United Nation Favored Japan – Pushed back China for Senkaku Islands Disputes – The Lawyer

UNCLOS favored Japan for the Senkaku Islands Disputes

The rights stuff in oil islands now

Energy companies should consider the Secure Path Vector Routing (SPV route) in light of the China-Japan island rights disputes (Philippines –China, Vietnam-China, ASEAN-China Sea Disputes)

Images of Chinese citizens overturning a Japanese-manufactured police car are a startling demonstration of the seemingly spontaneous civic anger about Japan's territorial claims to five uninhabited islands and three rocks in the East China Sea (and in a separate row in the West Philippines Sea (South China Sea), known to the Japanese as the Senkaku Islands and to the Chinese as the Diaoyu Islands.

The economic interest at stake is not the barren rocks, but the surrounding hydrocarbon potential. Oil majors contemplating investment need a primer in international law as well as an appreciation of the historical and political background before they venture into this region.

The West Philippines (South China) Sea dispute rose in tempo in 2009 after grumbling along for 30 years. In fact, there was a concrete legal reason: 13 May 2009 was the deadline for states to make claims to extend their rights to exploit the seabed for hydrocarbons under the 1982 UN Convention of the Law of the Sea (UNCLOS).

 

What needs to be understood about UNCLOS are:

1. Standard issue for coastal states is 12 nautical miles (nm) of territorial water projecting from their low-tide baselines, stretching out to 200nm of an Exclusive Economic Zone (EEZ). They must permit submarine cables, maritime passage and overflight, but can bag the hydrocarbon and mineral wealth.
2. If you can lay claim to an island you get 12 miles around it.
3. If you can persuade the UN's Commission on the Limits of the Continental Shelf (CLCS) that yours goes out beyond 200nm into undisputed seabed, you could get extra EEZ. If there is a dispute between states, the commission lacks jurisdiction.
4. If states do not like the submissions to the CLCS, they put in to the UN secretary-general a document known as 'note verbale'.
5. States can opt out of Unclos dispute resolution, and China did.
6. If it is a sovereignty dispute over land, Unclos is the wrong set of rules - one is into customary international law and the hand of history.

The UNCLOS template favors Japan's archipelagic geography over China's continental coastline, but there are other states with a dog in the fight - Vietnam, Philippines, Malaysia, Brunei and Taiwan.

 

Administration of the islands was handed back to Japan from the US in 1972. Around this time oil was discovered and China advanced its claim on historical grounds going back to the 15th century.

The worry is whether China's growing confidence and economic power, with the West hobbled by recession, may lead to aggression.

The Confucian view sees binding dispute resolution as disharmonious and rejects it. This view is virtually bound to win in these cases, where there is no compulsory dispute resolution mechanism and the question of whose legal arguments are in the right is theoretical.

An astute chief executive of an oil and gas major should get his legal department to seek advice on structuring investments through special purpose vehicles (SPVs) to take advantage of bilateral investment treaties that may give leverage to seek compensation from an international arbitration tribunal if investments become expropriated. (http://goo.gl/Q6znE )

The Lawyer  

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Philippine Minister named Euromoney Finance Minister 2012

Cesar Purisima, the finance minister of the Philippines, has been named as Euromoney's Finance Minister of the Year for 2012.

 

Purisima received his award from Euromoney's group publisher Neil Osborn and editor Clive Horwood at a private reception on the fringes of the World Bank/IMF meetings in Tokyo on Thursday.

 

Euromoney commended Purisima for his careful and successful stewardship of the economy in the Philippines since returning as Finance secretary in 2010. This has led to a shift in perception and positive view of the Philippines' economy, in which Purisima's leadership and decision-making have been a key factor.

 

Purisima has worked closely with President Benigno Aquino III to champion the idea that "good governance is good economics." Bankers in the country say he has stuck to his guns, and the country is reaping the rewards. Purisima has unleashed an unforgiving strategy to combat tax evasion and maximize revenue from corporates without introducing any new taxes or reforms.

 

The Philippine growth story stands out against the challenging global macro-economic backdrop. Under Purisima's guidance, and fighting back after storms and flash floods devastated the country in 2011, GDP growth reached 5.9 percent in the second quarter of this year – up from 3.6 percent the previous year – and brought the first-half GDP average growth to 6.1 percent, showing some of the strongest growth rates in Asia.

 

Purisima has also taken gutsy measures to protect the Philippines' economy, as developed markets in the west crumbled under pressure. In December 2010, he orchestrated the exchange of short- and medium-tenor local government securities for P39.5 billion ($940 million) 10-year peso bonds, and P181 billion 25-year peso bonds. There was a similar exchange in July 2011, when short- and medium-tenor local government securities were exchanged for P67.6 billion 10-year bonds and P255 billion 20-year bonds."

 

Euromoney also commends Purisima for his initiatives in promoting capital markets, both in the Philippines and across the broader ASEAN region.

 

Euromoney, the leading global banking and finance publication, has been nominating a Finance Minister of the Year for the past 30 years to coincide with the World Bank/IMF meetings. The previous three winners of the award were Jim Flaherty of Canada in 2009, Russia's Alexei Kudrin in 2010 and Wayne Swan of Australia last year.

 

Euromoney's decision is based on three factors: the opinions of a committee of Euromoney's senior editors, chaired by the editor; the views of some of the world's leading bankers, which Euromoney's editorial team seeks out in background meetings; and the analysis of the contributors to our service Euromoney Country Risk (ECR), which has more than 400 economists around the world contributing on a regular basis, as well as data sourced and compiled by ECR.

 

Recent data compiled by ECR highlight that the Philippines' economic fundamentals have improved since the beginning of the year: its score has risen by more than 10%, one of the biggest improvements among global economies.

 

Euromoney

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