Saturday, October 17, 2009

Bangladesh Braces for War!


Tensions in a simmering dispute over drilling rights in the Bay of Bengal were stoked last week after lawyers from Foley Hoag filed two international arbitration claims on behalf of Bangladesh against neighboring Burma and India. After Bangladesh brought in its legal guns, the real guns started to come out.

At issue between the three countries, each of which border the world's largest bay, are competing claims to exclusive zones thought to contain huge deposits of oil and natural gas. Bangladesh's claims to the strategic energy reserves have raised the ire of its neighbors, particularly Burma. In response, Burma began moving troops along the 200-mile border between the two Southeast Asian nations.

According to Foley Hoag partner Paul Reichler--whose international exploits have been covered before in this space (click here, here, and here)--the arbitration claim was meant to avoid violence, not cause it.

"The buildup by the Burmese armed forces actually began before the notice of arbitration was served," he says. "But it certainly seems to have intensified since then and hopefully they won't be a precursor to any unfortunate incidents."

Foley Hoag began advising Bangladesh in March, Reichler says. The three countries conducted negotiations over the next few months to try and resolve their differences, but the talks eventually broke down. On October 8, Bangladesh sent complaint letters to India and Burma indicating its intent to sue to protect its maritime boundary.

Reichler, who two years ago scored a big win for Guyana in a similar dispute with Suriname (represented by lawyers from Cravath, Swaine & Moore), says that maritime boundary disputes are on the rise. The reason: advances in technology and new drilling techniques have made tapping offshore energy reserves more economically feasible.

The United Nations Convention on the Law of the Sea, which Bangladesh's arbitration was brought under, allows countries to claim an exclusive zone up to 200 miles offshore. Countries can also lay claim to additional undersea territory if it's part of a continuous continental shelf that extends from the shoreline.

But Reichler says the Bay of Bengal complicates traditional definitions of maritime boundaries. Several major rivers feed into the bay--the Ganges River Delta in Bangladesh is the largest of its kind on earth--and sediment from runoff causes the continental shelf to extend far offshore into areas claimed by Bangladesh, Burma, and India.

With the Bay of Bengal only being roughly 400 miles across, Reichler says that the claims by the three countries to territorial waters converge at various places, thus leading to the underlying dispute.

Reichler says the disputed claims have made it almost impossible for foreign oil companies to drill in the area, a tremendous setback to a developing country like Bangladesh that could use both the revenue and energy produced from such drilling.

Burma and India have 30 days to respond to Bangladesh's arbitration claim by nominating their own arbitrators, Reichler says, adding that he has yet to hear from lawyers for either country. If the countries agree to arbitration, parties will have another 30 days to nominate three mutually agreed upon arbitrators for a panel of five. (Banglandesh has nominated noted international law specialist Vaughan Lowe from Oxford.)

Foley Hoag partners Andrew Loewenstein and Lawrence Martin are assisting Reichler in the arbitration along with international law and arbitration experts James Crawford from Cambridge and Payam Akhavan from McGill.

Reichler says he's not worried that Burma, considered a pariah state by the West, won't participate in arbitration proceedings. (While the military junta that runs Burma changed the country's name to Myanmar 20 years ago, the U.S. and some other Western countries that have imposed sanctions against the regime haven't formally recognized the change.)

"If they don't take part in the process, it will go on without them," he says. "So it's in their best interest to do so, unless they want their prospects for an international boundary acceptable to them to be lowered."

The president of the International Tribunal for the Law of the Sea, which sits in Hamburg, will appoint an arbitrator for Burma should it choose not to participate. A copy of Bangladesh's arbitration claim was not yet publicly available out of concern that parties in Burma might not have received notice.