International Royalties on the Extended Continental Shelf: Implications for Canada, Newfoundland, and Equinor

Canada’s international obligations under Article 82 of the United Nations Convention on the Law of the Sea impose domestic responsibilities to determine which party is to absorb the royalty payments owed to the International Seabed Authority. Currently, uncertainty exists in the royalty regime for projects within Canada’s 200 nautical mile limit waters, with multiple disputes arising between parties to sophisticated contracts. Given the comparatively ambiguous Article 82 language, it is important for Canada, Newfoundland and Labrador, and project proponents to come to a clear conclusion as to who will pay the international royalties. This raises the normative questions of which party should ultimately be paying these royalties, and whether Canada should be shifting its obligations to another party.