PhD Law Paper

Question

I need an article concerning the law problems of operation of the Northern Passage.
Some of the questions i was thinking to include in the article:
Operator of the passage
The transport regulations
Arctic – an environmentally sensitive region
Questions of insurance regulation board, fees
requirements for tankers

Answer

Title: LEGAL ASPECTS OF OPERATION OF THE NORTHERN SEA ROUTE

Contents

Introduction. 2

Operational Aspects of the Northern Sea Route. 3

The Arctic: An Environmentally Sensitive Region. 5

Transport Regulations for Operations in the Northern Sea Route. 12

Aspects of Marine Insurance. 18

Costs and Fees System in the NSR. 21

Requirements for Tankers. 24

Conclusion. 25

Bibliography. 27

Introduction

The Northern Sea Route passes through the Arctic Ocean. For decades, the Northern Sea Route has been a major source of legal contention among coastal states in the Arctic Ocean, notably between the Soviet Union/Russia and the United States of America. The contention arises from the fact that although the Arctic is essentially an ocean, jurisdictional claims of most of its coasts deviate substantially from existing maritime laws. One of these laws is the Law of the Sea Convention (LOSC), also known as the United Nations Convention on the Law of the Sea (UNCLOS), which was enacted in 1982. According to LOSC, coastal states are allowed to enforce laws aimed at preventing, reducing, and controlling marine pollution emanating from vessels operating in ice-covered areas in their respective exclusive economic zones.

            The Northern Sea Route is also unique in the sense that most parts of the Arctic Sea normally remain covered in ice for many months. This ice cover, coupled with severe climatic conditions, create numerous hazards and obstructions, making navigation difficult. Moreover, the Arctic Sea is of unique significance in terms of its contribution to global ecological balance. Concerns have been raised regarding the irreversibility of the ecological imbalances that may occur due to increased navigation along the Northern Sea Route. The aim of this paper is to investigate various legal aspects of legal aspects of operation of the northern sea route. The paper focuses on five key areas: operational aspects of the route, environmental issues, transport regulations, aspects of marine insurance, costs and fees system, and requirements for tankers transiting the Northern Sea Route.

Operational Aspects of the Northern Sea Route

Jurisdictional issues have continued at the forefront of operations in the Northern Sea Route. The existing international legal framework allows coastal states in the route to exercise jurisdiction over their exclusive economic zones. In this context, numerous efforts have been made to adopt and enforce laws and regulations aimed at protecting and preserving the marine environment this route. The question of how operations across the route should be managed has been at the heart of these efforts. In this regard, serious problems have persisted largely because of differences in the actions of three major actors in the Northern Sea Route: Russia, the USA, and Canada. These differences arise mainly because of variations in the interpretation of existing law as well as actions aimed at pursuing national interest. Fortunately, certain areas of consistency in the actions of these countries have also emerged. This has led to the commencement of the process of establishing customary international law governing the passage of vessels.

Russia enjoys remarkable support from Canada and the US largely because of the legal regime and state practice it has put in place to govern navigation in the Arctic region. In contrast, Denmark and Norway have not made remarkable progress through state practice aimed at establishing a stable regulatory mechanism. Nevertheless, based on the perspective of state practice, it is evident that the geographical situation in the North Sea Route remains highly sensitive for the states involved. The risk of disputes regarding the operator of the passage remains exceedingly high.

A major potential source of conflict is the expansive geographical coverage of the Arctic region. Different Arctic seas such as the Barents Sea and the nearby islands are positioned in such a way that territorial disputes among neighbouring littoral states may easily occur if practical measures aimed at preventing their occurrence are not sought. Russia and Norway are already embroiled in a maritime boundary dispute that is closely related to the Barents Sea. This dispute may be viewed in the context of a situation in which Russia is seeking to extend its Arctic legal regime to cover the Barents Sea. Negotiations aimed at resolving dispute between Russia and Norway, which relates to issues of exclusive economic zones and the reach of the Arctic continental shelf, were first conducted in 1974. Today, the negotiations may take a new turn if Russia made new claims that may understandably draw sharp reactions from Norway.

            Ice conditions also have a huge impact on legal aspects of operations in the Northern Sea Route (NSR). The main issue at this point is the extension of the NSR regime westwards based on the notion of ice cover. At this point, it is worthwhile to note that there are significant differences between ice conditions in the Barents Sea and those of other Arctic areas. Most of the ice cover in the Barents Sea originates from within this region and it hardly moves into other regions. In the Barents Sea, Russia lacks substantial support largely because of the absence of a definite boundary to the west in terms of both the exclusive economic zone (EEZ) and the Arctic legal regime.

Disputes may also arise from issues relating to ice conditions under Article 234 of LOSC. The contentious issue in this case would be whether ice cover within the Barents Sea is extensive enough to be covered under LOSC. State practice may play a critical role in this issue, in which case ice cover may be included by putting into consideration the confines of severe weather conditions as stipulated by the guidelines of the International Maritime Organization (IMO). Russian state practice may carry the day in this regard since the country has so far continued to abide by IMO guidelines. Moreover, it may be impractical to impose changes to ice-strengthened vessels operating in the Barents simply on the basis of theoretical considerations regarding the extent of ice cover. Under the current circumstances, drastic changes may not occur mainly because of current economic considerations governing the relationship between Russia and Western states particularly in regards to the transportation of liquefied natural gas and oil through the Northern Sea Route.

The Arctic: An Environmentally Sensitive Region
            The Arctic marine environment is an environmentally sensitive region. Unlike other parts of the world, it has an extreme climate characterized by high geographical latitude, low temperatures, and unique light conditions. The region’s soil formation processes have led to the emergence of unique flora and fauna. Being a frozen region, the Arctic region has traditionally failed to attract significant interest from humankind in terms of exploration, navigation, and economic exploitation. With the recent increase in commercial shipping along the Northern Sea Route as well as climate change, the region has become an important area of focus for environmentalists.

            Navigation remains a serious environmental concern in the Arctic waters. Navigational mistakes can have far-reaching negative effects on the environment in addition to posing dangers to human operators. For most of the year, the Arctic waters remain covered in ice, thereby making it extremely difficult for surface navigation to occur. Icebergs and ice-islands pose significant obstacles to ships passing through the polar waters. In recent years, the operational season of the Arctic region has been extended significantly by receding ice cover. Advanced ship designs capable of penetrating the Arctic waters at different times of the year have also contributed to the extension of the operational season. To maintain safety and protect the Arctic marine environment, the IMO came up with Guidelines for Ships Operating in Arctic Ice-covered Waters.[1] These guidelines form a core component of the present arrangement that also brings on board governments, international environmental protection agencies, and state practices. In these guidelines, the Arctic region was identified as an important international shipping channel that should be managed through operational procedures and special training. Although these guidelines are an important source of guidance for Arctic navigators, concerns about legal aspects of environmental protection remain.

            A major problem with the IMO guidelines is that they are not legally binding; they only provide recommendations. They do not contain any provision for follow-up procedures. Moreover, the only way in which they can be put into practice is through state practice. The formulators of these guidelines can only hope that individual states will implement them through binding legislation. So far, no state has implemented such legislation, meaning that the regulations have not been tested for their appropriateness.

            A major reason why IMO guidelines have been disregarded by many states is that there is an existing legal regime that is binding for all countries seeking to navigate the Arctic waters. This legal regime is defined under Article 234 of LOSC. Under this legal framework, Canada and Russia have enacted strict legal regimes governing navigation with their Arctic waters. They have also attempted to address issues of national sovereignty over these waters to ensure that the implementation of laws aimed at protecting the environment is not hindered.

            The need to protect the Arctic environment through a coherent legal framework has become a dominant theme in environment conferences globally because too much ice is melting from the Arctic due to global warming. These developments come at a time when the Arctic Ocean is being used by more ships due to its increased accessibility. The receding ice may be viewed as an advantage for market connectivity in Western Europe, North America and Asia. However, these benefits may be counteracted by potential environmental impacts on the Arctic ecosystem. Environmental aspects will continue to dominate discourse on Arctic navigation because the volume of marine traffic is increasing and more navigational patterns are being developed. These concerns tend to carry a sense of urgency considering that an oil tanker accident within the region can bring about far-reaching environmental consequences. The extensive absorptive capacity of snow and ice would lead to the transfer of pollutants over long distances. Despite these concerns, shipping is still regarded as the most environmentally friendly mode of transport. Therefore, international law must focus on ways of minimizing the environmental risks relating to shipping.

            A major legal problem for environmental protection in the Arctic Ocean is the absence of a treaty that covers the region in its entirety. Different treaties in the region provide legal frameworks for limited geographical areas only. For example, the Treaty of Spitsbergen only covers the Svalbard archipelago. According to UNCLOS (Article 194), states have a shared responsibility of ensuring that the environment of the Arctic Ocean is protected and its safety promoted.[2] The best way for such protection to be achieved is through the various cooperative and preventive frameworks provided under international law. Currently, it is difficult for these states to discharge this responsibility effectively because of competing national interests, conflicts over maritime boundaries, and competition for resources. For example, Canada and the United States are in a maritime dispute in the Beaufort Sea. The dispute between Russia and Norway over the continental shelf and EEZ boundaries in Barents Sea also remains unresolved.

            International law governing operations in the Northern Sea Route is not sufficient for ensuring environmental protection. A unilateral approach may be desirable although it would trigger challenges regarding the protection of the interests of coastal states and flag states. This means that an ideal legal regime for ensuring environmental protection in the route must encompass aspects of national regulation, regional cooperation, and adherence to IMO guidelines within the framework provided under international law.

            Efforts to promote cooperation in matters of  environmental protection in the Northern Sea Route are ongoing.[3] Arctic countries have already come up with the Arctic Environmental Protection Strategy. Under this strategy, a policy on measures aimed at preventing and controlling pollution in the region has been developed. In 1996, the Arctic Council was established with the objective of overseeing these pollution prevention and control efforts. These cooperative measures are being complemented with the existing legally binding norms under UNCLOS. These measures demonstrate that attention has shifted from power relations to a sense of duty as the underlying principle in the establishment of a legal regime for the protection of marine environment in the Arctic Ocean.

            Today, the question of maritime safety in the Northern Sea Route is being addressed in a manner that underscores the importance of protecting the environment. This means that a strong association between safety and environmental protection in the route has been established in the existing legal regime. Consequently, efforts to enact laws that lead to a reduction in accidents are expected to have a positive impact on environmental protection initiatives. To promote safety of navigation, different standards have been developed. The standards are particularly important in sea areas that are not under the control of national jurisdiction. They also play a critical role in ensuring that contradictory safety conditions do not cause confusion, for example through issuance of navigational permits.

            Diversity of regulations in different sea ports poses a major challenge in efforts to promote maritime safety. No uniform regulations have been put in place to ensure that all ships passing through the NSR are subjected to the same seaworthiness tests. This regulatory diversity has continued to exist despite the existence of intergovernmental institutions that confer certain responsibilities upon national governments. To enhance uniformity, greater participation by independent associations, classification societies, and nongovernmental organizations is required.

            The International Maritime Organization (IMO) has been at the forefront in promoting maritime safety and has adopted several crucial legal instruments with a view to achieve this objective. For instance, it facilitated the formation of the International Convention for the Safety of Life at Sea (SOLAS).[4] The objective of SOLAS is to outline safety standards within which ships should be constructed, equipped, and operated. State parties that comply with these standards are issued with compliance certificates. SOLAS has also developed control provisions for the inspection of vessels whenever there are clear grounds to believe that the vessels have not complied with all safety requirements.

            Several other regulations have been put in place to address various problems such as overloading, collision, and standards of training. To address the problem of overloading by vessels, Load Line Regulations have been developed. The aim of these regulations is to put in place a control mechanism for cargo handling by different vessels. On the other hand, the Collision Regulations were developed to address marine groundings and collisions. In 1978, the International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers (STCW) were developed to promote navigational safety.[5]

            States operating ships in the Northern Sea Route also need to be aware of the existence of various legal frameworks aimed at preventing and controlling marine pollution. Several agreements have been established to address this issue. One of them is the International Convention for the Prevention of Pollutants from Ships, whose objective is to prevent pollution from vessels through both operational and accidental discharges. Another agreement is the Convention on the Prevention of Marine Pollution, which addresses a diverse range of pollutants arising from the current increase in shipping activities along the Northern Sea Route.

            Other than conventions, the IMO also uses different guidelines, codes, and recommendations to enforce safety standards. A case in point is the ISM Code (International Safety Management Code for the Safe Operation of Ships and Pollution Prevention). The ISM Code has become a reliable reference point for international standards geared towards managing safe operations of ships and preventing marine pollution. For instance, the SOLAS Convention has made this code mandatory for all passenger vessels, bulk carriers, and tankers. The Safety Management Certificate is the official document that all ship operations should possess to show that they have complied with all the requirements of the ISM code. To ensure compliance, the IMO instrument stresses that the responsibility to ensure compliance rests with ship owners.

            Since the Northern Sea Route is situated within the context of ice-covered waters, it is imperative to focus on  Article 234 of UNCLOS, which specifically addresses issues relating to this context. The article gives coastal states the right to enforce laws and regulations aimed at preventing, reducing, and controlling marine pollution. These states are required to limit their jurisdictions to the exclusive economic zone. These laws and regulations should address issues relating to obstructions and exceptional hazards that may bring about severe disturbance to the ecological balance. The Article also outlines the need for states to refer to available scientific evidence when adopting and enacting laws aimed at protecting the environment of the Arctic waters.

            Unfortunately, it has been extremely for Article 234 to be interpreted under international law. Conflicting interpretations pose a serious problem because states tend to adopt perspectives that are in line with their national interests. Moreover, the term “due regard” has caused controversy because it is unclear not clear whether it translates into an obligation for all contracting parties to adhere to international standards when designing, constructing, manning, and equipping vessels. Moreover, there is a lack of clarity in the provisions of Part III and Article 234 of UNCLOS. These two sections fail to provide clear guidelines on the limits that international law imposes on national legislation in regards to ice-covered waters.

            At the level of national legislation, Arctic coastal states operating in the Northern Sea Route have established legislation based on their unique circumstances as far as internal waters are concerned. This means that national regulations vary. For instance, the US enacted the Oil Pollution Act following the Exxon Valdez accident. Other laws enacted in the US to protect marine environment include the Federal Water Pollution Control Act, the Port and Tanker Safety Act, and the Trans-Alaska Pipeline Authorization Act. In Russia, some of the laws enacted to provide protection to the marine environment include the Statute on the Protection of the Economic Zone of the USSR, the Statue on State Maritime Pilots, and the Law on the Russian Federation’s Internal Sea Waters. In Canada, legislation focuses on two categories of jurisdiction: Arctic Waters and Non-Arctic Waters. To govern these jurisdictions, two major laws have been enacted in Canada: The Arctic Shipping Pollution Prevention Regulations and the Arctic Waters Pollution Prevention Act. In Norway, the Maritime Safety Act and the Seaworthiness Act have been enacted. In Denmark, the principal legislation for protecting marine environment is the Sea Safety Act 2002. As an EU member state, Denmark is also required to foresee strict enforcement of environmental regulations.

Transport Regulations for Operations in the Northern Sea Route

            The best way to regulate transport operations in the shipping industry is through international treaties. This is because all sea routes cut across numerous national boundaries. Regulations adopted by one state are bound to have repercussions on the regulatory framework of the neighboring states. To avoid conflicts, international treaties are resorted to as a way of bringing together all maritime trading nations to establish an integrated regulatory framework. In the Northern Sea Route, efforts to establish such a framework are ongoing. These efforts are directed towards three core areas: safety, security, and prevention of pollution. The International Maritime Organization (IMO) is the United Nations agency that has been at the forefront of efforts to establish transport regulations not just for the Northern Sea Route but also all shipping routes across the globe.

            The biggest weakness of the IMO is that it lacks an enforcement mechanism.[6] Once the organization has adopted a transport regulation, it is up to member states to enforce those standards. This is one of the reasons why efforts to ensure compliance with various laws and regulations in the Northern Sea Route has been riddled with challenges. In other cases, the inability to enforce regulations also poses a serious problem. Moreover, most of the merchant fleets operating on the route  been registered under “flags of convenience”. This means that although most ship operators are headquarters in the developed world, they tend to register their fleets in developing countries such as Liberia, Bahamas, and Panama. This is because these states provide more attractive regulatory regimes in terms of both employment and taxation. For this reason, a large section of maritime trading nations have opted to embrace a unique regulatory regime in which access to their ports is only allowed on condition that they have complied with existing regulations.

In December 2002, the IMO came up with guidelines for all ships operating within the ice-covered waters of the Arctic Ocean. The objective of this move was to supplement existing transport regulations. It is worthwhile to note that IMO guidelines took the form of simple recommendations rather than requirements. They are applicable to cargo and passenger ships exceeding 500 gross tons. They are not applicable to military vessels, fishing vessels, small cargo ships, and yachts. The objective is to ensure that safety is improved and pollution prevented in the Arctic. They also include provisions on the construction of ships, navigation equipment, ship operation, and crew training. One of the recommendations is that all ships should contain lifeboats that are fully covered with tarpaulins. Moreover, crew members are expected to have gone through an ice navigation training program.

The IMO has also drafted mandatory requirements for ships undertaking international voyages in the Arctic Ocean in general and the Northern Sea Route in particular. Fortunately, the organization also provides states with leeway to enforce additional requirements on all ships that sail through their territorial waters or dock at their ports. However, this provision may be disadvantageous if abused by coastal states in the Arctic. For example, during maritime conflicts, feuding states may impose constraints on shipping operations as part of political maneuvers aimed at pushing for desirable outcomes in those conflicts. Similarly, if left unchecked, states may impose control mechanisms aimed at giving them competitive economic advantage over their neighboring countries. The pursuit of such interests through unfair practices may jeopardize joint efforts to introduce universal transport regulations for the Northern Sea Route.

The US is one of the coastal states operating in the Northern Sea Route that have largely adopted IMO conventions but have also mandated additional transport requirements in certain areas. For instance, coastal states in the US can impose a requirement on all ships that call at their ports to adhere to additional pollution prevention and safety requirements. Russia and Canada have also adopted a similar approach by establishing additional transport regulations to add onto those of IMO’s International Convention for the Prevention of Pollution from Ships (MARPOL). There is also an emerging trend whereby states come together based on mutual interests to enhance existing shipping requirements. For example, the US is keen to enter into an agreement with Russia on how to manage vessel traffic in the Bering Strait. This is expectedly a mutual pursuit for the two countries because they share a maritime border that cuts across the strait. Moreover, Bering Strait is a strategic region for both countries as well as the shipping operators across the Northern Sea Route because it experiences more than 300 transits annually.[7]

Decisive actions to harmonize transport regulations in the Northern Sea Route under the auspices of the IMO were launched during the early 1990s. These efforts were initiated because of the need to enhance transport operations in line with the increased use of the sea route. It is against the backdrop of this harmonization process that the IMO Guidelines on the Ships Operating in Arctic Ice-covered Waters were developed. The IMO Guidelines place emphasis on two main areas of focus: equipment and operational procedures.

The debate on the appropriateness of the IMO Guidelines is ongoing, with emphasis being on various legal, geo-political, and maritime issues raised. In these discussions, a major concern relates to the limitations of the standard-setting approach used by the IMO. One glaring limitation is the absence of a model navigation course. Moreover, there is no standard qualification scheme for operators of vessels particularly in the Northern Sea Route. Although the IMO Guidelines stipulate that all ice navigators should provide evidence of having gone through an ice-navigation training program, the description used is very broad; it states that the training program should offer understanding, knowledge, and proficiency needed to operate ships in the ice-covered waters of the Arctic Ocean.

Although the regulations take note of the severe circumstances of ship operators in the Arctic Ocean, they fail to make a provision for a detailed training program. For example, they do not provide regulations on icing, whereby cold temperatures lead to freezing of water upon coming into contact with vessels. Failure to remove the water regularly may build up on the structure of the ship, causing it to capsize. The Guidelines indicate that icing may interfere with a ship’s fire-fighting system, thereby hindering its proper functioning. Section 11 of the Guidelines indicates that icing should be removed regularly from launching equipment and lifeboats. Given that this is a serious hazard, it should have been regulated in a more extensive manner. The Guidelines ought to have provided a more critical appraisal of prevention and mitigation measures.

Operational procedures also form a core component of the legal regime in the NSR. Under the existing legal and regulatory framework, all ships that embark on voyages along the route are expected to operate using a training manual to be used by ice navigators. In terms of crewing, most emphasis is on the ice navigator, who should be specially trained to navigate vessels in ice-covered waters. An important point to be noted in this regard is that IMO Guidelines make specific reference to the provisions of the International Association of Classification Societies (IACS). This marks a significant step towards the process of harmonizing transport regulations in order o streamline operations in the NSR.

The contributions of classification societies and industry players have also been instrumental in the establishment of transport regulations for the NSR. In 1969, the IMO accorded consultative status to the IACS.[8] This interaction marked the start of a long journey of shared experiences and contributions that have led to the emergence of the present-day legal regime. Today, the IACS is one of the reputable non-governmental organizations that have succeeded in developing and applying safety rules relating to navigation.

            Unfortunately, the guidelines and recommendations of organizations such as the IACS are not legally binding. Incidentally, there is a rapid increase in the number of non-binding instruments being used in international law governing sea operations. This has greatly contributed to the structural diversity of existing law-making processes as well as instruments aimed at addressing complex matters. This multiplicity of approaches is beneficial because voluntary rules enable states to avoid lengthy law-making procedures as well as the risk of failure by most states to ratify the resultant treaties. Moreover, the voluntary guidelines can serve the purpose of transport regulation if they are implemented properly through existing national and international mechanisms. This effectiveness can be enhanced even further if the IMO is strengthened in a manner that enables it to develop and enforce universal standards.

            The issue of port control by flag states also constitutes a crucial component of transport regulations in the NSR. A basic requirement in international shipping is for all ships to carry a flag of the state in which they are registered. The flag state bears the primary responsibility for enforcement jurisdiction. In this regard, the provisions of UNCLOS come into play in that they provide a universal jurisdiction. They give a port state the power to carry out investigations as well as prosecute violations that occur beyond national jurisdiction. UNCLOS also has a provision for the extension of the jurisdiction of individual states in terms of preventing, reducing, and controlling marine pollution.

            Many legal issues relating to aspects of active navigational advice and monitoring in relation to maritime traffic management within the NSR have also emerged in the past. A key objective is the introduction of compulsory Arctic regulation. For a long time, maritime traffic in the NSR has continued to be managed through Vessel Traffic Services (VTS). The IMO has established a provision for the implementation of certain services by competent authorities with a view to improve the efficiency of traffic and to promote environmental protection. The authorities should have put in place the appropriate traffic management instruments and mechanisms to be able to respond to traffic situations that arise within their VTS areas.

            The international law of the sea provides for the establishment of instruments that depend on surveillance systems as well as those that do not depend on surveillance systems. In surveillance-based systems, land-based sensors send signals to a remote location where vessel traffic movements can be monitored and managed. In other types of systems, reporting points are established, where the details of the ship such as identity, speed, and course become accessible to the monitoring authority.

Aspects of Marine Insurance

            Numerous developments in the realm of marine insurance in the NSR have unfolded since the shipping route was discovered. For instance, between 1993 and 1998, the International Northern Sea Route Program (INSROP) was launched. INSROP provided a formidable framework for marine insurance aspects within the NSR by providing the necessary economic incentives such as the sharing of accurate information.[9] At the same time, individual states have come up with laws and regulations governing the marine insurance sector. For example, under Russian law, all foreign ships operating in the NSR must have a marine insurance cover. During the time when INSROP was in force, it became evident that the Russian as well as global marine insurance industry was willing to underwrite navigational risks in the NSR. The only condition imposed in this regard was that underwriters needed to be provided with the appropriate and sufficient information structures relating to each risk involved.

            The dominant position of Soviet shipping in the NSR has greatly influenced the development of marine insurance in the route. For instance, insurance cover for various shipping activities tended to be provided under state schemes. However, with the coming to an end of state monopoly in the insurance sector of the Russian federation, a redefined marine insurance sector founded on free-market competition emerged. Consequently, many companies are now able to compete for business in different categories of risk coverage. This environment of competition continues to improve because of the ongoing modernization of Russia’s legal system.

            INSROP recognized different types of risks for the NSR, namely P&I (protection and indemnity), H&M (hull and machinery) insurance, and several miscellaneous risks. The provisions of P&I insurance vary depending on type of cargo and size of the ship. On the other hand H&M insurance provisions take into account the price of the ship and estimated damage rate. H&M policies normally exclude navigation in regions covered ice such as the NSR, hence the need for shipping operators to make special arrangements with their insurers. Experience of shipping operations in the Russian context serves as an important source of information on P&I clubs as well as insurance claims on the Northern Sea Route. However, claims made on the NSR tend to be higher than those made in other regions within the Arctic Ocean. The main areas of particular concern in regards to pricing include cargo, wreck removal, crew claims, and pollution salvage.

Although the Northern Sea Route is shorter than the Suez route, its economic viability is impacted negatively by the fact that total insurance is almost twice as high. This makes the route very expensive for ship operators. However, such projects are based merely on estimates. Stakeholders may have to wait until reliable statistical data is available following the establishment of a better database to determine whether initial premiums are likely to be conservative. During INSROP, Russia’s unwilling to share its official data was a major source of problems because it was difficult to determine the rate of damages. However, the country accepted to share some of statistics on damages in the Northern Sea Route. These statistics showed that some 800 damages ocurred along the NSR between 1954 and 1990.[10]

Other than INSROP, ARCOP (Arctic Operational Platform) project was also developed, lasting between 2003 and 2006. Its objective was to facilitate the development of alternative policy options that would increase the viability of the NSR. Focus was primarily on ways of increasing access to oil and natural gas resources within the Arctic regions under Russia’s jurisdiction. To achieve this goal, there was a need to highlight the specific changes that needed to be implemented as well as risk factors affecting marine insurance premiums in the NSR.

Not much has been done in terms of efforts to establish an international legal regime that addresses the challenge of lack of statistics showing relative variations in insurance risk. Many insurers are unwilling to come up with insurance products based primarily on theoretical or hypothetical proposals. The ideal situation should be one where a new law that obligates the use of an analytical approach in the marine insurance sector across the NSR is enacted and enforced. Such a law should have a provision for a comparison between vessel-class regulations and theoretical estimates.

From a legal perspective, both INSROP and ARCOP faced similar complexities. They were both non-binding instruments, meaning that coastal states in the NSR could easily afford to ignore them. Similarly, they did not contain a provision on ways of imposing legal sanctions on marine insurance companies that refused to share risk coverage information on the basis of theoretical or hypothetical questions. Nevertheless, both projects led to an important finding: marine insurance companies are capable and willing to respond to risk coverage requirements in innovative ways provided such requirements are defined on the basis of practical experiences in the NSR.

Most practical experiences in the NSR route relate to the operations of Russian vessels. Concerns about vested interests may sometimes act as a hindrance to the adoption of information provided by Russian ship operators. To evaluate the needs of shipping in the NSR in terms of insurance coverage, it may be necessary to conduct experimental voyages involving non-Russian vessels. Unfortunately, both INSROP and ARCOP were unsuccessful in presenting significant data to marine insurers operating in the NSR. Information obtained from experimental voyages should be put into consideration when amendments to the current marine insurance law are being made. Such amendments should address a wide range of issues, including marine insurance cost and the feasibility of using icebreaking tankers to transport oil and natural gas resources from Russia to Western Europe.

Russia has already come up with NSR Guidelines, which provide a regulatory framework for marine insurance in those sections of the route that fall with the country’s EEZ and continental shelf. Under these regulations, insurance for all vessels is mandatory. Moreover, all ship operators must issue financial security for potential liability against marine environmental pollution. In this regard, the use of nuclear-powered icebreakers has led to the emergence of a unique challenge in regards to insurance cover. Conventionally, marine insurance underwriters in the NSR exclude coverage for damages arising from nuclear radiation. Moreover, under Russian regulations, no liability insurance for covering for damages arising from nuclear-related incidents is available. These challenges underscore not only the shortcoming of the existing legal regime governing the marine insurance industry in the NSR but also the dominant position of the Russian jurisdiction.

Costs and Fees System in the NSR

A major feature of the NSR is unique in the sense that some sections of the route are ice-covered. This poses a serious challenge for ship operators because it creates the need for icebreakers. The Russian government levies fees for the icebreaking services it provides to these operators. To assess the viability of the route compared to the Suez Canal, operators must put into consideration these fees. They must also bear in mind that NSR is being administered in a rather bureaucratic, non-transparent manner. Although the route is open to shipping by all states, one must plan many months before by filing passage applications and ensuring compliance with appropriate laws and regulations.

The Administration of the NSR is the official institution charged with the overall responsibility of the NSR. The headquarters of this institution are in Moscow. However, practical aspects of administration work are coordinated from Marine Operations Headquarters on both sides of the NSR. Ships that plan to sail eastwards must get clearance from the Headquarters in Dikson while those planning to sail westwards must get clearance from the Headquarters in Pevek. This arrangement gives a hint on the elaborate administrative procedures that ship operators must go through as a way of ensuring the operational safety and efficiency of their vessels.

All operational aspects of shipping activities, including scheduling, navigational support, and route assignment, are coordinated at MOHs. In Moscow, ship owners are required to have submitted their applications at least four months their planned voyage date. The NSR Administration responds to the applications ten days after receiving them. However, inconsistencies sometimes occur in terms of the time it takes the Administration to provide a response, with the waiting period extending to several months. Under the guidelines of the NSR Administration, the ship owner is responsible for meeting the cost of ensuring that the ship is available for inspection at the agreed port.

Ships that are found to be seaworthy are granted permission to pass through the NSR seaway. A date is scheduled, a specific route is defined, and all necessary pilotage and icebreaker support systems are provided. In situations where a ship is found not to have fulfilled all the stipulated requirements, it can still be allowed to pass through the NSR with some guidance that attracts an additional fee.

The basis for the fees levied on the Russian Northern Sea Route may be justified under Article 234 of UNCLOS. This article accords coastal states the right to enforce laws and regulations that help to prevent, reduce, and control pollution from vessels with the EEZ particularly in ice-covered areas with severe climatic conditions and a delicate ecological balance. The article also instructs these states to refrain from enforcing these laws and regulations in a discriminatory manner.

The fees system serves to finance the public services that come with operations in the seaway such as opening them to traffic and protecting the marine environment. Some of the core cost elements include icebreaker support, ice-air reconnaissance, maintenance of fairway infrastructure, pilotage, and satellite communication. Icebreaker support takes up a huge proportion of the costs because of the need to maintain and renew the icebreaking fleet.

The Russian government has traditionally adopted a policy that entails setting tariffs in such a way that all the aforementioned cost elements are financed by actual traffic. This means that it is virtually impossible to set a standard fee because of variations in maintenance costs, volume of traffic, and economies of scale. Some of the factors influencing fees include size of ship, type of cargo, ice conditions, ice class of the vessel, actual route, and competencies of vessel crew. Large ships attract lower fees because of economies of scale. Ice conditions influence fees because they determine the amount of icebreaker assistance required. Ships with more experienced crew are charged lower fees because the level of pilotage required is low.

Requirements for Tankers

            Careful consideration is being by NSR stakeholders to ensure that tankers are built and operated in a manner that does not increase the risk of marine accidents. A marine accident involving an oil tanker may cause serious environmental pollution, potentially causing irreversible damage to the entire Arctic ecosystem. Existing systems for vessel management need to be evaluated to ensure that they comply with all existing laws and regulations. One major international requirement is that oil transport at sea should be restricted to double-hull tankers. Currently, this requirement has not been fulfilled in eastern NSR.

Harbour operations also have a far-reaching impact on the ability by the international legal regime to enforce existing laws. Cooperation at national and regional levels can greatly contribute to efficiency in oil transport operations. Russia’s contribution to this legal regime is important not just because of its dominant position in the NSR but also because the country is a leading exporter of oil and gas to Western Europe through the route.

            Although freight forwarders are immensely interested in the Northern Sea Route because of its status as a short seaway, they are also concerned about possible hazards that come with oil shipments such as oil spills. Although tanker accidents do not occur often, the major concern is that whenever they do occur, the threat to the environment can be massive particularly in the Arctic environment. This was demonstrated during the Exxon Valdez incident in 1989 in the Alaskan coast. This incident attracted widespread media attention, thereby raising a lot of awareness about the potential negative impact of oil tankers on the environment. In most cases, focus has shifted to the efficiency of the existing legal regime in the adoption and implementation of laws and regulations aimed at streamlining the operations of oil tankers in the NSR.

Conclusion

            The Northern Sea Route is of strategic importance to coastal states that border the Arctic Ocean. It provides an economically viable alternative to the much-longer Suez Canal route. For example, the NSR has made it cheaper to transport oil and gas products from Russia to Western Europe. This paper has examined five areas where legal issues arise in regards to the use of the NSR by different countries, namely operational aspects of the route, environmental issues, transport regulations, aspects of marine insurance, costs and fees system, and requirements for tankers transiting the Northern Sea Route.

            It is evident that maritime disputes pose a major hindrance to the operationalization of the NSR. Fortunately, UNCLOS has provided a viable international legal regime that can be used as a basis for future legal amendments. Another major challenge is that the Arctic Ocean is an environmentally sensitive region that is ice-covered most of the year. The formation of a legal regime for environmental protection has been significantly hindered by maritime disputes. Currently, a blend of national, regional, international legal approaches is being used to address different aspects of operations in this route. This diversity of regulations, together with differences in the interpretations Article 234 of UNCLOS, poses a major challenge for ship operators in this route.

            Efforts are also being made to enhance the existing transport regulations in order to reduce marine accidents. Most of the existing shipping industry regulations are provided by international treaties although Russia dominates the legal regime in this regard because most of the coastal areas where the route passes are within its EEZ. The IMO should be strengthened to enable it to deal with challenges relating to ships that use “flags of convenience”. In this process, reference should be made to IACS rules because they provide a formidable legal framework for shipping operations. The voluntary role of non-governmental organizations in the development of transport regulations in the route should also be promoted.

            Developments in marine insurance in the NSR may be attributed largely to the INSROP and ARCOP projects. The Russian domination of insurance sector has also had far-reaching legal implications for ship operators in the route. Of specific importance is nuclear-related risk arising from the use of nuclear-powered icebreakers. Ship operators and underwriters also encounter numerous in their efforts to access reliable data for use in risk analysis. Finally, the costs and fees that are levied on ships transiting the NSR are justified under Article 234 of UNCLOS. They are also justified in light of the fact that they are meant to fund all operational aspects of shipping activities, including scheduling, navigational support, and route assignment. Currently, Russia is in charge of managing most of the administrative aspects of the NSR. Article 234 of UNCLOS should be amended to create a provision for the establishment of an independent international agency charged with the responsibility of taking over the administrative role in the Northern Sea Route.

Bibliography

Brubaker, Douglas and Claes Lykke. “A review of the International Northern Sea Route Program (INSROP) – 10 years on.” Polar Geography  33, no. 1 (2010): 15-38.

Bunik, Ivan and Vladimir Mikhaylichenko. “Legal Aspects of Navigation Through the Northern Sea Route.” Environmental Security in the Arctic Ocean 4, no. 2 (2012): 231-239.

Chircop, Aldo. “The Growth of International Shipping in the Arctic: Is a Regulatory Review Timely?” The International Journal of Marine and Coastal Law 24, no. 2, (2009): 355 – 380.

Elferink, Alex and Donald Rothwell (eds). The Law of the Sea and Polar Maritime Delimitation and Jurisdiction. Rotterdam: Martinus Nijhoff Publishers, 2001.

Jensen, Øystein.  The IMO Guidelines for Ships Operating in Arctic Ice-covered Waters. Working Paper, The Fridtjof Nansen Institute, Lysaker, 2007.

Jensen, Øystein. Arctic shipping guidelines: Towards a legal regime for navigation safety and environmental protection? Polar Record, 44, no. 2 (2008): 107-114.

Liu, Miaojia and Jacob Kronbak. “The potential economic viability of using the Northern Sea Route (NSR) as an alternative route between Asia and Europe.” Journal of Transport Geography 18, no. 3 (2010): 434–444.

Meschtyb, Nina., Bruce Forbes and Paula Kankaanpää. “Social Impact Assessment along Russia’s Northern Sea Route: Petroleum Transport and the Arctic Operational Platform (ARCOP).” Arctic 58, no. 3 (2005): 322-327.

Ragner, Claes. The 21st Century — Turning Point for the Northern Sea Route? Amsterdam: Kluwer Academies Publishers, 2000.

Tymchenko, Leonid. The Northern Sea Route: Russian Management and Jurisdiction over Navigation in Arctic Areas. The Hague: Kluwer Law International, 2001.


End Notes

[1] Aldo Chircop, “The Growth of International Shipping in the Arctic: Is a Regulatory Review Timely?” The International Journal of Marine and Coastal Law 24, no. 2, (2009): 355 – 380.

[2] Alex Elferink and Donald Rothwell (eds). The Law of the Sea and Polar Maritime Delimitation and Jurisdiction. Rotterdam: Martinus Nijhoff Publishers, 2001.

[3] Miaojia Liu and Jacob Kronbak. “The potential economic viability of using the Northern Sea Route (NSR) as an alternative route between Asia and Europe.” Journal of Transport Geography 18, no. 3 (2010): 434–444.

[4] Claes Ragner, The 21st Century — Turning Point for the Northern Sea Route? Amsterdam: Kluwer Academies Publishers, 2000.

[5] Øystein Jensen, The IMO Guidelines for Ships Operating in Arctic Ice-covered Waters. Working Paper, The Fridtjof Nansen Institute, Lysaker, 2007.

[6] Øystein Jensen, Arctic shipping guidelines: Towards a legal regime for navigation safety and environmental protection? Polar Record, 44, no. 2 (2008): 107-114.

[7] Ivan Bunik and Vladimir Mikhaylichenko. “Legal Aspects of Navigation Through the Northern Sea Route.” Environmental Security in the Arctic Ocean 4, no. 2 (2012): 231-239.

[8] Tymchenko, Leonid. The Northern Sea Route: Russian Management and Jurisdiction over Navigation in Arctic Areas. The Hague: Kluwer Law International, 2001.

[9] Douglas Brubaker and Claes Lykke. “A review of the International Northern Sea Route Program (INSROP) – 10 years on.” Polar Geography  33, no. 1 (2010): 15-38.

[10] Nina Meschtyb, Bruce Forbes and Paula Kankaanpää. “Social Impact Assessment along Russia’s Northern Sea Route: Petroleum Transport and the Arctic Operational Platform (ARCOP).” Arctic 58, no. 3 (2005): 322-327.

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