1. The funds of the Enterprise shall include:
- amounts received from the Authority in accordance with article 173,
- voluntary contributions made by States Parties for the purpose of
financing activities of the Enterprise;
- amounts borrowed by the Enterprise in accordance with paragraphs 2
- income of the Enterprise from its operations;
- other funds made available to the Enterprise to enable it to commence
operations as soon as possible and to carry out its functions.
- The Enterprise shall have the power to borrow funds and to
furnish such collateral or other security as it may determine. Before
making a public sale of its obligations in the financial markets or
currency of a State Party, the Enterprise shall obtain the approval
of that State Party. The total amount of borrowings shall be approved
by the Council upon the recommendation of the Governing Board.
- States Parties shall make every reasonable effort to support
applications by the Enterprise for loans on capital markets and from
international financial institutions.
4. The funds, assets and expenses of the Enterprise shall be kept separate
from those of the Authority. This article shall not prevent the Enterprise
from making arrangements with the Authority regarding facilities, personnel
and services and arrangements for reimbursement of administrative expenses
paid by either on behalf of the other.
- The Enterprise shall be provided with the funds necessary to
explore and exploit one mine site, and to transport, process and
market the minerals recovered therefrom and the nickel, copper,
cobalt and manganese obtained, and to meet its initial administrative
expenses. The amount of the said funds, and the criteria and factors
for its adjustment, shall be included by the Preparatory Commission
in the draft rules, regulations and procedures of the Authority.
- All States Parties shall make available to the Enterprise an amount
equivalent to one half of the funds referred to in subparagraph (a)
by way of long-term interest-free loans in accordance with the scale
of assessments for the United Nations regular budget in force at the
time when the assessments are made, adjusted to take into account the
States which are not members of the United Nations. Debts incurred by
the Enterprise in raising the other half of the funds shall be
guaranteed by all States Parties in accordance with the same scale.
- If the sum of the financial contributions of States Parties is less
than the funds to be provided to the Enterprise under subparagraph
(a), the Assembly shall, at its first session, consider the extent of
the shortfall and adopt by consensus measures for dealing with this
shortfall, taking into account the obligation of States Parties under
subparagraphs (a) and (b) and any recommendations of the Preparatory
- Each State Party shall, within 60 days after the entry into force
of this Convention, or within 30 days after the deposit of its
instrument of ratification or accession, whichever is later, deposit
with the Enterprise irrevocable, non-negotiable, non-interest-bearing
promissory notes in the amount of the share of such State Party of
interest-free loans pursuant to subparagraph (b).
- The Board shall prepare, at the earliest practicable date after
this Convention enters into force, and thereafter at annual or other
appropriate intervals, a schedule of the magnitude and timing of its
requirements for the funding of its administrative expenses and for
activities carried out by the Enterprise in accordance with article
170 and article 12 of this Annex.
- The States Parties shall, thereupon, be notified by the
Enterprise, through the Authority, of their respective shares of the
funds in accordance with subparagraph (b), required for such
expenses. The Enterprise shall encash such amounts of the promissory
notes as may be required to meet the expenditure referred to in the
schedule with respect to interest-free loans.
- States Parties shall, upon receipt of the notification, make
available their respective shares of debt guarantees for the
Enterprise in accordance with subparagraph (b).
- If the Enterprise so requests, State Parties may provide debt
guarantees in addition to those provided in accordance with the scale
referred to in subparagraph (b).
- In lieu of debt guarantees, a State Party may make a voluntary
contribution to the Enterprise in an amount equivalent to that
portion of the debts which it would otherwise be liable to guarantee.
- Repayment of the interest-bearing loans shall have priority over the
repayment of the interest-free loans. Repayment of interest-free
loans shall be in accordance with a schedule adopted by the Assembly,
upon the recommendation of the Council and the advice of the Board.
In the exercise of this function the Board shall be guided by the
relevant provisions of the rules, regulations and procedures of the
Authority, which shall take into account the paramount importance of
ensuring the effective functioning of the Enterprise and, in
particular, ensuring its financial independence.
- Funds made available to the Enterprise shall be in freely usable
currencies or currencies which are freely available and effectively
usable in the major foreign exchange markets. These currencies shall
be defined in the rules, regulations and procedures of the Authority
in accordance with prevailing international monetary practice. Except
as provided in paragraph 2, no State Party shall maintain or impose
restrictions on the holding, use or exchange by the Enterprise of
- "Debt guarantee" means a promise of a State Party to creditors of the
Enterprise to pay, pro rata in accordance with the appropriate scale,
the financial obligations of the Enterprise covered by the guarantee
following notice by the creditors to the State Party of a default by
the Enterprise. Procedures for the payment of those obligations shall
be in conformity with the rules, regulations and procedures of the
5. The records, books and accounts of the Enterprise, including its annual
financial statements, shall be audited annually by an independent auditor
appointed by the Council.
1. The Enterprise shall propose to the Council projects for carrying out
activities in accordance with article 170. Such proposals shall include a
formal written plan of work for activities in the Area in accordance with
article 153, paragraph 3, and all such other information and data as may be
required from time to time for its appraisal by the Legal and Technical
Commission and approval by the Council.
2. Upon approval by the Council, the Enterprise shall execute the project
on the basis of the formal written plan of work referred to in paragraph 1.
4. The Enterprise shall have title to all minerals and processed substances
produced by it.
- If the Enterprise does not possess the goods and services
required for its operations it may procure them. For that purpose, it
shall issue invitations to tender and award contracts to bidders
offering the best combination of quality, price and delivery time.
- If there is more than one bid offering such a combination, the
contract shall be awarded in accordance with:
- the principle of non-discrimination on the basis of political or
other considerations not relevant to the carrying out of operations
with due diligence and efficiency; and
- guidelines approved by the Council with regard to the
preferences to be accorded to goods and services originating in
developing States, including the land-locked and geographically
disadvantaged among them.
- The Governing Board may adopt rules determining the special
circumstances in which the requirement of invitations to bid may, in
the best interests of the Enterprise, be dispensed with.
5. The Enterprise shall sell its products on a non-discriminatory basis. It
shall not give non-commercial discounts.
6. Without prejudice to any general or special power conferred on the
Enterprise under any other provision of this Convention, the Enterprise
shall exercise such powers incidental to its business as shall be
7. The Enterprise shall not interfere in the political affairs of any State
Party; nor shall it be influenced in its decisions by the political
character of the State Party concerned. Only commercial considerations
shall be relevant to its decisions, and these considerations shall be
weighed impartially in order to carry out the purposes specified in article
1 of this Annex.
1. To enable the Enterprise to exercise its functions, the status,
privileges and immunities set forth in this article shall be accorded to
the Enterprise in the territories of States Parties. To give effect to this
principle the Enterprise and States Parties may, where necessary, enter
into special agreements.
Legal status, privileges and immunities
2. The Enterprise shall have such legal capacity as is necessary for the
exercise of its functions and the fulfilment of its purposes and, in
particular, the capacity:
- to enter into contracts, joint arrangements or other arrangements,
including agreements with States and international organizations;
- to acquire, lease, hold and dispose of immovable and movable
- to be a party to legal proceedings.
- Actions may be brought against the Enterprise only in a court of
competent jurisdiction in the territory of a State Party in which the
- has an office or facility;
- has appointed an agent for the purpose of accepting service or
notice of process;
- has entered into a contract for goods or services;
- has issued securities; or
- is otherwise engaged in commercial activity.
- The property and assets of the Enterprise, wherever located and by
whomsoever held, shall be immune from all forms of seizure,
attachment or execution before the delivery of final judgment against
5. The Enterprise shall negotiate with the host countries in which its
offices and facilities are located for exemption from direct and indirect
- The property and assets of the Enterprise, wherever located and
by whomsoever held, shall be immune from requisition, confiscation,
expropriation or any other form of seizure by executive or
- The property and assets of the Enterprise, wherever located and by
whomsoever held, shall be free from discriminatory restrictions,
regulations, controls and moratoria of any nature.
- The Enterprise and its employees shall respect local laws and
regulations in any State or territory in which the Enterprise or its
employees may do business or otherwise act.
- States Parties shall ensure that the Enterprise enjoys all rights,
privileges and immunities accorded by them to entities conducting
commercial activities in their territories. These rights, privileges
and immunities shall be accorded to the Enterprise on no less
favourable a basis than that on which they are accorded to entities
engaged in similar commercial activities. If special privileges are
provided by States Parties for developing States or their commercial
entities, the Enterprise shall enjoy those privileges on a similarly
- States Parties may provide special incentives, rights, privileges and
immunities to the Enterprise without the obligation to provide such
incentives, rights, privileges and immunities to other commercial
6. Each State Party shall take such action as is necessary for giving
effect in terms of its own law to the principles set forth in this Annex
and shall inform the Enterprise of the specific action which it has taken.
7. The Enterprise may waive any of the privileges and immunities conferred
under this article or in the special agreements referred to in paragraph 1
to such extent and upon such conditions as it may determine.
Convention on the Law of the Sea: Index