The Maritime Aspects of the Award in the Arbitration between Croatia and Slovenia

By: Nigel Bankes

Decision commented on: Final Award pursuant to the Arbitration Agreement between the Government of the Republic of Croatia and the Government of the Republic of Slovenia, signed on 4 November 2009, Final Award 29 June 2017

The long awaited Final Award in the Arbitration between Croatia and Slovenia dealing with the land and maritime boundaries (and related matters) between the two States was delivered on 29 June 2017 – over three years after the hearings in this case, held in the first half of June 2014, were closed. This post deals with the maritime aspects of the Award, which included the determination of the maritime boundary between the two countries, “Slovenia’s junction” to the high seas, and the regime for the use of the relevant maritime areas.

It was originally anticipated that the Final Award would be delivered on 17 December 2015 and indeed the website of the Permanent Court of Arbitration continued to herald that release for many months. But shortly after the release date had been announced it was revealed that there had been improper communications between the Agent for Slovenia and the Slovenian nominated member of the Arbitral Tribunal. A transcript of those communications is available here. Resignations followed: first, the Slovenian-appointed arbitrator, followed thereafter by Croatia’s appointed arbitrator, and soon also by the replacement arbitrator nominated by Slovenia – the President of the International Court of Justice, Ronny Abraham, who resigned only days after being involved in the case; all those resignations occurred in a span of ten days from 23 July and 2 August 2015. Eventually, on 25 September 2015 the Arbitral Tribunal was partly reconstituted (see Award at paras 178 – 188). Croatia took the view that Slovenia had committed a material breach of the Arbitration Agreement within the meaning of Article 60 of the Vienna Convention on the Law of Treaties which entitled Croatia to terminate the agreement. In these circumstances the re-constituted Tribunal (comprised of the three original members Judge Guillaume, Professor Lowe and Judge Simma and the two new members Ambassador Fife and Professor Michel, both appointed by President Guillaume in default of appointment by the Parties and as contemplated by Article 2 of the Arbitration Agreement) issued a Partial Award on 30 June 2016. In that Award the Tribunal concluded: (1) that it had the jurisdiction to evaluate the validity of Croatia’s purported termination of the Arbitration Agreement, (2) that it was able to take the necessary measures to ensure the integrity of the proceedings and thus had a duty to continue, and (3) that Croatia was not in a position to terminate the Arbitration Agreement since there had been no material breach of that Agreement. The view of the Tribunal was that Slovenia did violate the provisions of the Arbitration Agreement (para 231(a) of the Partial Award), but that the breach of the Agreement was not such as would justify termination since it did not defeat the object and purpose of the Arbitration Agreement – the only consequence of Slovenia’s actions was that the Tribunal required Slovenia to advance payment for the costs of the additional proceedings (para.  231(e) of the Partial Award). Notwithstanding the conclusion of the Tribunal in its Partial Award Croatia maintains the view it has held since July 2015 (see here and here), that the material breach of the Arbitration Agreement by Slovenia led to its termination, and has since that time declined to participate in further proceedings of the Tribunal.

Under the terms of Article 3(1) of the Arbitration Agreement the Tribunal was tasked with determining: (a) the course of the maritime and land boundary between Croatia and Slovenia, (b) “Slovenia’s junction to the High Sea”, and (c) the “regime for the use of the relevant maritime areas”. The applicable law for these determinations was stipulated in Article 4 to consist of:

(a) the rules and principles of international law for the determinations referred to in Article 3(1)(a);

(b) international law, equity and the principle of good neighbourly relations in order to achieve a fair and just result by taking into account all relevant circumstances for the determinations referred to in Article 3(1)(b) and (c).

It is important to note that the applicable law is stipulated to be different and broader for tasks (b) and (c) than it is for task (a).

The Tribunal was an ad-hoc Tribunal. It was not an Annex VII tribunal within the meaning of the Law of the Sea Convention (LOSC). Rather, under the terms of that Convention, the Arbitration Agreement constitutes the expressed preference of the parties to settle their dispute as to their maritime boundaries by a peaceful means of their own choice: (Section 1, of Part XV of the LOSC).

The background to the conclusion of the Arbitration Agreement is outlined in the first part of the Award. Both Croatia and Slovenia are successor States to the Socialist Federal Republic of Yugoslavia (“SFRY”). Croatia and Slovenia were part of the SFRY as two of its six constituent republics. Croatia and Slovenia proclaimed independence on the same day (25 June 1991: the ‘critical date’ under the Arbitration Agreement, Article 5); they also became Members of the United Nations on the same day (22 May 1992). The disputed maritime area (Award at para. 7) is located in the northernmost part of the Adriatic Sea, which includes the Gulf of Trieste. The Gulf of Trieste is enclosed by the coasts of Italy, Slovenia, and Croatia. The Bay of Piran is part of the Gulf of Trieste. The mouth of the Bay is approximately 5 km wide and runs between Cape Savudrija in Croatia and Cape Madona in Slovenia. Croatia and Slovenia differed as the status of the Bay and as to its delimitation.. Also in dispute was the question of Slovenia’s “right of access” to the high seas. See the map at the end of the post.

Negotiations between the two States with respect to boundary issues began shortly after independence; in some instances at senior political levels and in other instances cases assisted through expert groups or commissions or facilitated through mediation.  Slovenia acceded to the European Union in 2004. Slovenia raised certain objections to Croatia’s accession – effectively blocking the Croatia’s EU accession process – and in this context the EU Commissioner for Enlargement launched an initiative (since 21 January 2009) to facilitate resolution of the dispute. Prior to this Croatia had favoured referring the dispute to the International Court of Justice whereas Slovenia favoured mediation or conciliation. While the parties ultimately reached agreement in principle to resolve the dispute through arbitral means they still differed dramatically as to the choice of applicable law. Croatia favoured arbitration in accordance with international law. Slovenia favoured reference to its vital interests (understood by Slovenia as access to the high seas), all relevant circumstances, and reference to ex aequo et bono (see, Article 38(2) of the Statute of the International Court of Justice).The EU Commissioner continued to facilitate negotiation of the arbitration agreement through various proposals and it is evident that the linked Article 3 (task of the Tribunal) and Article 4 (the applicable law provision) were heavily contested. It should be noted that while neither of these clauses in their final form referenced “vital interests” or resolution of the dispute ex aequo et bono, the idea of “vital interests” was picked up in the preamble to the agreement in which the Parties affirmed “their commitment to a peaceful settlement of disputes, in the spirit of good neighbourly relations, reflecting their vital interests.”

The Arbitration Agreement was ultimately signed on 4 November 2009 and entered into force on 29 November 2010. Croatia issued an interpretive declaration with respect to the Agreement (Award at para. 132) on 9 November 2009 in which it inter alia indicated that Croatia and Slovenia had previously jointly informed the EU and the United States as to the content of the Declaration. The Declaration further indicated that “Nothing in the Arbitration Agreement between the Government of the Republic of Croatia and the Government of the Republic of Slovenia shall be understood as Croatia’s consent to Slovenia’s claim to its territorial contact with the high seas.” Slovenia denied that it had prior notice of the Declaration and denied that it had agreed to its contents.

Most of the Award deals with the determination of the land boundary but, as noted above, this post is solely concerned with the Tribunal’s decision in relation to the maritime issues that the Tribunal was asked to resolve.

The Tribunal’s Final Award is based on the record as it stood before the Tribunal after it was re-constituted and issued its partial Award. There were no subsequent oral hearings (except those held on 17 March 2016, to examine the scope of Slovenia’s violation of the Arbitration Agreement).

The Legal Status of the Bay of Piran

Before determining the maritime boundary the Tribunal first had to consider the juridical status of the Bay of Piran. Slovenia contended that the entire bay was a juridical bay or an historic bay and as such part of Slovenia’s internal waters and thus continued as part of Slovenia by virtue of the doctrine of uti possidetis. There was little doubt geographically as to the status of the Bay of Piran as a bay (Award at para. 862) since it is clearly a significant natural indentation but Croatia argued that it had not become a juridical bay by the time of the dissolution of the SRFY since there was no evidence that the SRFY had ever drawn a closing line across the Bay. If that were the case Croatia went on to assert that both Article 7 of the 1958 Geneva Convention on the Territorial Sea and the Contiguous Zone and Article 10 of the LOSC should be interpreted as precluding the possibility of  plurinational bays. Slovenia by contrast argued that these two Conventions simply failed to address the juridical status of such bays since the language in each Convention provides, in identical terms, that “This article relates only to bays the coasts of which belong to a single State.” Croatia further argued that even if the Bay were a juridical bay at the time of the dissolution of SRFY its status as such did not survive that dissolution.

The Tribunal decided this set of issues comprehensively in favour of Slovenia. It concluded that the Bay was a juridical bay at the time of the dissolution of SRFY. At that time the coasts of the Bay belonged to a single State (Award at para. 872); the dimensions of the Bay fulfilled the conditions fixed by the Conventions (ibid); and, contrary to the contentions of Croatia, the 1958 Convention did not oblige the coastal State to publish charts indicating the closing lines of juridical bays (Award at para. 877). The new requirements of Article 16 of LOSC were not material since by the time of the entry into force of LOSC the Bay was already a juridical bay within the meaning of the 1958 Convention. Since the Bay had the status of internal waters at the time of the dissolution of the SRFY it retained that status (Award at para. 883) consistently with the decision of the International Court of Justice in the Bay of Fonseca Case: Land, Island and Maritime Frontier Dispute (El Salvador v. Honduras: Nicaragua intervening), Judgment, I.C.J. Reports 1992, p. 351 at pp. 389-90. As to the status of plurinational bays more generally, the Tribunal simply remarked (Award at para. 884) that “The limitation of the scope of application of these provisions [of the 1958 Convention and LOSC] does not, however, imply that they exclude the existence of bays with the character of internal waters, the coasts of which belong to more than one State.”

The maritime boundary in the Bay of Piran

Having determined the status of the Bay, the Tribunal then turned to determine the maritime boundary in the Bay remarking that in the absence of a provision in the Convention addressing the delimitation of internal waters the delimitation must be made (Award at para. 886) “on the basis of the same principles as are applicable to the delimitation of land territories. In the present case, that delimitation must thus be made on the basis of uti possidetis.” Neither party claimed that a condominium had been established in the Bay and in the absence of a formal division of the Bay between the two Republics prior to the dissolution of SRFY the Tribunal acknowledged (Award at para. 888) that delimitation must be “on the basis of the effectivités at the date of independence.” The effectivités (fisheries regulation, policing and scientific research) overwhelmingly favoured Slovenia with the result that the Tribunal drew the delimitation line on the Croatian side of the Bay. See map at page 280 of the Award. The Tribunal (Award at para. 914) saw no need to prescribe “any particular usage regime in the Bay, different from what applies under international law.”

Delimitation of the Territorial Sea

Turning to the delimitation beyond the closing line of the Bay, the Tribunal acknowledged that the statement of tasks entrusted to the Tribunal (Article 3) when read in conjunction with the Applicable Law provision (Article 4) required the Tribunal to conduct a sequential analysis since (Award at para 947) “It would be difficult to implement the deliberate distinction between determinations to be made in accordance with international law, on the one hand, and those to be made in accordance with international law, equity, and the principle of good neighbourly relations, on the other hand, if all tasks were to be performed in a combined fashion.”

Both parties acknowledged that the delimitation of the territorial sea should proceed in accordance with Article 12(1) of the 1958 Geneva Convention on the Territorial Sea and the Contiguous Zone and Article 15 of LOSC and that the provisions were virtually identical. The crucial question for the Tribunal was whether or not there were special circumstances that required it to depart from an equidistance line. The Tribunal did identify one special circumstance and that was the fact that very close to the starting point of the delimitation on the closing line of the Bay (Award at para. 1011) “the coastline of Croatia turns sharply southwards … so that the Croatian basepoints that control the equidistance line are located on a very small stretch of coast whose general (north-facing) direction is markedly different from the general (southwest-facing) direction of much the greater part of the Croatian coastline … and deflect the equidistance line very significantly towards the north, greatly exaggerating the ‘boxed-in’ nature of Slovenia’s maritime zone.” That merited an adjustment to the equidistance line (although not of the scale proposed by Slovenia since that was “at such an angle that it cannot properly be regarded as a part of the territorial sea generated by the Slovenian coast, rather than by the Croatian coastline in front of which it runs.”) The differing proposals of the parties are shown on Map IV at page 317 and the Tribunal’s delimitation line is shown on Map VI at page 323.

Slovenia’s junction to the High Sea

The next step was for the Tribunal to determine “Slovenia’s junction to the High Sea”. Both Parties proceeded on the basis that there was no distinction to be made between “High Sea” and high seas and both accepted (Award at para. 1015) that, given the critical date in the Agreement (Article 5), no State had proclaimed an EEZ in the Adriatic Sea and thus that high seas must refer to those areas beyond the territorial seas of the parties. According to the Tribunal (Award at para. 1080) both Parties also attached “particular importance” “to the question of rights of access to and from Slovenia by sea and by air, and of the exercise of jurisdiction over ships and aircraft exercising that right, viewed in the context of the geography of the northern Adriatic Sea.”

But beyond that there was little agreement between the parties.

Croatia contended that there could be no actual physical junction between Slovenia’s territorial sea and the high seas since between these two bodies of water lay the territorial seas of Italy and Croatia as established by the 1975 Treaty of Osimo between Italy and Yugoslavia. Croatia therefore proposed to give the term “junction” a more functional and purposive meaning as referencing Slovenia’s right to secure maritime access between the High Seas and Slovenian waters. According to Croatia, Slovenia already had this right under the existing applicable law including IMO traffic regulations, the LOSC provisions on innocent passage and the four freedoms of EU law. Slovenia contended that “junction” must have a physical rather than a conceptual meaning, arguing for a “direct territorial contact” of its territorial sea and the high seas, and that the existing regime was inadequate to secure Slovenia full and unimpeded access to the high seas. Furthermore, Slovenia emphasised that the Tribunal had two separate tasks – the determination of the junction and the determination of the applicable regime. The Tribunal could not, according to Slovenia, deal with the issue of navigational access entirely as a matter of the applicable regime for that (Award at para. 1044) would amount to a decision infra petita.

The Tribunal largely accepted Slovenia’s arguments (while rejecting the idea of a physical contact). Thus it concluded (Award at para. 1073) that the ordinary meaning of junction “has an essentially spatial meaning and connotation” which the Tribunal defined in this case (Award at para. 1076) as “the connection between the territorial sea of Slovenia and an area beyond the territorial seas of Croatia and Italy.” The Tribunal explained what that might mean in the following crucial passage (Award at para. 1079):

The Tribunal recalls once more the provision of the Arbitration Agreement that it must apply to this question. Under Article 4 … the Tribunal has the duty to determine both “Slovenia’s junction to the High Sea” and “the regime for the use of the relevant maritime areas,” and must do so applying “international law, equity and the principle of good neighbourly relations in order to achieve a fair and just result by taking into account all relevant circumstances.” The power and duty of the Tribunal to determine the “regime for the use of the relevant maritime areas” implies that the Tribunal is not to regard itself as confined to an indication that the “regime” in any particular location is whatever it would be if each Party were to assert to the fullest extent its rights under UNCLOS at the relevant distance from the coast. The duty to “achieve a fair and just result by taking into account all relevant circumstances,” which includes consideration of the vital interests of the Parties, requires the Tribunal to consider what modifications might be necessary in order to achieve that fair and just result. This is underlined by the very broad terms in which the principles that the Tribunal is directed to apply are framed. [footnotes omitted; emphasis added]

Based on that assessment of the scope of its discretion, the Tribunal then went on to determine (Award at para. 1081) that the “junction” was actually a “Junction Area” sufficient to connect the Slovenian territorial sea as just delimited and the “High Sea” i.e. the area that is beyond the 12 NM territorial sea limits of Croatia and Italy. It is evident that in the mind of the Tribunal this is both a geographical location and a regime since the Tribunal describes this area (Award at para. 1081) as “an area in which ships and aircraft enjoy essentially the same rights of access to and from Slovenia as they enjoy on the high seas” i.e. an area “within which a special legal regime applies”.  The Junction Area is approximately 2.5 NM wide and is depicted in Map VII at page 345 of the Award.

The Special Regime for the Junction Area

The Tribunal prefaced its remarks with respect to its prescribed regime of the Junction Area by once again recalling that the task entrusted to it included the obligation “to determine the regime for the use of the relevant maritime areas applying “international law, equity and the principle of good neighbourly relations in order to achieve a fair and just result by taking into account all relevant circumstances.” The specific details of the prescribed regime are important and are set out below. As a general proposition what the Tribunal has tried to do is to guarantee to Slovenia a comprehensive set of what the Tribunal refers to as “freedoms of communication” (much like those that apply in the Exclusive Economic Zone (EEZ) of a coastal State under Part V of LOSC) while at the same time denying Slovenia any resource-related rights within the Junction Area. The Tribunal does not use this terminology but the effect of the Award is to burden that part of Croatia’s territorial sea within the Junction Area with a communications servitude in favour of Slovenia. The area remains part of Croatia’s territorial sea but the Award limits the authority that Croatia may exercise within that part of its territorial sea in order to give effect to Slovenia’s declared freedoms of communication.

Since the details are important it seems wise to quote extensively from this section of the Award (footnote references are omitted).

1123. … in the Junction Area, there is freedom of communication for the purposes of uninterrupted and uninterruptible access to and from Slovenia, including its territorial sea and its airspace. That freedom consists in the freedoms of navigation and overflight and of the laying of submarine cables and pipelines, and other internationally lawful uses of the sea related to these freedoms, such as those associated with the operation of ships, aircraft and submarine cables and pipelines.
1124. These freedoms apply to all ships and aircraft, civil and military, of all flags or States of registration, equally and without discrimination on grounds of nationality. The extension of these rights to ships and aircraft of all States, and not just to Slovenian ships and aircraft, is necessary for the practical realization of rights of access to and from Slovenia’s ports and waters, which is a matter that relates not only to Slovenian vessels and aircraft but also to vessels sailing and aircraft flying under the flags of all countries other than Slovenia.
1125. Ships and aircraft are entitled to the freedoms of communication in the Junction Area described above when travelling to or from Slovenia, including its territorial sea and its airspace.
1126. The freedoms of communication in the Junction Area do not include the freedom to explore, exploit, conserve or manage the natural resources, whether living or non-living, of the waters or the seabed or the subsoil in the Junction Area. Nor do they include the right to establish and use artificial islands, installations or structures, or the right to engage in marine scientific research, or the right to take measures for the protection or preservation of the marine environment.

The Tribunal distinguished the prescribed regime from the regime of innocent passage in the territorial sea as follows:

1127. Unlike innocent passage, the freedoms of communication in the Junction Area are not conditioned upon any criterion of innocence and are not suspendable under any circumstances. The freedoms of communication in the Junction Area are not subject to any duty of submarine vessels to navigate on the surface, nor to any coastal State controls or requirements other than those permitted under the legal regime of the EEZ established by UNCLOS.

And the Tribunal distinguished the prescribed regime from the regime of transit passage in international straits as follows:

1128. Unlike transit passage, the freedoms of communication in the Junction Area are exercisable as if they were high seas freedoms exercisable in an exclusive economic zone. They are not subject to any additional restrictions and conditions except as provided in this Award. They include the freedoms of navigation and overflight and of the laying of submarine cables and pipelines, and other internationally lawful uses of the sea related to these freedoms. The laying of submarine cables and pipelines is subject to the conditions set out in UNCLOS Article 79, including the right of Croatia under Article 79(4) to establish conditions for such cables and pipelines entering other parts of Croatia’s territorial sea.

The Tribunal also offered guidance with respect to the enforcement jurisdiction of Croatia and its jurisdiction to prescribe rules. With respect to enforcement:

1129 The Tribunal considers that, in order to guarantee the freedoms of communication as defined above, it is necessary that ships and aircraft of all flags and of all kinds, civil and military, exercising the freedom of communication are not subject to boarding, arrest, detention, diversion or any other form of interference by Croatia while in the Junction Area.

However, the Tribunal clarified that this represented a restriction on Croatia’s right of enforcement rather than the complete loss of the power to enforce its laws:

1131 In this regard, the Tribunal observes that the Junction Area is small, and Croatia retains its rights to enforce its laws and regulations in all other areas of its territorial sea and other maritime zones in accordance with UNCLOS. Notably, the present Award does not affect the right of Croatia to take enforcement action outside the Junction Area in accordance with international law. Those rights include the right to take enforcement action in respect of violations of Croatian law that had been committed in the Junction Area.

But with respect to the power to prescribe rules

1130 ….The Tribunal considers it fair, just, and practical for Croatia to remain entitled to adopt laws and regulations applicable to non-Croatian ships and aircraft in the Junction Area, giving effect to the generally accepted international standards in accordance with UNCLOS Article 39(2) and (3). Ships and aircraft exercising any aspect of the freedom of communication would be under an obligation to comply with such Croatian laws and regulations.

Finally, the Tribunal recognized that Croatia (Award at para. 1132) “should retain the right to respond to a request made by the master of a ship or by a diplomatic agent or consular officer of the flag State for the assistance of the Croatian authorities and also, exceptionally, that Croatia should retain the right to exercise in the Junction Area powers under UNCLOS Article 221 in respect of maritime casualties.”

Both parties (Award at para. 1134) should exercise all of the above rights and obligations of the regime of the Junction Area “in good faith, and with due regard for the rights and obligations of other States.” (emphasis added) The Tribunal also referenced Article 123 of LOSC (“Cooperation of States bordering enclosed or semi-enclosed seas”), Article 300 (“Good faith and abuse of rights”), and Article 301 (“Peaceful uses of the seas”). For the context for the “due regard” reference see LOSC Article 56 and 58 (in the context of the relations between the coastal State and “other States” in the EEZ).

The Award (at paras 1136 – 1140) contemplates that the special regime of the Junction Area shall remain inforce in perpetuity unless modified by agreement between the two states. The Award emphasizes it is not intended to affect the IMO’s Traffic Separation Scheme in the northern Adriatic nor international rules applicable to air navigation and neither is the Award intended to affect the rights and obligation of either State under LOSC apart from the Junction Area and “except to the extent necessary to ensure the application of the regime established by this Award.”

The Tribunal concluded this part of its Award by addressing itself to LOSC Article 311(3). It will be recalled that this provision contemplates that State Parties may conclude an agreement modifying or suspending the operation of provisions of this Convention as between them, provided that the agreement is not incompatible with the effective execution of the object and purpose of the Convention. In response to this potential challenge the Tribunal remarked only (Award at para. 1140) that it was “satisfied that the special regime for the Junction Area described above is consistent with those basic principles.”

The Need for Additional Special Regimes?

The Tribunal also considered whether it was necessary to establish any other special regimes for any other “relevant maritime areas” referenced in its Award. It will be recalled that the Tribunal had already concluded (Award at para. 914) “there is no need for it to define any particular usage regime in the Bay, different from what applies under international law.” It similarly concluded that not only was Slovenia’s claim to its own continental shelf completely baseless (Award at para. 1103) but also (and in light of that conclusion) that it was unnecessary to prescribe a special regime for any continental shelf area (Award at para. 1141). The Tribunal also found it unnecessary (Award at para. 1142) to prescribe a special regime for the use of the high seas. It simply observed that high seas as a concept could simply disappear in the Adriatic (and indeed in the broader Mediterranean) should the relevant coastal states proclaim exclusive economic zones. Neither did the Tribunal think that it needed to anticipate that eventuality by prescribing a regime for parts of the EEZ in the northern Adriatic Sea. It did not think (ibid) that this was required by international law or “by equity or the principle of good neighbourly relations.”

The response to the Award

Slovenia issued a short statement declaring that it respects the Final Award and “expects the same from Croatia.” Croatia issued its own statement in response to the Award on 29 June 2017 in which it asserted that “Today’s arbitral award does not in any way bind Croatia and Croatia shall not implement it.” The two countries have since entered into bilateral talks, commenced with a meeting of the two Prime Ministers on 12 July 2017 in Ljubljana (Slovenia), while their next meeting is scheduled to be held in September in Croatia.

Concluding observations

I anticipate that the part of the Award (at least on the maritime issues) that will attract the most attention and controversy is the Tribunal’s decision on the Junction Area both with respect to “Slovenia’s junction to the High Sea” and the prescription of a regime. With respect to both aspects the Tribunal was careful to emphasise that the Arbitration Agreement conferred upon it a very broad choice of law in respect of its tasks of determining the “junction” and the “regime”. That said, the conferral of authority is not as broad as it might have been and it was clearly intended to be something less than the conferral of authority to decide the matter ex aequo et bono. The question on which one can anticipate much debate is whether or not the Tribunal has stayed within the authority conferred upon it by the Agreement. I have two interlinked comments on that question. The first is that the Tribunal on its own terms has established a Junction Area rather than a Junction. The second is that in doing so the Tribunal has conflated the second and third tasks entrusted to it. The Tribunal itself promised to proceed sequentially (see above at para. 947). In a very formal sense it has done so but the concept of a Junction Area cannot be understood without the regime that applies to that Area. It might have been clearer if the Tribunal had admitted that it would proceed sequentially with respect to the first issue (delimitation of the boundary) but then deal with the second and third tasks together. That is perhaps the only important distinction given that the same applicable law provision applies to those two tasks.

The solution offered by the Tribunal is certainly elegant. The Award offers Slovenia the guaranteed EEZ-fashioned access that it sought and it does so by limiting the authority of Croatia within its territorial sea as little as possible. Certainly the Award denies Slovenia any resource-related rights or indeed prescriptive rights within that area or beyond. While some might argue that the Tribunal lacked the authority to so limit Croatia’s sovereignty, that argument fails to give any real meaning to the third task conferred on the Tribunal which was to prescribe a regime where necessary in order to achieve a fair and just result. What the Tribunal could not do was to deny Croatia the full extent of its territorial sea and the Tribunal has not done that.

Under the terms of Article 7(2) of the Arbitration Agreement the Award is binding on the Parties and constitutes a definitive settlement of the dispute.

For a timely analysis of the (non) availability of a review or appeal mechanism for inter-state arbitral awards see Peter Tzeng, “The Annulment of Interstate Arbitral Awards” on the Kluwer Arbitration Blog.

Thanks to Don Rothwell and Davor Vidas for comments on a draft of this post although they should not be taken to share the opinions and interpretations expressed here.