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right or obligation directly related to the exercise of permanent sovereignty over natural resources. For the purposes of this work, the rights and obligations in question have been organised into five separate thematic areas: management of natural resources; development of the country and prosperity of nations; environmental protection; international cooperation; and investment protection.

3.1 The management of natural resources

3.1.1 The right to freely dispose of natural resources

The sovereign right of a state to freely dispose of wealth and natural resources within the limits of national jurisdiction is clearly highlighted in virtually all resolutions regarding permanent sovereignty.¹³⁴ It is closely related to the principle that every state has the right to adopt a social and economic system it considers to be most beneficial for its development.¹³⁵ This right is also expressed in the International Covenant on Civil and Political Rights (ICCPR)¹³⁶ and the International Covenant on Economic, Social and Cultural Rights (ICESCR),¹³⁷ as well as the African Charter on Human and Peoples’ Rights (ACHPR).¹³⁸ A similar regulation is included in the Convention on Biological Diversity.¹³⁹ The Energy Charter Treaty recognizes the sovereignty of the state and sovereign rights to energy resources and provides that it in no way violates the regulations of the Contracting Parties that regulate the system of ownership of energy resources. The Treaty stipulates that each state retains the right to decide which geographic areas within its territory are to be made available for exploration and development of energy resources.¹⁴⁰

The right to freely dispose of natural resources is also recognized in the decisions of arbitration courts. In the Liamco ruling (1977)¹⁴¹ a similar view was expressed. The Tribunal noted that Resolution 1803 (XVII)¹⁴² recommends respect for the sovereign right of the state to dispose of its property and natural resources and stated that resolutions, even if they are not unanimous sources of law, are proof of the dominant trend of international opinion regarding the sovereign right of states to their natural resources. In the Aminoil (1982) ruling, it was also noted that many constitutions foresee that all natural resources are state-owned.¹⁴³

The Texaco judgment (1977) indicates, however, that territorial sovereignty grants the state exclusive competence to freely organize the economic structure of its territory and to introduce reforms that may seem desirable. Choosing and freely shaping the economic and social system is a significant privilege of sovereignty for the constitutionally authorized state organs. International law grants this privilege to the state, as well as the privilege of freely defining its political regime and its constitutional bodies.¹⁴⁴ The Texaco ruling clearly indicates that the right of states to dispose of their natural resources includes the right to exercise sovereignty by undertaking international obligations towards other states and non-state actors.¹⁴⁵ The sole arbitrator J. Dupuy introduced a distinction between “enjoyment” and the “exercise” of sovereignty. In his opinion, the concept of permanent sovereignty can be completely reconciled with the situation where a state concludes a contract that leaves the control of the other party to the contract in its territory under state control. Otherwise, each contract concluded between the state and a private foreign entity would be contrary to ius cogens regarding the exploitation of natural resources. Therefore, the concession agreement does not constitute a transfer of sovereignty, but only its limitation: the state retains, in reserved areas, the power over the operations carried out by the concessionaire, and the continuation of the exercise of sovereignty is manifested, for example, by the obligations imposed on it.¹⁴⁶

The state therefore has considerable freedom in managing its natural resources and can assume obligations with respect to the exercise of its sovereignty by voluntary arrangements, provided that they do not transfer its sovereign entitlement to a private entity. The question then arises, where the discretion of the state reaches its limits, with allegedly “inalienable” and “permanent” character of sovereignty. As indicated by the ILA in the Seoul Declaration, permanent sovereignty is not transferable. However, the state may accept obligations with respect to the exercise of such sovereignty by way of a freely concluded contract.¹⁴⁷ It follows that in each particular case, verification should be made as to whether the act actually infringes state sovereignty over its natural resources.¹⁴⁸

3.1.2 The right to free exploration and exploitation of natural resources

States have the right to freely use and exploit natural resources and exercise effective control over them, and to decide how their natural resources should be used.¹⁴⁹ These rights were originally formulated by developing countries with a view to ensuring effective control of their natural resources and maximizing the benefits resulting from their exploitation, and expressed in the Continental Shelf Convention.¹⁵⁰ It provides that the coastal state exercises sovereign rights on the continental shelf to explore and exploit its natural resources. These rights are also exclusive in the sense that if a coastal state does not carry out research on the continental shelf or exploit its natural resources, no one can take such action, nor claim it on the continental shelf, without the express consent of the coastal state.¹⁵¹ This regulation has been repeated in the UN Convention on the Law of the Sea (UNCLOS),¹⁵² which also states that in the exclusive economic zone the coastal state has sovereign rights to explore, exploit, protect, and rationally use natural resources, both living and non-living, waters covering the seabed, as well as the seabed and its subsoil, and for other activities related to the economic exploration and exploitation of the zone, such as energy production through the use of water, currents, and winds.¹⁵³

Both the International Covenant on Civil and Political Rights, as well as the International Covenant on Economic, Social and Cultural Rights, formulate the inalienable right of nations to enjoy fully and freely their wealth and natural resources.¹⁵⁴ The parties to the Treaty for Amazonian Cooperation also declare that the exclusive right to use and exploit natural resources in their territories is a right which is an integral element of the sovereignty of each state.¹⁵⁵ In the subsequently signed Amazonian Declaration, the presidents of the states-parties to the Treaty for Amazonian Cooperation confirmed the sovereign right of each state to freely manage its natural resources.¹⁵⁶

The

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