n 296)
301 Tuula Honkonen, The Common but Differentiated Responsibility Principle Multilateral Environmental Agreements:
Regulatory and Policy Aspects (Wolters Kluwer Law and Business 2009)
302 Stone(299)
135
heavily since their emissions would only rise with time.303 In contrast, developed nations have
already amounted to GHG emissions that they are not required to pay for since the damage has
already been done. Additionally, contemporary state practice shows that nation states most
responsible for climate change issues do not enforce future prevention mechanisms. In such
circumstances, there is talk of ethically dealing with climate change adaption finance304 while
practically the largest contributors shirk from enforcing such mechanisms through binding legal
terms under international law305. It could clearly be said that the principle of CBDR has the
capability to provide guidelines but lacks an enforcement mechanism that would add credibility
to it.
CBDR also suffers from inherent design flaws since developing and under developed
nations demand that separate frameworks of rights and obligations be available for them. The
contention is to install frameworks that facilitate these nations’ developmental goals while not
compromising environmental objectives. However, it must be realised that over time as these
nations progress, the burden on them would have to be increased to reflect emerging realities306.
However, the creation of a mechanism that estimates these changes and implements them
303 Shoibal Chakravarty, Ananth Chikkatur, Heleen de Coninck, Stephen Pacala, Robert Socolow and Massimo Tavoni,
‘Sharing global CO2 emission reductions amongst one billion high emitters’ [2009] Proceedings of the National
Academy of Science of the United States of America 106(29), 11884-11888
304 Marco Grasso, ‘An ethical approach to climate change adaptation finance’ [2009] Global Environmental Change 734
305 Robert Falkner, ‘International Climate Policy after Copenhagen: Towards a “Building Blocks” Approach’ [2010] Global
Policy 1(3) 252-262
306 French(n 296)
136
accordingly is an overwhelming challenge in itself 307 and hardly seems achievable in the current
scenario. Arguably, these constraints would require that each country be assessed on a case to
case basis but this would prevent the creation of agreeable legal principles to deal with
differentiation.
Overall, the principle of CBDR needs further resolution or decomposition since the
common responsibilities are not being taken commonly while differentiation presents practical
challenges. It is without doubt that further legal work is required on the principle of CBDR in
order to make it more viable to implement.
3.4.4. Principle Four: Precaution regarding human health, natural resources and ecosystems
It has been argued that a precautionary approach is required to deal with environmental
degradation. The Rio Declaration has made it abundantly clear that environmental protection is
top priority such that a precautionary approach needs to be taken with respect to the
environment. No State or other party is allowed to tinker with the environment in an effort to
discover the system-wide consequences of any such attempts. It has been made clear that even if
there is a slight chance of irreversible damage to the environment, the party involved has to take
precautionary measures that cannot be delayed, even if scientific certainty is used as a pretext for
taking any such measures or attempts308.
The origination of a precautionary approach towards the environment can be seen to emanate
from the national law in general and German national law in particular. Under the auspices of the
307 Honkonen (n 301)
308 Rio Declaration, Article 15
137
German national law, there is no room available for experimentation in sectors where
environmental damage may occur. This approach has the distinct advantage of solving the
practical dilemma of making decisions in cases where there is little or absent scientific evidence
to tell what the environmental consequences of any action will be. If attempts are made to solicit
scientific information, there are chances that irreversible damages to the environment may occur.
In terms of practicality, it has been common practice to allow economic development with
greater priority to environmental protection since economic development has strong impetus.
Only cases where enough scientific information exists, there have been attempts to conserve the
environment at the cost of economic development. As a straight consequence of this fact, the
precautionary approach has gained momentum over the years in order to allow for development
that is sustainable. It needs to be recognised that social and economic development become
subservient to environmental objectives once the precautionary approach is relied upon309.
The precautionary approach is the primary element of any method aimed at conserving
the environment in precedence to social and economic development if there exists any slight
chance of severe or irreversible damage to the environment. It needs to be realised that the
precautionary approach does not need scientific evidence to back up its positions as gaining such
evidence may cause massive harm and damage. In cases where the risk has been established but
the severity is unknown, the precautionary approach dictates that any such activities should be
aborted or not carried out altogether. The precautionary approach allows the switching of the
burden of proof necessary to take onto policy measures or responses to save the environment.
309 P L Gundling, ‘The status in international law of the principle of precautionary action’ in D Freestone and T Ijlstra, The
North Sea: Perspectives on Regional Environmental Cooperation (London: Graham and Trotman 1990)
138
However, it must be kept in mind that the precautionary approach cannot be fitted to all
situations alike and may require certain stipulations to be met310.
For one thing, the precautionary approach can be best applied to areas where a systematic
response is required for dealing with problems that do not have scientific certainty established.
The principle also requires a determined trigger that bases itself on a number of different factors
to trigger policy measures and any other actions. The policy trigger must include the following
three elements:
- Magnitude of damage;
- Distribution of damage;
- Probability of damage.
It has also been suggested to include the relationship between the magnitude of expected
damage as well as the possibility of such an event occurring. The distribution of risks needs to be
tabulated in order to decipher how damage will affect the various involved parties. The
precautionary approach’s triggers resemble a number of other systems used around other sectors
such as Failure Modes Effectiveness Analysis (FMEA) that use various factors to decide where
action ought to be taken and otherwise. However, in certain cases where there may be low risk,
but the magnitude of damage may be high, such as the loss of human lives, the policy would still
310 A Trouwborst, Evolution and Status of the Precautionary Principle in International Law (The Hague: Kluwer Law
International 2002)
139
be triggered. It is up to the various policy makers and implementers to decipher through practice
what thresholds need to be settled in order to allow policy triggers to work311.
The precautionary approach in sustainable international law can be compared to the lex
ferenda under which legal principles become customary international law312. However, it must
be taken to note that the precautionary principle is still under development and would require
further deliberation to assume maturity. Moreover, it needs to be realised that in the wake of
other more pressing priorities, the precautionary principle takes a back seat. It could, therefore,
be surmised that the precautionary principle is still under development and would require further
deliberation and a resolution of the most pressing priorities for sustainable development to take
centre stage313.
3.4.5. Principle Five: The principle of public participation and access to information and
justice
The involvement of the general masses is critical to the success of any sustainable
development objectives. Agenda 21 makes it abundantly clear that broad-based public
participation is key to ensuring that sustainable development receives the support that it requires
to develop and grow. In a similar manner, the Johannesburg Declaration makes it clear that a
long-term commitment is required to involve the masses in order to keep sustainable
development on track. The contention is to involve the major groups in any set of circumstances
311 F Perrez, Precaution from Rio to Johannesburg (Geneva: GEN and SAEFL 2002)
312 J Cameron, ‘International Law and the Precautionary Principle’ in T O Riordan, J Cameron and A Jordan,
Reinterpreting the Precautionary Principle (Cameron 2001)
313 J Wargo, Regulating Ecologically (New Haven: Yale University Press 2004)
140
so that all parties are on board when decisions relating to sustainability are taken. In order for the
public to effectively participate in the decision-making process, it is necessary to provide them
with the right kind of information at all levels. Moreover, there is also need to ensure that the
rights of affected groups are safeguarded by providing them access to justice through courts of
law or otherwise so that existing divisions do not widen.
The demands under this principle may seem to be fundamental to all human beings, but
practice belies this idealistic disposition. As yet the right to public participation is under debate
in the national law given that States have sovereignty over such affairs. Some quarters claim that
public participation is a basic human right in itself and should be allowed irrespective of the
national laws. It has been argued that the rights to freedom of speech and expression, as well as
the right to assembly, allow for public participation. On the other hand, there are other groups
that contend that public participation is a portfolio of national law more than international law,
and the State ought to dictate the level of public participation.
There have already been instances where legal instruments have espoused public
participation rights to mankind in general. For example, the International Covenant on Civil and
Political Rights as well as the Universal Declaration of Human Rights provide mankind with the
rights to participate in the decision-making process. However, it must be realised that practically
this has not been made possible despite decades of enactment of the aforementioned legal
instruments. It is clear that States have decided over time as to how much public participation
and what areas of public participation they are ready to allow the masses. In order to deal with
this principle of the New Delhi Declaration, it is necessary to allow public participation as well
as providing for access to information and justice. It has been argued extensively that people
141
affected by environmental changes have the right to participate and take charge of their own
futures314.
On the part of the United Nations, it has been declared clearly that public participation,
access to information and justice are pivotal to providing sustainable development vis-à-vis
social, cultural and economic rights. It has been argued that any decisions that have the intended
or unintended consequence of affecting any group of people must seek the opinion of the
affected people at all costs315.
There has been an increasing move towards sustainable development based on
augmented access to decision making for the common man. This is all the more true for natural
resources where the common man is finding an increasing role as a partner in the decision-
making process316. In addition to the access to information, there is also the need for redress and
remedy through judicial proceedings. The contention is to enable the people affected by
development goals to be part of the decision-making process. A crucial development of this
principle is the recognition that litigation by the common man is an auxiliary process for public
participation in decision-making317. This indicates that legal redress and remedy are an essential
314 Alexander Kiss and Dina Shelton, International Environmental Law (2
nd edition, New York: Transnational Publishers
1994)
315 Committee on Economic, Social and Cultural Rights, General Comment No 14: The Right to the Highest Attainable
Standard of Health (UNESOOR 2000)
316 Donald M Zillman, Alastair Lucas and George Pring, Human Rights in Natural Resource Development: Public
Participation in the Sustainable Development of Mining and Energy Resources (Oxford: Oxford University Press 2002)
317 B J Richardson and J Razzaque, ‘Public Participation in Environmental Decision Making’ in B J Richardson and S
Wood, Environmental Law for Sustainability (Oregon: Hart 2006)
142
component of emerging strands of thought on sustainable development. In addition, the inclusion
of the common man in the decision-making process allows the masses to achieve greater trust in
governance318. Consequently, this principle allows an adjustment of people’s needs and wishes
without the need for conflict. Troubled regions such as the Sudan, Nigeria, West Africa, etc. are
in a state of turmoil because the common man was not involved in developmental goals. As a
result, people have taken to arms and civil wars have ensued. The situation in Iraq is comparable,
and it is possible that if the common man was allowed to be part of the decision-making process,
there would be a reduced chance for the assertion of demands through violence. Comparably, in
Iraq’s situation, the Kurds have taken up arms in order to defend what they see as a right that the
federation fails to consult them on. It can also be argued that good governance is not essentially
possible without allowing for public participation and access to information and justice319.
The emergence of this principle in international law is signified from legal instruments
such as the Convention on Access to Information, Public Participation in Decision-Making and
Access to Justice in Environmental Matters done at Aarhus, Denmark, on 25 June 1998 (Aarhus
Convention)320 and the United Nations Framework Convention on Climate Change. It must be
realised that although this principle is highly important to guarantee environmental and
318 J Razzaque, Public Interest Environmental Litigation in India, Pakistan and Bangladesh (Hague: Kluwer Law 2004)
319 Edith Brown Weiss, Stephen C McCaffrey, Daniel Barstow Magraw and A Dan Tarlock, International Environment
Law and Policy (2nd
edn, Aspen 2006)
320Available online at <www.unece.org/env/pp/documents/cep43e.pdf > accessed 25 July 2013. See also M Pallermaerts,
The Aarhus Convention at Ten: Interactions and Tensions between Conventional International Law and EU
Environmental Law (Netherlands: Europa Law 2011)
143
developmental sustainability but as yet this principle is a nascent emerging norm321. Without the
proper integration of this principle in emerging legal frameworks, there is little hope to secure
environmental and developmental aims322.
3.4.6. Principle Six: The principle of good governance
The realm of governance tends to encompass social, economic and political aspects that
are dealt with through administrative means in order to handle the needs and requirements of the
inhabitants. As a framework, governance tends to cater to any methods and the institutions that
allow the inhabitants to achieve their goals, meet their stipulated obligations and deal with
differences within legal means323. The JPOI makes it clear that good governance is essential to
ensuring sustainable development at both the local and the global levels. Good governance is not
a real possibility without the introduction of public participation which itself serves as a vehicle
of transparency. The concepts of public participation and consequent good governance are highly
interlinked such that public participation is a subsumed practice for good governance to emerge
as a result. Domestic policies in relation to good governance under JPOI were as follows324:
- Environmental policies;
- Social policies;
321 C Bruch and M Filbey, ‘Emerging Global Norms of Public Involvement’ in C Bruch, The New Public: The
Globalization of Public Participation (Washington DC: ELI 2002)
322 B J Richardson and J Razzaque (n 317)
323 P Uvin and I Biagiotti, ‘Global governance and the new political conditionality’ at Global Governance: A Review of
Multilateralism and International Organizations (1996)
324 Johannesburg Declaration, paras 4, 45(f), 62 and 71
144
- Economic policies;
- Democratic institutions;
- Rule of law;
- Anti-corruption mechanism;
- Gender equality;
- Enabling environment for investment.
Good governance can be seen as an enforcing mechanism that both States, as well as
international institutions, have to respect for a number of different portfolios. The principle of
good governance is closely related to the principles of public participation as well as access to
information and justice. However, there are a number of different issues that confront the scope
and the involved parties for this principle. There is active debate regarding interstate decision-
making as well as the level of involvement of private sector groups in such initiatives.
Currently, there are two different approaches to good governance. The first approach
encompasses issues relating to domestic governance while the second approach encompasses
issues relating to international governance. The first approach has been pursued for decades by
various international fiscal institutions in order to pursue governance reforms in developing
nations325. The contention behind the actions of the international fiscal institutions was to coerce
developing nations to straighten their act in order to promote efficiency in the governance
processes and frameworks326. The second approach relies on promoting democratic governance
325 P McAuslan, ‘Good governance and aid in Africa’ [1996] Journal of African Law 168, 168-182
326 World Bank, Sub Saharan Africa: From Crisis to Sustainable Growth (1989)
145
through sustained pressure in an effort to promote more efficient administrative decision-making
and overall better governance327.
Of late, there has been an emerging strand of thought that sees this principle and the
principle of public participation and access to information and justice as being intertwined328. As
yet this principle fails to figure as customary international law329 given the relatively ambiguous
nature of good governance. In addition, there exist legal gaps as to the normative character of
good governance as well as the ensuing practical ramifications. These gaps can only be filled in
given the right amount of effort by nation states330. In addition, this principle has emerged as a
soft law that is being incorporated into various national and international legal instruments even
though it does not have any binding character as yet331. Hence, it could be stated that the
importance of good governance as a principle for sustainable development has begun to assume
greater ground in national and international legal realms.
3.4.7. Principle Seven: The principle of integration
The final principle of the New Delhi Declaration stipulates that environmental objectives
cannot be pursued in isolation from social and economic objectives. The contention is to ensure
that environmental priorities are kept on top given the danger to environmental sustainability
327 E Buscagalia, W Ratliff and R Cooter, The Law and Economics of Development (London: JAI Press 1997)
328 Onita Das, Environmental Protection, Security and Armed Conflict (Edward Elgar 2013)
329 B Kondoch, ‘Human rights law and UN peace operations in post-conflict situations’ in N D White and D Klaasen, The
UN, Human Rights and Post-Conflict Situations (Manchester: Manchester University Press 2005)
330 N Choudhary and C E Starstedt, ‘The Principle of Good Governance’ [2005] CISDL Draft Legal Working Paper
331 Nico Schrijver (n 15)
146
around the globe. This approach is comparable to the Rio Declaration that stipulated the need for
integrating social and economic objectives with environmental objectives332. As mentioned
earlier, sustainable development tends to encompass the areas of social, economic and
environmental development. It needs to be kept in mind that the international environmental law
need not always be sustainable development law. For example, the rights of animals are part of
the international environmental law but have nothing to do with sustainable development law. It
must be realised that sustainable development law is based on mutual areas covered by social,
economic and environmental development333. Sustainable development law comprises in large
part of the narrower objectives that emerge from social and economic development that is bound
by environmental objectives. The WSSD placed a large emphasis on supporting sustainable
development by integrating the primary areas of social, economic and environmental objectives.
This principle is inarguably one of the bedrocks of sustainable development since
isolationist approaches to sustainability are deemed to fail334. However, the nature and scope of
this principle remain troubling since this principle applies to nearly all horizontal and vertical
levels of sustainable development and its determinants. It is interesting to note that this principle
has begun to emerge through case law given its relative applicability coupled with a loose
definition. The Gabcikovo – Nagymaros case, the Iron Rhine case and the Pulp Mills case all
point to the need for integrating social, economic and environmental objectives in order to
achieve sustainable development goals. However, there is still dire need to qualify this principle
332 Rio Declaration, Principle 4.
333 Alan Boyle and David Freestone(n 255)
334 Das( n 328)
147
and its application, as well as the resulting ramifications through the judicious application of this
principle at various levels. Injudicious application of this principle will complicate more things
than it resolves and would tend to abrade the emerging normative nature of this principle. When
compared to other principles of the New Delhi Declaration, this principle displays the most
amorphous nature as well as a nascent character that has not been incorporated much into legal
instruments. Even so, certain quarters argue that this principle provides the most practicable legal
approach to sustainable development335.
3.5. Synthesis of New Delhi Declaration Principles
The New Delhi Declaration Principles are another right step in the direction of
sustainable development but labelling them as a stringent practice guideline would be unrealistic.
The principles cover most situations that warrant the implementation of sustainable development
but are overly vague in terms of their implementation. Moreover, as mentioned before, the
principles can be considered as being a guideline but cannot be seen as an exhaustive list of
things to do to provide international legal cover for sustainable development. In addition, certain
parts of the principles lack strong legal character as yet. Above everything else, the New Delhi
Declaration Principles must be seen as suggestive international law as yet that has been consulted
in various juristic decisions but does not hold the effect of an established international customary
law.
On the positive side, the New Delhi Declaration provides a comprehensive yet brief
starting point for the legal cover required for sustainable development. In addition, it expands on
335 French(n 296)
148
the defunct Stockholm Declaration and Rio Declaration that served as little else than formal
commitments to further sustainable development. The New Delhi Declaration has for the first
time been able to incorporate environmental, social and economic objectives with added
emphasis on economic and social objectives. Sustainable development has long been seen as an
environmental objective which has led to juristic decisions pushing economic and social
objectives to the background.
3.6. Examples of Practices for Sustainable Development of Oil and Gas
Resources
Sustainable development of oil and gas resources has emerged as a basic policy issue for
nations that have oil and gas resources. The contention is to develop oil and gas resources on a
sustainable basis so that the environmental, economic and social aspects are fully taken care of.
There are examples from around the world that highlight how various nations have or are in the
process of developing oil and gas resources to offer sustainability and long-term growth and
development prospects.
Currently, a number of different East African nations are in the process of discovering
and exploiting new oil and gas resources in order to augment social and economic development
in these regions. The first move to sustainability by these governments is to gauge the size of the
available reservoirs so that adequate sustainable development could be planned within such
periods. A number of different think tanks have been spurred into action in order to work out
details on the sustainable development. Leading the charge are the Economic Policy Research
Centre (EPRC), the Centre for Strategic Analyses and Research (C-SAR), Africa Growth
Initiative (AGI) and the Kenya Institute for Public Policy and Analysis (KIPPRA). These think
149
tanks are meant to provide the policy level deliberations required to develop oil and gas
resources in the region to augment sustainable development336.
There have been similar moves on the part of the International Petroleum Industry
Environmental Conservation Association (IPIECA) in order to provide a framework that deals in
large part with social concerns to aid sustainable oil and gas development337. A leading example
is provided by Chevron’s development in Papua New Guinea alongside the World Wildlife Fund
(WWF) that allowed an environmentally and socially responsible development to occur338.
In a similar manner, there have been the adoptions of technical standards to limit the
amount of pollutants that can be moved into the environment to ensure sustainable development.
For example, oil and gas operators in the Gulf of Mexico cannot set monthly discharge levels
above 29 mg/L with a given daily maximum discharge level of 40 mg/L. The North Sea, on the
other hand, has limited such discharge to 30 mg/L while the United Kingdom limits it to 22
mg/L, and Norway restricts it to 25 mg/L339.
These actions can be compared to Kazakhstan’s new found oil and gas reserves and their
development on sustainable frameworks. The sulphur being produced along with the oil and gas
in Kazakhstan has not been dealt with through conventional means such as firing it into the open
environment. Instead, a daring program has been launched to consume the sulphur being
336 Brookings Institution, Oil and Gas Management for Inclusive and Sustainable Development: An East African Regional
Forum (1st, Brookings Institution, Washington, D. C. 2013)
337 IPIECA, Industry as a Partner for Sustainable Development (World Summit on Sustainable Development 2002)
338 Ibid.
339 OGP, Inputs to the North Sea for the Offshore Oil and Gas Industry (London: OGP 2001)
150
produced for secondary cost effective uses so that sulphur is not moved into the environment. If
sulphur is released openly, there is the danger of environmental damage leading to social and
economic back falls for Kazakhstan340.
Oil and gas exploration and development companies have taken onto a host of Health,
Safety and Environment (HSE) policies in order to ensure sustainable development341. The HSE
policies are aimed at the various horizontal and vertical levels of operation for dealing with oil
and gas exploration and exploitation. A firm system of work permits is established in any such
operation that informs relevant authorities beforehand regarding any form of operation, whether
critical or non-critical. The nature of operations in the oil and gas industry is dangerous in large
part given the need to handle volatile and often combustible substances. In addition, there is the
constant danger of oil spills and gas leakages. There have been various instances of oil and gas
spillages around the world that have impacted the adoption of effective HSE policies. Recently,
the British Petroleum (BP) Macondo tragedy has prompted strong investigations into HSE
procedures adopted by oil and gas companies342. The need to cut costs has cost both BP and the
local environment dearly leading to a reaffirmation of the idea that safe operations are critical to
340 P D Kalb, S Vagin, P W Beall and B L Levintov, Sustainable Development in Kazakhstan: Using oil and gas production
by product sulfur for cost effective secondary end use products (REWAS 2004 Global Symposium on Recycling, Waste
Treatment and Clean Technology in Madrid, Spain 2004)
341 Slobodan M Sokolovic, Zoltan Z Zavargo and Dunja S Sokolovic ‘Sustainable Development, Clean Technology and
Knowledge from Industry’ [2012] Thermal Science 16(1) 131-139.
342 Colin McDonell ‘The Gulf Coast Claims Facility and the Deepwater Horizon Litigation: Judicial Regulation of Private
Compensation Schemes’ [2012[] Stanford Law Review 64(3) 765-795. See also, Nadia B. Ahmad, The Tropics Exploited
:Risk Preparedness and Corporate Social Responsibility in Offshore Energy Development Available online at
<http://ssrn.com/abstract=2252287>
151
sustainable development in the oil and gas industry. BP has been banned for a number of years
from receiving any contracts in the United States. Moreover, the Environmental Protection
Agency (EPA) has taken to monitoring the BP HSE system until it is satisfied by its
performance.
3.7. Iraq’s need for Sustainable Development of Oil and Gas Resources
Iraq has had a tumultuous history following its independence from the United Kingdom.
The political changes in Iraq and regional developments ushered in the regime of Saddam
Hussein who ended up doing more damage to an already weakened nation. Sectarian differences
had existed in Iraq prior to Saddam Hussein, but such differences only came to the forefront in
Saddam’s regime. Moreover, ethnic differences, especially with the Kurds, also arose in these
decades leading to a demand for independence from the central government. The discovery of oil
in Iraq only added more fuel to the fire, and the Kurd streak for independence only worsened.
Following the Second Gulf War and Iraq’s liberation from the fascist Saddam regime, the plot
only thickened as new international players inundated the scenario343.
At the current point in time, Iraq is haunted by the apparitions of the past and stands
derisive and challenged as an emerging nation. The state of infrastructure and development is
abysmal to say the least and the nation requires extensive rebuilding effort to allow social and
economic development and growth. The best chance that Iraq has for the future is to utilise its oil
and gas resources to initiate and support long-term development and growth. Iraq’s current oil
output of 2.5 million bpd is expected to rise to 6 million bpd in another decade leading to oil
343 Zedalis (n 5)
152
revenues of over 100 million USD per day at net present value344. However, it needs to be kept in
mind that Iraq has a limited chance at such development and any miscalculations on the part of
the inhabitants and the government could lead to a fragmented nation, unable to support itself.
Iraq needs to pursue a path of sustainable development and growth in the longer run by
merging social, economic and environmental objectives into one focused approach. Such an
approach stands endangered from the separatist Kurds who lay claim to extensive oil and gas
reserves in Iraq and whose separation could cost the federation dearly. Iraqi state and other non-
state actors have begun to move in this direction as seen in the Government of Iraq National
Development Plan, as well as the United Nations Development Assistance Framework for Iraq.
Broadly speaking, Iraq requires a realignment of national development strategies by bringing in
long-term developmental policies and legal frameworks to alleviate poverty. Given Iraq’s
significant oil and gas reserves, the role of oil and gas sectors in the national development,
especially sustainable development, is undeniable. The combined contribution of oil and gas to
the Iraqi economy is around 60% such that oil and gas exports make for more than 95% of the
exports and over 90% of government earnings345. The need of the hour is for the Iraqi
government to manage oil and gas development so as to extract and invest revenue sustainably.
Another major issue for Iraq has been the stagnation of human development throughout
the dictatorial regime and the ensuing conflict. Around a quarter of Iraq’s population lives below
344 ibid.
345 IMF, Country Report No. 11/75 (New York: IMF 2011)
153
the poverty line346 with rising unemployment. Similarly, around 40% of the entire population is
under 15 years of age, and the state would need to provide this segment with jobs in another
decade or so. There is a need to develop Iraq’s oil and gas resources while placing focus on
sustainable development. The size of Iraq’s oil resources means that it tends to overshadow other
sectors leading to Dutch Disease and a hampered chance at sustainability. This is coupled with
the fact that the state is the largest employer since oil revenues allow the state to be the employer
of choice. However, sustainability arrangements dictate that state-employed labour has to be
decreased in order to allow sustainable developments in the private sector. Additionally, Iraq is
food insecure since the country cannot meet its own demand targets for food production 347
leading to further dangers of unsustainable development. Once oil and gas exploration and
exploitation begin on vast scales, environmental protection will also have to be prioritised in
order to augment sustainable development.
3.8. From Legal Evolution of Sustainable Development to Iraq’s Legal
Frameworks for Oil and Gas Sustainable Development
The various elements of sustainable development’s evolution have been highlighted
above including legal agreements under international law as well as various case laws and
tribunal awards. This form of sustainable development’s evolution needs to be applied to Iraq’s
burgeoning oil and gas resources to ensure sustainable development. The existing legal
346 World Bank, Iraq Household Socio-Economic Survey (New York: World Bank 2007); See also, UNAMI, UN
Development Assistance Framework, Iraq 2015-2019 available online at<
http://planipolis.iiep.unesco.org/upload/Iraq/Iraq_UNDAF_2015-2019.pdf> accessed 2 January 2015
347 World Food Program, Comprehensive Food Security and Vulnerability Analysis (WFP 2007)
154
arrangements for oil and gas resource’s exploration and exploitation in Iraq need to be analysed,
in next chapter, and more sustainable elements need to be superimposed to ensure sustainable
development.
3.9. Conclusion
It must be taken to note that sustainable development has evolved over the years to
assume the dimensions of social, economic and the originally espoused environmental elements.
The evolution of sustainable development can now be considered to be composed of social,
economic and environmental aspects. In terms of legal evolution, the realm of sustainable
development has undergone the Stockholm Declaration (1972), the Rio Declaration (1992) and
the New Delhi Declaration (2002). However, it must be taken to note that the legal evolution of
sustainable development also espouses juristic reasoning based on a number of different case
outcomes. A number of different cases and tribunal awards have been discussed above to clarify
the evolution of sustainable development. Various case outcomes espouse economic, social or
environmental aspects or a combination of these aspects to justify sustainable development.
The New Delhi Declaration will be used for the remainder of this research as the base
measure of sustainable development. It must be taken to note that the New Delhi Declaration is
not an exhaustive list of sustainable development principles but can be seen as a positive step
towards such an end.
As analysed above, the first four principles of the New Delhi Declaration will be
considered critical to the social and economic development of sustainable development in Iraq.
155
The environmental responsibilities will be limited to the first four principles while social and
economic sustainable development will be explored using the remaining three principles too in
later chapters. This chapter analysed in detail the various international and national legal
arrangements put in place to ensure sustainable development. The next chapter will build on the
concepts delineated in this chapter to build a specific case for Iraqi international legislation and
sustainable development.
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Chapter Four
International Legal Aspects of Iraq’s Oil and Gas Sustainable
Development
4.1. Introduction
Iraq is among the countries with the world’s largest proven oil and gas reserves. Current
estimates of proven oil reserves suggest a potential of 115 billion barrels of crude oil which
makes Iraq the world’s third largest oil-rich country. On another note, decades of stagnation and
sanctions in the Saddam regime meant that further oil and gas exploration was not possible. In
addition to Iraq’s proven reserves of oil and gas, it is expected that another 45 billion to 100
billion barrels of crude oil remain unexplored348. However, it is ironic that for the fiscal years
20014 and 2015, Iraq’s central government had to face a fiscal deficit, even though, there are
vast oil and gas reserves in the country’s territory. The lack of effective frameworks to explore
and exploit the oil and gas resources has led the Iraqi nation to a miserable state such that the
Iraqi’s long term sustainable development is highly impaired.
This chapter will look into various forms of international petroleum agreements to
observe how they have been implemented throughout the world and in Iraq. Given the fact that
Iraq changed regimes, the international petroleum agreements binding it internationally also
changed. International petroleum agreements would be discussed only in enough detail to allow
an appreciation of how they apply in Iraq’s case, so as to discover how governmental priorities
have shifted in the Saddam, the post-Saddam regimes and the Kurdistan Regional Government’s
348 Blanchard (n 3) 1.
157
friction with the federal government regimes. This chapter will also look into how political
factors, both external and internal, tend to affect petroleum agreements, especially, in the context
of the friction between the Kurdistan Regional Government and the federal Iraqi government.
This chapter will then explore the environmental clauses of Iraqi petroleum agreements and
ascertain its bearing on community development and economic development targets. Lastly, the
chapter will look into the various legal challenges that sustainable development of oil and gas
resources face in Iraq at present.
4.2. Evolution of International Petroleum Agreements
International petroleum agreements (IPA) have evolved over time as the relationship
between suppliers and producers has transformed through its highs and lows. In the modern day,
IPAs are well-established tools of business and a narrow range of IPAs tends to provide for most
business arrangements between petroleum producers and suppliers. The various legal
arrangements utilised under international law and IPA to benefit the petroleum producer and
supplier are being discussed in order to evaluate what kinds of legal arrangements are more
sustainable than others. This will further be applied in Iraq’s case to decipher how Saddam era
petroleum agreements tend to differ from modern oil and gas contracts, especially with reference
to sustainability and sustainable development for the people of Iraq.
4.2.1. Concession Agreements
Since most nation states tend to assume control of any mineral resources discovered in
their territory, it is a direct consequence that they tend to represent any such interests under the
international law. The discovery of oil over the globe in the late nineteenth century and early
158
twentieth century saw a number of nation states trying to conjure legal arrangements to allow for
petroleum extraction. In the initial period of such exploration and exploitation, the oil companies
used simple legal arrangements in order to extract the larger share of profit349. The legal
arrangements were simple and depended on concession based agreements between individuals
and oil corporations350. However, as nation states took onto petroleum agreements, especially in
the Middle East and Latin America, legal arrangements diversified from the initial legal
frameworks in use351. Concession agreements allow the investors to own the entirety of the
produced mineral item. This is particularly helpful to oil prospectors since they are allowed
possession of any oil and gas present in a field with concession agreements.
4.2.2 Profit Sharing
The fifties saw a drive for profit-sharing principles between the host country (HC) and
the international oil company (IOC) involved. Profit sharing schemes between the HC and the
IOC may see trouble for the HC as its regulatory nature tends to raise the costs of projects for
both petroleum exploration and exploitation. Additionally, the HC may be at a disadvantage
since it may have to assume legal responsibility for abandoning the project at any stage352. It is
349 T Moran, ‘Politics of Nationalism and the Evolution of Concession Agreements’ [1972] American Journal of
International Law 66(4) 216-219.
350 Claude Duval, Honore Le Leuch, Andre Pertuzio and Jaqueline Lang Weaver, ‘International Petroleum Agreements:
Politics, oil prices steer evolution of deal forms’ [2009] Oil and Gas Journal 107(3) available online at
<http://www.ogj.com/articles/print/volume-107/issue-33/general-interest/international-petroleum.html> accessed 20
August 2013.
351 C Nahkle, ‘Petroleum Fiscal Regimes: Evolution and Challenges’ in P Daniel, M Keen and C McPherson, The Taxation
of Petroleum and Minerals: Principles, Problems and Practice (London: Routledge 2010) 89-121.
352 S Tordo, ‘Fiscal Systems for Hydrocarbons: Design Issues’ (Washington D C: World Bank Publications 2007) 10.
159
notable that such a drive was instituted by Venezuela and Saudi Arabia such that the HC and the
IOC shared profits equally. Since most other Middle Eastern nations faced a similar situation, the
profit sharing principle spread like wildfire throughout the Middle East including Iraq. Another
notable development from the era is the emergence of politics between IOC and HC.
Iran, unlike other Middle Eastern nations, did not share the profit sharing principle and
instead took onto nationalisation of the petroleum industry. This was done in order to drive up
profits for the government, but the plan backfired and significant IOC placed an oil embargo on
Irani oil353. Consequently, the Iranian regime toppled and led to the return of the Shah of Iran to
power. This indicates that one of the biggest challenges to legal arrangements and sustainability
arises from oil politics. There is a strong chance that the involved stakeholders, including the oil
producers, may induce political currents that would lead to a failure of the governing system and
hence the legal arrangements in use354.
4.2.3. Risk Service Agreements (RSA)
As an alternative to the concession based agreements and profit sharing principle, risk
service agreements emerged especially in the sixties. Under a RSA, an IOC carried out oil
exploration, at its own risk, with predefined legal arrangements with the HC in case of a
353 Charles Lipson, Standing Guard: Protecting Foreign Capital in the Nineteenth and Twentieth Centuries (University of
California Press 1985) 112; Richard W Cottam, Nationalism in Iran (University of Pittsburgh Press 1964) 205.
354 E Bastida, T Walde and J Warden-Fernandez, International and Comparative Mineral Law and Policy, Trends and
Prospects (Netherlands: Kluwer Law International 2005).
160
petroleum discovery355. The IOC was legally stipulated through a RSA to provide technical,
fiscal as well as commercial services in the event that a successful discovery took place356. When
an IOC discovers petroleum, the HC is under obligation to allow discounted sales of the
petroleum product up to a certain part of the total production to the IOC. The RSA allows for
production sharing between the IOC and the HC in already agreed proportions even before the
discovery itself. It needs to be taken to note that the RSA allows the IOC to assume a greater
share of the risk involved since exploration activities may not yield exploitable petroleum
resources.
In the case of a RSA, the oil producer tends to act as a general contractor and not as a
concession based petroleum owner. This has significant legal implications since the oil
producer’s claim to the petroleum resources wanes. In addition, the RSA structure forces the
investor into troubled waters since the returns on investment may be too little to justify the
inputs. However, investors may still decide to go out on a limb with RSAs in order to accrue
favour with HCs357.
4.2.4. Production Sharing Agreements (PSA)
Comparable to the RSA structure for petroleum production, the PSA structure began
emerging in the sixties. Under the PSA structure, the production of petroleum assumes national
355 K Khan, Petroleum Resources and Development: Economic, Legal and Policy Issues for Developing Countries
(London: Bellhaven Press 1987).
356 M Stanley and E Mikhaylova, ‘Mineral Resource Tenders and Mining Infrastructure Projects Guiding Principles: Case
Study – The Aynak Copper Deposit’ (Washington D C: World Bank Publications 2011) 6-7.
357 Nahkle (n 350) 104; Khan (n 354) 99-100.
161
significance as petroleum is seen as a national resource. Hence, the state assumes a larger role in
the control and imbursement of proceeds from petroleum production. The PSA, comparable to
RSA, ensures that the oil producer takes the risk of exploration and only shares the profits in case
of a commercial success. The oil explorer and producer are entitled to a payment of exploration
costs as well as some share in the production of petroleum in case of a discovery that results in
the commercial extraction of petroleum.
Although the PSA may seem to be structured on the same grounds as the RSA there are
fundamental differences in approach358. The PSA signals greater political maturation on the part
of the HC as petroleum production ceased to be a quick cash earning scheme and more of a
consistent means of state revenue. Previously, HC were little else than sleeping partners in
petroleum agreements but this changed as it was realised that the petro dollars could be spent to
achieve far-reaching goals in the HC.
It could be argued that HC’s stakes in petroleum ventures assumed far-reaching political,
economic and social aims that forced them to press IOC harder for a larger part of the petroleum
resources359. Objectives associated with petroleum agreements from the point of view of the HC
could be listed as:
- exerting greater influence on the use of natural resources discovered within the territorial
boundaries as a sovereign nation state;
- increasing the overall share of petroleum production offered to the HC;
358 Duval, Le Leuch, Pertuzio and Weaver (n 350).
359 M Humphreys, J D Sachs and J E Stiglitz, Escaping the Resources Curse (New York: Columbia University Press 2007).
162
- extracting greater fiscal benefit from the production of petroleum assets;
- accelerating the process of fiscal self-reliance for the HC using finance derived from the
petroleum venture(s);
- diverting petroleum based revenue to other programs of national importance;
- acquisition of expertise and technology;
- creating greater opportunities for employment of locals through localised training and
employment programs;
- ensuring the long-term growth and development of the nation state using petroleum
assets.
It needs to be noted that the HC’s involvement in petroleum exploration and exploitation
through PSA frameworks tends to espouse environmental, economic and social benefits for the
development of the HC. If these criteria are compared to the ones used by the United Nations for
defining sustainable development, a lot of similarities is visible. As mentioned in the previous
chapter360, the United Nations ‘three pillar approach’ to sustainable development espouses the
convergence of:
- economic development;
- social equity361;
- environmental protection.
360 See chapter three section 3.2.1, pp105-106; see also Drexhage and Murphy(106)1-26.
361 Mark Roseland, ‘Sustainable community development: integrating environmental, economic and social objectives’
Progress in Planning 54(2) (Pergamon 2000) 73-132.
163
This, in essence, signals the evolution of a sustainable relationship in the development of
a HC through the work of an IOC. Moreover, the development of the PSA framework also
signals towards rising nationalistic agendas and ambitions on the part of nation-states. In
essence, the role of the IOC has been transformed from an independent contractor to that of an
employee of the HC under PSA362. This also tends to distinguish the legal, technological,
political and fiscal relationship between an IOC and HC.
4.3. Learning from IPA Structure and their Application to Iraq
On another note, it needs to be realised that IPAs are affected by changing political
relationships and circumstances as well as by market forces at work. The modern IPA framework
needs to be well-defined yet flexible at the same time to accommodate changing political
circumstances and market conditions due to price volatility among other factors. Most modern
IPAs are essentially production sharing or modernised versions of concession agreements.
Moreover, the modern IPA framework places greater control with the HC compared to the IOC
through a combination of control over petroleum operations as well as the level of state
participation. There is the presence of risk service based contracts in the modern petroleum
world too, but such presence is limited. It needs to be realised that IPA frameworks have evolved
over the years based on (a) state ambition363 and (b) volatility in oil prices. The late seventies and
the early eighties witnessed stiff competition between IOCs given constricted oil production
362 Excalibur Ventures LLC v Texas Keystone Inc & Ors (Rev 1) [2013] EWHC 2767 (Comm) available online at:<
http://www.bailii.org/ew/cases/EWHC/Comm/2013/2767.html> accessed 21 August 2013
363 P D Cameron, International Energy Investment Law: The Pursuit of Stability (Oxford: Oxford University Press 2010).
164
which led to IPAs with stringent terms for IOCs364. In contrast, after the mid- eighties and in the
nineties, IOCs shifted exploration and exploitation to more politically stable states leading to a
reduction of bargaining power of the HCs. Essentially, new IPAs from this period were based on
less stringent terms for IOCs while IOCs were also allowed to renegotiate their older IPAs with
HCs. The reduced price situation of the period led to favourable IPA terms for IOCs so as to
encourage exploration and production in the HCs.
However, this trend has been reversed in the first decade of the twenty-first century.
Continuous political turmoil and war in the Middle Eastern region, as well as rising demand for
petroleum products in the international market, has led to a scarcity of oil supply. Consequently,
HCs have regained a position where they can force IOCs to their terms365.
This has important bearings for the proposed legislative framework for Iraq’s sustainable
oil and gas resources development. It needs to be kept in mind that any proposed legal
frameworks must be clear yet flexible enough to deal with political changes, as well as market
price volatility, 366. Moreover, the central Iraqi government, being the HC, in this case, needs to
364 Omolade A Akinwumi, ‘Cost recovery and high oil price: How can host governments capture adequate revenue? A case
study of Nigeria’ Center for Energy, Petroleum and Mineral Law Policy, University of Dundee (2008)
<file:///C:/Users/Hp/Downloads/CAR-12_25_554710128%20(1).pdf > accessed 22 August 2013; Ole Andreas H Engen,
‘The development of the Norwegian Petroleum Innovation System: A historical overview’ in J Fagerberg, D C Mowery
and B Verspagen, Innovating, Path Dependency and Policy: the Norwegian Case (Oxford: Oxford University Press 2008)
365 Duval, Le Leuch, Pertuzio and Weaver (n 349); A F M Maniruzzman, ‘The issue of resource nationalism: Risk
engineering and dispute management in the oil and gas industry’ [2009] Texas Journal of Oil, Gas and Energy Law 5, 79-
106.
366 P D Cameron, ‘The Structure of Petroleum Agreements’ in N Beredjick and T Walde, Petroleum Investment Policies in
Developing Countries (London: Graham and Trotman Limited 1988).
165
exert just enough control to provide for sustainable development such as through the Federal Oil
and Gas Laws. In the current set of political and fiscal circumstances, too much pressure on the
IOCs would lead to their withdrawal while too little pressure would lead to unfavourable terms
for the Iraqi people. Additionally, as Iraq is still a war zone inhabited by a host of different
stakeholders, the emerging legal framework would need to provide for an unambiguous and
mutually agreed upon set of rules that partake the involved parties and their reservations. The
only real guarantee for sustainable oil and gas development in Iraq would emanate from
satisfying the stakeholders through an agreed upon legal framework.
4.4. Iraq’s Bilateral and Multilateral Investment Treaties
4.4.1. Sustainable Development and Investment Treaties
There is little doubt that a well-balanced investment treaty can provide for a large
measure of social and economic growth in the host country. In the existing international scenario,
investment treaties need to be figured out in such a method that it favours long-term sustainable
growth rather than short term economic and social gains at the expense of environmental
degradation and human rights abuses. Already there are a number of different approaches
available under international legal instruments to promote long-term sustainable growth such as
IISD’s Model International Agreement on Investment for Sustainable Development367, the
367 U.N. Conference on Trade & Development, ‘Investment Policy Framework for Sustainable Development’ (2012),
available online at <http://unctad.org/en/PublicationsLibrary/webdiaepcb2012d6_en.pdf> accessed on 18 September
2014.
166
SADC’s Model Bilateral Investment Treaty Template with Commentary368, the Commonwealth
Secretariat’s Integrating Sustainable Development into International Investment Agreements: A
Guide for Developing Countries369 etc. The recent work by John Ruggie concerning human
rights and business practices is also essentially an exploration of the same issue that looks to
promote long-term sustainable growth by businesses operating around the globe. The measures
of sustainable development promoted through these overarching international legal instruments
can be classified broadly to cover the following areas370:
1. Inter-linking sustainable development and international investment;
2. Qualifying the rights of investors;
3. Liberalising international investments;
4. Qualifying the right of involved states especially the host state;
5. The obligations on international investors;
6. Means of settling disputes.
More notably out of these aspects is the issue of investor obligations that are often paid
only lip service in most BITs globally. It has been suggested that investors should be obliged
using ratified legal instruments to deal with the environment’s protection and conservation,
368 South African Development Committee, SADC Model Bilateral Investment Treaty Template with Commentary,
available online at <http://www.iisd.org/itn/wp-content/uploads/2012/10/SADC-Model-BIT-Template-Final.pdf>
accessed on 19 September 2014.
369 J Anthony and VanDuzer et al, Integrating Sustainable Development into International Investment Agreements: A Guide
for Developing Countries (London, Commonwealth Secretariat 2013).
370 Howard Mann, Reconceptualising international investment law: its role in sustainable development (2013) Lewis and
Clark Law Review 17(2) 521-544.
167
applying ILO’s Core Labour Standards, providing human rights, allowing for social and
economic development as well as raising existing corporate governance standards371.
4.4.2. Iraq’s Take on BITs and MITs
Iraq is a party to numerous international investment agreements, but the validity of such
international arrangements for sustainable development remains to be seen. At present, Iraq is a
signatory to several intellectual property rights conventions as well as to several regional and
BITs that include (but are not limited to)372:
1. Paris Convention for the Protection of Industrial Property (1967 Act), ratified by Law
No. 212 of 1975;
2. World Intellectual Property Organizations (WIPO) Convention, ratified by Law No. 212
of 1975;
3. Arab Agreement for the Protection of Copyrights, ratified by Law No. 41 of 1985;
4. Arab Intellectual Property Rights Treaty (Law No. 41 of 1985).
In addition to the above, Iraq has signed around 35 BITs and 9 MITs such as the
Investments Promotion and Protection Bilateral Investment Treaty with the Arab League.
Moreover, Iraq has BITs with Afghanistan, Bangladesh, India, Iran, Japan, Jordan, Kuwait,
Germany, Mauritania, Republic of Korea, Sri Lanka, Syria, Tunisia, Turkey, the United
Kingdom, Vietnam, and Yemen. In a similar manner, Iraq has bilateral free trade agreements
371 ibid.
372 US Department of State, “Iraq Investment Guide” available online at
<http://www.state.gov/e/eb/rls/othr/ics/2013/204661.htm> accessed on 21 September 2014.
168
with Algeria, Egypt, Jordan, Lebanon, Oman, Qatar, Sudan, Syria, Tunisia, Yemen, and the
United Arab Emirates while it is also a signatory to the Taysir (Facilities) agreement with other
Arab nations373. It needs to be realised that most of these BITs concern areas such as the
promotion and protection of investments, dispute settlement mechanisms, fair expropriation rules
as well as compensation for losses to the operator374. When Iraq’s BITs and other international
investment arrangements with its global partners are taken into account, it becomes clear that
elements of sustainable development such as protection of human rights, promotion of social and
economic development, garnering civil society, environmental protection and conservation are
not an essential priority in these arrangements. The lack of focus on these areas, with some
salient lip service otherwise, is derogatory to the overall sense of the sustainable development of
Iraq’s oil and gas resources. It has already been suggested that Iraq’s oil and gas resources are
being extracted in a non-sustainable manner under the aegis of such BITs and MITs375. In terms
of the bigger picture, it has been observed that international investment agreements have been
providing limited coverage to environmental, labour and anti-corruption issues376.
Iraq’s BITs with its international investors provide mere lip service to social development
as an apparent objective. The overarching focus is typically lined with environmental protection
373 OECD, “Supporting Investment Policy and Governance Reforms in Iraq” (2010) OECD Publishing, 57.
374 US Department of State(n 372)
375 Ahmed M. Jiyad, (nd) “The new oil production targets, new terms and implications” Iraq /Development Consultancy
and Research,Norway, 1-6< http://www.iraq-businessnews.com/wp-content/uploads/2014/09/Ahmed-Mousa-Jiyad-The-
New-Oil-Production-Targets.pdf > accessed 20 December 2014
376 Kathryn Gordon, “International Investment Agreements: A survey of environmental, labor and anti-corruption issues”
(2008) International Investment Law: Understanding Concepts and Tracking Innovation, 135-240.
169
clauses of a limited scope and nature with some coverage provided to labour issues. It is
noticeable that most Iraqi BITs have no oversight for fighting and eradicating corruption through
specific measures or objectives. Another observation stems from the use of language that extends
to broad international legal instruments such as the Universal Declaration of Human Rights
without providing specific measures to combatting the actual issues on the ground in Iraq.
Moreover, there is little coverage provided to Iraqi citizens to become part of any dispute and, in
general, the dispute settlement mechanisms are tilted to favour the international investor rather
than Iraq. Overall, an examination of the various BITs by Iraq reveals a weak structure for the
promotion of sustainable development of oil and gas resources.
4.5. Political Bearing on Petroleum Production and Pricing
Political events and currents tend to have a direct effect on the production and pricing of
petroleum products. The changes in the prices of petroleum products in recent years have the
hallmark of political changes inscribed all over them. The recent past has seen violent political
changes including the ouster of the Saddam regime in Iraq that has left large political gaps in its
wake. Other than these violent political changes, other political undercurrents over time with no
violent bearing have impacted petroleum prices and IPA arrangements377.
4.5.1. External Political Factors
Perhaps the greatest element of political bearing on petroleum prices in the twentieth
century was the creation of Organisation of Petroleum Exporting Countries (OPEC). It is notable
377 Duval, Le Leuch, Pertuzio and Weaver (n 350).
170
that most Middle Eastern and Latin American petroleum producing nations (including Iraq) were
members of OPEC378. The organisation was able to manipulate the local production of petroleum
so as to impact global prices of petroleum products. Rather than promoting a sustainable
relationship between producer and consumer, such actions led to an estrangement of IOCs and
HCs leading to a long term reduction in oil prices globally as IOCs went in search of new oil
fields. OPEC’s original agenda of jacking up crude oil prices went down the drain in the long
term prospect. This has strong implications for Iraq in the modern day.
If Iraq utilises a legal framework that will provide it with the overwhelming control of
petroleum production and export, there are chances that such a legal regime may fall prey to
political manipulation. There are greater chances that such political manipulation would be
external than internal as OPEC’s embargoes have shown over time. However, it needs to be
noted that such manipulation of IPA arrangements would only estrange IOCs and would lead to
lowered oil prices in the longer run for Iraq. Consequently, this would not bode well for
sustainable development as changing oil prices would impact economic and social development
negatively since investable revenues from petroleum would decrease over time. Iraq needs to
evolve a legal framework that is flexible enough to respond to political changes and market price
variations, but the legal framework needs to be strong enough to resist political manipulation,
whether internal or external.
378 Keith W Blinn, International Petroleum exploration and exploitation agreements: legal, economic and policy aspects
(New York: Barrows 1986) 16.
171
4.5.2. Internal Political Factors
However, there are chances for internal political manipulation of oil and gas contracts
even though it may not seem apparent at first. Internal political changes have a strong chance of
leading to upsetting the apple cart of oil and gas contracts. For example, after Colonel Qaddafi’s
takeover of the Libyan government, there was an urgent demand for increases in petroleum
prices by the HC. The IOCs operating in Libya in particular and the Middle East region, in
general, realised the implications of Libya’s absurd demands for price hikes. If prices for
petroleum products went up in Libya, there would be demand to increase petroleum prices
throughout the Middle East. Given the speculation, Shell refused to accept the Libyan
government’s demands which led to the shutdown of their 150,000 barrels per day production in
Libya. However, the pricing demands set forth by Libya were accepted later by Occidental
Petroleum, which led other IOCs to accede to such demands as well379.
This situation is comparable to that experience during the Chilean Copper Nationalisation
drive. The nationalisation drive in Chile led to the eviction of foreign copper producers. The
cases brought forth by the copper producers were decided in large part against them380. Fearing
such reprisals by courts of law, no IOCs in the Middle East took to legal action against Qaddafi
or other HCs pressurising for petroleum price increases. The Chilean Copper Nationalisation
case and the case of Libyan demands for petroleum price increases indicate that local political
379 Everett W Benton, ‘The Libyan Expropriations: Further Developments on the Remedy of Invalidation of Title’ [1974]
Houston Law Review 11, 924-945.
380 Ignaz Seidl-Hohenveldern, ‘Chilean Copper Nationalisation Cases before German Courts’ [1975] American Journal of
International Law 69, 110-119.
172
upheavals have the potential to offset the fragile balance of trust between producers and
suppliers381.
Following the Libyan demands for petroleum price increases, Iran and Saudi Arabia
followed suit and won price increases from their respective IOCs. It is notable that such price
increases were supported by the US government382. Moreover, these price increases did not
invite legal action since the IOC was forced through political means to agree to price increases.
This signals that the local political setup has enough power through local political upheavals and
through the use of foreign diplomacy to pursue price increases even though already agreed upon
IPAs are already present383. It goes without saying that in the longer run, the subjected political
pressure for petroleum price increases had to subside in the face of fast disappearing IOCs due to
unfavourable operation terms.
The learning of internal political factors is significant in the case of Iraq and its drive to
achieve a legal framework for sustainable oil and gas development. At present, the Iraqi central
government is ravaged by a number of internal political problems ranging from ethnic strife to
chances of a forceful take over at the hands of regional warfare through the Islamic State of Iraq
and the Levant (ISIS). The relative instability of the Iraqi regime is also expressed in the actions
of the Kurdistan Regional Government (KRG) that feels confident enough to enter into
381 Charles N Brower, ‘The Future of Foreign Investment – Recent Developments in the International Law of
Expropriation and Compensation’ in Virginia Shook Cameron, Private Investors Abroad – Problems and Solutions in
International Business (New York: Matthew Bender 1976) 166-167.
382 A Yamani, ‘The Oil Industry in Transition’ [1975] Natural Resources Law 391-394.
383 D N Smith, ‘Mining the Resources of the Third World – From Concession Agreements to Service Contracts’ [1973]
American Society of International Law Proceedings 67, 227-230.
173
independent oil and gas contracts384. Additionally, the question of internal ethnic strife between
the Kurds in the north, the Sunnis in central Iraq and the Shiites in southern Iraq make current
political settlements rather volatile385.
Presently, there have been instances where internal political manoeuvres saw the KRG
acting independently in order to secure oil and gas contracts with IOCs without the approval of
the Iraqi central government386. In the current legislative framework, the central Iraqi
government has chosen to deal with such transgressions of national sovereignty and national
laws by blacklisting any IOCs working independently of the central government and the Iraqi oil
ministry. Blacklisted IOCs are forbidden under law from exploring any blocks in any region of
Iraq for oil and gas exploration. In addition, any companies that are already working with the
central government and are then found working with KRG independently are told to shutdown
their operations in the rest of Iraq387.
Given the instances above, it is painstakingly clear that internal political manoeuvres
have a significant chance of upsetting Iraq’s move to sustainable development of oil and gas
resources. Interpreting the internal political volatility with the United Nations’s ‘three pillar
384 Eric Watkins, ‘ExxonMobil nettles Baghdad with Kurdish PSC’ available online at <
http://www.ogj.com/articles/2011/11/exxonmobil-nettles-baghdad-with-kurdish-psc.html> accessed 21 August 2013.
385 Tariq Shafiq, ‘Iraq petroleum law: Problematic issues and its fate’ [2008] Middle East Economic Survey 51(31).
386 Peter D Cameron, ‘Contracts and constitutions: The Kurdish factor in the development of oil in Iraq’ [2011] International Journal of Contemporary Iraqi Studies 5(1) 81-99. See also Meghan L. O'Sullivan, "Future of Oil Hangs on Iraqi Politics" <http://belfercenter.ksg.harvard.edu/publication/24399/future_of_oil_hangs_on_iraqi_politics.html>; Steve Nadis, Mixing Oil and Politics in Iraq,<http://www.hks.harvard.edu/news-events/publications/impact-newsletter/archives/autumn-2011/mixing-oil-and-politics-in-iraq>
387 Cameron (n 386) 81-99.
174
model’ for sustainable development, it becomes clear that Iraq stands to lose out on sustainable
development as discussed below:
- Economic development: Iraq requires massive restructuring efforts following its war of
liberation. The central government relies on petro dollars in order to support its
expenditures given that 90% of the state revenue comes from oil and gas exports388. In
case that Iraq is unable to provide a centralised legal framework that provides for
sustainable and continuous development, there are chances that Iraq may fail as a nation.
- Social equity: Iraq’s society is divided along ethnic and sectarian fault lines that dot the
oil and gas production avenues too389. In case that Iraq’s legal frameworks cannot provide
for a centralised measure of socio-economic uplift within a decade or so390, there are
chances that the country might rupture along sectarian and ethnic lines. A sharp divide
may emerge from Iraq’s oil and gas resources if their division in is not equitable. In case
that the KRG continues with its independent IPAs, the Kurds stand to receive on most of
the proceeds of the oil and gas production. Consequently, the Kurds and the Shiites
would become richer than the rest of the nation since they control most oil and gas
reserves. Also, the Sunnis would be left out from this unsustainable model of
development leading to the likes of a civil war. The current violence and break down of
388 IMF (n 345).
389 Tariq Shafiq, ‘Impediments abound to exploiting Iraq’s vast petroleum resource’ [2009] Oil and Gas Journal 107(10)
34.
390 World Bank (n 346).
175
law and order in Iraq is indicative of such gaps emerging in the Iraqi society391. Only the
right kind of legal framework for IPAs brings the promise of socially sustainable
development for the Iraqi people as a whole.
- Environmental protection: There are best practice limits to the optimal extraction of oil
and gas from known reserves. In the past, it has been the practice of IOCs to develop oil
and gas fields quicker than optimal recommendations leading to a quick depletion of oil
and gas resources392. If oil and gas extraction is carried out at greater than the optimal
rate, there are ample chances that some of the oil and gas may remain entrapped as oil
depth and gas extraction pressures fall below economically extractable limits. The current
political volatility in Iraq signals that certain parties such as the Kurds are in a hurry to
extract oil and gas so as to finance other avenues such as arming themselves. This
provides the chance that IOCs may extract oil and gas from reservoirs faster than optimal
limits would allow. Consequently, this would lead to environmental degradation for the
reservoirs being exploited. Such a model of development would not be sustainable in any
sense of the word. A mutually agreed upon legal PSA framework that provides optimal
drilling and extraction rates from oil and gas fields is the only real guarantee that the Iraqi
people get the most of their oil and gas without degrading the environment.
391 Michael Ross, ‘Does oil hinder democracy?’ [2001] World Politics 53(3) 325-361; Jeffrey D Sachs and Andrew M
Warner, ‘The curse of natural resources’ [2001] European Economic Review 45(4-6) 827-838; Benjamin Smith, ‘Oil
wealth and regime survival in the developing world 1960-1999’ [2004] American Journal of Political Science 48(2) 232-
246; John P Entelis, Islam, Democracy and the State in North Africa (Indiana University Press 1997).
392 UNEP, Environmental management in oil and gas exploration and production (UNEP 1997)
<http://www.ogp.org.uk/pubs/254.pdf> accessed 25 August 2013
176
4.6. The Triple Bottom Line versus the Petro Curse
The triple bottom line can be seen as an extension of the basic United Nations partake on
sustainable development vis-à-vis economic, environmental and social aims and objectives. In
recent years, there has been a growing trend on the part of various IOCs to take onto sustainable
development as one of their core aims and objectives. A significant number of IOCs have taken
onto the standard definition of sustainable development provided by the Brundtland Commission
as393:
“... meeting the needs of the present without compromising the ability of future generations to meet their own needs.”
Alternatively, the triple bottom approach has been defined by the United Nations
Development Program in terms of energy production and usage so as to sustain human use over
the long term394. In turn, this definition has been expanded upon using the United Nations ‘three
pillar model’ to produce the triple bottom line approach. The congruence of this approach can be
summed up as395:
- corporate economic growth which is measured through a combination of:
o revenue generated;
o overall earnings;
393 Charles Smith and Gareth Rees, Economic Development (2
nd edition, Basingstoke: Macmillan 1998) 103.
394 United Nations Development Programme, ‘The World Energy Assessment: Energy, and the Challenge of Sustainability’
(UNDP 2000) 3; Virginie Barral(n 234)377-400.
395 Conoco Sustainable Growth Report (2002) 7; Martin Whittaker, ‘Emerging triple bottom line model for industry
weighs environmental, economic and social considerations’ [1999] Oil and Gas Journal 23.
177
o return on investment to the shareholder which can be compared to economic
growth in the HC that bases itself on the generation of taxes, employment
opportunities, profit sharing between IOC and HC, various forms of royalties as
well as any transfers of technology required for petroleum operation;
o reduction in the use of imported oil and gas which is replaced by local oil and gas
production.
- corporate environmental stewardship which is measured through a combination of:
o increases in overall energy efficiency and its usage;
o reduction in the overall pollution (due to oil and gas extraction as well as due to
the use of petroleum products);
o mitigation projects that can be compared to national initiatives for a cleaner
environment such as clean water, air and land;
o preservation of ecologically important areas.
- corporate social progress which is measured through a combination of:
o community outreach;
o human rights records;
o standards of labour employed;
o respect for diversity in the workplace;
o prevention of new conflicts and mitigation of existing conflicts;
o spending from oil and gas revenues on social uplift such as through social
infrastructure projects in order to:
� promote income equality;
� provision of clean and cheap energy;
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� provide chances for equal growth and advancement to all segments of
society.
On the one hand, there are lofty aims espoused under the triple bottom line396 and on the
other hand, there is ample evidence to indicate that nations with oil and gas resources have made
significantly lower progress than nations without oil and gas resources. This is especially true for
developing nations that have entered the oil and gas exploration and exploitation regime. It is
typical to find that large multinational companies (MNC) and state-owned mega corporations
extract the oil and gas resources. In such situations, it is common to find that the local people and
environment have lost more than they have gained from oil and gas extraction397. Weaver
suggests some examples of where oil and gas extraction has left people poorer, and the
environment degraded compared to before oil and gas extraction398. The primary example of
such ruthless and highly unsustainable practices stems from the former communist bloc
countries. The multiple five-year plans developed by the Communist regime led to increased oil
and gas extraction over every successive five-year plan. However, the oil and gas extracted from
such ventures was used to finance the military industrial complex under the Communist regime.
Consequently, the local people and communities suffered due to environmental degradation
resulting from oil and gas extraction and from the combustion of fuels since pollution controls
396 S Tordo, D Johnston and D Johnston, Petroleum Exploration and Production Rights: Allocation Strategies and Design
Issues (Washington D C: World Bank 2009).
397 KPMG, Impact of IFRS: Oil and gas (KPMG International 2011)
398 Jacqueline L Weaver, ‘Energy Law and Sustainable Development’ in IUCN Environmental Policy and Law Paper No
47 (2003) 3.
179
were virtually nonexistent399. There are chances that this such may take place in the case of Iraq
if a conservative regime takes hold of power. Neighbouring Iran and its interference in Iraq’s
domestic affairs means that there could be chances of a hostile takeover of the government. In
case that the right kinds of legal frameworks are not in place, it would be hard to divert oil and
gas revenue to the socio-economic upliftment of the Iraqi people. It must also be taken to note
that Iraq has already had a similar experience under the Saddam regime when oil and gas
revenues were diverted to the military industrial complex and dictatorial ambitions.
Additionally, petroleum producing nations have borne the brunt of years of war due to
internal conflicts spurred by local war lords. This, in turn, has led to the near devastation of
subsistence of farmers as well as nomadic communities in these nations. Currently, Iraq stands to
suffer from a similar fate if the oil and gas reserves are not equitably distributed around the
nation. Iraq houses three widely distinct communities that are separated by both ethnic and
sectarian divides. The Kurds in the north are distinct from the Sunnis in central Iraq and the
Shiites in the south. The Kurds see themselves as a separate nation that has been strapped to the
Sunnis and the Shiites. On the other hand, the Shiites in the south view themselves as being
closer to Shiite Iran due to sectarian linkages. Decades of dictatorial rule by a Sunni dictator
have spurred the ambitions of local groups to unite with Iran. In contrast, the Sunni Arabs in
central Iraq are seen as persecutors and oppressors since Saddam belonged to the same sect.
Matters are further complicated by the presence of larger reserves of oil and gas in the Kurdish
399 Fred Bosselman, Jim Rossi and Jacqueline Lang Weaver, Energy, Economics and the Environment (Foundation Press
2000) 901-905.
180
north and the Shiite south compared to the predominantly Sunni central Iraq400. The need of the
hour is for a legal framework that accounts for the local ethnic and sectarian differences in order
to mitigate the possibilities of a civil war. The constant bloodshed in Iraq instigated by one
faction on another is indicative of the vast gap that was created during the Saddam era and was
strengthened in its aftermath.
The petro curse has far deeper impacts than could be estimated otherwise401. It has been
estimated that between 1960 and 1993, the GDP growth rate for resource-rich nations was lower
than that for resource-poor nations. The study comprised of 85 different nations with different
mineral resources present including oil producing nations402. The results made it abundantly
clear that nations with a lower resource pile were able to manage themselves better than nations
with greater resource piles403. It is clear that nations suffering from the petro curse or the mineral
curse tend to display a stagnated economy with high inflation rates and external debts. In
addition, the society displays income inequality and disparity along with pervasive corruption
and pollution. Research on the matter from a large academic body proves that this state of affairs
is a consequence of misguided national objectives rather than due to the presence of mineral
400 Ronald A Harris, Bilal Haciogullari, Alaa Shams and Sinan A Abood, ‘Lines in the Sand: Sustainable Development in
Iraq’ in Twenty Seventh Annual ESRI International User Conference (2007) San Diego, California 16.
401 Richard M. Auty, Sustaining Development in Mineral Economies: The Resource Curse Thesis (London: Routledge
1993).
402 Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro States (University of California Press 1997).
403 Richard M Auty and Raymond F Mikesell, Sustainable Development in Mineral Economies (Oxford: Clarendon Press
1998) 86-87; ibid (n 402).
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resources404. In addition, other factors found responsible for this phenomenon include (but are
not limited to) lack of democracy, low human development index (HDI), poor educational
standards, lack of rule of law among others405. Iraq has already undergone a phase of the petro
curse whereby its oil and gas revenues were squandered without thought to sustainable
development. Previous legal arrangements made it possible for the ruling elite to utilise national
resources as personal wealth. Iraq could stand to benefit from already established examples from
the international arena such as the Chad-Cameroon Pipeline, which has provided employment for
over 13,000 locals and has generated infrastructure growth of over 400 million USD in the
region406.
4.7. Contract Clauses from Iraqi Oil and Gas Contracts
Iraqi oil contracts can be classified into two major epochs that are the pre-Saddam and
the post-Saddam periods. Contracts from both periods will be looked into in order to ascertain
the various legal clauses relating to sustainable development vis-à-vis environmental, social and
economic objectives.
404 David S Landes, The Wealth and Poverty of Nations (W W Norton and Company 1998)
405 William Ascher, Why Governments Waste Resources: Policy Failures in Developing Countries (John Hopkins
University Press 1999); Bernard S Black and Anna S Tarassova, ‘Institutional Reform in Transition: A Case Study of
Russia’ (Stanford Law School 2002); ibid (n 404).
406 International Finance Corporation, ‘Chad Cameroon Pipeline Project’ available online at <
http://www.ifc.org/wps/wcm/connect/region__ext_content/regions/sub-saharan+africa/investments/chadcameroon>
accessed 10 January 2014.
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4.7.1 Joint Management Committees
A joint management mechanism has been espoused under the Iraqi oil and gas framework
through the creation of Joint Management Committees (JMC). In essence, the JMC is a
combination of representatives from the nation state’s government as well as from the oil or Gas
Company’s management. The basic contention is to allow both sides to come together to achieve
workable solutions. In Iraq’s case, the National Oil Company (NOC) and the IOCs are required
to form JMCs under the law in order to jointly administer exploration and exploitation efforts.
Model contracts for oil and gas operations espoused in the post-Saddam period declare407:
“The Parties shall establish, within thirty (30) days from the Effective Date, a joint
management committee, referred to herein as the “Joint Management Committee” or “JMC”,
for the purpose of general supervision and control of Petroleum Operations.”
The JMC has a large range of functions to cater to ranging from budgeting and
scheduling to auditing requirements. The involvement of representatives from the NOC and the
IOCs is intended to allow the nation-state to control the operations of the IOCs, without being
too intrusive or too detached from such activities. When the concept of JMCs is superimposed
with sustainable development, it becomes clear that JMCs support sustainable development
through multipartite involvement. In contrast to previous arrangements where either the state or
the IOC directed oil and gas exploration and exploitation agreements to benefit one party alone,
407 Iraqi Oil Ministry Contract Model , Producing Oil Field Technical Service Contract(PFTSC) (2009), Art13(1) available
on line at< http://platformlondon.org/documents/PFTSC-23-Apr-09.pdf> accessed 29 December 2014
See also KRG PSC’s Model(2007) Art 8 (1) , available online at< http://www.krg.org/pdf/3_KRG_Model_PSC.pdf>
accessed 29December 2014
183
the current JMC arrangement allows involved stakeholders to negotiate their interests. This, in
turn, allows both parties to jointly steer operations to provide optimal benefit to both parties.
The JMC concept also stands in line with the New Delhi Principles on sustainable
development. For one thing, the JMC concept stands in line with the first principle mandating
States to ensure the sustainable use of their natural resources. The composition of the JMCs
allows State participation in decisions such as production quotas, transparency and auditing
requirements and the use of local human resources for oil and gas operations. In turn, this
provides greater sustainability to such operations since the local populace is being provided with
the right kind of coverage and opportunities. The involvement of the State ensures that the rights
of the local people are protected both in the short term, such as training and employment
opportunities, and the long term, such as appropriate production quotas to allow for extended
revenue generation.
Nevertheless, the formation of JMCs under legal cover also caters to the fifth principle of
the New Delhi Declaration. Good governance is promoted through the formation of JMCs since
they tend to make governance more balanced especially in the context of dealing with natural
resources available to a nation state. Moreover, the creation of JMCs to deal with oil and gas
resources presents an auspicious picture of resource sharing between the IOC and the nation
state’s populace. It cannot be said that JMCs guarantee fairness and transparency but the
presence of JMCs does provide assurance that the resource sharing formula is on the right track
since governance is distributed between foreign and local parties. Moreover, the presence of
JMCs is auspicious in the sense that the local population may be provided with some forms of
representation at a later time.
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However, the JMC structure is not without its limitations and drawbacks. The formation
of JMCs is encouraging, but this structure may be manipulated to provide relaxation to the IOC
or favours to the State. The limited number of representatives on JMCs 408 is pursuant to
practicality constraints but also provides a narrow spectrum for manipulation through the use of
bribes, favours, coercion or any other such means. In critical terms, legal coverage for and the
presence of JMCs is encouraging, since they represent a strong link in the evolution of oil and
gas governance structures, but there is still great room for improvement to ensure the
transparency and fairness of JMCs. This point may be further strengthened with a look into the
Joint Operating Company (JOC) structure used widely in the oil and gas industry409. Iraq’s
service agreements dating to 2009 ask for a JOC structure to be used, where the parent company
is detached from the field operating division that is actually working to explore or exploit oil and
gas resources. The JOC places strong control in the hands of the Iraqi state, but low level
408 The TSC for Rumaila Oil Field( 2009) Art 13(1) stipulates :(…The JMC shall consist of ten (10) members. SOC shall
nominate five (5) members, including the Chairman. Contractor shall nominate five (5) members, including the Deputy
Chairman and the Secretary. The Parties shall also designate one alternate to each of their members and shall promptly
inform each other in writing of any change of the members or alternates…..) available online at<
http://www.fuelonthefire.com/uploads/files/BP-CNPC-Rumaila-contract-8Oct09.pdf> accessed 1 February 2014
whereas, in KRG contracts the JCM members are 4, see for example Art 8(1) of PSC for Ain Sifni Block, Kurdistan
Region, with Hunt Oil (2007),and same Article of PSC for Topkhana Block, Kurdistan Region, with Talisman (2011);
both provided that (…The Management Committee shall comprise two (2) members designated by the GOVERNMENT
and two (2) members designated by the CONTRACTOR….) available online at< http://www.krg.org/p/p.aspx?l=12&p=1
> accessed 1 February 2014
409 Open Oil, Oil Contracts: How to read and understand them (Time Up Press 2012) 72; See also Chris Flynn and David
Martino, The new 2012 AIPN Model International Joint Operating Agreement,
<http://www.lexology.com/library/detail.aspx?g=3b3341a4-1a20-4c76-a297-b9de4dcb450c> accessed on 1 Feb 2014
185
management decisions are still taken by the JOC410. In some cases, the JOCs have had the power
to manipulate the State and hence there is a need to strengthen the JMC / JOC structure to
promote greater transparency to benefit the local populace.
As such, there is greater need to concentrate on the fourth principle of the New Delhi
Declaration to promote public participation through greater access to information and justice.
Currently, there are structural barriers such as the JMC and the JOC structures that are promoting
yet inhibiting public participation411. On the one hand, these structures are promoting greater
public participation than before and, on the other hand, these structures are inhibiting public
participation by providing narrow formations that can be exploited with ease. A simple solution
for these issues would be to provide the proceedings of these structures as public documents. It
may not be possible to release all forms of documents on account of technical and trade secrets
as well as competition related issues so it is up to legislation to define what kind of documents
need to be exposed to the public domain. The public release of documents and related materials
may yet be a nascent concept and would require elaboration and practice to be of real value to
sustainable development.
4.7.2 Transforming Horizons
Iraq, like other oil and gas producing nations, is beginning to come to the realisation that
the petroleum industry can make far greater contributions to its development than merely the
410 See for example addendum one and three of Technical Service Contract For Rumaila Oil Field (n 407)
411 Nancy Birdsall and Arvind Subramanian, ‘Saving Iraq from its Oil’
<http://www.foreignaffairs.com/articles/59923/nancy-birdsall-and-arvind-subramanian/saving-iraq-from-its-oil> accessed
28 November 2014.
186
revenue from such activities. Moreover, the local populations have been demanding an increase
in the role of the oil and gas sectors in the development and welfare of the people. These surging
demands are being incorporated into the legal arrangements of the day as reflected by various
legal arrangements for oil and gas exploration and exploitation. The Kurd government’s
production sharing contract (PSC) Model incorporates such realisations and their projection in
the preamble by stating412:
“The GOVERNMENT wishes to develop the petroleum wealth of the Kurdistan Region(as defined in this Contract) in a way that achieves the highest benefit to the people of the Kurdistan Region and all of Iraq, using the most advanced techniques of market principles and encouraging investment, consistent with the Constitution of Iraq including, without limitation, Article 112 thereof;”
The contractual provisions listed above reflect changing attitudes and transforming
horizons that allow for greater public participation to achieve greater welfare and development of
the local people. Once such method is the inclusion of local people in the workforce required to
operate oil and gas operations since this allows a greater share for the local people in the overall
operation set. In addition, IOCs may be forced to procure goods and services from local
companies for oil and gas operations413. This allows local businesses greater access to the
generated revenue and also allows local businesses to achieve new heights of growth thereby
spurring the local economy and providing for local social upliftment uplift. Overall, these steps
allow the petroleum sector to employ more local people leading to the creation of economic
value through experience building and competitiveness.
412 Kurdistan Regional Government, PSC Model (n 406)
413 ibid. Arts19(4) and 23(2)
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In terms of the New Delhi principles on sustainable development, these forms of legal
cover provide support to the first principle in vague and indirect terms. An achievement of
sustainable development on social and economic fronts would allow for easier achievement of
the overall sustainable development domain. The aforementioned legal cover has greater
consequences for the second principle that calls for the eradication of poverty and the
establishment of equity in society. The welfare of the local population and development in local
domains would allow for an equitable distribution of wealth unlike in the Saddam regime when
wealth was concentrated in the hands of the ruling elite alone. Iraq has much to gain from oil and
gas revenues and supporting services since the nation is underdeveloped and is also engulfed in a
Civil War. Strong and coordinated efforts are required to lift Iraq out of its current dilemmas, and
the legal cover under oil and gas contracts provides much of an opportunity to do so. The seventh
principle of the New Delhi Declaration is also espoused under welfare and development through
oil and gas operations since it supports integrated socio-economic uplift of the local people.
Another issue of critical importance is the gulf between the Iraqi Federation and the
KRG. The aforementioned legal provisions from the KRG’s end reflect a changing attitude that
is cognisant of the place and value of the Iraqi Federation for oil and gas operations and the
ensuing development. It could be suggested that legal awareness of such realities reflected in
such legal premise indicate a desire to work in synergy rather than squabble over present natural
resources. However, it must also be taken to note that there are still certain divides between both
factions since the Iraqi people have been mentioned in the legal premise as Kurds and Iraqis.
Overall, it could be said that gulfs and bridges are being closed between the Kurds and the Iraqi
Federation and the legal provisions reflect such a developing reality.
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4.7.3 Environmental Objectives for Sustainable Development
Natural materials are required for oil and gas extraction both in the initial and then in the
operational phases. There is also a constant requirement for electricity and water use for
petroleum and gas extraction operations. The utilisation of electricity generating equipment on
oil and gas extraction sites means that electricity is available in abundance, but other natural
resources such as water are needed from outside the designated work area. Governments, in
general, entering into production agreements, do not care much for the utilisation of natural
resources external to the work site. Instead, there is an overwhelming focus on the production of
oil and gas and the resulting revenue. In order to facilitate the IOC that is exploring or producing
oil and gas, governments tend to confer large concessions in terms of external natural
resources414. The case of Iraq is similar with respect to its treatment of external natural resources
in the use of the IOC. For example, a contract handed out by the KRG for oil and gas production
allows the IOC the rights to415: “freely use sand, water, electricity, and any other natural
resources located inside or outside the Contract Area for the Petroleum Operations.”
When the clauses written above is analysed from an environmental perspective, it can be
seen as wasteful since it allows the IOC an umbrella to utilise natural resources as it sees fit,
especially within the contract area. The IOC has not been limited, through the provision of
acceptable environmental limits or through adherence to applicable laws, to ensure that the
414 Kyla Tienhaara, ‘Foreign investment contracts in the oil and gas sector: A survey of environmentally friendly relevant
clauses’ [2011] Sustainable Development Law and Policy 11(3) 18.
415 KRG’s PSC model Art 2(8)(c) ; See also Taq Taq (KRG)PSC with Genel /Addax, (2008) Art 2(8)<
http://cabinet.gov.krd/p/p.aspx?l=12&r=296&h=1&s=030000&p=163> accessed 5 February 2014
189
ecological balance is not disturbed. Moreover, the IOC has not been asked to limit waste
production or to remove any toxic or hazardous substances that might be produced during oil and
gas exploration and exploitation. This form of leniency meted out to the IOC provides them
blanket cover to walk over environmental regulations that are applicable throughout the rest of
the country. The provision of environmental regulations in contracts handed out by the federal
Iraqi government is comparably similar and fails to limit the IOC’s advantage in the extraction
area. There is more work required to classify acceptable limits to waste production and disposal
in the exploration and extraction area as well as on the usage of natural resources external to the
work area.
4.7.4 Community Development and Economic Development
Perspectives
The clause listed above has strong implications for community development as well as
economic development. The use of natural resources outside the contract area allows the IOC lax
operational terms since the natural resources in use are bought at low rates. The IOC should pay
more in order to offset the balance between domestic and commercial rates for natural resources
usage. However, governments, such as those in Iraq, looking to attract foreign oil and gas
investors, tend to allow such loose clauses since it provides the IOC with a strong operating
margin.
Furthermore, there is the strong issue of finance required for community development in
the long term perspective. The IOC operating in the contract area is allowed the use of natural
190
resources at subsidised a rate which is inimical to the interests of local communities416. It would
only benefit the local community if the IOC were to pay just as much as the local community. In
the longer run, sustainable development would only occur if the local community were able to
support itself. This in turn requires costly research and development objectives to be met. While
the local community is paying for the use of natural resources as well as for sustainable
development research and development, the IOC is not paying for research to support sustainable
development. The subsidy available to the IOC arrives from a lack of obligation on their part to
pay for sustainable development objectives. This situation tends to affect the community
development, as well as various aspects of economic development.
In contrast, economic development is also directly affected by the stated clause above
since resources must be rallied to waste removal and rehabilitation of contract areas. Both
exploration and exploitation of oil and gas tend to produce sizable waste, as well as certain
hazardous substances. As listed above, the IOC is not under any legal obligation to clean up
either during the operation or after it. This allows the IOC to limit its environmental development
and servicing costs and this in turn tends to affect the IOC’s revenue directly. The provision of
lax environmental clauses in exploration and production contracts tends to increase the IOC’s
direct revenue making it more attractive to operate in certain areas than others. 417.
416 PSCs have an ambiguous structure that does not specify the rates of using natural resources. These are stipulated later
on during negotiations and are rarely made public since they are treated as confidential data.
417 Notwithstanding, the Bilateral Investment treaties(BITs) signed by Iraq contain provision designed to minimize the
environmental impact of any investment activities; by requiring parties to refrain from weakening or waiving their
191
As listed before, the Iraqi government is looking to divert foreign oil and gas investors
into certain production fields and exploration areas. The provision of lax environmental clauses
allows the IOC’s greater operating margin in certain areas and so allows the Iraqi government to
control where IOC’s go. However, in the longer run and to facilitate sustainable development,
there would be a need to remove the waste and hazardous substances produced from oil and gas
operations. Since the IOC is under no legal obligation, the money for such enterprise would
come from the pockets of the federal Iraqi government or the taxpayers. This, in turn, would
affect economic development in the future since the local people’s disposable incomes would
decrease on account of taxation for meeting long-term environmental objectives. In essence, it
would be accurate to state that IOC’s are given an early rebate through the application of legally
benevolent environmental clauses.
4.8 Legal Arrangement Challenges to Sustainable Oil and Gas
Development in Iraq
The Saddam era legal arrangements for oil and gas extraction were aimed at personal
enrichment, furthering regional ambitions and keeping local communities constrained and
deprived. Since the formation of the newly elected Iraqi government, there have been attempts at
creating new frameworks to deal with oil and gas extraction418. The primary approach of the
newly formed government was to utilise the pre-Saddam era and Saddam-era laws and
environmental rules in order to encourage or incentivise foreign investment. See for example Art. 22 of the Agreement
between Japan and the Republic of Iraq for the Promotion and Protection of Investment , 7 June 2012 <
http://www.mofa.go.jp/mofaj/press/release/24/6/pdfs/0607_05_02.pdf> accessed 24January 2014
418 Zedalis (n 5) 97.
192
guidelines for contract formation whilst new legislation was brought to effect419. Although there
were clear problems in using previous legislation for the extraction of oil and gas but practical
exigencies signalled otherwise. For one thing, the new government had to provide means to
derive its own revenues in order to make state machinery more robust and available. In addition,
the ongoing law and order situation required that a sizable expenditure be placed aside for
maintaining law and order as well as to restructure law and order units afresh.
However, there has been a clear split between the federal government and regional
governments, especially in the context of the KRG. While the federal government worked on its
own set of laws and model contracts, the KRG came out with its set of laws and model contracts
to deal with oil exploration and extraction. It is notable that while the federal government was
still working on its legal aspects, the KRG had already issued its version of a standard PSC that it
planned to use for oil and gas extraction420. The PSC utilised by the KRG early on was meant to
deal with both exploration and development options in the fields controlled by the KRG.
In contrast to the legal arrangements utilised by the KRG, the federal government came
up with its own legal formula under which the subject laws applied to all forms of petroleum
operations with the exception of refining. In contrast to the KRG’s use of a single PSC structure,
the federal government went ahead with a number of different legal arrangements designed to
419 Tariq Shafiq, ‘Iraq’s Technical Support and Production Service Contracts: Pros and Cons’ (2008) Middle East
Economic Survey 51(30) 2.
420 KRG, ‘KRG Ministry of Natural Resources Production Sharing Contracts’ available online at <
http://www.krg.org/p/p.aspx?l=12&p=1> accessed on 8 January 2014.
193
deal with various situations. The federal government took onto three distinct approaches to
exploration and development contracts, namely421:
- service contract;
- field development and production contract;
- risk exploration contract.
Although PSCs were not explicitly espoused by the proposed structure but drafting on the
matter had left room for the introduction of PSCs as an option too. In addition, the proposed
forms of contracts (mentioned above) were not defined explicitly, and the leverage that remained
fuelled the idea that PSCs could be used as an alternative means of dealing with oil and gas
exploration and development. The legal arrangements for these types of contracts signalled that
the federal government was looking at a multi-pronged approach to oil and gas development.
In contrast to the singular vision of the KRG, the federal government provided three clear
contracting options with the possibility of PSCs as well. The language of the contracts indicates
that the service contract would be utilised in order to deal with oil and gas fields that are already
discovered and are either in production or are not producing. The contention is to use this type of
contract so that the IOC becomes a facilitator for the extraction of discovered resources422. It is
possible that the discovered resources may or may not be producing and depending on the
situation encountered, the federal government could use this type of contract to enlist the IOC.
421 N K al Bayati, ‘The New Structure of the Iraqi Oil Industry’ in Iraq Oil, Gas, Petrochemical and Electricity Summit
(2007) Dubai, UAE.
422 Ruba Husari, ‘The rush for oil: Iraq’s oil capacity potential and regional geopolitics’ [2009] Middle East Economic
Survey LII(45) 5-6.
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On the other hand, the second type of contract, the field development and production
contract would apply with oil and gas fields that have been discovered but have not been
developed at all. This type of contract would allow the federal government to enlist the IOC to
develop the field until actual commercial production is achieved423. This would tend to reduce
the risk available to the IOC so that the federal government could ask for greater compensation
for the extraction of oil and gas resources from such fields.
The third type of contract is comparable to standard RSAs and PSAs whereby the IOC is
enlisted to deal with undiscovered areas for oil and gas extraction. Since exploration stagnated
during the Saddam era, there is still a great need to search for oil and gas resources in vast
regions around Iraq. However, this would entail the considerable expense of the kind that the
federal government could not shoulder. In order to deal with this dilemma, the federal
government’s framework for oil and gas exploration and extraction contracts has included the
risk exploration contract. However, it needs to be kept in mind that the federal government
would have to allow the IOC a greater share of the field’s production to deal with the higher
entailed risk and to encourage IOCs to operate deeper within Iraq. Given the current state of
affairs in Iraq, the IOCs need to deal with technological challenges as well as with law and order
dilemmas that require considerable encouragement. The flexibility offered under the current set
of laws by the federal government ensure that as matters stabilise, the premium offered with risk
exploration contracts could be decreased. Alternatively, if the need arises, such premium could
423 Peter Wells, ‘Iraq’s technical service contracts – a good deal for Iraq?’ [2009] Middle East Economic Survey LII(47) 1-
9.
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also be increased. This hints at the inherent flexibility available within these set of laws and
contractual forms.
The competing form of contract offered by the KRG was essentially a PSC framework
that applied to the entire set of petroleum operations including refining. Even though the central
government objected to the KRG’s activities, contracting was carried out with IOCs to encourage
exploration, field development and extraction activities. Moreover, these contracts did not
possess the ratification of the central government or its agents and representatives424. This stands
to indicate that there are factions inside Iraq and its regions that are more interested in making a
quick buck rather than worrying about the collective sustainable future of the nation425.
The aforementioned agreements were revoked after being signed when the independent
contractors were warned by the RRT as to the fiscal and legal risk involved in such contracts. It
was also made clear that following the Hydrocarbon Framework Law’s passage, the current
agreements would hold little to no legal position and acceptance426.
On another note, it needs to be taken into account that the KRG diversified its list of
activities for petroleum operations by defining such operations as prospecting, development or
for authorisation to fields only. However, the basic contention in defining such operations was
nonetheless to allow field exploration, development and eventually the extraction of oil and gas
424 John Ehrenberg, J Patrice McSherry, Ramon Sanchez and Caroleen Mari Sayeji, The Iraq Papers (New York: Oxford
University Press 2010) 388.
425 Nick Snow, ‘Lawmakers seek data on Hunt’s Iraq oil contract’ available online at <
http://www.ogj.com/articles/2007/10/lawmakers-seek-data-on-hunts-iraq-oil-contract.html> accessed 22 August 2013
426 Ehrenberg, McSherry, Sanchez and Sayeji (n 424) 389.
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whether locally or globally. Among other things, the set of laws and the legal framework
provided by the KRG could be seen as more sustainable than that offered by the federal
government in the sense that the KRG allowed for development of local resources in order to
limit reliance on foreign resources and operators .
While the federal government has created a large list of institutions such as the Ministry
of Oil, the Iraqi Council of Representatives, INOC, FOGC, etc, the KRG has kept the structure
simple. In order to deal with oil and gas exploration, development and extraction, the KRG has
created two different institutions namely the Kurdish Exploration and Production Company
(KEPCO) and the Kurdish National Oil Company (KNOC). It needs to be kept in mind that both
institutions have a clearly increasing role to play in the development of oil and gas resources
around Kurdistan including the exploration and the development aspect. There is nothing to
indicate that these institutions would be involved in the commercial marketing and sales of the
oil and gas, so no such contracting or legal arrangements have been filed as yet.
It is clear that KEPCO would be charged with the exploration side of oil and gas
operations while KNOC would deal with development and extraction operations. The initial
arrangements allowed KNOC to compete in any field that required prospecting, development or
access. In contrast, KEPCO was designed to fit into the future of oil and gas operations in
Kurdistan. However, it is undeniable that the presence of KNOC and KEPCO would allow for a
sustainable growth of local resources including human, technological and capital resources
required to sustain oil and gas operations in Kurdistan.
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4.9 Conclusion
The strong interrelationship between political currents and market volatility for oil and
gas exploration and extraction operations cannot be denied. This has important bearings for the
proposed legislative framework for Iraq’s sustainable oil and gas resources development. It
needs to be kept in mind that any proposed legal frameworks must be clear yet flexible enough to
deal with political changes, as well as market price volatility. Moreover, the central Iraqi
government, being the HC, in this case, needs to exert just enough control to provide for
sustainable development. In the current set of political and fiscal circumstances, too much
pressure on the IOCs would lead to their withdrawal while too little pressure would lead to
unfavourable terms for the Iraqi people. Additionally, as Iraq is still a war zone inhabited by a
host of different stakeholders, the emerging legal framework would need to provide for an
unambiguous and mutually agreed upon set of rules that partake the involved parties and their
reservations. The only real guarantee to sustainable oil and gas development in Iraq would
emanate from satisfying the stakeholders through an agreed upon legal framework.
Additionally, if Iraq utilises a legal framework that will provide it with the overwhelming
control of petroleum production and export, there are chances that such a legal regime may fall
prey to political manipulation. There are greater chances that such political manipulation would
be external than internal as OPEC’s embargoes have shown over time. However, it needs to be
noted that such manipulation of IPA arrangements would only estrange IOCs and would lead to
lowered oil prices in the longer run for Iraq. Consequently, this would not bode well for
sustainable development as changing oil prices would impact economic and social development
negatively since investable revenues from petroleum would decrease over time. Iraq needs to
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evolve a legal framework that is flexible enough to respond to political changes and market price
variations, but the legal framework needs to be strong enough to resist political manipulation,
whether internal or external.
The standard United Nations ‘three pillar model’ for sustainable development is in danger
in Iraq due to current legal practices for oil and gas extraction. The dangers stem from economic,
social and environmental concerns simultaneously. It needs to be kept in mind that in the current
circumstances, Iraq faces distinct economic, social and environmental challenges that could
shred the fragile federal government apart at any time unless an equitable division of resources
does not take place. In essence, economic and social aims must take priority but this does not
indicate that environmental objectives should take a back seat since it would hurt sustainability
just as much.
Iraq’s presence in a volatile neighbourhood with tensions mounting indicates the
possibility of a military regime to rise. Comprehensive legal arrangements are required to ensure
that sustainable development is spurred in order to allow socio-economic uplift while not
deepening existing socio-economic divides. A tough legal framework for oil and gas extraction
would be required to ensure that oil and gas revenues are not spent on enlarging the military
industrial complex such as under the Saddam regime. Legal arrangements for oil and gas
extraction during the Saddam era were aimed at:
o enriching the ruling elite;
o fuelling the military industrial complex;
o furthering regional ambitions (such as through the Iran-Iraq war);
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o suppression of communities and people with differentiated ethnic and sectarian
profiles.
All of this needs to change under a truly representative democratic regime that accounts
for the wishes of the differentiated ethnic and sectarian sections of society. Socio-economic
uplift must also go hand in hand with environmental protection since it is often neglected. Iraq
has already suffered in large part from the petro curse in the past. Legal arrangements in modern
Iraq must take into account the possibility that national resources may be squandered if they are
not protected using the right kinds of legal barriers. On the outset, the relationship between a
legal arrangement in Iraq and avoidance of the petro curse may not seem well connected.
However, it needs to be taken into account that various forms of oil and gas legal arrangements
such as PSAs, RSAs and the like could include the possibility of stopping business if a hostile
takeover occurs. It has been seen before from the Libyan example that a hostile takeover tends to
harm the interests of both HC and IOCs427. It is in the long-term interests of both HC and IOCs if
the business is retracted citing legal stipulations under international law and under the PSA or
another legal arrangement. Continued pressure from IOC withdrawal would tend to soften the
hostile takeover so that a positive balance can be restored for the HC and IOCs to benefit from. It
is also notable that most oil-producing nations tend to bank on oil and gas revenues for running
the state. In Iraq’s case, the government deals up to 90% of its expenditure from oil and gas
427 Alfredo De Jesus, ‘The prodigious story of the Lex Petrolea and the Rhinoceres philosophical aspects of the
transnational legal order of the petroleum society’ in TPLI Series on Transnational Law 1(1) (Transnational Petroleum
Law Institute 2012) 8.
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revenues. This would indicate that a withdrawal of IOCs under legal arrangements would lead to
a regime collapse since expenditures cannot be met without the participation of the IOCs. There
is a strong possibility that IOCs and HCs can form mutually beneficial and symbiotic
relationships through legal arrangements that protect each party’s interests in the other’s
domain(s).
Moreover, civil war is imminent in Iraq given the wide ranging differences of ethnicity
and sect between the Kurds, the Sunnis and the Shiites. The legal framework for oil and gas
extraction agreements has to take into account the peculiar local ethnic and sectarian
circumstances to allow a fair distribution of resources. There are chances that civil war may be
spurred in Iraq due to disagreements on oil and gas resource distribution that can only be avoided
through clearly worded legal arrangements between IOCs and Iraq. In addition, in the event of a
civil war in Iraq, there is a significant possibility that oil and gas revenues would be diverted to
funding the civil war which in turn would wreak havoc on sustainable development goals. Iraq
needs to prioritise economic and social objectives for sustainable development through legal
arrangements in order to mitigate the chances of a civil war.
Finally, there is the question of differentiated contracting arrangements between the
federal government and the KRG. There has been evidence to indicate attempts by the KRG to
break free of the federal government’s orbit in terms of oil and gas operations. While such
actions must be dealt with through prompt legal means under a comprehensive legal framework,
this is also indicative of other problems. Years of mistrust between the Kurds and the Sunnis has
led things to a low point in their relationship. The need of the hour is an equitable division of
resources spearheaded by the federal government. In doing so, the federal government could take
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a cue from the KRG’s sustainable development initiatives such as the creation of KNOC and
KPECO. It might also be possible to legally incorporate both KNOC and KEPCO into the federal
government’s structure in order to develop trust in the Kurds and to find a fitting solution to a
paradoxical situation.
It must be realised that Iraq’s challenges and opportunities for sustainable development of
oil and gas resources stem from both international as well as domestic factors. This chapter
discussed international oil and gas contracts for exploration and exploitation in terms of their
evolution and their application to Iraq in the modern context. Various factors affecting Iraq’s
production policies and pricing policies were also examined followed by an evaluation of the
triple bottom line and the petro curse. This allowed a development of challenges to the
development of a unified legal arrangement in Iraq to utilise the oil and gas resources
sustainably. This chapter has analysed some of the international issues in detail and has set the
ground for exploring the domestic situation more carefully in the next chapter.
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Chapter Five
The Constitutional Divide – Federation versus Kurdistan:
Differentiated Legal Approaches
5.1. Introduction
Iraq finds itself blessed with oil and gas resources that currently stand at the world’s third
largest reserves. However, recent years have seen mounting violence and threats of separatism
based on the oil and gas resources of the nation. More prominently, the Kurdish camp to Iraq’s
north is eyeing separatism within a realm of possibility by colluding with regional elements to
frame a free Kurdistan. This places Iraq’s national integrity at stake. It may be argued that the
current situation has been precipitated due to misplaced legal frameworks and an overriding
priority for economic development that have catalysed the split between the federal government
and the KRG. This chapter will examine this argument through a combination of historical
explorations of the subject divide supported by an investigation of legal arrangements on the
matter. The argument will be strengthened further through the application of expert opinions
gathered from a variety of academia, government and technical sources operating within Iraq’s
chequered framework for sustainable development of oil and gas resources.
Thus, this chapter will look into the split between the KRG and the Federation and attempt to
answer how this tends to affect the sustainable development of Iraq’s oil and gas resources. This
chapter will explore the sustainable development of oil and gas resources in Iraq by examining
the post-Saddam regime’s development of legal mistrust between the KRG and the centre.
Additionally, this chapter will look into the environmental aspects of sustainable development
that have been pushed to the back by both the Federation and the KRG to different extents, and
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finally what is the implication of this split and as a consequences, different legal approach, on
Iraqi’s investment situation. The findings of the previous chapters will be linked to the
discussion in this chapter to perform a comprehensive review of the sustainable development of
oil and gas resources and obstacles preventing it.
5.2 . Split between KRG and Iraq’s Federal Government
5.2.1 The Ethnic Perspective
Iraq is a diverse land, and its history shows that diversity comes at a price. The Colonial
Era saw the use of force to bundle together the fragments of the Ottoman Empire including what
is now modern day Iraq. The might of the British Empire coupled with the relative lack of
awareness of the locals allowed the Colonial masters to run the newly formed nation in great
shape. From this time, Iraq has been a conglomeration of three distinct geographical regions that
are rooted in ethnic as well as sectarian differences. In essence, Iraq’s society and geography are
a combined function of its ethnic and sectarian diversity. To the north of Iraq are the separatist
Kurds while central Iraq is home to Arab Sunnis. In contrast, the south is dominated by the Arab
Shiite.
The Sunnis and the Shiites are differentiated based on their differing sects. The
differences between both sects can be traced back to the earliest periods of the Islamic caliphates
and the differences are considered irreconcilable in general. The Colonials chose to settle these
differences not with long-term confidence building but with administrative dexterity instead. The
age-old notion of divide and rule seems true in terms of Iraq’s colonial history. It is notable that
the legislative arrangements from this period in time do not do much in terms of bridging such
gaps. The administrative complexities of this period mandated that the Colonials kept all groups
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separated and dependent on the central government’s authority. The post-Colonial period again
did not do much to relieve these gaps and governments from this period remained tumultuous at
best. The coup by the military and the ensuing decades again do not reflect much in terms of
building common ground. Instead, successive governments and legislation were aimed at
keeping the Sunnis and Shiites separated from each other so that trouble did not ensue. The
Saddam regime did much to aid the cause of the Sunni Arabs since Saddam was himself a Sunni
Arab. Lope-sided legislation and hiring policies for government policies led to a pro-Sunni
regime.
The mistrust between the Sunnis and the Shiites increased further during the Iran-Iraq
War that saw both the neighbouring nations embroiled in conflict for around a decade. The
Shiites in the south of Iraq shared a common border with neighbouring Iran, which is
predominantly Shiite too. The role of Iran’s government in helping out local Shiite insurgent
elements during the Iran-Iraq War made the central government paranoid enough to instigate a
regime of violence against Shiite populations. This was all the more true for Shiites living on the
Iraqi side of the Shat-al-Arab, the water channel, which marks the border between Iraq and Iran.
While there was a possibility that the Saddam regime could have increased Shiite representation
in the government through legislatively erected quotas, but no such efforts were ever carried out.
Consequently, the bridge between the Shiites and the Sunnis only grew with time so as to gain
wider currency in the nation. The post-Saddam regime has been marred due to differences
between the Sunnis and the Shiites, both of which are prepared to use violence as a pivotal tool
to subdue the other faction. The Shiites are aided in their efforts by the Iranians next door while
the Sunnis are supported by the various Sunni nations in the Middle East including (but not
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limited to) Saudi Arabia, Kuwait and the United Arab Emirates. The undeniable role of
unwanted foreign participants has only exacerbated the situation to a point where the Shiites and
the Sunnis are not ready to allow each other long term trust. Legislative development in such an
atmosphere is not only challenging but also endangering. Any bold moves on the part of the
federal government would only lead to the creation of further mistrust that could upset the apple
cart.
5.2.2 The Impact of Military Governance
People were not allowed from Iraq’s Sunni, Shiite and Kurdish quarters to develop
common stakes since the Kurds were seen as inimical to the Iraqi state under the Saddam regime.
The hatred against the Kurds stemmed from long-standing ethnic bifurcations dating back to the
Colonial Era. Rather than leaving behind the past differences, the Saddam regime chose to
suppress the Kurdish identity. The Kurds were constantly persecuted, such as through the use of
chemical weapons, for their demands for a separate homeland. The presence of Kurds along a
sizable belt in the Middle East, starting from northern Iraq, provided a natural calling for the
unification of Kurds throughout the Middle East to form a separate nation. However, exigencies
and practical considerations in the post Second World War era mandated that the territorial
integrity of various nation states be preserved. The Kurdish insurgency to the north of Iraq, i.e. in
Turkey also created fears of separatism in Iraq’s Kurdish regions, leading the military regime to
pursue a violent path in place of confidence building measures and mutual compromise.
The Saddam regime’s treatment of the Kurdish question has led to an unsustainable
situation since the Kurds feel insecure in any new governance mechanism. The apparent mistrust
provided by the Kurds to the new federal Iraqi government clearly indicates that the Kurds have
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been driven to a point of doubting whatever new political arrangements are made. The presence
of an independent KRG from the early nineties indicated that the Kurds had been eyeing
separatism for long. The treatment meted out to the Kurds under the Saddam regime only helped
to intensify the struggle for an independent Kurdistan stretching from northern Iraq all the way to
the Mediterranean Sea.
In order to dissuade the fears of separatism and to allay the fears of the Kurds, the real
way forward would be to build better rapport between the Kurds and the rest of Iraq including
the Sunni and the Shiite quarters. Confidence building between the Kurds and the rest of Iraq is
really necessary given the concentration of oil and gas fields in the region. The Kurdish problems
needs immediate settlement since the Sunni-Shiite split is along sectarian lines and not along
ethnic lines and there seems to be no real solution for the Sunni-Shiite split at present, given the
global involvement of certain religious elements. The settlement of the Kurdish question would
also pave the way for the settlement of the Sunni-Shiite problem since it would provide a
workable example that could be utilised, in theory, to deal with the Sunni-Shiite split.
In terms of sustainable development, the settlement of the Kurdish problem would allow
a reduction of insurgent elements in the north of Iraq and would provide the federation with
greater revenue to pursue social sector development and also sustainable economic development
of the country. As highlighted by the New Delhi Principles on Sustainable Development, the
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only real way forward for sustainable development is through socio-economic upliftment on an
equal footing. In the words of John Fitzgerald Kennedy428:“A rising tide lifts all boats.”
5.2.3 The Post-Saddam Reign of Mistrust Federation versus Kurdistan – Legal Embodiment
of Mistrust
Available volatility, missing national cohesion, overwhelming ethnic and sectarian affiliations
and the lack of common development objectives pushed the Kurds to mistrust the federal
government from the start. The development of mistrust was catalysed by the provisional Iraqi
political setup as well as by the later political arrangements. Top tier political positions were
provided to either Sunnis or Shiites which led the Kurds to doubt the intentions of the
metamorphosing federal Iraqi government. For example, the Transition Administrative Law
(TAL) created executive presence in the newly emerging political structure of Iraq but chose to
sideline the Kurds at the expense of the Sunnis and the Shiites. A combined power sharing
formula was produced using one Prime Minister and a three-member Presidential Council in
order to allow combined power sharing through an embodiment of a fair share in governance429.
This was suspected to produce genuine interest on the part of all involved in the political process
so as to generate legitimacy for the newly emerging Iraqi federal government. While this formula
was praiseworthy, the implementation shook the very notion’s foundations. The Kurds were
expecting one of their numbers to be hoisted to the seat of the interim Prime Minister or the
interim President given the TAL power-sharing arrangement. However, the Kurds were
428 The Presidency Project, ‘John F. Kennedy’ available online at < http://www.presidency.ucsb.edu/ws/?pid=74231>
accessed on 7 February 2014
429 Peter Galbraith, ‘How to get out of Iraq?’ New York Review of Books (2004)
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disappointed early on when the declared interim Prime Minister and the interim President were
Shiite and Sunni respectively430.
On another note, the creation of Iraq’s nascent political framework and its legal
embodiment presented peculiar contours that upset the theoretical image of a unified Iraq. The
TAL enacted in March 2004 espoused the federalist structure of governance for Iraq. On the
outset, the TAL made much senses since federalism was best suited to the interests of a
sustainable and prosperous Iraq. However, details of the proposed federalist structure created
more problems than it solved. While Iraq was provided with a Federation in the centre, the
Kurdistan Regional Government (KRG) was also enshrined within the federalist structure as a
semi-separate entity. Rather than treat the Kurds as a part of the federal structure and allow them
to participate, the authors of the TAL saw it fit to enshrine the KRG as a separate government
under Article 53(a) of the TAL431.
As a straight consequence of the TAL, two major problems emerged on the national and
the Kurdish levels. The national problem emerging with the TAL is based on its definition of
federalism. The TAL sees federalism basing itself on historical and geographical aspects coupled
with the separation of powers432. However, there is no clear indication of what separation of
powers is meant to embody or how powers could be separated. It could only be expected that
430 Brendan O’Leary, John McGarry and Khaled Salih, The Future of Kurdistan in Iraq (University of Pennsylvania Press
2006) 294.
431 Peter Galbraith (n 429) 195.
432 Transitional Administrative Law, Article 4 (2004) <http://web.archive.org/web/20090423064920/http://www.cpa-
iraq.org/government/TAL.html>
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separation of powers is meant to address the issues of burgeoning ethnic and sectarian identities
in Iraq.
The natural consequence of the TAL for Iraqi Kurds was a feeling of misunderstanding
regarding their identity in the federal structure. The recognition of the KRG as a distinct identity
in the overall federal structure through legal embodiment allowed the Kurds to see Kurdistan
progressing towards separatism. This assumption is comparable to the independence of the
colonies in the twentieth century. The British Empire allowed its colonies limited self-
government that was later allowed expanded roles under legislative reforms of various sorts. This
allowed the creation of dominions that finally saw the colonies separating from the Motherland.
Comparably, the Kurds see the recognition of the KRG as a step towards limited self-governance
that will finally lead to independence433.
The notion that Kurds should separate from Iraq and other neighbouring nations such as
Turkey all the way up to Syria is a serious threat to regional peace and security. A large body of
political support is available to the idea that the Kurds should form some kind of regional
alliance into a national identity. However, this would both destabilise the region and would also
lead to an unstable and rather shaky Kurdish alliance 434. The presence of an independent
433 Peter Beaumont (2004) ‘Premature rejoicing in Kirkuk’ The Guardian , 9
th March.
434 Iraqi Energy Expert Dr. Luay Al-khateeb argues that it is rather naïve of many observers to assume that Kurdistan’s
secession from Iraq is a matter of KRG decision in the foreseeable future.
In supporting his view, he asks what about:
1-The 4 States (Iraq, Iran, Turkey and Syria) that all don’t want to see a Kurdish State to exist in the first place,
2-The disputed boarders, provinces and resources (including water) in all 4 States – an unfinished business that requires
many years of negotiations, if not thinking regional wars to endanger the lives of millions and jeopardize economies,
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Kurdish government in Iraq’s north has been true for a long time. The Saddam government was
unable to prevent the Kurds from forming an independent government since the early nineties. It
would be expected that the formation of an independent Kurdish government against Saddam
would tend to solidify the Kurds, but the opposite was true. The split between rival Kurdish
parties in 1994 and the ensuing violence signalled large rifts between contending Kurdish
factions. The instigation of violence, including the use of chemical weapons, against the Kurds
was able to unite the Kurds into a separate whole again, but there are no guarantees that this will
3-The fact that 70% of Iraqi Kurds are on the Iraqi Govt.’s payroll, and today, Iraq’s Federal budget is 90% financed from
4 Super-Giant fields in Basra,
4-The fact that most of Iraq’s future oil production will continue to come out of Basra and will travel eastward to meet
demand in Asian markets,
5-No matter what happens in central and northern Iraq, southern producing assets and export corridor will stay far from all
troubled provinces and fault-lines to sustain Iraq’s economy,
6-Iraq will sooner or later monetize/utilizes its associated gas and this commodity could contribute to 7bcf+ of daily
production. The 17% share of such volumes is more promising and stable than MNR’s current plans,
7-The claim made by KRG/MNR that Kurdistan will produce 2mbpd (any soon) is as good as Iraq’s claim (back in 2009)
to produce 12mbpd+ by 2017 before sensibly reviewing production plateaus down to 9mbpd by 2020. Also, many experts
believe that the 2mbpd of future production from Kurdistan is more of a marketing statement than anything else.
Last but not least, the KRG and the Federal Govt. of Iraq have no option but to reconcile their differences, and think
Federalism, instead of Centralism vs. Confederalism.
Email from Dr Luay J. al-Khatteeb , Director of Iraq Energy Institute (IEI) and Advisor of The Federal Parliament of
Iraq forwarded to the author ( 30 April 2014)
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continue as such. The cement that held the Kurds together, namely Saddam Hussein, has long
since disappeared, and cracks in Kurdish unity may appear on account of the control of oil and
gas resources. In order to prevent a situation comparable to West Africa, it would be advisable to
allow Iraq a transformation into a federative regime held in place by legal cement rather than
dictatorial personality clout.
The warlord regimes in West Africa contending for control of diamond mines could
become a reality for Kurd Iraq if the situation is not handled properly. To ensure the sustainable
development of the Iraqi people and the nation’s oil and gas resources, it would be advisable to
allow legal regimes to decide the allocation of resources to all of Iraq’s people rather than to one
faction or the other.
5.2.4 Policy Dilemmas
Various attempts at keeping Iraq a singular entity have been criticised strongly. Policy
titans have labelled the American attempt to keep Iraq single wrong. It has been argued that
keeping Iraq a singular entity has been the US’ largest “error” in dealing with the imbroglio in
Iraq435. If the division of Iraq were carried out, it would in essence abort the question of a
sustainable future for Iraq and would lead to increasing polarisation in the region. The partition
proposal presented by various policy makers reveal suggestions to partition Iraq into a Kurdish
portion in the north, a Sunni portion in the centre and a Shiite portion in the south436. If such a
435 Peter Galbraith, The End of Iraq: How American Independence Created a War without End (New York: Simon and
Schuster 2007) 222-224.
436 Beaumont (n 433)
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division of Iraq were carried out, it would lead to an intensification of the civil war and the
conflict may assume the shape of a fully fledged war for control of oil and gas resources. The
current situation in Iraq makes it clear that foreign contenders would not keep out of the conflict
for the sake of their economic and religious interests in the region. The proposed division of Iraq
would lead to a conflagration in the region comparable to the scenario in Syria, based especially
on concerns of the ethnic blocks.
In contrast, even if the division of Iraq were supervised by regional and international
organisations such as the Arab League and the United Nations, it would be possible to man new
territorial borders but there would be no guarantee against a war. The newly created entities
would be disposed to war given concerns for controlling oil and gas resources. The chances for a
regional conflagration are again large and this prospect tends to weigh down the option of
partitioning Iraq into new portions as separate entities. In addition, the breakout of a regional war
would spur spending of oil and gas revenues to procure arms and run a war effort. The central
contention of this research would, in essence, be defeated by such an event. Rather than spending
oil and gas revenues to enrich the socio-economic lives of the Iraqi people, the revenues would
be diverted to nefarious and wasteful purposes leading to human misery and devastation for
generations to come.
5.3 Federation versus Kurdistan – Legal Character of the Split Speculated
Regional Involvement
Iran has had some role in Iraq’s regional politics historically. The use of Shiite militia in the
Iran-Iraq war signified the depth of ties between the Shiites in Iraq and the government of Iran.
The post-Saddam era witnessed Iran’s indirect support for the Shiite militia, in Iraq, to support
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the interests of the Shiite south. The polarisation in Iraq over ethnic and sectarian differences has
meant that Iran’s involvement has been seen as a major factor in the legal development of the oil
and gas framework. The KRG supports the contention that legal development for oil and gas
resources is eclipsed by the government of Iran to serve its own interests and to bolster the
interests of the Shiite south. The KRG sees Tehran as a major player in legislative negotiations.
Representatives of the Shiite south are seen as representing the interests of Tehran which are in
turn viewed as being inimical to the interests of the KRG. Here, it must be kept in mind that the
representation of the Shiites on the Council of Ministers and a Shiite Prime Minister has only
added to the concerns of the Kurds437. Negotiations between the Kurds, the Sunnis and the
Shiites are dammed over legal issues due to prevalent mistrust. A comprehensive measure of
confidence-building moves is the only real way possible to successful and sustainable legal
agreements between the KRG and the Iraqi federal government.
5.3.1 Violation of Legal Norms and its Consequences
In Iraq’s case a number of factors; such as ethnicity, historical legacy, sectarian violence,
foreign influence etc., have paid a decisive role in legal decision-making and implementation.
The basic legal norm of pacta sunt servanda has been violated time and again in terms of Iraq’s
legislative development and implementation. An interview with the head of the Oil and Gas
Committee in Iraq’s Federal Parliament revealed a number of instances where decisions taken
with consensus were repealed. For instance, the agreement between KRG regional
437 Author’s interview with Dr Ali H Balo, The Former Head of the Oil and Gas Committee in Iraqi Federal Parliament
(Duhok, Iraq, 15 September 2012)
214
representatives and the federal government over oil and gas resources reached in October 2011
was later repealed by the Council of Ministers. A comparable episode was enacted again in
2012438 when a similar agreement was first agreed upon and then reversed by the Council of
Ministers and the then Prime Minister439. The consistent violation of basic legal norms on the
part of the federal government has developed a regime of mistrust between the KRG and the
federation such that both are not ready to give each other concessions. The KRG views these
faltering positions as indicators of coordinated attempts to deprive the Kurds of their oil and gas
resources.
5.3.2 Constitutional Manoeuvres by the Federation
Iraq’s nascent emergence from dictatorship has rendered stunted constitutional growth.
The nation has promulgated two constitutions after the post-Saddam period. In terms of oil and
438 ibid.
439 It is noteworthy that, the Iraqi government agreed on Tuesday 2 December 2014, to an oil export deal with Kurdistan
Regional Government, signaling an end to a yearslong political impasse that has nearly bankrupted both governments and
hobbled efforts to fight the Islamic State insurgency. Notwithstanding, the deal is ambiguous about the legality of
Kurdish oil sales outside the SOMO mechanism beyond the agreed quotas: 250,000 bpd from the KRG and 300,000 from
Kirkuk and associated fields. However, Speaking at CWC's Kurdistan-Iraq Oil & Gas Conference recently in London, Dr
Hawrami said that the first stage of the deal covers the issues recently agreed, including the 2015 budget, the export of
250,000 bpd from KRG-controlled oilfields, and the facilitation of 300,000 bpd exports from the Kirkuk fields. Still to be
agreed as part of the second stage of negotiations over the next six months are issues including the KRG's right to export
oil independently and to receive payments directly. He added that following the KRG's recent experience about the
receipt of payments from Baghdad, which he described as "a wake-up call", there will be no flexibility in the KRG's
position on these two points, the deal is ambiguous about the legality of Kurdish oil sales outside the SOMO mechanism
beyond the agreed quotas: 250,000 bpd from the KRG and 300,000 from Kirkuk and associated fields.See Matt Bradley,
Sarah Kent and Ghassan Adnan, Iraq and Kurdistan Agree on Oil Deal <http://www.wsj.com/articles/iraq-agrees-
kurdistan-oil-deal-1417513949 > accessed 3 December 2014; Padraig O’Hannelly, Hawrami Calls for Private Oil
Exporthttp<//www.dinar-guru.com/category/krg/> accessed 2 January 2015
215
gas development, neither constitution required the Parliament to ratify any oil or gas exploitation
or exploration contract440. On the other hand, the service contracts issued by the federal
government during the course of meeting licensing requirements cannot be considered as PSCs
and are therefore not required to carry comparable legal ratification441. In essence, oil and gas are
being extracted using the service agreement structure, and the PSC structure but the service
agreements do not need legislative approval, even if the same activity is being carried out.
Article 61(4) of the Constitution states442:“.. regulating the ratification process of international
treaties and agreements by a two-thirds majority of the members of the Council of
Representatives.”. Article 110 of the Constitution demarcates the domain of the federal
government including its exclusive authorities. The First part of Article 110 makes it clear
that443:“… negotiating, signing, and ratifying international treaties and agreements; ” is a
prerogative of the federal government, as mentioned above.
The PSC method of contract awarding considers PSCs as being international treaties and
agreements but service contracts are precluded from such a classification. The reason behind this
can be explained better by the need for more PSCs in the Kurdish north since Saddam-era oil and
gas development was primitive at best. However, the rest of Iraq’s oil and gas fields are well
440 Author’s interview with Abdul Alah Alamir, Advisor of the Deputy Prime Minister for Energy Affairs (Baghdad, Iraq,
26 September 2012)
441 ibid.
442 Constitution of Iraq 2005 available online at< http://www.wipo.int/wipolex/en/text.jsp?file_id=230000> accessed 20
December 2014
443 ibid.
216
developed and can be exploited with little more than service agreements. Since the Kurds
need PSCs in order to develop their oil and gas fields for exploitation, their path has been
blocked outright utilising constitutional safeguards.
On another note, the democratically elected representatives of the nation have no say in
the exploitation and exploration of oil and gas contracts. The current Constitution does not
require the House of Representatives to ratify any oil or gas contracts. The methodology
proposed by the Constitution requires ratification from the Council of Ministers which is a
smaller body and can hence be easily manipulated. Historically, a simple tool for exploitation of
political systems has been the creation of a limited electoral college that can be manipulated to
generate favourable outcomes. The dominance of the Council of Ministers over the Parliament in
such a critical role in Iraq leads to legal abhorrence since the law has been used to sanction the
interests of certain groups over others444. The KRG’s rift from the federation seems better
444 Recent example of such sanction was against KRG when the federal government stopped transferring funds to Kurds,
as punishment for their moves to export crude oil independently, making it extremely difficult for the Kurdish authorities
to pay their civil servants since beginning of 2014, till 13 Nov 2014, when the new federal government had agreed to
reach a comprehensive settlement of all the outstanding issues between the Iraqi federal government and the Kurdistan
Regional Government.. See, Iraqi Oil Minister holds successful talks in Erbil
<http://www.krg.org/a/d.aspx?s=040000&l=12&a=52515> accessed 14 November 2014;See also
Baghdad, Kurds strike temporary oil deal< http://www.iraqoilreport.com/news/baghdad-kurds-strike-temporary-oil-deal-
13629/?utm_source=IOR+Email+Update+Subscribers&utm_campaign=5d3ed8cc22-
Email_Update&utm_medium=email&utm_term=0_f9870911e6-5d3ed8cc22-192784961> accessed 14 November 2014.
217
justified if placed in the context of the aforementioned fundamental legal aberrations. Article 112
of the contemporary Iraqi Constitution states445:
“The federal government with the producing governorates and regional governments shall undertake the management of oil and gas extracted from current fields provided that it distributes oil and gas revenues in a fair manner in proportion to the population distribution in all parts of the country with a set allotment for a set time for the damaged regions that were unjustly deprived by the former regime and the regions that were damaged later on, and in a way that assures balanced development in different areas of the country, and this will be regulated by law.”
The demographic makeup of Iraq, as mentioned in a previous section, makes it
abundantly clear that the Shiites dominate the numbers, followed by the Sunnis while the Kurds
are a minority. However, the distribution of oil and gas resources makes both Kurdistan and the
Basra South valuable, but both regions contain little Sunni pockets. Hence, the majority of oil
and gas resources are not geographically occupied by the largest faction in the country i.e. the
Shiites. Article 112 of Federal Constitution clearly spells out that the federal government carries
the precedent to decide the production quantities and the dissemination of the revenues from oil
and gas production. The Constitution of Iraq provides guarantees to all three ethnic factions of
their share in the revenues generated from oil and gas production. This arrangement is the
essential bone of contention between the extremist Sunni and Kurdish elements and the federal
government. The extremists claim that the federal government will be overruled by the Shiite
elements such that the revenue generated from Shiite and Kurdish regions will be unable to reach
its destination. The federal government does possess the legal justification for allotting the
resources to regions as it sees fit under Article 112 of the Constitution. However, when making
445 Constitution of Iraq 2005.
218
such an argument, it must be considered that the federal government is not merely composed of
Shiite elements alone but also has Sunni and Kurdish representatives too. Hence, asserting that
the government would be overrun by Sunni and Shiite interests is unrealistic and rather paranoid.
There could be some call for better mechanisms to decide the exact allocation of resources as per
geographic regions, but there is little room for else.
Another major line of contention arrives when dealing with the separation of powers and
particularly the decisions to make when the federal government and the regional governments
are in dispute with one another. In violation of the principle outlined by Article 112 of the Iraqi
Constitution, Article 115 expounds446:
“All powers not stipulated in the exclusive authorities of the federal government shall be the powers of the regions and governorates that are not organized in a region. The priority goes to the regional law in case of conflict between other shared between the federal government and regional governments.”
Legal opinion on the matter confirms the idea that both the federal Iraqi government as
well as the KRG are bound by Article 111 which states “Oil and gas are owned by all the people
of Iraq in all the regions and governorate”. This comes consistently with the popular belief that
the KRG has overwhelming authority447 relating to matters of oil and gas operations in the
446 Constitution of Iraq 2005.
447 James Crawford, ‘The Authority of the Kurdistan Regional Government over Oil and Gas under the Constitution of
Iraq’, Clifford Chance (January 2008)
<http://cabinet.gov.krd/uploads/documents/James_R_Crawford_Kurdistan_Oil_Legal_Opinion_English__2008_07_09_
h11m23s26.pdf >accessed 14 January 2015; Kurdistan Regional Government, ‘International law expert confirms KRG’s
authority to manage oil & gas resources’ available online at < http://www.krg.org/a/d.aspx?s=010000&l=12&a=22631>
accessed 22 December 2013; Rex J Zedalis, The role provincial governmental units can play regarding oil and gas
development agreements in the Kurdish North: allocation of Iraqi constitutional power, Journal of World Energy Law and
219
Kurdistan region448. Article 121 makes it clear that in terms of a dispute between the regional
government and the federal government, the regional government’s position would be given
greater leverage. However, for all other matters that have been settled, such as those relating to
oil and gas fields that are already under production, the federal government has the prerogative to
decide. This clearly means that the spheres of influence of the federal government and the
regional governments are defined, albeit not in completely black and white terms449. There are
chances that disputes may occur over newly discovered oil and gas fields or fields where
discovery has been made but production is pending450. Furthermore, For example, a recent deal
Business, 2013, Vol. 6, No. 4, downloaded from http://jwelb.oxfordjournals.org/ at University of Portsmouth Library in
February 9, 2014; Ben Hollamd, Are Kurdistan’s Oil Contracts Constitutional? Available on line at< http://www.cms-
cmck.com/Hubbard.FileSystem/files/Publication/63538de4-c6c3-47ee-aea9-
c58e03f60e57/Presentation/PublicationAttachment/de7979f5-590b-44a9-ae76-
c5d5fc52b686/ADIPEC%20BH%20Kurdistan%20copy.pdf>
448 For the legal opinions challenge, that KRG has overwhelming authority relating to oil and gas development . See
Joseph C. Bell, and Prof. Cheryl Saunders, Iraqi Oil Policy ,Constitutional Issues Regarding Federal and Regional
Authority‟ Legal memorandum, (2007) , available online at <http://www.revenuewatch.org/news/iraq-oil-and-gas-law>.
accessed 2 May 2015 ; Rex J Zedalis, Foundations of Baghdad’s Argument that Regions Lack Constitutional Authority
Over Oil and Gas Development Agreements [2008]Journal Energy & Natural Resources Law 26: 2: 303-316.
449 On 27 September 2012, Iraqi Oil Ministry requested opinion of the Federal Supreme Court(FSC) on Art. 112 of the
Constitution and whether or not, it gives regional and producing governorate the power to manage and sign contracts, to
develop oil and gas resources, without federal government authorisation. On 9 October, 2012, the court considered this
matter as a dispute and held that the oil ministry can file a lawsuit against such regional and producing governorate
governments under Article 5 of its statute. As the time of writing this research, such claim has not yet been filed.
However, this decision can be seen as an indication that the court will interpret this article to the extent that means no
such action allowed without federal government authorization. See FSC decision no 74/Federal/2012,<
http://www.iraqja.iq/krarat/2/2012/74.pdf > accessed 19 Jun. 2014.
450 The KRG claims that it has an exclusive authority under Article 112 and Article 115 of the Constitution to manage oil
and gas in the Kurdistan Region extracted from fields that were not in production in 2005 (“new fields”). And all of
220
to export Kurdish oil to Turkey has been welcomed in Baghdad451 but this does not preclude
chances for a dispute at a later stage such as on matters regarding the amount of oil to be
exported and who has right to sell it452. These issues can be settled better by considering the
stance of Al-adhadh who considers that453 “The fundamental Constitution must be amended to
Kurdistan’s oil and gas produced from new fields. See Statement by Kurdistan Regional Government in response to
Federal Ministry of Oil (MOO) announcement on 23 May 2014, that it has filed a “Request for Arbitration” against the
Republic of Turkey and a Turkish state-owned entity. <http://www.krg.org/a/d.aspx?l=12&a=51600> accessed 30 May
2014
451 Turkish Journal, ‘Baghdad welcomes KRG oil, gas agreements with Turkey’ available online at <
http://www.turkishweekly.net/news/159883/baghdad-welcomes-krg-oil-gas-agreements-with-turkey.html> accessed on
22nd
December 2013; Reuters, ‘Turkey, Iraqi Kurdistan clinch major energy pipeline deals’ available online at <
http://www.reuters.com/article/2013/11/06/us-turkey-iraq-kurdistan-idUSBRE9A50HR20131106> accessed 22nd
December 2013
452 On 23 May, 2014, the Iraqi Oil Ministry (MoO) announced that it has filed a Request for Arbitration against the
Republic of Turkey and its state-owned pipeline operator BOTAŞ, seeking to stop the unauthorized transportation,
storage and loading of crude oil pumped into the Iraq-Turkey pipeline by the Kurdistan Regional Government. The
Request for Arbitration was filed with the International Chamber of Commerce (ICC) in Paris in accordance with the
agreements that govern the pipeline and related facilities. The(MoO) claims that by transporting and storing crude oil
from Kurdistan, and by loading that crude oil onto a tanker in Ceyhan, all without the authorization of the Iraqi Ministry
of Oil, Turkey and BOTAŞ have breached their obligations under the Iraq-Turkey Pipeline Agreement, that was signed in
1973 and amended several times, most recently in 2010. <http://www.moo-
iraq.com/en/index.php?name=News&file=article&sid=321> accessed 30 May 2014
It is worth mentioning that, the Iraqi Oil Ministry on 7 January 2015, has won a procedural legal victory in its long-
standing disputes with the autonomous Kurdistan Regional Government (KRG) over oil export rights. The Southern
District Court in Texas on Wednesday denied the KRG's motion to dismiss a case that is preventing the delivery of 1
million barrels of oil to customers in the U.S. The decision forestalls Kurdistan's attempt to establish a high-profile
precedent that might enhance its ability to export oil independently. SeeBen Vanheuvelen, Ben Lando and Patrick
Osgood, U.S. court takes on Iraq oil disputes ,Iraq Oil Report < http://www.iraqoilreport.com/news/u-s-court-takes-iraq-
oil-disputes-13897/?utm_source=IOR+Email+Update+Subscribers&utm_campaign=78cf117072-
Email_Update&utm_medium=email&utm_term=0_f9870911e6-78cf117072-192784961> accessed 9 January 2015
453 Al-adhadh(n 6) 10.
221
incorporate a clear-cut provision, stating that the operation and management of the oil and gas
resources are a federal responsibility.”
Thus, there is a clear need to look into the nascent emerging legal framework that is
responsible for deciding sharing of resources between the centre and KRG, before problems gain
greater size and spill into the Shiite south.
However, the arrangement provided by the Constitution of Iraq as noted before, balances
delicate ethnic and sectarian sentiments with socio-economic realities. This manner of
approaching the problem is participatory and is justified under the New Delhi Principles through:
- Principle Two i.e. “the principle of equity and the eradication of poverty”;
- Principle Four i.e. “the principle of public participation and access to information and
justice”;
- Principle Five i.e. the principle of good governance;
- Principle Seven i.e. “the principle of integration and interrelationship, in particular,
relation to human rights and social, economic and environmental objectives”.
5.3.3 Oil and Gas Laws
At present, Iraq does have a Constitution but it does not have any updated oil laws. The
plethora of bifurcations in modern Iraq mentioned above as well as foreign involvement in Iraq’s
domestic affairs have complicated the march towards national integration on a legal place. Iraq
has managed to agree to a working Constitution, but there has been little progress on oil and gas
production and exploration laws largely due to political, ethnic and sectarian considerations.
Consequently, to suit legal requirements, Iraq has adopted the previous set of oil laws known
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better as the Law of Conservation of Oil Wealth454 enacted in 1985 under Saddam Hussein455.
The biggest advantage offered by the incumbent law is that it covers all aspects of oil operations
holistically ranging from drilling to the establishment of auxiliary entities. Therefore, as
agreement and consensus are built for a new law, the old law serves the purpose of an umbrella
cover. The more notable aspect of the subject law is that it provides the Ministry of Oil
overarching authority over decisions relating to oil and gas production and exploration in almost
all aspects. The production of revenues from oil and gas operations has been termed as an
“inviolable” duty whose “protection is the duty of every citizen”456. The aforementioned Article
of the Constitution makes it clear that Iraq’s people are considered as citizens and not as Sunnis,
Shiites or Kurds and hence entail the same responsibilities under the law. Therefore, it would be
safe to assume that the federation’s intentions are positive with respect to oil and gas laws, and
positive developments could be expected in the coming years.
5.3.4 KRG’s Take on Oil and Gas Laws
The KRG was frustrated early on with Baghdad’s attempts at taking up its resources into
its own fold. In order to deal with such limiting circumstances, the KRG decided to adopt its own
laws for oil and gas exploitation and to tap into revenues generated from such means. One of the
454 Ministry of Oil, Iraq, Law No. (84) of 1985,available online at <
http://www.oil.gov.iq/en/index.php?name=News&file=article&sid=206> accessed on 9 February 2014
455 Author’s interview (n 440)
456 Constitution of Iraq 2005, Art 27.
223
earliest and most effective of these attempts was the Law No(22) of 2007457 adopted by the KRG
that allowed it an overwhelming power to deal with its localised oil and gas resources and the
revenues generated from such sources458. The subject law provides the KRG with almost open
powers to issue both exploration and exploitation of oil and gas resources459. This early move by
the KRG is to blame for the later misunderstandings between the centre and KRG. Although the
pre-emptive move on the part of the KRG was justified as a means to earn revenues but, in
essence, this move produced more problems than it solved in the first place. Consequently, the
Federation was forced to frame a Constitution and certain other oil and gas laws that provided it
with precedence over the oil and gas resources in case that a dispute arises460. Hence, the
controlling mindset can be blamed to a certain extent on the KRG’s attitude regarding such laws.
However, it would be unfair to put the blame on one party alone. In essence, the problem
between the KRG and the Federation is of an ontological nature and both sides can be seen as
accentuating each other’s woes.
457 Oil and Gas Law No (22) of 2007, KRG, available online at <
http://www.krg.org/pdf/2_English_Version_Kurdistan_Petroleum_Law.pdf> accessed on 10 January 2014
458 Zedalis(n 5) 79-81.
459 The President of KR (Massoud Barzani) in his interview with Al-Hayat Arabic Newspaper on 8 April 2012, declared
that (….We have repeatedly said that we committed to the Constitution: the oil and gas belongs to all the people of Iraq,
in February 2007 we have agreed on a draft law to be approved by Parliament, but the federal government changed it, and
the agreement included a supplement provided that: if this draft of law is not approved by Parliament by May of the same
year, each party has the right to sign contracts with foreign companies, this was an agreement between us and al-Maliki
Iraqi Prime Minister( emphasis added)..). Available online at:< http://sotaliraq.com/mobile-
news.php?id=51027#ixzz1rSOjKcPY> accessed 22 May 2014
460 Zedalis(n 5).
224
5.3.5 Differences in Awarded Contracts
The character of contracts awarded by the Iraqi Federation and the KRG tend to differ
significantly, which in turn is indicative of differing objectives towards oil and gas development.
Moreover, this split also highlights the difference in priorities, between the Iraqi federal
government and the KRG, in terms of long-term socio-economic development objectives. Most
of the oil and gas contracts handed out by the KRG are production sharing contracts (PSC) 461
while most of the contracts handed out by the Federation are service contracts462.
The KRG has chosen to award PSCs for new and undiscovered fields while it has chosen
to award service contracts for previously discovered fields.
The lack of development of oil and gas fields in the Saddam regime and the currently
hostile investment environment means that the KRG is going the extra mile to attract investment.
The issuance of PSCs on the part of the KRG shows its willingness to allot a greater share of
production to the oil and gas operator in order to lure as many investors as possible. The Iraqi
federal government, on the other hand, is choosing to award service contracts since oil and gas
461 List of these contracts available at< http://www.krg.org/p/p.aspx?l=12&p=1> contracts made available for public access
by Sixth Cabinet of KRG in Sep 2011, the released came as, according to the KRG- NRM Dr. Hawrami “….the next step
in implementing our policy of transparency and commitment to freedom of information in Kurdistan’s oil and gas sector,
in line with the Region’s oil and gas law of 2007.” Available online at
<http://www.krg.org/a/d.aspx?a=41567&l=12&s=010000> accessed 2 June 2014.
However, the new contracts signed after this date have not been published, such as the PSCs signed with Exxon Mobil,
Chevron and Total.
462 Ahmed M. Jiyad , The Governance of the Iraq Energy Sector and the Relevance of Association with Energy Charter
Treaty.<www.iraq-businessnews.comwp-contentuploads201405Ahmed-Mousa-Jiyad-Extended-Abstract-ECTS-May-
2014.pdf> accessed 20 May 2014
225
fields are already developed. Moreover, the federal government is looking to bring in oil and gas
operators at the lowest possible operating margin. The federal government’s strategy lies in line
with international practices on the issue, as discussed in the previous chapter (chapter four) while
the KRG’s approach seems more desperate. Since the split between the KRG and the Iraqi
federal government is an open secret, so oil and gas operators are unwilling to initiate contracts
with the KRG due to the federation’s overwhelming ability to cancel any such contracts. The
situation is complicated by the legally allowed interference of the Iraqi national oil companies in
the business of the IOCs by infringing on the working rights of the IOCs463. In order to deal with
these problems, the KRG is more willing to issue PSCs that violate market norms in terms of
contractor’s compensation464.
The KRG’s eccentric approach to oil and gas development is focused on keeping
Kurdistan’s resources committed to its geographical boundaries without any participatory role
for the Iraqi Federation. This stance not only complicates the extraction of oil and gas resources
but also ensures that such resources are diverted to nefarious designs between the KRG and the
Federation. In recent years, major oil producers such as Exxon, Chevron, Total and Gazprom
have taken a renewed interest in working in Kurdistan at the expense of the Iraqi federal
463 Author’s interview (n 437). It is clear from the second round awards that the contract model adopted by the Federal
Government was the service contract model with joint venture elements added to it to ensure Iraqi participation in the
operations.
464 For instance, Concerning the cost provision, the PSC Model article (25.3) states: “from the First Production in the
Contract Area, the CONTRACTOR shall at all times be entitled to recover all petroleum costs incurred under this
Contract…” The profit provision article (26.2) states: “From first production and as and when Petroleum is being
produced, the CONTRACTOR shall be entitled to take a percentage share of Profit Crude Oil and/or Profit Natural
Gas…..” these provisions are evident that the benefits of the IOCs are clearly stated.
226
government465. This friction between the KRG and the federal government only stands to benefit
oil and gas operators in the long run. The First Principle of the New Delhi Principles i.e. “the
duty of states to ensure sustainable use of natural resources” 466 is clearly violated since the
KRG’s posture wastes oil and gas resources that belong to the people of Iraq and are meant in
principle for their socio-economic advancement. In addition, the Seventh Principle i.e. “the
principle of integration and interrelationship, in particular in relation to human rights and social,
economic and environmental objectives”467 is also violated since the socio-economic
advancement of the people of Iraq is at threat. There are chances, as discussed above, for the
possibility of a fully-fledged war between the various ethnic and sectarian factions in Iraq if
polarisation over oil and gas development was to increase. This would essentially divert oil and
gas resources to war mongering rather than the socio-economic betterment of the people and the
protection of the environment.
On another note, there are certain discrepancies in terms of how contracts were awarded
to oil and gas operators by both the federal government and the KRG. The general principle has
been to award oil and gas exploration and exploitation contracts to IOCs without any
consultation from civil society groups of any sort at all. These practices provide a clear violation
of sustainable development principles that demand public participation and transparency. This
465 Author’s interview (n 437)
466 International Law Association, New Delhi Principles (2002)
467 ibid.
227
principle has resonated throughout the annals of federal and KRG’s oil and gas contracts468. The
federation has still chosen to issue contracts through open bidding while the KRG took the
approach of issuing contracts by direct negotiations with the oil and gas operators. Although the
KRG is required to release details regarding these negotiations, based on stipulations through
Articles 51 and 52 of the Oil and Gas Law 2007469, but there have been limited moves to this
effect as yet. The contract awarding technique of the federal government has been flawed since
access to information and public participation were denied, but the approach by the KRG is still
more flawed. Moreover, the non-compliance with KRG’s own laws tends to produce greater
mistrust and undermines the sustainable nature of the awarded contracts. In terms of forming a
comparison, the Iraqi federation’s contract awarding methods are more transparent than those
found in KRG’s contemporary practices. The Iraqi federation’s bidding system provides greater
468 Author’s interview with Ali N. Muhammad, Coordinator of Iraqi Transparency Alliance for Extractive Industries
(Baghdad, Iraq, 9 October 2012)
469 Article 51 provides:
First: The Minister shall publish:
(1) invitations for applications for Authorisations; and
(2) notice of the grant and termination of Authorisations.
Second: The Minister shall publish invitations for applications for Authorisations in the media and via the Ministry
internet website, in such manner as is required by regulation.
Whereas Article 52 stipulates:
First:
(1) The Minister shall make available to the public:
(a) details of all Authorisations and amendments thereto, whether current, modified or terminated;
(c) information regarding unitisation agreements.
228
transparency under its bidding mechanism that makes this approach in line with principles of
good governance. In contrast to the Iraqi Federation, the KRG’s system of direct negotiation
does not espouse such far-reaching transparency since the Minister is allowed to negotiate and
award contracts at his personal disposal. Articles 24 and 26 of Oil and Gas Law 2007, provide
the Minister wide powers after some limited consultation with the Regional Council for
awarding petroleum contracts470. In addition, the Minister has complete authority to decide if
contract awards are to be decided through negotiations or through open bidding which violates
the openness of the entire procedure471. The inclination of the KRG to award contracts in this
fashion can be explained by the use of more primitive mechanisms. Open bidding requires the
utilisation of more resources and is a more complicated procedure in comparison to direct
negotiations. In addition, bidding requires greater legal compliance and homework that are
supported by well-formed institutions that the KRG does not have as yet472. However, one
commentator argues that when country succeeds in achieving its national objectives, then it
could be a suitable time for it to consider using the bidding system473 . Nevertheless, the bidding
system will not be succeed in cases such as, unavailability of data, the high cost of preparing
invitations, absence of strong competition, and concern over the nationality of some oil
470 Art 24.
471 Art 26.
472 Author’s interview with KRG NRM’s Senior Advisor (Erbil, Iraq, 5 September 2012).
473 Howayda Hassan Fawzi ‘ The Evolution Of The Legal and Contractual Framework for Exploration and Production Of
Oil In Sudan and The UK: A Comparative Approach To developing and Developed Countries’( PhD Thesis, University of
Dundee September 1996) 211
229
companies, their ability to gain a monopolistic position and consequently influencing the
country's petroleum policy. 474
The realm of contesting human attitudes has produced an atmosphere in Iraq that tends to
eclipse the area of environmental protection. The following section discusses environmental
concerns regarding the sustainable development and the legal plane governing such growth vis-à-
vis the split between the Iraqi Federation and the KRG.
5.4 . Environmental Concerns
The United Nations three pillar approach relies on environmental concerns as well475. In
recent times, the three pillar approach is encouraging hard laws against softer guidelines. The
long term sustainability of any nation depends pivotally on environmental sustainability.
According to some quarters:
“While a great deal has been achieved in the field of environmental law since the 1990s, the extraordinary environmental crises facing humanity in 21st century indicate a continuing urgent need for the generation of policies and frameworks concerning ecological, social/cultural and sustainability”476
474 ibid, 212.
475 The Three Pillars of Sustainability<http://www.thwink.org/sustain/glossary/ThreePillarsOfSustainability.htm >accessed
10 Feberuary 2014.
476 Jamie Benidickson, Ben Boer, Antonio Herman Benjamin and Karen Morrow, Environmental law and Sustainability
after Rio, Iucn Academy of Environmental Law,(Edward Elgar Pub April 28, 2013).
230
The legislation regarding oil and gas development in Iraq has also espoused
environmental concerns as a basic element. 477 Notably, emphasis on environmental concerns
remains vague both in developed and developing nations478. The applicability of environmental
provisions is to be found in both exploration and exploitation contracts issued by the federal
government as well as the KRG. In this regard, it must be stated that the provision of
environmental concerns is greater in exploration and exploitation agreements issued by the KRG
than the Iraqi federal government. According to experts, on the matter479, the KRG approached
environmental concerns more comprehensively given their paying attention to regional and
international agreements as well as guidelines on the matter. One such case in point is the role of
the civil society in the legal frameworks for environmental protection. The federal environment
477 The Iraqi Environment protection and development law provides in Article 2(16) a definition for sustainable
development in the following words:
“Sustainable Development: The economic and social development that fulfil the needs of the existing generation without
affecting the needs of the next generation by observing the environmental legislations and the optimum utilization of the
natural resources.”
An examination of the provided definition reveals that it has been adopted from the standard definition provided by the
Brundtland Commission Report. This provides two major problems with such an approach – first that the definition
provided does not take into account Iraq specific issues such as the ethnic divide involved and second that the provided
definition is vague. It may be possible to garner broad working guidelines with such a definition but to presume that this
approach would produce a workable solution is beyond practicable application of the law. Ministry of Oil,
Iraqi Law of Protection and Improvement of the Environment, No. 27 of 2009, available online at <http://www.moo-
iraq.com/en/index.php?name=News&file=article&sid=265> accessed on 11 February 2014.
478 A F M Maniruzzman, Environment and Sustainable Energy Development in the Asia-Pacific Region’(Canterbury:
IELTR 2003) 38< http://cmsdata.iucn.org/downloads/cel10_maniruzzaman.pdf >accessed 20 February 2014
479 Author’s interview with Dr. Luay J. al-Khatteeb Director of Iraq Energy Institute (IEI), and Advisor of The Federal
Parliament of Iraq.(UK 20 July 2012)
231
legal framework in the shape of the Protection and Improvement of the Environment 480 provides
no real role for the civil society to participate in contracts handed out to IOCs. In contrast, the
KRG legal framework provides for civil society participation in the shape of the Kurdistan Oil
Law (2007) and the Environment Protection and Improvement Law (2008). The Kurdistan Oil
Law under Article 52 makes it clear that a basic right of citizens is their access to information
regarding any oil and gas exploration or exploitation agreement481. In a comparable manner, the
Environment Protection and Improvement Law provides civil society role through its Article
4(6) that makes clear the participation and role of civil society organisations in the council for
protection and improvement of the environment482. Article 19 of the same law provides that any
individuals or the civil society are at liberty to report to the environment protection and
improvement board under the KRG of any “activities and practices that have harmful effect on
the environment”483. Finally, the principle of public participation and access to information and
justice has been endorsed under Article 21(4) which clarifies the role of NGOs in environmental
protection through participation and intervention484. In addition to the above, the same article
provides for a limited amount of backing for the concept of a “citizen suit” whereby the citizens
and NGOs can bring forth complains against IOCs that are damaging the environment485. It must
480Law No 27of 2009.
481 Oil and Gas Law No 22 of 2007.
482 ‘Environment Protection and Improvement Law No 8 of 2008.
483 ibid.
484 ibid.
485 ibid.
232
be noted that the approach of the KRG reflects reliance on the Fourth Principle of the New Delhi
Principles of public participation and access to information and justice. This indicates that the
KRG’s legal framework is built more around sustainability than the legal framework of the Iraqi
Federation.
5.4.1 Structure of Environmental Legislation
Environmental concerns have been espoused using a pyramidal hierarchical structure that
consists of three different tiers. The basic tier consists of guiding laws provided by the
Constitution486 while the second tier consists of ordinary laws that have been issued by the
Parliament. 487 In contrast, the latter tier consists of bylaws from any rules or regulations that
provide flaws and loopholes in the overall environmental legislation framework. The third tier of
this structure also deals with laws that are ambiguous due to lack of detail. This ensures that the
oil and gas operators are not provided with any loopholes to exploit the environmental legislation
framework.
The environmental legislation in use by the KRG is still lax when compared to
international legislation on the issue. The current legislative vacuum, especially for long-term
486 Article 33 of Iraqi Constitution 2005 stipulates:
“First: Every individual has the right to live in safe environmental conditions.
Second: The State shall undertake the protection and preservation of the environment and its biological diversity.”
487 Twelve environmental laws and 15 related laws were legislated during the last four years by the Iraqi parliament;
another 10 proposed legislations were left to a future parliament to act on, see Iraqi Fourth National Report to the
Convention on Biological Diversity, Ministry of Environment, p77 available on line at:
<http://www.biodiv.be/iraq/biodiversity/Studies%20and%20Reports/iraq-fourth-national-report-final-july-2010.pdf >
accessed 14 May 2014
233
environmental damage for sustained operations, is deemed to provide advantage to oil and gas
operators488. Certain quarters have also argued that the legislation on environmental affairs
provided by the KRG is as robust as any international legislation on the issue, but the
implementation mechanisms are lacking. Proponents argue that the Environmental Protection
and Improvement Board have been limited in its powers to a large extent so as to facilitate
foreign oil and gas operators. It is speculated that such a complacent policy would only lead to an
erosion of Iraq’s environmental assets489.
5.4.2 Drawbacks and Loopholes of Environmental Legislation
While environmental legislation is highly beneficial in the longer run, there are distinct
disadvantages in the short run. Oil and gas operators are only ready to do business with nations
that offer ease of doing business. The erection of exacting environmental standards and
legislation leads to lost business opportunities as oil and gas operators shy away from such
regions. Consequently, nations soften their environmental legal frameworks and other non-tariff
barriers to market entry, in an attempt to encourage foreign investment490. It needs to be kept in
mind that environmental legislation and ease of doing business need to be balanced carefully so
as to promote long-term growth without compromising on environmental concerns. In case
environmental barriers are high, oil and gas operators will be unwilling to enter a market leading
488 Author’s interview with Dr S Muhammad, Assistant Dean , Faculty of Law, Erbil University, and a Member of KRG
Environment Protection and Improvement Law Draft Committee(Erbil, Iraq, 2 September 2012 )
489 Author’s interview with Dr Rizan M Hassan, The Head of KRG Environment Protection and Improvement Board(Erbil,
Baghdad, 8 September 2012)
490 Maniruzzman(n 477) 44.
234
to a loss of revenue which will affect development directly. On the other hand, if oil and gas
operators are legislated lightly, they will be more willing to compromise environmental
concerns. The best possible method is to balance both environmental concerns and the ease of
doing business. Since Iraq has little experience with commercial exploitation of oil and gas
resources, given the impact of the Saddam regime, it is prudent to relate that such a balance
would only come about with iterative efforts.
Figure 3 - Balancing priorities in Iraq would remain essential to ensuring the sustained growth of its
oil and gas resources.
environmental legislation
ease of doing business
235
According to interview with a Member of KRG Environment Protection and
Improvement Law Draft Committee, there are three major problems with Iraq’s current
environmental legislation and its implementation that tends to hinder sustainable development491:
1. Current Iraqi environmental legislation is overlapping and requires the oil and gas
operators to acquire multiple licenses from various ministries. This tends to cause friction
since various government agencies dump their work onto others therefore producing
inertia to oil and gas development;
2. The implementation of current environmental laws is lacking. Although the Iraqi
parliament has legislated these laws, but there are no effective mechanisms to monitor the
implementation of these laws;
3. Members of the executive bodies overseeing environmental legislation are inexperienced
and unqualified for handling such positions since appointments are partisan and political.
An examination of above mentioned problems make it clear that Iraq’s environmental
legislation is comprehensive but requires maturity in terms of its implementation and capacity
building of the people dealing with it. This can also be seen as a cause why the KRG chose to
implement its own version of legislation and wanted its own implementation492. Another
alarming aspect of the current legislation vis-à-vis sustainable development is the ease it allows
491 Author’s interview (n 488)
492 Author’s interview with Dr Mazen L Rathee, Advisor of the Advisory Council of the Kurdistan Regional Government
(Shura Council), (Duhok, Iraq, 10 September 2012)
236
oil and gas operators to violate the agreed norms. The lack of a coherent and effective judicial
framework in Iraq prevents the common citizen from challenging the actions of oil and gas
operators.
Moreover, the lack of awareness on the part of the Iraqi citizens also makes the job of oil
and gas operators easier while infringing laws493. In terms of the New Delhi Principles, this
entails the development of Principle Four494 i.e. encouraging public participation and providing
access to information and justice. Without any further growth in Principle Four of the New Delhi
Principles, it would not be possible to achieve the First Principle i.e. “the duty of States to ensure
the sustainable development of natural resources” 495 since oil and gas operators in Iraq are
benefiting from a lack of public awareness, lax implementation of laws and a loose judicial
framework. Surprisingly, there are currently no cases in any Iraqi court that challenge the actions
of any oil and gas operator based on environmental grounds496.
The complete application of the Fourth Principle of the New Delhi Principles is also not
possible due to limited citizen participation and due to legal confusions in the treatment meted
out to complaining citizens or NGOs. The eventuality of denial of information to the citizen has
not been provided coverage under the KRG legal frameworks discussed above. Similarly, Article
21(4) of the Environment Protection and Improvement Law provides a citizen’s suit scenario
where an individual, a civil society organisation or a NGO may file complaints against an IOC
493 Author’s interview (n 488).
494 International Law Association, New Delhi Principles (2002)
495 Author’s interview (n 492).
496 Author’s Interview (n 488).
237
for disregarding environmental laws and causing damage to the environment and the
complainant party497. Although this law is present, but its scope and interpretation are not
properly defined. The method of proving damage remains vague at best. According to one writer:
“Some academics have interpreted such subsection to mean that citizens, in particular, NGOs, are given the right to initiate legal action against offenders against environmental laws, but government officials have consistently held the view that such a right is restricted to persons who have damage. The latter view is in line with the traditional judicial decisions proof of damage is necessary to create the requisite legal standing to bring an action.”498
The involvement of NGOs represents another attempt by the KRG law to promote public
participation in environmental management. Some of the active NGOs have exercised their right
to request funding from the Environmental Fund499, but many have complained that
497 Environment Protection and Improvement Law No 8 of 2008.
498 Kobkun Rayanakorn, Some Legal Aspects of Sustainable Development : Problems of Implementing the Biodiversity,
Climate Change and Related Conventions in Thailand, ( PhD Thesis, University of London King's College March 1996)
206
499 Iraq’s Environment Protection and Improvement Law No 27 of 2009, provides for the establishment of an
environmental protection fund under Article 26 and then proceeds to provide the Environment Minister with powers to
encourage protection of the environment in Article 31. Similarly, Article 10 of KRG’s ‘Environment Protection and
Improvement Law’ No. 8 of 2008, provide similar conditions. Meanwhile, KRG Oil and gas Law No 22 of 2007 in
Article (1.33) provides definition of Environment Fund as: “the fund, administered by the Regional Government, to
which Revenues will be allocated pursuant to this Law, and to which Contractors are required to contribute pursuant to
the terms of a Production Sharing Contract, as specified in Article 37 of this Law;”
In compliance with this law, for instance, contribution of the contractor in Garmian Block (KR) PSC with Western Zagros
in 2011 were ($150.000) in advance each contract year during the exploration period following 11 December
2011and($300.000) in advance for each contract year during the Development Period. See Article 23.9 of the contract
available online at:< http://www.krg.org/p/p.aspx?l=12&r=296&h=1&s=030000&p=12> accessed 17 May 2014.
However, there is no real implementation of the stated laws since public participation is absent largely.
238
governmental regulations concerning the release of the fund and the complicated procedures
relating to account reporting and auditing have made it extremely difficult for them to meet the
requirement. In some cases, the delay in obtaining releases from the Fund has frustrated the
operation of a project which is partly funded by other sources As a result, some of the NGOs
which have been allocated funds have indicated that they wish to waive their right to use them,
and some prefer not even to apply to the fund at all500. It could be surmised that laws may be
present that espouse the New Delhi Principles but offer little practical application due to social as
well as governance based problems.
On the other hand, environmental impact assessment of oil and gas operations in KRG
legal framework501 is performed only once, and when oil and gas operations commence, there is
no demonstrable follow-up of the environmental impact assessment. The Ministry of Natural
Resources should theoretically follow up on environmental impact assessment through its
representation in Council of Environmental Protection502. However, this is not carried out as per
500 Author’s interview with following concerned civil society organizations: Time Centre for Youth Awareness and
Training, Almassala for Human Resources Development, Nature Iraq and Kurdistan Environment Friends, ( August
2012) , see also Rayanakorn (no 498) 208.
501 For more details of definitions and adoption of EIA in developing country see, Mohammed Nuruddeen Isah, The Role
Of Environmental Impact Assessment In Nigeria’s Oil and Gas Industry (PhD Thesis, Cardiff University September
2012).
502 According to the interview with KRG NRM's senior adviser, it was confirmed that the IOC as a contractor obliged to
conduct the EIA as it is a technical issue not as a legal requirement and the ministry follows up afterward. Author’s
interview (n 471)
However, there is no role for the Environmental Protection and Improvement board whatsoever.
Author’s interview (489)
239
agreed formulas due to intervention by the KRG to protect the interests of oil and gas
operators503. It is worth noting that in Angola for example the Ministry of Environment reviews
and provides comments on the EIA and advises the Ministry of Petroleum on the acceptability of
proposed projects and then the Ministry of Petroleum gives the final approval to the EIA and
then issues an Environmental License504. Another set of discrepancies result from the
Environmental Impact Assessment (EIA) laws espoused by the Iraqi Federation and the KRG505.
Although both sides have provided for vague legal framework regarding EIA as a requirement of
both PSCs and Technical Service Contracts (TSCs) but the method of carrying out and assessing
the validity of an EIA has not been made clear. This provides a free hand to the IOCs in
interpreting the EIA in their own methods and to deliver on it accordingly. Consequently, this
does not bid well for the environmental aspects of the legislation. For comparison sake, the
KRG’s EIA methods are still better off than the Iraqi federation’s EIA methods. While the Iraqi
Federation requires two EIAs, one before the commencement of field work and the other during
503 Author’s interview (n 489 )
504 OSISA, Angola's oil industry operation. available online
at:<http://www.osisa.org/sites/default/files/angola_oil_english_final_less_photos.pdf> accessed 12 May 2014
505Article 2(17) of Iraq ‘Environment Protection and Improvement Law’ provides the following definition for EIA
“Evaluation of the environmental impact: Study and analysis of the environmental feasibility of the proposed projects
which may affect, if set up or carried out, human health and the safety of the environment in the present time and in the
future in order to protect the environment.”
A rundown of the article above reveals that there are no specifics mentioned in the law regarding the methods required for
environmental impact assessment and the resulting action items. There is only a vague reference to environmental
consequences for human beings and the environment that can be interpreted loosely under law. The lack of specific
provisions to deal with actual environmental problems reveals the amount of effort required to make Iraq’s oil and gas
laws more compliant to international standards.
Meanwhile, KRG ‘Environment Protection and Improvement Law’ provides no definition for EIA.
240
the Enhanced Redevelopment Plan, 506 the KRG requires the EIA to be conducted and submitted
either prior to the execution of the contract507 or within six months after the effective date, and
in some contracts required approval of a third party environmental evaluator for the EIA after the
fieldwork starts, and may post the report on the government’s website to invite public
comments508. The approach of the KRG is more in line with the New Delhi principle of access to
information for the general public so that public participation can be promoted.
Nonetheless, both Iraq and KRG models based contracts did not require concluding of
EIA before getting the approval and permits. Comparing the global scenario, in some countries,
EIA is a requirement prior to the approval, and frequently the results of the EIA determine the
conditions of approval and permits509.
On a more practicable scale, the Iraqi government has to balance between environmental
concerns and the ease of doing business. It could be argued that the Iraqi government may use a
lax implementation of environmental and other laws at this stage to attract investment. Once
investment arrives in Iraq and some threshold of performance has been breached, the Iraqi
government may decide to beef up the implementation of environmental and other laws
applicable to oil and gas operators such as for the Rumaila oil field. This version of events seems
506 Technical Service Contract for the Rumaila Oil Field 2009, Art 41(5)
507 Topkhana oil field PSC with Talisman, art37(5) available on line at<
http://www.krg.org/p/p.aspx?l=12&r=296&h=1&s=030000&p=176.>accessed 20 May 2014
508 Taza Oil Field PSC with Oil Search / Shaman 2011, Art 37(6)(1) ,available online at
<http://www.krg.org/p/p.aspx?l=12&r=296&h=1&s=030000&p=167> accessed 20 May 2014
509 UNEP (n 392) 16.
241
more plausible since other oil and gas operations within the Gulf and around the world have used
similar techniques to balance the need for environmental protection and development of natural
resources such as Venezuela.
5.5 . International Legal Implications of Iraq’s Investment Situation
The Iraqi Federation has to exercise greater care in awarding contracts and licences to oil
and gas operators since disputes could occur. A review of international investment law reveals
that investment disputes could go in either direction even if the same version of events is used.
For example, the contrasting outcomes of Lauder v Czech Republic510 and CME v Czech
Republic511 make it clear that although the case facts may be the same, but the case outcomes
may be contrasting. Under Lauder v Czech Republic, the claim for damages by the international
investor were denied outright while under CME v Czech Republic, the investor was allowed
damages to be paid by the Czech Republic for using its regulatory framework to pressurise the
foreign investor. In Iraq’s case, the Ministry for Oil and Gas provides the overarching framework
that may be skewed to favour the federation but this would curtail the ease of doing business and
may lead to long term damages to the government. In such a case, the long-term sustainable
development of the contested oil and gas sites would come into question.
Other international investment decisions such as CMS v Argentina512 highlight that
foreign investors are blaming host countries and their regulative frameworks for being over
510 Ronald S Lauder v Czech Republic, UNCITRAL (2001).
511 CME Czech Republic BV v Czech Republic, UNCITRAL (2001).
512 CMS Gas Transmission Co v Republic of Argentina, ICSID Case No ARB/01/8 (2007).
242
regulative and causing damage to the investments. This form of a plea may be utilised by oil and
gas exploration firms working in Iraq given the volatility surrounding Iraq’s ethnic, sectarian as
well as other social bifurcations. CMS contended that the BIT with the Argentinean government
made it clear that it was the government’s responsibility to513:
“… to maintain a stable framework for investments and maximum effective use of
economic resources.”
However, since the investment climate was not favourable to CMS’ interests in the long
run due to governmental manipulation, so the Argentinean government had to pay for
compensation. Companies that have been operating in Iraq and KRG before the American-led
liberation may not have similar claims as demonstrated by Continental Casualty v Argentina514
where the foreign investor’s claim against the host country was not favoured. In contrast, in the
case of Iraq the actions of the federation and the KRG may be used to prove an unstable business
environment for oil and gas operators. As before, this tends to put the Iraqi Federation and the
KRG, both at danger of being held hostage under international investment law. More
specifically, the disagreement between the KRG and the Federation may be exploited by oil and
gas operators to reclaim compensation earned for the government. This would tend to endanger
the sustainable development of Iraq since it would directly lower the socio-economic conditions
of the Iraqi people.
513 Nathalie Bernasconi-Osterwalder and Lise Johnson, “International Investment Law and Sustainable Development: Key
Cases from 2000-2010”, (IISD 2010) 46.
514 Continental Casualty Co v Republic of Argentina, ICSID Case No ARB/03/09 (2009).
243
5.6 . Conclusion
This chapter has explored the various bifurcations that exist uniquely in Iraq’s case
including the ethnic split between the Sunnis, the Shiites and the Kurds. The negative
consequences of the military governance in Iraq, with respect to the development of oil and gas
resources, shows that the nation stagnated during the period from developing itself using these
resources. The emerging post-Saddam regime and the embodiment of mistrust between the
various competing factions complicate matters further in Iraq’s current situation. In turn, this has
led to policy dilemmas for both the Federation and KRG that in turn discourages the creation of
an acceptable legal framework to bridge existing divides. The repeated violations of legal norms
by both the KRG and the Federation have only added fuel to the fire and have caused major
impediments to the development of a mutually acceptable and respected legal framework to
develop oil and gas resources. The use of constitutional and other legal aides by the Federation to
outsmart the KRG has further led to a trust deficit between both parties. This chapter also
develops on the existing oil and gas laws from the KRG’s and the federation’s side and how
these laws are mutually exclusive in certain respects. The concern for socio-economic
development and the presence of divides in Iraq’s case has meant that environmental protection
has been pushed to the back burner as there is lax legal cover for environmental protection.
There has been a clear split between the Iraqi Federation and the KRG in terms of their
legal and developmental approach to oil and gas field exploration and development. A
rapprochement has been established between both parties, but the peace might be uneasy given
the sectarian and ethnic undertones of the conflict of interests. Moreover, external pressures from
foreign investors and benefitting parties may also drive the Federation and KRG apart in the
244
future. Rising regional involvement in Iraq is also to blame for creating a lack of awareness of
sustainable development on the part of the Iraqi people. In terms of the New Delhi Principles,
this entails the development of Principle Four515 i.e. encouraging public participation and
providing access to information and justice, since oil and gas operators in Iraq are benefiting
from a lack of public awareness, lax implementation of laws and a loose judicial framework.
At present, the legal framework in Iraq may prompt development of oil and gas but not
on sustainable grounds, especially when looked at from the perspective of the New Delhi
Principles. Recent judgements from international investment disputes also signal the need for
caution in chartering new oil and gas exploration and exploitation agreements since foreign
investors can use sectarian and ethnic pleas for demanding compensation.
In Professor John S. Lowe’s view 516:
“The central government’s constitutional interpretation is right though I think that
Kurdistan took the better approach to development.”
Therefore, the essential elements for developing a workable framework are present in
Iraq. The need of the hour is merely to use the legal interpretations of the centre while relying on
the developmental approach of KRG. This form of synergy would invite not only development
but rather sustainable development for the Iraqi people. At present there is a clear split between
the KRG and the Federation concerning the course of action for sustainable development of oil
and gas resources in Iraq but as this chapter highlights, there are possibilities that this divide
515 International Law Association, New Delhi Principles (2002)
516 Email from Professor John S. Lowe to author (10 May 2013)
245
could be bridged. The next chapter would build on the concepts of national legal arrangements,
international legal arrangements, climate change requirements, transparency initiatives, human
rights, etc. in order to evaluate Iraq’s current standing of sustainable development. The
contention would be to decipher Iraq’s current position and the ideal legal international and
national requirements for sustainable development of oil and gas resources.
246
Chapter Six
Catalysts and Inhibitors to Iraqi oil and gas Sustainable
Development
6.1. Introduction
This chapter will list out various kinds of legal arrangements at local, regional, national
and international levels that catalyse or inhibit the sustainability of Iraq’s oil and gas sector
development. In addition, this chapter will explore how different legal domains interact to either
augment or discourage the sustainable development of the oil and gas sector. The various
dimensions of the Kurdistan and Iraqi federation relationship vis-à-vis oil and gas exploitation
arrangements will be explored in order to solicit factors for a legally sustainable framework.
Options presented for Iraq’s sustainable development in the oil and gas sector will be explored to
bring out the legal character of such options in the wider context of Iraq.
A number of legal frameworks, both governmental and otherwise, will be examined in
detail in terms of their practicable implementation and their results in catalysing or inhibiting
sustainable oil and gas development in Iraq. More particularly this chapter will look into the
Extractive Industries Transparency Initiative (EITI), Iraqi energy integration report, multilateral
treaties on human rights and climate change that Iraq has signed along with relevant case law.
The New Delhi principles will be taken as the yardstick to evaluate the efficacy of these legal
arrangements in assessing the sustainable development of Iraq’s oil and gas resources. The
examination of these legal frameworks is expected to espouse the United Nations three pillars
sustainable development approach (social and economic development plus environmental
247
conservation) and serve as an indicator if the petro-dollar curse is inhibiting sustainable oil and
gas development in Iraq.
6.2. International Legal Arrangements
6.2.1. International Soft Law Instruments for Sustainable Development
There has been an upsurge in the use of non-binding legal instruments in the realm of
international law within the context of sustainable development517. These instruments are
considered to be extensions of “soft law” that do not possess the traditional form recognised as a
form of international law but nonetheless have legal effects518. Over time, such legal instruments
have gained greater momentum and recognition in both international relations as well as
international law. Modern international legal instruments display a hybrid composure of both
binding / hard law as well as non-binding / soft law519.
6.2.2. Extractive Industries Transparency Initiative (EITI)
The EITI serves as a watchdog initiative to oversee the extraction of oil, gas and other
minerals in a sustainable manner. The organisation is composed of thirty-five different countries
including governments, companies and civil society groups that evaluate the extraction activities
taking place in member states. The central contention is to ensure that there are transparency and
517 Jurgen Friedrich, International Environmental “soft law” (Springer 2013) 1-2.
518 G F Handl, ‘A hard look at soft law’ [1988] American Society of International Law Proceedings 82, 371-393.
519 E Brown Weiss, International Compliance with Nonbinding Accords (Washington D C: American Society of
International Law, 1997) 4.
248
accountability in revenues derived from natural resources520. In the longer run, this form of an
initiative ensures that sustainable extraction of mineral resources is made possible in lieu of
social and economic indicators. As yet, there is little focus available on the environmental
aspects of extraction activities in member states.
6.2.2.1.EITI Requirements
Iraq joined the EITI initiative in 2010 and has since been evaluated for compliance
against the EITI standard. EITI works on a number of different fronts to ensure transparency and
accountability in extraction operations of oil and gas in Iraq. The major focus of the EITI is
reconciling the listed areas521:
- various revenues and payments being reported by:
o the Iraqi Federation;
o international crude oil buyers;
o international oil and gas operators (exploration and exploitation).
- statistics on oil generation and oil exports reported by:
o the Iraqi Federation;
o local and international petroleum operators;
o third party auditors and verifiers.
- statistics on oil and gas generation and consumption locally reported by:
520 EITI, ‘What is the EITI?’ available online at < http://eiti.org/eiti> accessed on 25 March 2014
521 EITI, ‘Iraqi Extractive Industries Transparency Initiative (IEITI) Report 2011’ (PricewaterhouseCoopers London: 2013)
4.
249
o the Iraqi Federation;
o national oil and gas companies;
o power producers;
o refineries.
- revenue and payments reported by for mining operations by:
o the Iraqi Federation;
o national mining corporations.
- production levels of mining operations reported by:
o the Iraqi Federation;
o national mining corporations.
6.2.2.2.EITI Observations and Legal Hurdles
One of the more notable aspects of the reporting and verification mechanism enunciated
above is the inclusion of the Iraqi Federation at all reporting levels. As explained in the previous
chapters, the Iraqi Federation is a party to any oil and gas discovery and its subsequent
extraction, so the inclusion of the Iraqi Federation is mandatory for all such operations.
However, in Iraq’s peculiar case the role of the Kurdistan Regional Government (KRG) cannot
be discounted. The EITI initiative on the part of the Iraqi Federation was auspicious but provides
a true reflection of the conflict available between the Iraqi Federation and the KRG. The EITI
Report for 2011 clearly announces that the data was not provided by the KRG as well as four out
of nine national mining companies operating in Iraq522. In contrast, the KRG states that although
522 ibid, 4.
250
it was consulted for the EITI report but data provided by the KRG was purged at the last moment
to suit vested interests in the Iraqi federal government. The KRG’s Office for Government
Integrity was taken on board by the KR Ministry of Natural Resources, and data was provided
for the EITI report, but it was not published523. In legal terms, this indicates that there are
information sharing laws and guidelines between the Iraqi Federation and the KRG but the
regional governments have not protection against the discretion of the Federation.
Various legal hurdles between the Iraqi Federation and the KRG have been resolved such
as through the National Iraqi Oil Marketing Organization (SOMO) and the Federal Oil and Gas
laws. However, there is still a large disconnect between the Iraqi Federation and KRG as
highlighted by the EITI report for 2011. The report also brings into focus some reconciliation
differences in the numbers reported by the Petroleum Contracts and Licensing Directorate
(PCLD) and international oil companies (IOCs) amounting to USD 645 million. The slow
growth and archaic business practices of the PCLD have been explained in terms of bureaucratic
hurdles, political partisan behaviour and legal obstacles524.
523 PUK Media, ‘The EITI oil transparency report that inexplicably disappeared’ available online at <
http://pukmedia.com/EN/EN_Direje.aspx?Jimare=3911> accessed 20 March 2014.
524 US Senate Committee on Foreign Relations, ‘Iraq Report: Political Fragmentation and Corruption Stymie Economic
Growth and Political Progress’ (Washington DC: US Government Printing Office 2012) 9.
251
Figure 4 - Reconciliation differences between company payments and government revenues as
tabulated by EITI for Iraq525
Similar differences existed in numbers reported by internal service payments and the
Ministry of Oil (MoO) amounting to USD 74 million526. These differences have been explained
in terms of unreported data from certain entities as well as through time lag between data
reported and data compilation. Projecting these facts into the legal realm, it can be inferred that
525 EITI, ‘Iraq’ available online at < http://eiti.org/Iraq> accessed 21 March 2014.
526 IEITI,2011 ( n 521) 5.
252
oil and gas production and revenue reporting in Iraq has an established legal framework to work
with but the implementation of such laws remains lax. The legal framework between the Iraqi
Federation, oil and gas production and regulation entities and the KRG require more detailed
laws to ensure implementation. The lack of awareness on the part of the Iraqi people serves to
limit accountability since such issues are not brought to court as discussed in chapter five.
Although the EITI has provided Iraq an EITI compliant status in December 2012, but the lack of
reported data and reconciliation differences provide sound basis to justify further probing into
the areas mentioned before.
Another facet of critique faced by the EITI report formulation was the insistence of
covering 2011 and 2012 together initially527. It was expected that trying to cover two years
instead of the mandated one year would tend to produce complications. Moreover, the EITI
directives did not require a two-year report, so the move was seen as overkill. However, when
the report was finally released, it covered only the year 2011 which served to highlight the
shortcomings of using two years as a reporting timeline. Additionally, the 2011 EITI report had
inconsistencies in terms of the revenues reported by the Iraqi Federation and the revenues
reported by the IOCs528. These differences were explained by the differences in reporting time
and also by the consistency between the volumes produced figures provided by the Iraqi
Federation and the IOCs.
527 Ahmed Mousa Jiyad, ‘Iraq EITI Report 2011: Initial Assessment’ (Norway: Development Consultancy and Research
2014) 3 available online at<http://www.iraq-businessnews.com/wp-content/uploads/2014/01/Ahmed-Mousa-Jiyad-Iraq-
EITI-Report-2011-AMJ-Assessment.pdf >accessed 12March 2014
528 ibid , 6.
253
Certain ambiguities were also found in the report such as the internal service payments
reported in the 2011 EITI report. It was felt that more detail was required to elaborate what the
internal service payments referred to, even if the reported figures reconciled529. Another
shortcoming was the data reported by the oil refineries, which failed to account for total volumes
supplied to the oil refineries and the final output volumes. Similarly, the accounting prices for
such supplies were not provided530. Comparable differences existed in the figures reported for
gas volumes and revenues. Overall, this provides the impression that smuggled petroleum
products from refiners could not be accounted for using the currently practiced methods.
6.2.2.3.Critique on EITI Assessment
The EITI initiative serves to highlight some of the major shortcomings in terms of the
Iraqi oil and gas revenues and payments to the Iraqi Federation situation. While the EITI report
on Iraq serves to highlight some reconciliation challenges that translate into legal obstacles, there
are some reservations regarding EITI’s assessment. One major limitation of the EITI assessment
is its lone coverage provided to export sales revenues alone. The EITI framework for assessment
and evaluation was agreed upon in 2009, at a time when foreign participation in Iraq’s oil
industry was absent. As the entry of IOCs in Iraq began in 2009, the revenue stream to the
government swelled and is currently not just limited to export sales alone. For example, the
second licensing round initiated in 2009 saw seven oil fields awarded under TSCs. The legal
character of these TSCs created new revenue streams for the Iraqi government such as in lieu of
529 ibid, 6 .
530 ibid, 7.
254
remuneration fees, costs of recovery as well as signature bonuses531. The legal framework for the
model TSCs expounded by the Iraqi government makes it clear under Article 4.1 that532:
“Within thirty (30) days from the Effective Date the Companies shall deposit cash into a
bank account designated by the ROC, a signature bonus of ___ million USD (US$ ___).”
Even with such clear instructions available under the applicable legal framework, the
EITI framework failed to account for such revenue streams. The issue is further complicated by
the expected absolute dollar amounts from such signature bonuses. Estimates place the signature
bonuses to date between the Iraqi Federation and IOCs around 2.25 billion USD533. Similar
estimates place the value of remuneration, which the EITI report did not account for, around 1.25
billion USD. The large amounts involved in these alternative revenue streams and the presence
of unambiguous legal instructions as to the disposal of such streams tends to abrade the
credibility of the EITI report.
The EITI report failed to account for any of these revenue streams and in doing so failed
to imply that legal impasses between the Iraqi Federation and the KRG had been breached. The
awarding of TSCs in this fashion serves to highlight that the Iraqi Federation, its regulatory
agencies and the KRG governance and regulation framework came to workable solutions under
suitable legal frameworks such as the Federal Oil and Gas Laws.
531 Zara Rehman, ‘The missing pieces in Iraq’s first EITI report’ available online at <http://openoil.net/2012/02/22/the-
missing-pieces-in-iraqs-first-eiti-report/> accessed on 24 March 2014.
532 Iraqi Model (n 407)11.
533Jiyad (n 527).
255
EITI came under fire for not clarifying two major accounting heads namely cost recovery
and remuneration that took place between the Ministry of Oil and the IOCs. At the outset, the
2011 EITI report reconciles these cost heads but fails to mention that payments were made in
crude oil, not money. The physical payment for these cost heads through crude oil is an
important weakness of this reporting initiative since this reporting method cannot account for the
war repatriation payment that amounts to around five percent. These payments were related to
the Rumaila, Zubair, West Qurna and Alahdab fields that are approaching their plateau
production which requires the EITI to pay special consideration534.
Another problem with the EITI reporting style is the amount of corporate income tax
paid. The report does mention the amount of corporate income tax paid by the IOCs but fails to
provide if such a tax was pre-corporate income tax or post corporate income tax. The large
discrepancy (around 35%) between both figures makes it necessary for an examination of this
aspect of reporting. Similar concerns existed for the state partner’s share that amounted to some
25% which was not mentioned clearly either. The allocations for training, technology and
scholarship fund and the one-time payments provided by the IOCs were not also reported clearly,
and this leads to comparably similar concerns535.
534 Jiyad (n 527) 7-8.
535 ibid , 9-11.
256
6.2.2.4.EITI – Silver Lining to a Dark Cloud
On the positive side of things, the EITI initiative must be appreciated for timely release of
its report for three consecutive years536. EITI was able to release its reports for 2009, 2010 and
2011 which indicates that there is a certain seriousness with which this initiative is being
pursued. It may be true that there is no broad consensus and that certain stakeholders are kept at
bay by the current EITI panel in Iraq537. However, it cannot be discounted that the EITI report is
still being released which signals the involvement of certain stakeholders such as the KRG and
civil Iraqi groups who do wish to see transparency in oil and gas operations in Iraq. An
examination of the relevant reports also reveals that newer portfolios are being added each year.
In simpler terms, it could be said that the current EITI reports are not fully up to expectation
levels but gradual progress is being made in the right direction. Legal, as well as other hurdles in
Iraq's case, may make it hard to compile the required facts but steady progress by EITI speaks
volumes of straightening the entire process. The conflict between the Federation and the KRG, as
well as ethnic and sectarian biases, may lead to a lopsided legal framework, but the mere
presence of the legal framework is auspicious.
On the other end of the spectrum, it must be realised that sustainability reporting has
gained a natural de facto foothold in business circles over time. KPMG reports that 95 percent of
the 250 largest corporations around the world voluntarily report on their sustainability measures
536 EITI, ‘Home’ available online at <http://ieiti.org.iq> accessed 15 April 2014.
537 Author’s interview (n 468).
257
which entails an established market practice for businesses538. Although the larger corporations
being mentioned have approached an integrated reporting standard that incorporates the various
reporting standards and areas of business, but in Iraq’s case it would be best to build this
approach ground up. EITI could expand its portfolio to include technical, accounting, safety,
environment, labour, social and other allied aspects to its reporting format to increase the
credibility of reporting. This could be achieved using the existing EITI reporting mechanism and
building on it stage wise as decided through public participation.
6.2.3. Energy Charter
The Energy Charter (EC)1991, came into being as a result of liberalisation in energy
markets in Eastern and Western Europe after the dismemberment of the Soviet bloc539. The need
to integrate the Eastern European energy markets necessitated the creation of a legal framework
that provided a firm basis for integration. The EC and the ensuing treaty (Energy Charter Treaty
(ECT)1994) provide comprehensive coverage to commercial activities in the energy markets
including transit of energy resources, investments in existing and new energy opportunities,
investments in energy markets and efficiency of energy utilisation to produce a more sustainable
framework540. In addition, the ECT provides a legal mechanism for dispute resolution that is
538 Adam Sulkowski and Sandra Waddock, “Beyond sustainability reporting: Integrated reporting is practiced, required and
more would be better” (2014) University of St. Thomas Law Journal Volume 10, Issue 4, Article 7.
539 Energy Charter, ‘About the Charter’ available online at <http://www.encharter.org/index.php?id=7> accessed 9
December 2014.
540 Europa, ‘European Energy Charter’, available online at
<http://europa.eu/legislation_summaries/energy/external_dimension_enlargement/l27028_en.htm> accessed 7 December
2014. Art 3 and 7.
258
binding on members. At this point in time, the EC has sixty-four parties with most members
belonging to the European mainland. The effectiveness of the EC has been demonstrated through
its effective liberalisation and integration of the Eastern European energy markets.
Iraq can build on the International Energy Charter (IEC) draft (an updated version of EC)
for developing its oil and gas resources. The IEC draft espouses a large number of sustainable
development principles as a core tenant, so as to encourage socio-economic uplift and
environmental protection through legally enforced oil and gas operation methods. The IEC draft
develops on the United Nation’s three pillar approach and bases itself outright on social
acceptability, economic viability and sound environmental policies541. The charter works its way
through the three pillar approach for guaranteeing local sustainable development and embeds the
overall framework with regional and international cooperation. This ensures that the competing
needs for sustainable development and encouraging foreign investment are kept well balanced.
The major tenants of the IEC draft broadly reflect on sustainable development by
focusing on a number of allied issues such as542:
- improved energy security;
- maximised production efficiency;
- conversion, transport, distribution and use of energy;
541 International Energy Charter, “Concluding document of the ministerial (The Hague II) conference on the International
Energy Charter” (Hague 2014) 2. < http://www.encharter.org/fileadmin/user_upload/document/IEC_ENG.pdf.> Accessed
27 November 2014
542 ibid, 4.
259
- enhancing safety in a socially acceptable manner;
- ensuring economic viability;
- ensuring sound environmental practices.
In addition, the signatories to oil and gas contracts are required to pursue non-
discriminatory practices towards each other. This ensures that the economic viability of the
contract is valid, even if political interventions cause friction between signatories. In a similar
vein, the IEC draft provides for maximising the efficiency of production by reducing wasteful
measures such as gas flaring and venting. A unique capability of the IEC draft is that it provides
for alternative dispute resolution mechanisms as part of its core tenants543. Although contracts
between oil and gas producers and nations provide for alternative dispute resolution schemes, but
such methods are confined to individual contracts. The IEC draft provides for a larger umbrella
and a standardised method to settle disputes using emerging popular means such as international
arbitration. This may also lead to an arbitration body in the future that could allow IEC based
signatories to settle their disputes with greater simplicity and with lower wasted time. A number
of examples exist of pipelines espousing yet preceding the sustainable development principles of
the IEC, such as the Baku-Tbilisi-Ceyhan pipelines544 and
543 ibid, 8.
544 Gareth M. Winrow, ‘The Southern Gas Corridor and Turkey’s Role as an Energy Transit State and Energy Hub’ (2013)
Insight Turkey 15(1) 145-163.
260
TANAP545 . Already, Iraq has some sustainable aspects of the IEC draft in some of its
agreements such as Kirkuk-Ceyhan pipeline for crude oil transportation. This cross-border
agreement between Turkey and Iraq encompasses varied areas such as transportation during idle
pipeline time, fixed minimum costs of remuneration for crude oil per unit, etc.546 This reflects
that Iraq has had some sustainable development principles espoused in older agreements for oil
and gas exploitation. At present, the Iraqi Federation needs to incorporate and modernise these
legislative tools to provide a more integrated and modern approach to sustainable oil and gas
development. Furthermore, Iraq and Turkey would need to incorporate new standards of
performance as per environmental standards to make the existing arrangement more sustainable
in form and function.
6.2.4. International Energy Infrastructure and Sustainable Development
In addition to the IEC draft itself, Iraq can implement a number of different lessons from
a number of different inter-governmental agreements (IGAs) and host government agreements
(HGAs) on pipelines for exporting oil and gas. Iraq can benefit from the learning on standards
provided by the Legal Advisory Task Force (LATF) that delineates best sustainable practices for
technical, health, quality, insurance, environmental, safety, labour, human rights and social
545 Gulmira Rzayeva, ‘TANAP – the breakthrough project of the Caspian Gas to Europe’ available online at
<http://www.academia.edu/4765540/TANAP_-_The_Breakthrough_Project_of_Caspian_Gas-to-Europe> accessed
12 December 2014.
546 T. C. Resmi Gazete. Crude Oil Pipeline Agreement between The Government of the Turkish Republic and The
Government of the Iraqi Republic. ( 17/6/1975), arts 3 and 7.
261
issues547. The LATF document provides for a model that covers the areas listed above for a
comprehensive oil and gas exploitation arrangement. The model IGA provides a flexible starting
ground that can be adapted by Iraq to draft up new agreements and to revise existing
arrangements with other nations. The framework of the model IGA provides for a flexible
approach to implementation such that contracting nations can choose the practices most suited to
their situations, while keeping a focus on sustainability in terms of the environment, the society
and economic concerns. A number of examples of IGAa and HGAs exist that Iraq could stand to
benefit from including (but not limited to) the Baku-Supsa, Georgia-Azerbaijan, Trans-Balkan,
Nabucco, TAPI, TANAP, Burgas-Alexandroupolis IGAs and HGAs. Moreover, Iraq could also
utilise the model IGA drafted by the LATF combined with the various IGAs and HGAs listed
above keeping an overarching emphasis on ensuring provisions related to sustainability. A more
positive aspect of utilising the model IGA is that it covers the more unrelated aspects of legal
arrangements such as technical standards and accounting standards as well as the more generally
accepted sustainability principles. Additionally, it has to be kept in mind that human rights
standards are only covered in great detail under the Trans Adriatic Pipeline arrangement through
the umbrella of the UN Global Impact on Human Rights548. The better approach for Iraq would
be to incorporate human rights principles as a matter of obligation rather than as an auxiliary
issue, given the domestic problems of Iraq that span various human rights abuses over time.
547 Legal Advisory Task Force, “Intergovernmental agreements and host government agreements on oil and gas pipelines”,
Energy Charter, 2014<http://www.encharter.org/index.php?id=19&id_article=569&L=0 > accessed 12 December 2014
548 ibid.
262
6.2.5. Climate Change Legal Frameworks for Sustainable Development
Iraq has become a party to a number of different conventions that deal with
environmental conservation and climate change. The progression of Iraq towards the sustainable
development under the legal framework of these conventions has only been made possible after
the removal of the dictatorial government. Notably, Iraq has only signed up for a number of
different conventions on environmental conservation and climate change after a democratic
government was installed. At the present, Iraq is a party to the Montreal Protocol (2007), the
Vienna Convention for the Protection of the Ozone Layer (2007), the Kyoto Protocol (2009), the
United Nations Framework Convention on Climate Change (2009) and the Biodiversity
Convention (2009)549. The progression of Iraq as a party to these conventions signals the
underlying change in governmental perspective that espouses environmental challenges and
looks for solutions to such problems. There has been some work done, and some gradual
progress has been made on the part of Iraq under these international legal frameworks to protect
and re-establish its environmental degradation. This is not to indicate that all environmental
challenges have been solved, but this does indicate that progress is being made in the right
direction, albeit at a slow pace. There are still speculations as to how Iraq plans to incorporate
international agreements into its localised legal framework for implementation550. In addition to
the international agreements listed above, Iraq has entered into the World Bank’s Global Gas
549 Northeastern University, ‘Basrah Climate Change Conference’ available online at
<www.northeastern.edu/cos/experience-science-northeastern-2015/urban-coastal-sustainability/basra-conference/>
accessed 10 April 2014.
550 United Nations Development Program, ‘Sustainable Development, Green Economy and Oil and Gas in Iraq’ (New
York: United Nations 2012).
263
Flaring Reduction Public-Private Partnership551. While the international conventions listed above
are vaguer in their interpretation as per legal implementation552, more specific application
measures such as the Global Gas Flaring Reduction Public-Private Partnership signal a growing
practicality in Iraq’s Federation to tackle environmental challenges. The major international
environmental conventions that affect Iraq’s legal, sustainable development of oil and gas
resources are discussed below to gauge progress.
6.2.6. Climate Change Conventions in the Iraqi Context
Iraq is one of the recent signatories of the Kyoto Protocol and only took onto the
initiative in 2009. Any subjective assessment of the Kyoto Protocol in Iraq must take into
account the brief amount of time for which application has been necessary. Even with legal
difficulties and challenges, Iraq has been able to incorporate the Kyoto Protocol into its legal and
environmental regeneration frameworks. A clear example of this is provided by the Iraqi
initiative to re-establish the Iraqi wetlands that had been in decline under the Saddam regime.
Iraq has been able to manoeuvre its position carefully on the issue by synergising with
international donors and by changing its local legal policies and their implementation.
Iraq stands to benefit from the Clean Development Mechanism (CDM) that emphasises
on localised sustainable development for developing countries through the global participation of
551 ibid.
552 Maniruzzaman (n 478) 38.
264
more advanced nations553. The CDM mechanism for projects related to sustainable development
is covered under Article 12 of the Kyoto Protocol554. The CDM framework requires participating
states to reduce GHG emissions as a means of facilitating climate change initiatives555. The
reduction in emissions through CDM initiatives are termed as Certified Emission Reductions
(CERs) and make a participating nation eligible for support in sustainable development
projects556. Additionally, Iraq as a non-Annex I party can generate carbon credits the (CERs) and
then sold to Annex I countries to help them meet their targets as part of their part compliance
required by the Kyoto Protocol.557
In order to ensure that Iraq stands to benefit fully from CDM, it would be worthwhile to
create a national CDM umbrella in Iraq that promotes sustainable oil and gas development558.
The legal cover available to such an organisation would allow the various tenants of the CDM to
be implemented across the board to aid sustainable oil and gas development559. Iraq may be able
553 Oluwatomilola Akanle, ‘Distributive justice in international law: can the CDM regime support an equitable geographic
distribution of projects?’ (University of Dundee: 2011), 18.
554 K. Illum and N I Meyer, ‘Joint implementation: methodology and policy considerations’ (2004) 32 Energy Policy 1013;
S. Fankhauser, ‘The Investment climate for climate investment: joint implementation in transition countries’ (2003) 3
Climate Policy 417.
555 Kyoto Protocol, Art 12(2).
556 Akanle (n 553) 21.See also ‘Opportunities, Issues and Barriers to the Practical Application of the Kyoto Mechanisms’
Report of the Milan Workshop, April 2000,Pdf. Available at <http://www.ipieca.org/library?page=21>
557 Kyoto Protocol, Arts 6(1)(d); 12(3)(b); 17.
558 Luay J. Al Khatteeb ,Investment Policies & Commercial Incentives of Kyoto Protocol, available online at
<http://iraqenergy.org/library/?cat=IEI%20Presentations >accessed 16 December 2014
559 G Loibl, ‘The evolving regime on climate change and sustainable development’ in N Schrijver and F Weiss (editors),
International Law and Sustainable Development: Principles and Practice (Leiden/Boston: Martinus Nijhoff Publishers
265
to provide some or all of the finance required for development, but it lacks the expertise and the
vision to ensure sustainable development. Moreover, Iraq suffers from ethnic and sectarian
divides as discussed already that require much foresight to ensure sustainable development. A
strong regional example arrives from Qatar’s CDM initiative on its Al-Shaheen Oil Field where
gas recovery has been undertaken. Qatar stands to benefit from the project since the flare up gas
has been diverted to power generation bolstering the sustainability of oil and gas resources. In
addition, the emissions of GHGs would reduce significantly along with providing a demonstrated
example of CDM initiatives for both Qatar and the region at large560.
On another note, it must be kept in mind that the Kyoto Protocol and any initiatives taken
under it are non-binding in character. The Kyoto Protocol is non-binding under international law
and is seen as soft law which is exemplified by non-ratification by large GHG producers such as
the United States, China, Canada, etc. This problem affects Iraq directly since Iraq requires a
strong legal framework to carry out environmental protection and development given overriding
priorities being given to socio-economic uplift and meeting law and order challenges. There is as
yet a strong debate going on as to the role of soft law in binding the affected parties. The
majority legal view would have that soft law is an instrument of change in the longer run that
2004) p.97; P Sands, Principles of International Environmental Law 2nd Edition (Cambridge: Cambridge University
Press 2003) p.10; M C Segger and A Khalfan, Sustainable Development Law: Principles, Practices & Prospects (Oxford:
Oxford University Press 2004) p.2.
560 CDM, ‘Project Deign Document for Al-Shaheen Oil Field, Qatar’ version 2 (July 2004).
<https://cdm.unfccc.int/filestorage/5/V/E/5VEM9Z9DVJ14XVQ8CWAFXPDAC8RQLH/PDD.pdf?t=aUp8bmdxd24yfD
DtN1FQaEqSrloyQCMXnsqs > accessed 17 December 2014
266
evolves into hard law over time561. It is argued that this occurs as soft law provides a ground for
setting up customs that in turn leads to hard law over time, although the process is slow562. The
conventional stance on soft law turning into hard law may be acceptable for more developed
nations but not for a nation like Iraq that faces myriad challenges simultaneously. The Iraqi
legislature needs to catalyse the process of turning soft law into hard law so that sustainable
development ensues under the Kyoto Protocol in general and through the CDM mechanism in
particular.
In regards to broad legal frameworks for sustainable development, the United Nations
Framework Convention on Climate Change (UNFCCC) provides fertile ground for Iraq to work
on. Unlike other climate change conventions, the UNFCCC views climate change causing
agents, such as GHG emissions, as the consequence of global inequity between rich and poor
nations. It aims to eliminate such inequity through a two-pronged approach – equitable
distribution of clean-up obligations on rich and poor countries and encouraging sustainable
development initiatives in developing nations. The application of the UNFCCC to Iraq’s case is
important for clarifying Iraq’s position on common but differentiated responsibilities (CBDR)
and inter-generational equity. The basis for sustainable development is protecting the
561 Alan Boyle, ‘Some Reflections on the Relationship of Treaties and Soft Law’ International and Comparative Law
Quarterly [1999] 48(4) 901-913; Allison Christians ‘Hard Law & Soft Law’ [2007] Wisconsin International Law Journal
25 (2); Hartmut Hillgenberg, ‘A Fresh Look at Soft Law’ European Journal of International Law [1999] 3 499-515;
Andrew T Guzman and Timothy L Meyer, ‘International Soft Law’ [2010] Journal of Legal Analysis 171.
562 Roberto Andorno, ‘The Invaluable Role of Soft Law in the Development of Universal Norms in Bioethics’ Workshop
by the German Ministry of Foreign Affairs and the German UNESCO Commission (Berlin 2007).
267
environment for current, but more importantly, future generations563. This lies in line with the
Brundtland Commission’s Report as explained in previous chapters. It must be taken to note that
recent climate change management frameworks such as the Kyoto Protocol and the UNFCCC
espouse CBDR as a common tenant. Iraq stands to benefit from the combination of the UNFCCC
and the Kyoto Protocol in creating projects that enhance the sustainable development of oil and
gas resources. One such example is the move to utilise flare gas from oil fields and refineries to
provide desalinated water, especially to the water parched communities of the southern
governorates564. The proposed project provides that flare gas should be diverted to water
desalination operations for regions that require it most such as Basra and Misan since large
oilfields such as Rumailah, Majnoon, West Qurnah and Zubair operate nearby. It is expected that
even with these water desalination operations, there would be spare flare gas that could be
diverted to commercial purposes such as selling Compressed Natural Gas (CNG), Liquefied
Natural Gas (LNG), Liquefied Petroleum Gas (LPG) as well as for power generation565. In a
similar manner, there are proposals in the pipeline to make Iraq’s disaster management
framework more proactive than reactive through the creation of a National Platform for Disaster
Risk Reduction Strategy566. It must be realised that these strategies and others provide chances of
diverting oil and gas resources to sustainable development measures without relying on the
revenues generated by oil and gas exploitation. These measures would serve to provide the local
563 UNFCCC, para 23 Preamble; art 3(1).
564 New Eden Project, ‘Technical Assistance for the Implementation of the UN Framework Convention on Climate Change
and of the UN Convention on Biological Diversity in Iraq Years 2010-2014’ (2012) 6.
565 ibid, 6.
566 ibid, 7.
268
people with clean drinking water, would aid Iraq in earning CERs credits since flare gas levels
and their emissions would decrease, provide revenues to the state and governorates for
independently carrying out development activities, would generate employment in the short and
long run, provide much needed training to the local population on technical grounds and would
aid in the conservation of the environment. Although the scope of activities under the UNFCCC
and the Kyoto Protocol seem vague but their translation into hard law initiatives such as Project
Eden through global assistance is in essence the answer to Iraq’s quest for sustainable
development. In Iraq’s case, there is a dire need to integrate various legal conventions on
managing climate change and to encode them into hard local law for utilisation rather than wait
for the current soft law to evolve into usable hard law.
6.3. Human Rights Legal Arrangements
Basic human rights have also been typically relegated to the background when looking
into examples from around the world concerning the development of extracted resources. On
another note, human rights and environmental protection become sides of the same coin in
certain circumstances. Although sustainable development has been linked more with
environmental protection, such as through legislation, but the issue of delivering on human rights
has often been pushed to the back burner. Effective sustainable development is only a possibility
when human rights are delivered upon along with environmental protection through appropriate
legislation and effective implementation such as through Ruggie’s “protect, respect, remedy”
269
framework567. Iraq has also been able to pay little attention to human rights in the larger context
of negative consequences of oil and gas operations. Comparable nations such as in Africa and
other underprivileged parts of the world have also faced similar challenges for long. There is
research-based evidence from around the world that indicates that MNCs are able to extract
revenues and profits in such a manner that they leave people worse off than when the original
operations begun568. A recent example of this phenomenon stems from the oil spill cases in the
Nigerian deltas, the Ogoniland, by subsidiaries of Shell. Oil extraction operations in Nigeria’s
deltas have caused significant harm to subsistence farmers and fishermen, but legal recourse has
provided little compensation. Of the various legal actions brought against Shell, only one minor
claim was endorsed by a court of law although physical damage of a large extent exists as
evidence569. An examination of the contracts provided to the IOCs in Iraq reveals a host of legal
barriers that lead to disparities. For example, the IOC is sold oil and gas for local consumption at
rates lower than that offered to the local population570. This entails that the IOC is privileged
through a legal framework to pay less while the local Iraqi pays more and receives lower
567 John Ruggie, ‘United Nations Guiding Principles on Business and Human Rights’ available online at
<http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf> accessed 2
July 2014.
568 Jacqueline L Weaver, ‘Energy Law and Sustainable Development’ in IUCN Environmental Policy and Law Paper No
47 (2003) 3.
569 Business and Human Rights Resource Center, ‘Shell lawsuit (re oil pollution in Nigeria)’ available online at
<http://business-humanrights.org/en/shell-lawsuit-re-oil-pollution-in-nigeria#c9354> accessed on 1st July 2014; Ivana
Sekularac and Anthony Deutsch, ‘Dutch court says Shell responsible for Nigeria spills’, Reuters, available online at
<http://uk.reuters.com/article/2013/01/30/uk-shell-nigeria-lawsuit-idUKBRE90T0DC20130130> accessed on 2nd
July
2014.
570 See for example Art 10(2) of the TSC for Rumaila Oil Field 2009.
270
amounts from the IOC to sustain local development. In a similar manner, IOCs are not under any
mandate to clean up toxic substances and hazardous wastes either during their operation phase or
after it. Legal arrangements are present on paper to this effect, but their implementation is not a
real possibility since these legal arrangements are loosely defined so as to facilitate the IOCs.
It needs to be kept in mind that MNCs such as IOCs are treated under the international
law and domestic law as a legal person, but the constraints placed by international law and
national law are widely varied. For the case of Iraq, IOCs have a direct impact on human rights,
criminal law, investment and the environment. The globally emerging character of MNCs makes
them wield immense social power through their economic influence. It is argued that the power
of MNCs rivals that of modern nation states571. On the positive side, such immense power of
MNCs can make them contributors to technological and economic progress but on the downside
such power often results in infringement of human rights, corporate crimes and environmental
damage. Various instances of corporate power abuse around the world, such as the examples
cited above, indicate that domestic law provides little cover for human rights protection. The lack
of effective accountability mechanisms under domestic law make the economic environment
unstable and unreliable572. It needs to be realised that MNCs are provided significant rights under
international investment law and under international human rights laws such as through the Draft
Norms on the responsibilities of transnational corporations and other business enterprises with
571 Jan Wouters and Anna-Luise Chane’, Multinational Corporations in International Law, (2013) Working Paper No. 129,
Leuven Center for Global Governance Studies, 1-20.
572 ibid.
271
regard to human rights573, OECD Guidelines for Multinational Enterprises574, ILO Tripartite
Declaration of Principles Concerning Multinational Enterprises and Social Policy575 etc. In
contrast, MNCs are under no legal obligation through international law to contribute to the
social, economic and environmental wellbeing of the local populace. The actions carried out by
MNCs such as CSR initiatives are more of voluntary instruments than legally binding
instruments576. Iraq and other such nations need to forge common platforms to promote
accountability of MNCs under international laws that could be implanted and exercised under
domestic laws such as the EITI.
There are a number of global initiatives in the pipeline to ensure that good practice on
human rights is observed by MNCs in general and IOCs in particular. The oil and gas industry,
under the umbrella of IPIECA, has already begun to work towards such goals by providing
guidelines to implement good practice human rights frameworks. The IPIECA has tried to
balance business impact with human rights by offering guidelines in the following areas577:
1. Human rights due diligence process;
573 Jan Wouters and Leen Chanet, ‘Rechten en plichten van (multinationale) ondernemingen in het internationaal recht’ in
Robby Houben and Stefan Rutten (eds), Actuele problemen van financieel, vennootschaps-en fiscaal recht. Feestbundel
20 jaar Werkgroep financieel recht (Intersentia 2007) 333, 335 ff.
574 OECD, Guidelines for Multinational Enterprises (2000) available online at
<www.oecd.org/investment/mne/1922428.pdf> accessed 14 September 2014, Part I, ch II, para 2. 575 Jernej Letnar Cernic, ‘Corporate Responsibility for Human Rights: Analyzing the ILO Tripartite Declaration of
Principles concerning Multinational Enterprises and Social Policy’ (2009) 6 Miskolc Journal of International Law 24, 26.
576 Wouters and Chane(n 571)1-20.
577 IPIECA, “IPIECA advances good practice on human rights”, available online at
<http://www.ipieca.org/news/20121130/ipieca-advances-good-practice-human-rights> accessed on 15 September 2014.
272
2. Operational level grievance mechanism;
3. Human rights training toolkit
The central contention of the IPIECA publications is to provide guidelines for human
rights infringements in the workplace as well as in the local communities impacted by such
business concerns. However, it needs to be kept in mind that these guidelines are again voluntary
measures more than binding instruments of domestic or international law. Iraq could stand to
benefit from such measures by espousing such guidelines under its domestic legal framework to
promote accountability for human rights abuses by IOCs.
6.3.1. International Human Rights Instruments Implications for Iraq
Iraq is bound by international instruments such as the Universal Declaration of Human
Rights (UDHR) that provide clearly that human rights should be protected. Legislation in Iraq
could benefit from the utilisation of such international instruments as a source of municipal law
that dictates the development and exploitation of oil and gas resources. To put things into
perspective, human rights conventions would serve as the third major source of law following
international environmental law and international law on development578. It has been suggested
that a state could enhance its human rights legal framework by579:
578 Antoinette Hildering, ‘International Law, Sustainable Development and Water Management’ (Eburon Academic
Publishers 2004) 35.
579 Greg Muttitt, ‘Investor rights versus human rights: The implications of oil contracts in the Kurdistan Region of Iraq’
(2008) no 13 Legal Review 7-8.available at
<http://www.carbonweb.org/documents/investor%20rights%20vs%20human%20rights.pdf > accessed 12 November
2014
273
- prioritising key areas for action;
- incorporating newly emerged and recognised human rights treaties into domestic laws;
- by providing legal cushion for unforeseen threats and circumstances.
The KRG’s practices with regards to its Production Sharing Contracts (PSCs) and their
stabilisation clauses provide blatant disregard for human rights since they favour the investor
over the local population580. Broadly put, human rights can be claimed by the local people
through either litigation or non-litigation measures. A typical example of non-litigation type
human rights provision is in the Camisea gas project where human rights and environmental
practice were recognised as parts of the modus operandi581. This case has important implications
for Iraq, primarily that legislative cover is necessary to ensure the protection of human rights.
Peru espoused this through the Peruvian Law for the Promotion and Development of the Natural
Gas Industry and the Peruvian Energy Tariffs Commission. In essence, the Peruvian model
demonstrates that both legislative cover and the implementation mechanism must be present on
the ground to ensure that human rights are preserved in letter and spirit582. At present, Iraq has
comparatively weak legislation, and enforcement mechanisms are weak. What needs to be
learned from the Peruvian example is that both strong legislation, which may be iteratively
modified, and a strong enforcement mechanism must be in place for a protection of human
rights.
580 ibid, 8.
581 Michael Likosky, ‘Contracting and regulatory issues in the oil and gas and metallic minerals industries’ [2009]
Transnational Corporations 18(1), 33.
582 ibid, 35.
274
In Iraq’s case, on the one hand, the Federation is looking to further the lofty aims and
ideals of the triple bottom line583 while it faces hurdles from vested power groups inside the
structures of governance. The most notable consequence of this arrangement is the absence of
the common Iraqi from the decision-making process. Until and unless the common Iraqi is not
made part of the development process, there is little hope of protection of basic human rights
such as access to a safe and clean environment.
6.3.2. Global Perspectives on Sustainable Development Sponsored by Corporate Umbrella
In contrast to the Iraqi situation, there are examples from around the world that can be
used as a means of learning to sustain development objectives while not compromising basic
human rights. Oil and gas exploration and exploitation in East Africa is being overseen by a
number of watchdogs and umbrella organisations that settle policy directions so as to ensure
sustainable development under a legal umbrella. A number of think tanks such as Economic
Policy Research Centre (EPRC), the Centre for Strategic Analyses and Research (C-SAR),
Africa Growth Initiative (AGI) and the Kenya Institute for Public Policy and Analysis (KIPPRA)
are operating in East Africa to facilitate the sustainable development of local oil and gas
resources584. A similar example can be found in Papua New Guinea’s case where the
International Petroleum Industry Environmental Conservation Association (IPIECA)’s umbrella
583 S Tordo, D Johnston and D Johnston, Petroleum Exploration and Production Rights: Allocation Strategies and Design
Issues (Washington D C: World Bank 2009).
584 Brookings Institution (n 336)
275
legal structure was used in order to provide sustainable development by Chevron585. The
partnership between Chevron and the World Wildlife Fund (WWF) in Papua New Guinea
allowed a socially responsive development model to take root. Legal measures can also be
installed by defining specific limits for discharge of effluents and other hazardous substances
that would limit or minimise damage to the human environment586.
Iraq needs to look into the cases of more advanced nations such as Norway and
comparable nations such as Kazakhstan in order to find befitting legal models to encourage
sustainable development. For example, Kazakhstan has taken onto an innovative effort to
consume sulphur produced from extraction operations as a means to limit environmental
damage587. Sustainable development of local oil and gas resources is only possible if proper
Health, Safety and Environment (HSE) policies are framed and applied in Iraq’s case under legal
cover.
6.3.3. Ruggie’s “Protect, Respect, Remedy” Framework’s Implications for Iraq
In addition, Iraq could stand to benefit from the Ruggie principles that have received wide
acclaim in international legal circles regarding the protection of and reimbursement for human
585 IPIECA ( n 337)
586 OGP (339)
587 Kalb, Vagin, Beall and Levintov (340)
276
rights abuses by businesses588. Already some global business leaders such as Coca-Cola and
General Electric have espoused the Ruggie principles as being flexible and serving as
foundations to arriving at workable solutions between states and businesses in regards to human
rights589. On the downside, there has been some criticism of the Ruggie principles regarding a
need for an accountability mechanism so as to make these principles legally enforceable590. The
Ruggie Principles, also known as the United Nations Guiding Principles on Business and Human
Rights (UNGPs), build on three simple principles that are591:
1. state duty to protect human rights;
2. corporate responsibility to respect human rights;
3. access to remedy for victims of business-related abuses.
International ideas on economic activity and its infringement of human rights have
entered a new phase with the adoption of the Ruggie Principles, which are a unique case in
themselves. The UN Human Rights Council’s adoption of the UN Guiding Principles for
Business and Human Rights provides a distinctive window into how the future of human rights is
588 Ulrike Hoessle, The UN Guiding Principles on Business and Human Rights (Seattle: Walla Walla Solutions Series
2013).
589 Ruggie (n 566); Edward E Potter, ‘Guiding Principles Endorsement from Coke’ available online at <http://www.global-
business-initiative.org/SRSGpage/files/Guiding%20Principles%20Endorsement%20from%20Coke.pdf> accessed 4 July
2014; Bob Corcoran, ‘GE letter to John Ruggie’ available online at <http://www.global-business-
initiative.org/SRSGpage/files/GE%20letter%20to%20John%20Ruggie.pdf> accessed 4 July 2014.
590 Kenan Institute for Ethics, ‘The UN Guiding Principles on Business and Human Rights: Analysis and Implementation’
available online at <http://kenan.ethics.duke.edu/wp-content/uploads/2012/02/UN-Guiding-Principles-on-Business-and-
Human-Rights-Analysis-and-Implementation.pdf> accessed 5 July 2014.
591 Ruggie (n 567).
277
evolving globally. The Ruggie Principles have been taken positively, but it has been observed
that current norms on business and human rights projects still empower an elite part of civil
society groups, enterprises and lawyers. It is argued that business and human rights will not
deliver to the common man unless stakeholders at all vertical levels are not integrated into the
process through effective legislation to such effect. The empowerment of stakeholders and the
transfer of value across the chain will allow a modification of existing norms and practices592. A
number of examples from around the world demonstrate that failure to empower stakeholders at
all vertical levels of the value chain lead to disastrous results for the environment and human
rights alike593. For example, expectations that mining in Goa, India would bolster the local
economy turned out to be a farce. Farmers in the vicinity ended up getting affected by poisoned
groundwater and withering crop levels. Moreover, corruption run amok and weakened local
structures of governance and public delivery594. In a similar manner, Bangladesh’s tannery
industry has been poisoning ground water and workers alike, providing transgression to the
rights of human beings and the environment. Moreover, unregulated corporate behavior has
592 Larry Cata Backer, Nabih Haddad, Tomonori Teraoka and Keren Wang, ‘Democratizing International Business and
Human Rights by Catalyzing Strategic Litigation: The Guidelines for Multinational Enterprises and the UN Guiding
Principles of Business and Human Rights from the Bottom Up’ [2013] available online at
<http://dx.doi.org/10.2139/ssrn.2325994> accessed on 17 August 2014.
593 Christopher Albin-Lackey, ‘Without Rules – A Failed Approach to Corporate Accountability’ [2013] available online at
<http://www.hrw.org/world-report/2013/essays/112459> accessed 18 August 2014.
594 Human Rights Watch, ‘Out of Control’ available online at <http://www.hrw.org/reports/2012/06/14/out-control-0>
accessed 18 August 2014.
278
allowed a weakening of the existing health, safety and environment legislation595. It needs to be
kept in mind that only exploration and mining industries are not responsible for the transgression
of human rights and environmental protection. Qatar’s attempts at hosting the 2022 World Cup
present a new lens to the issue. Lax emigrant labour laws have enabled construction enterprises
to abuse worker rights, including basic human rights, in myriad ways. Although Qatar surges
forward with the construction of new hotels, stadiums and roads but its human rights record
plunges nose down596. Qatar’s example provides a regional parable to Iraq and its situation with
IOCs and other forms of corporate enterprises working around the nation.
The application of UNGPs to Iraq’s case is possible given first and foremost the
protection of the citizen’s rights by the state itself through applicable legislation to deal with
labour laws, environmental protection and conservation legislation, HSE regulations. Moreover,
it is up to the Iraqi Federation to ensure the implementation of such legislation through the
effective use of state power, else any such devised legal frameworks would remain incomplete
without accountability. Extending the argument to the other side, businesses operating inside Iraq
would need to use their corporate frameworks to ensure that corporate social responsibility
evolves into the broader framework of respect for human rights by design. The oil and gas
operators working inside Iraq have an ethical obligation to the Iraqi people under more than one
legal framework. However, it needs to be kept in mind that such respect may not be expected
595 Human Rights Watch, ‘Toxic Tanneries’ available online at <http://www.hrw.org/reports/2012/10/08/toxic-tanneries>
accessed on 19 August 2014.
596 Human Rights Watch, ‘Building a Better World Cup’ available online at
<http://www.hrw.org/reports/2012/06/12/building-better-world-cup-0> accessed on 21 August 2014.
279
outright from businesses given their overriding priority for making profits. It would be more
practical if the Iraqi Federation, as well as the KRG, could draft legal provisions under the oil
and gas exploration and exploitation contracts awarded to the IOCs. The expectation that all
business entities operating inside Iraq’s lax implementation environment would become
compliant with human rights respect by default is best described through Samuel Johnson’s
words597: “… the triumph of hope over experience.”
Examples from around the world already discussed such as the Shell oil spill in
Nigeria598, the BP oil spill in the Gulf of Mexico599 etc. signify that businesses need to be reined
in by the state through effective legislation to this effect. As discussed before, Iraq’s Federation
and the KRG both have a role to play in this regard to both legislate and ensure the
implementation of legislation that ensures that businesses respect human rights in Iraq.
Lastly, the victims of abuse by businesses in Iraq, whether due to lax environmental
legislation or due to low paying jobs need to reprisal through separate courts that deal with these
matters expediently. This idea is comparable to participation as espoused by Vinuales as well as
by guiding principles of the New Delhi declaration. However, as pointed out in the previous
chapter (chapter five), people in Iraq are both disadvantaged to pursue such litigation and also
lack the awareness and social organisation to initiate litigation against abusing businesses. This
problem can be solved through a mix of awareness drives as well as legislative efforts. Iraq’s
597 James Boswell, The Life of Johnson (London: Everyman’s Library 1791).
598 John Vidal, ‘Shell faces payout in Nigerian oil spill’ available online at <
http://www.theguardian.com/environment/2014/jun/20/shell-faces-payouts-nigerian-oil-spill-case>.
599 Smithsonian Institution, ‘Gulf Oil Spill’ available online at < http://ocean.si.edu/gulf-oil-spill>.
280
federation could bring legislation to effect that IOCs pay for campaigns to raise the awareness
levels of the average Iraqi citizen to business based abuse. Moreover, such legislation could
divert oil and gas revenues to programs that provide for awareness drives and independent third
party assessments of business based human rights abuses. In addition, the speedy disposal of
litigation arising from business based human rights abuses could be ensured through special
courts constituted for this purpose in Iraq. It must be realised that this access to justice and
reprisals resulting from it are long term objectives since sizable work is required in terms of
legislation to this effect, implementation of such legislation and formation of special courts to
deal with these issues. It is out of this reason that Cronstedt et al. proposed to form a tribunal
aimed at keeping a close eye on business and human rights.600 The tribunal is aimed at acting in
a fair and impartial manner, by going to the extent of addressing the provisions contained in the
International Convention on Civil and Political Rights and several international labor
conventions. The proposed tribunal, just like the Investor-State Dispute Settlement (ISDS) would
stand at the crossroads of private and public interests. This is because it is not enshrined in the
Treaty and the other shortcoming it might face is the lack of financiers.601
600 Cronstedt, Claes , Robert Thompson, Rachel Chambers, Adrienne Margolis, David Rönnegard, and Katherine
Tyler. An international arbitration tribunal on business & human rights – reshaping the judiciary. < http://business-
humanrights.org/sites/default/files/media/documents/international_arbitration_tribunal_on_business_and_human_rig
hts.pdf > accessed 23 September 2014.
601 Sophie Nappert, Proposal for an International Arbitration Tribunal on Business and Human Rights, email
forwarded to the Author (20 September 2014)
281
However, the comfort of this tribunal is that unlike criminal courts, it caters for
compensation of the victims of human rights abuses. The abuses include but not limited to
personal injury, property destruction and environmental damage. The tribunal, therefore, seeks to
embrace the use of the civil court, which is the best avenue for achieving adequate remedies.602
Currently, the main reason why the existing civil courts are unable to solve many cases of
serious human rights abuses involving business enterprises is the absence of an independent and
functional judicial system in the host countries. The tribunal seeks to use alternative dispute
resolution (ADR) methods to provide justice where justice is lacking.603 Even if civil courts
come up, the tribunal would still be more comfortable because of its approach of using ADR
which include eliminating the role of the forum non-convenience doctrine, thereby allowing
parties throughout the world will be able to avail themselves for the services of the tribunal. It
also seeks to streamline its operations by ensuring there is less formal pleadings required thus
achieving flexibility in the examination of witnesses. By availing enough arbitrators to work on a
relatively dedicated basis would ensure that there is no overcrowding of the calendar, unlike in
many civil courts. This proposal is using the limits of the arbitration as a consensual system of
dispute resolution. With its highly qualified expert arbitrators drawn from all over the world,
coupled with the assistant of a competent secretariat, it would make ADR attractive to all the
602 Cronstedt, (n599) 5
603 Ibid, 6
282
affected and thus obtaining consent would only be a formality. Victims are, therefore, likely to
consent to the use of the tribunal, especially in cases where no other forum is available.604
Endowing the process of the tribunal with a public function will serve to alleviate abuse,
which is at times orchestrated by public bodies. This implies in the case where the host state uses
its regulatory authority over a business enterprise, and then the tribunal will adjudicate for this.
Some states have been previously accused of violating human rights. For instance, on 9
August 2011, the United States entered into an arbitral panel with Guatemala to effectively
enforce its labor laws. Guatemala has previously violated human rights. The US and Guatemala
agreed to do away with the arbitral panel pending the negotiation and implementation of the
Enforcement Plan. Guatemala has been trying to implement the measures outlined in the
Enforcement Plan.605 However, failure by Guatemala to closely adhere to the provision on
adherence to human rights has moved US for the first time ever to intervene and begin formal
consultations used to resolve trade disputes in the area of labour rights enforcement. In
September 2014, Office of the United States Trade Representative(USTR) announced that it will
finally move forward to arbitration in the long-running dispute with the government of
Guatemala regarding whether or not Guatemala is meeting the labour commitments of the
604 Office of the United States Trade Representative. United States Proceeds with Labor Enforcement Case against
Guatemala,<http://www.ustr.gov/about-us/press-office/press-releases/2014/September/United-States-Proceeds-
with-Labor-Enforcement-Case-Against-Guatemala> accessed 24 September2014
605 Ibid
283
Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) or
(CAFTA).606 In announcing the decision, the USTR stated that the goal is to improve conditions
that workers face every day.
6.4. Iraq’s National Legal Arrangements
There has been a growing emphasis in countries with natural resources to promote
economic interests at the cost of environmental interests607. This move can be explained by the
need to spur short-term economic growth leading to socio-economic uplift which produces
political support from the general populace. Decisions regarding the mode of development ought
to rest with the general populace, but governments tend to manipulate such rights on their own.
In Iraq’s case, the consultative process on the EITI report reveals that there is little involvement
of the civil society since the concerned stakeholders were handpicked by the government. The
selection of the council of stakeholders for the initiative was done not on technical grounds but
rather on political motives instead608. Iraq, like other developing nations, utilises similar
developmental priorities and tends to focus more on economic and social measures instead of
environmental concerns that would affect it in the longer run. On the other hand, there are certain
superficial measures in place such as the provision of five dollars for each barrel of oil produced
606 Ibid
607 Maniruzzaman (n 478) 37.
608 Author’s interview (n 468).
284
as a measure of compensating for environmental damage due to oil and gas operations609. There
has been a little rationalisation of such a measure vis-à-vis any damage assessment reports,
environmental impact assessment, etc. and is little more than a shallow measure to provide a
positive public image.
6.4.1. Integrated National Energy Strategy Report (INES)
The Iraqi Energy Integration Report offers a unique insight into how lopsided
development priorities favour economic and social development at the cost of environmental
issues. In essence, the report covers long-term policy objectives concerned with oil, gas, power
and other allied industries based on projection up to 2030. Another important aspect of the report
is its limited scope of interaction – the report has been compiled while dealing with official
sources, IOCs or technical experts alone610. There has been little participation and consultation
with civil society groups which tends to provide an air of aloofness from long term objectives of
conservation and environmental protection.
The approach used by the INES can be blamed partly on the non-inclusion of an
environmentalist perspective in framing the report. Instead, the INES has relied in large part on
economic perspectives in dealing with Iraq’s long term projection on energy development. In all,
the entire report mentions environmental issues and the priority in dealing with them in very
vague and broad terms such as “environmental remediation”, “environmental context”,
609 Law of governorates not incorporated into a region No.21 of 2008 as amended, art 44 second (8) available at<
http://www.iraq-lg-law.org/en/node/181> accessed 20 August 2014
610 Iraqi Economists Network, ‘Final Report of the Iraq’s Integrated National Energy Strategy’ (Baghdad: INES 2014).
285
“environmentally friendly”, “environmental protection” etc. Certain commentators have analysed
this form of an approach used by developing nations in providing vague environmental
objectives against the backdrop of more specific social and economic objectives. For example611:
“Even if there is any reference to environmental matters, it may be found in very broad
terms. This seems to be a general trend in many other countries’ – both developed and
developing …”
It has been argued in the previous chapters that using such an approach tends to favour
foreign investment. The inclusion of environmental standards in strict terms tends to reduce the
ease of doing business. However, the inclusion of environmental provisions with a more specific
scope would tend to favour long-term environmental conservation which is more necessary as
reflected in the New Delhi Principles.
The Iraqi Energy Integration Report provides an entire chapter for dealing with environmental
stress resulting from energy sector operations. The third chapter of the Iraqi Energy Integration
Report starts out with socio-economic constraints that govern the Iraqi power sector. Although
the chapter does deal with environmental concerns but it is limited when it comes to providing
workable methods to deal with the environmental stress produced due to power sector
operations. The provision of environmental concerns in the report does provide credence to
environmental concerns on a legal scale but essentially the enforcement of such loose ended
provisions is not a real possibility. In order to satisfy legal requirements and to produce a
611 Maniruzzaman(n 475) 38.
286
positive image of the Iraqi Energy Integration Report, environmental concerns have been
brought into consideration but the lack of practical application produces strong limitations.
It is notable that the sections of society most affected by such ambiguous provisions,
namely the civil society, have not been made part of the Iraqi Energy Integration Report effort.
While problems exist on account of providing ambiguous provisions in relation to environmental
concerns, it must be appreciated that administrative concerns on application exist as well. Most
developing nations have developed schemes and policies that do not provide for all inclusive
environmental provisions and the required administrative machinery to deal with environmental
concerns. This is all the more true for long-term damage to the environment and its long-term
impacts on people’s quality of life and livelihood. Petroleum exploitation and exploration
operations fall into such a category too. Most developing nations and some developed nations
espouse legal frameworks through policy guidelines such as the Iraqi Energy Integration Report
that provide for vague references to the environment alone. The need for Iraq, and other such
comparable situations, is to develop a legal framework that provides for a robust balance
between developmental needs and environmental concerns. The inclusion of civil society groups
is necessary for such an initiative since otherwise vested interests would tend to overrule the
interest of the common man. The vested interests of power groups such as IOCs, foreign
investors, major Iraqi players would tend to favour an approach that provides for economic gains
that supplement social gains on a scale that keep the economic gains afloat. In contrast,
environmental concerns would be of the least importance, such as reflected by the Iraqi Energy
Integration Report since economic interests would rule supreme. This stands in clear contrast to
the three pillar UN approach to sustainable development and the New Delhi Principles. The Iraqi
287
Energy Integration Report needed to be clearer in its objectives related to the environment,
specifically for environmental protection in the short run and environmental conservation in the
longer run.
6.5. Petro-Dollar Curse Evaluation
Iraq, like other comparable nations, has suffered through much of its post-colonial history
at the hands of elite that consumed power and held onto it. Legal arrangements under these
regimes ensured that revenues from the state were used for personal goals and ambitions rather
than for socio-economic uplift of the masses. Under the Saddam regime, Iraq represented a failed
state due to international economic embargoes levied as a consequence of warring ambitions in
the region. Revenues from indigenous oil and gas resources were diverted to the protection of the
dictatorial form of governance. After the post-Saddam regime, the political and legal horizon has
changed, and revenues from oil and gas operations have begun to trickle down to the common
man. However, the question of equitable distribution of resources still looms at large given the
fact that Iraq faces numerous social bifurcations and overriding developmental priorities. New
legislation and other legal measures have been introduced in order to distribute oil and gas
revenues more equitably612. However, the impact of such measures has not been fully realised
and requires an evaluation.
It can be argued that the petrodollar curse still confronts the new Iraqi state. The power
centre has shifted and so have the applicable legal arrangements, but the fact remains that civic
society involvement is still lower than it ought to be. Most of the Iraqi populace is
612 Zedalis (n 5) 97.
288
underprivileged, and certain power groups control the structures of governance and the legal
arrangements that are derived thereof. The nascent Iraqi state in the post-Saddam period and
even today has had to face numerous law and order challenges that have played heavily on the
national exchequer. Additionally, the government is also confronted with the challenge of
generating its own revenues to keep governance and the state afloat. On a legal plane, the new
Iraqi state was forced to rely on legal arrangements from the pre-Saddam regime and the Saddam
regime while new legislation could be brought into application613. This has meant over time that
the Iraqi state has not been fully able to pursue its objective of sustainable development under the
United Nations three-pillar approach of social, economic and environmental objectives.
Iraq has also been confronted with challenges from the North in terms of a breakaway
struggle by the Kurds. The KRG has historically been looking to remove itself from the Iraqi
state, and the problem has local as well as regional dimensions. The petrodollar curse comes to
light strongly while considering the legal arrangements brought forward by the KRG and the
Iraqi Federation for the development of the population. The KRG had its own set of laws and
legal arrangements with IOCs for oil and gas operations while the Iraqi Federation saw the
extraction of oil and gas as its overriding privilege614.
Vested interests on the part of the KRG were made apparent through the creation of
localised institutions under applicable legal frameworks such as Kurdish Exploration and
613 Tariq Shafiq (n 419)2.
614 KRG, ‘KRG Ministry of Natural Resources Production Sharing Contracts’ available online at <
http://www.krg.org/p/p.aspx?l=12&p=1> accessed 8 January 2014; N K al Bayati,(n 420); Ruba Husari, (421)5-6; Peter
Wells (n 423) 1-9.
289
Production Company (KEPCO) and the Kurdish National Oil Company (KNOC). This stands in
contrast to the many institutions developed by the Iraqi Federation to achieve the same oil and
gas operations purposes such as the Ministry for Oil, the Iraqi Council of Representatives, INOC,
FOGC, etc. On another note, vested interests in the Iraqi oil and gas operations result from the
operations of multiple MNCs and IOCs in Iraq. For the foreign operators and investors, loose
and flexible legal frameworks are a blessing in Iraq since they facilitate the accrual of large
profits. Other than the political elite, the regional KRG dimensions, Iraq is also confronted by
challenges for sustainable development by interests of the IOCs operating in Iraq.
It needs to be realised that sustainable development is, in essence, a policy goal in itself
alone. The various kinds of operational exigencies supporting sustainable development are
typically mired in political demands, recommendations as well as projections of soft law and
some hard law615. Another overarching problem posed to Iraq’s move towards sustainable
measures is a recent criticism of sustainable development as being more talk and less action616.
The proposed alternative model to the New Delhi declaration consists of:
1. participation;
2. decarbonisation;
3. innovation;
4. dissemination of technologies.
615 Jorge E Vinuales, Foreign Investment and the Environment in International Law (Cambridge University Press 2012).
616 Vinuales (n 221)1-20.
290
The structure of this model is effectively somewhat similar to the New Delhi declaration,
give or take a few ideas. In essence, the Venulae’s proposal is complementary to the New Delhi
Principles with some overlapping areas although it is observable that the New Delhi Principles
are more comprehensive in their design. However, the major finding of these set of ideas is that
sustainable development is worthless without effective implementation. Iraq needs a renewed
focus on the development of lacking mechanisms and the implementation of already developed
mechanisms that may have the full effect of sustainable development. Superimposing this on
Iraq’s current situation, we find that the sustainable development of oil and gas resources is
subject to a host of factors including internal challenges and external threats. Consequently, it
could be surmised that Iraq’s sustainable development hinges on espousing various principles
under different models for sustainable development and their effective implementation through
local initiatives and the involvement of the international community.
6.6. Conclusion
A number of measures have been taken by the Iraqi Federation to augment the
sustainable development of its oil and gas resources under the United Nations three pillar
approach that relies on social, economic and environmental objectives. One of the major
initiatives in this regard is the EITI report that has been filed consecutively for three years
showing a measure of seriousness attached to it. The EITI report should not be taken as a
benchmark to critique Iraq’s oil and gas exploration and exploitation framework since it fails to
account for multiple oil and gas related revenue streams available to the Iraqi Federation. The
bulk of Iraq’s revenue generation arrives from export sales that EITI accounts for but considering
it a holistic picture is not accurate by any means. Rather than seeing Iraq’s oil and gas framework
291
in an impasse with indicators such as KRG’s information publishing debacle in the EITI report, it
must be realised that steady progress is being made. This progress can be attributed to the legal
frameworks for oil and gas development. The question of sustainable development looms at large
with few solutions being displayed by the Iraqi Federation. However, it must be realised that the
Iraqi Federation has a number of problems to deal with, including sectarian and ethnic
differences, which inhibit a catalytic development of oil and gas resources. The current legal
framework for oil and gas development in Iraq is making steady progress, and it may be
expected that maturation in the form of sustainable development may be arrived at in the future.
Iraq has also shown that it can allow international legal arrangements to take root in its
local legal frameworks to support environmental preservation and restoration.
On another note, Iraq’s federation needs to look into its laws regarding the operation of
IOCs that prevent the interest of the common man from taking root. IOC operations and
facilitation to IOCs such as cheaper oil and gas for localised use, the lack of liability for
hazardous and toxic substances clean up means that the basic human rights of the Iraqi people
are being infringed. The currently available HSE laws under the applicable Iraqi legislation are
loose ended and are not comparable to international standards that are followed by the same
IOCs elsewhere around the world. Iraq needs to re-examine its HSE laws and make them more
stringent for IOCs to follow through administrative reforms and the involvement of civil society.
292
Chapter Seven – Conclusions and Recommendations
This Chapter will provide conclusions drawn from the study and recommendations for
Iraqi law and policy maker in the area of legislation and regulation for the sustainable
development of oil and gas resources.
7.1. Conclusions
The current research was geared to engineering solutions for Iraq’s oil and gas
development problems, with special emphasis on sustainable development measures. The
research has utilized a number of theoretical frameworks including the New Delhi Declaration,
John Ruggie’s principles, the United Nations three pillar approach and others. It must be
understood that Iraq, like many other nations, comes with its set of unique challenges and
opportunities for the development of a legal framework for oil and gas exploitation that offers
sustainability. The research has made it clear that sustainability as a concept bases itself on three
central tenants of development – the society, its economic conditions and the environment. All
and any developments on sustainable development arise from the aforementioned aspects by
integrating these concerns with the regulatory legal regime.
The research has determined that at present Iraq offers legal arrangements that are geared
in the direction of sustainable development but are not fully implemented in letter and spirit. The
multitude of Iraqi legislation on sustainable development suffers from two major problems – lax
implementation of existing legislation and the absence of legislation in certain areas to protect
the interests of the society. Environmental protection and conservation are espoused through
legal arrangements but lax implementation, in order to attract foreign investors, has meant that
environmental protection and conservation has figured low in the government’s priorities.
293
However, there are a few positive developments in this regard such as the New Eden Project that
has been aimed solely at environmental protection and conservation for inter-generational
equality617. In a comparable manner, there are certain areas where legislation is altogether amiss
from Iraq’s legal regimes such as in the areas of ensuring civil society participation in the
environment, health and safety measures. One stark example of such issues is the absence of the
KRG or its representative from the EITI report discussed above in Section 6.2.2 which indicates
that legal arrangements are not guaranteeing the rights of citizens618.
In the case of Iraq, it is clear that legal regimes are available and are at loggerheads with
each other. The Federation exerts itself through the Ministry of Oil and Gas while Kurdistan
exerts itself through the KRG’s internal legal framework for oil and gas exploitation. The legal
and policy obstacles that hinder sustainable development for Iraqi oil and gas resources stem at
the regional, national and then the international levels. At the regional level, Iraq finds itself
divided along ethnic and sectarian lines that have not been addressed for equity using legal
arrangements. The Kurds in the North see themselves detached from the Iraqi Federation and
rather as part of the greater Kurdish movement of the Turkish Kurds and the Syrian Kurds.
Similarly, the Shiites see themselves as closer in religious ideology to Iran while the Sunnis
perceive themselves at a disadvantage since oil and gas resources are largely located in Kurdish
or Shiite areas. The absence of an equitable legal arrangement has already paid out negative
617 New Eden Project, ‘Technical Assistance for the Implementation of the UN Framework Convention on Climate Change
and of the UN Convention on Biological Diversity in Iraq Years 2010-2014’ (2012) 6.
618 PUK Media, ‘The EITI oil transparency report that inexplicably disappeared’ available online at <
http://pukmedia.com/EN/EN_Direje.aspx?Jimare=3911> accessed 20 March 2014; Zara Rehman,(n 530); Ahmed Mousa
Jiyad, (n 527) pp7-8.
294
dividends for Iraq as the nation finds itself embroiled in another bloody and ruthless civil war as
this thesis is finalized619. Developing the argument further, at the national level, the inequitable
treatment of the Kurds and the Sunni population have forced Iraq into the global agenda for
jihad. The national imbalance between regional groups has led Iraq into the hands of
international forces that have exploited the situation to their advantage. The presence of a
mutually agreed legal arrangement would have allowed Iraq to bypass the current situation since
all current disgruntled stakeholders would have been on board to curtail violence. At the
international level, Iraq’s policy has been to appease IOCs and hence their respective
governments with favorable production agreements. Iraq’s BITs and MITs place it at a
disadvantage since economic externalities are not addressed in letter and spirit including social,
economic and environmental concerns. Consequently, a non-sustainable oil and gas development
agenda in Iraq has led to the current situation where the local population has taken to arms at the
behest of global jihadists who are exploiting the developmental disparities to their advantage. It
is strongly concluded with the current research that more equitable international legal
arrangements with IOCs could have avoided the current situation outright. If the Iraqi people,
whether Sunni, Shiite or Kurd had greater stakes in oil and gas dividends that would appear in
socio-economic uplift and environmental conservation, the global jihadist agenda would have
failed absolutely. Thus, frustration begets desperation.
619 Ahmed Rasheed and Isabella Coles, “Obama warns of US action as jihadists push on Baghdad”, available online at <
http://www.reuters.com/article/2014/06/13/us-iraq-security-idUSKBN0EO15R20140613 > accessed on 20 November
2014.
295
7.2. Recommendations
There are no second opinions to the severity of Iraq’s current situation. The newly
founded Iraqi civil war threatens to tear the nation apart into ethnic and sectarian regions, which
stands out in stark contrast to any attempts at sustainability. The very thread of Iraq’s existence
as a nation is in question at the present point in time. Although the situation is dire but hope
exists since the advance of jihadists has stagnated with the involvement of international forces
and their air strikes. Moreover, the Kurds have chosen to stick to the Iraqi Federation for the
present. The Iraqi Federation needs to revise its basic legal tenants to ensure that oil and gas
development is more equitable to all stakeholders. The friction between the KRG and the
Federation, as well as the current Sunni insurgency, are merely symptoms of much deeper
structural problems with Iraq’s legal arrangements for sustainable development.
The Iraqi Federation needs to consider its legal arrangements on a number of different
levels at the same time for the cogent correction to the current legal arrangements. It is suggested
that Iraq should begin revision of its legal arrangements at the international level for two major
reasons:
1. Iraq has relapsed control of some of its territory that would require time to be re-
integrated into the federation so legislative changes starting at the regional or national
level would prove futile since de facto governance is not available to the Iraqi
Federation;
2. The economic leverage required by the Iraqi Federation for socio-economic changes
and environmental protection and conservation measures can only be achieved by
renegotiating Iraq’s international legal arrangements with IOCs.
296
In terms of the negotiations required at the international level, the Iraqi Federation should
pursue oil and gas exploitation legal arrangements that favour the common man and not the
federation, a particular region in Iraq or least of all the IOCs. The TSCs developed by the
Federation need revision to make them more locally participative. Members of civil society from
respective oil and gas production regions need to be taken on board to chalk out their levels of
participation with IOCs for oil and gas exploration and exploitation. For example, the federation
should allow local governmental structures to decide their levels of involvement with IOCs to
decide on:
1. environment, health and safety arrangements;
2. levels of employment and skill development available to local populations for
employment at oil and gas facilities;
3. compensation paid out to Iraqi workers;
4. coverage of economic externalities resulting from oil and gas operations;
5. priorities for socio-economic development within the local governance structures.
The rationale behind such a legal arrangement is to enable the Iraqi society to be more
participative in socio-economic development, as well as environmental conservation and
protection. The Iraqi Federation should allow a greater degree of autonomy to the local
governance structures rather than forcing them to look to the Federation to micromanage issues.
It is suggested that the Iraqi Federation should revise its international legal arrangements with
IOCs to allow the participation of local populations to decide their own fate.
297
Iraq’s federation should legally limit itself to setting out the broad objectives of
development rather than trying to control all power. The current dilemma faced by Iraq is a
direct outcome of micromanagement of issues through such legal frameworks. The Federation
should provide templates for PSCs, etc. and let local people decide how they want to tailor them
to their needs. For the sake of transparency, people should be informed of the negotiation of
PSCs with IOCs so that their participatory role as a condition of sustainable development can be
effectively ensured.
Finally, the Iraqi Federation needs to deal with the challenge of “remedying” the
grievances of local people. This could be made more transparent and accountable by allowing
access to public documents and forming courts or ADR mechanisms to decide on contentious
issues at the regional and national level. This would also allow Iraq to provide support to
disgruntled groups such as the Sunnis who feel left out of national progress since they control
little of the oil and gas resources of the nation. The suggested legal framework of the federation
should allow developmental focus and priority to inverse criteria such that more underdeveloped
areas get greater attention than more developed areas.
298
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Conferences, Symposiums and Workshops
1. Al-Bayati NK, ‘The New Structure of the Iraqi Oil Industry’ in Iraq Oil, Gas,
Petrochemical and Electricity Summit (2007) Dubai, UAE
2. Andorno R, ‘The Invaluable Role of Soft Law in the Development of Universal Norms in
Bioethics’ Workshop by the German Ministry of Foreign Affairs and the German
UNESCO Commission (Berlin 2007)
3. Chakravarty S, Chikkatur A, de Coninck H, Pacala S, Socolow R and Tavoni M, ‘Sharing
global CO2 emission reductions amongst one billion high emitters’ [2009] Proceedings
of the National Academy of Science of the United States of America 106(29), 11884-
11888
4. Choudhary N and Starstedt CE, ‘The Principle of Good Governance’ [2005] CISDL
Draft Legal Working Paper
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5. ILA Res. 3/2002, ‘New Delhi Declaration of Principles of International Law Relating to
Sustainable Development’ (2002)
6. IPIECA, Industry as a Partner for Sustainable Development (World Summit on
Sustainable Development 2002)
7. Iraqi Economists Network, ‘Final Report of the Iraq’s Integrated National Energy
Strategy’ (Baghdad: INES 2014)
8. Kalb PD, Vagin S, Beall PW and Levintov BL, Sustainable Development in Kazakhstan:
Using oil and gas production by product sulfur for cost effective secondary end use
products (REWAS 2004 Global Symposium on Recycling, Waste Treatment and Clean
Technology in Madrid, Spain 2004)
9. Smith DN, ‘Mining the Resources of the Third World – From Concession Agreements to
Service Contracts’ [1973] American Society of International Law Proceedings 67, 227-
230
Interviews
1. Interview with Abdul-Alah Alamir, Advisor of the Deputy Prime Minister for Energy Affairs
(Baghdad, Iraq, 26 September 2012)
2. Interview with Dr Ali H Balo, The Former Head of The Oil and Gas Committee of Iraq
Federal Parliament (Duhok, Iraq,15 September 2012)
338
3. Interview with Ali N. Muhammad Coordinator of Iraqi Transparency Alliance for Extractive
Industries (Baghdad, Iraq, 9 October 2012)
4. Interview with Dr. Luay J. al-Khatteeb Director of Iraq Energy Institute (IEI), and Advisor
of The Federal Parliament of Iraq.(UK, 20 July 2012)
5. Interview with the KRG NRM’s Senior Advisor (Erbil, Iraq, 5 September 2012).
6. Interview with Dr Mazen L Rathee, Advisor of the Advisory Council of the Kurdistan
Regional Government, Iraq (Duhok, Iraq, 10 September 2012)
7. Interview with Dr Rizan M Hassan, The Head of KRG Environment Protection and
Improvement Board (Erbil, Iraq, 8 September 2012)
8. Interview with Dr S Muhammad, Assistant Dean, Faculty of Law, Erbil University, and a
Member of KRG Environment Protection and Improvement Law Draft Committee(Erbil, Iraq, 2
September 2012 )
9. Interviews with directors of the following civil society organizations: Time Centre for Youth
Awareness and Training, Almassala for Human Resources Development, Nature Iraq and
Kurdistan’s Environment Friends, ( August 2012)
Personal Communications
1. Email from Dr Luay J. al-Khatteeb Director of Iraq Energy Institute (IEI), and Advisor of
The Federal Parliament of Iraq forwarded to the author ( 30 April 2014)
339
2. Email from Professor John S. Lowe to author (10 May 2013)
3. Proposal for an International Arbitration Tribunal on Business and Human Rights, email
from Sophie Nappert, forwarded to the Author (20 September 2014)
Oil Contracts and Models
1. Ain Sifni PSC with Hunt Oil, 08/09/2007, KRG, available online at<
http://cabinet.gov.krd/p/p.aspx?l=12&r=296&h=1&s=030000&p=29> accessed 1 February 2014
2. Garmin PSC with Western Zagros, 25/07/2011, KRG, available online at:<
http://www.krg.org/p/p.aspx?l=12&r=296&h=1&s=030000&p=12> accessed 17 May 2014.
3. Iraqi Oil Ministry Contract Model, Producing Oil Field Technical Service Contract(PFTSC)
(2009), available on line at< http://platformlondon.org/documents/PFTSC-23-Apr-09.pdf>
accessed 29 December 2014
4. KRG PSC Model(2007), available online at<
http://www.krg.org/pdf/3_KRG_Model_PSC.pdf> accessed 29December 2014
5. Taq Taq PSC with Genel Energy/Addax, 26/2/2008, KRG, available online at
< http://cabinet.gov.krd/p/p.aspx?l=12&r=296&h=1&s=030000&p=163> accessed 5 February
2014
6. Taza Oil Field PSC with Oil Search/Shaman, 27/07/2011, KRG, available online at
<http://www.krg.org/p/p.aspx?l=12&r=296&h=1&s=030000&p=167> accessed 20 May 2014
7. Topkhana PSC with Talisman, 19/08/2011, KRG, available online at
340
<http://cabinet.gov.krd/p/p.aspx?l=12&r=296&h=1&s=030000&p=176> accessed 1 February
2014
8. Rumaila Oil Field TSC, July 2009, Iraq, available online at<
http://www.fuelonthefire.com/uploads/files/BP-CNPC-Rumaila-contract-8Oct09.pdf> accessed 1
February 2014
Empirical Study (Oil Fields Visit)
The researcher paid visit to 3 different oil fields, for the observation of the HSE regulations and
the social, environment and economic impacts of oil development activities on surrounding
areas, as follow:
1- Tawke Oil Field, Zakho, KRG, visited on 15 September 2012
2- Ain Zala Oil Field, Mosul, Iraq, visited on 17 September 2012
3- Najmah Oil Field, Mosul, Iraq, visited on 19 September 2012
341
Appendixes
1- Invitation Letter …………………………………………………………342
2- Interview questions……………………………………………………….344
3- Ethics Committee Approval………………………………………………347
342
Khalid Al-saleem
School of Law,
University of Portsmouth,
Richmond Building,
Portland St.
Portsmouth,
PO1 3DE
UK Date:
Email [email protected]
PhD Thesis Title: “The legal framework for the sustainable development of Iraqi oil and gas:
A study in particular reference to the Kurdistan Region, and with Special Emphasis on the
New Delhi Declaration”
REC Ref No: E 209
Dear potential participant,
My name is Khalid I. Al-Saleem, and I am a PhD student in the School of Law, University of
Portsmouth, United Kingdom.
I would like to invite you to participate in my research study in my above-mentioned PhD
research field survey.
To carry out my study I need to conduct several semi-structured interviews. The focus of these
interviews will be gleaning information regarding the Iraqi petroleum legislation and policy. The
outcome of these semi-structured interviews will be geared towards clarifying the legal
regulation issues surrounding the sustainable development of Iraqi oil and gas.
I have obtained your address from your website and would like to ask you whether it is possible
for you to participate. Participation is entirely voluntary, and your withdrawal easily facilitated,
343
to the point of data analysis. I would expect that the contribution of your interview will be made
in your official capacities, and will, therefore, represent the official stance of the organization
you represent. Any material that represents your personal views will remain strictly confidential.
A transcript of the interview will be sent to you for your approval prior to my use. I have
attached the information sheet and the consent form, which need to be signed, by those who are
interested in participating, and I would also request them to send back the completed consent
form to the above e-mail address.
Since I am depending on the outcomes of these interviews to achieve meaningful results,
participants are requested to make a reasonable contribution to my research.
I thank you in advance in participating and for your kind cooperation in my research.
Yours Sincerely
Khalid I. Al-Saleem
PhD/ Law Student
344
SEMI-STRUCTURED INTERVIEW
INTRODUCTION
• Researcher name(Interviewer) Khalid I.Alsaleem
• Master Degree in international law, college of law, University of Baghdad, Iraq
•PhD Student, School of Law, Portsmouth University.UK
•Research Title: “The Legal Framework for the Sustainable Development of Iraqi Oil and Gas: A Study
in Particular Reference to the Kurdistan Region, and with Special Emphasis on the New Delhi
Declaration”
Open Ended Questions
1. I would like to start by asking you to describe your involvement with oil and gas sector.
• When and how involved?
2. One of the reasons I chose oil and gas resource for my study is that it is Central to Iraqi fiscal position
and critical to its economy. Furthermore, sustainable development is also regarded as being the ultimate
goal for modern legislation of oil and gas. What do you think sustainable development principles means
in the context of oil and gas resource?
• Indirect, cumulative, long-term impacts
345
• Uncertainty
• Public/stakeholder involvement (including minority groups)
• Access to the decision-making process
• transparency
• Monitoring
3. To what degree do you consider Iraqi oil and gas legislation being effective in promoting and adopting
principles of sustainable development?
• Barriers?
• Improvement?
4. What do you consider as being important within oil and gas legislation to achieve the aim of
sustainable development?
• Any further aspects to those listed above?
5. To what extent do you think the differences between federal government and KRG over the
interpretation of oil articles in Iraqi constitution effects its sustainable development?
•Is it legal or political motivated differences;
• and how to overcome it.
6. What do you think about the contracts that are made by the Iraqi government and KRG with
international oil companies and the role of this contractual practice in Iraq’s oil and gas sustainable
development.
• which one more consistent with the Iraqi constitution
• which one the best in term of ensuring and reflecting principles of sustainable development for oil
and gas recourse.
346
6. That is about it, but is there anything else you would like to add to the discussion at this point of
time?
Interviewee name (The participant):
Job Title:
Organisation:
Date:
347
FORM UPR16
Research Ethics Review Checklist 4. Please complete and return the form to Research Section, Quality Management Division, Academic Registry, University House, with your thesis, prior to examination 5.
Postgraduate Research Student (PGRS) Information
Student ID:
UP616200
Candidate Name:
Khalid Ibrahim Al-saleem
Department:
PBS / School of Law
First Supervisor:
Prof. M. Maniruzzaman
Start Date: (or progression date for Prof Doc students)
February, 2011
Study Mode and Route:
Part-time
Full-time
�
Yes
MPhil MD PhD
� � Yes
Integrated Doctorate (NewRoute) Prof Doc (PD)
� �
Title of Thesis:
The Legal Framework for the Sustainable Development of Iraqi Oil and Gas:
A Study in Particular Reference to the Kurdistan Region, and with Special Emphasis
on the New Delhi Declaration
Thesis Word Count: (excluding ancillary data)
77,910Words
348
If you are unsure about any of the following, please contact the local representative on your Faculty Ethics Committee for advice. Please note that it is your responsibility to follow the University’s Ethics Policy and any relevant University, academic or professional guidelines in the conduct of your study
Although the Ethics Committee may have given your study a favourable opinion, the final responsibility for the ethical conduct of this work lies with the researcher(s). 6.
UKRIO Finished Research Checklist: (If you would like to know more about the checklist, please see your Faculty or Departmental Ethics Committee rep or see the online version of the full checklist at: http://www.ukrio.org/what-we-do/code-of-practice-for-research/)
a) Have all of your research and findings been reported accurately, honestly
and within a reasonable time frame?
YES
b) Have all contributions to knowledge been acknowledged?
YES
c) Have you complied with all agreements relating to intellectual property,
publication and authorship?
YES
d) Has your research data been retained in a secure and accessible form
and will it remain so for the required duration?
YES
e) Does your research comply with all legal, ethical, and contractual
requirements?
YES
*Delete as appropriate
Candidate Statement:
I have considered the ethical dimensions of the above named research project, and have successfully obtained the necessary ethical approval(s)
349
Ethical review number(s) from Faculty Ethics Committee (or from NRES/SCREC):
E209
Signed: Khalid I.Al-saleem (Student)
Date: January 20, 2015
If you have not submitted your work for ethical review, and/or you have answered ‘No’ to one or more of questions a) to e), please explain why this is so:
Signed: (Student)
Date:
350
Ethics Review application E209 [Khalid Al-saleem]
sharman
06/01/2015
To: Khalid Suleiman
ETHICS REVIEW APPLICATION Ref E209
Researcher: Khalid I Alsaleem
To explore how the concept of "sustainable development" can be transposed into and
implemented within Iraqi domestic law, with the end in view of proposing an effective national
framework in accordance with international legislative regulations in the area of environmental
sustainable development.
The PBS Ethics Committee is pleased to confirm that Ethics Review application ref. E209 has
received a favourable opinion.
Sharman Rogers
351
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