May 09, 2012 Articles

Reemergence of the Falkland Islands Territorial Dispute

The centuries-old controversy intensifies over the rights to oil exploration.

By M. Imad Khan – May 9, 2012

Sovereignty over the Falkland Islands has historically been a point of contention involving many states. But while most have abandoned their claims, the Argentine Republic and the United Kingdom of Great Britain and Northern Ireland continue to assert their respective sovereignty. The dispute between Argentina and the United Kingdom began in 1833, when the British returned and reclaimed the Falklands from Argentina. Recently, this dispute has evolved to encompass each state’s interest in obtaining control of the Falklands’ natural resources, particularly in developing oil and gas around the islands. Sylvia Pfeifer, Exploring for Oil in Falklands Threatens to Open Old Wounds, Financial Times, Dec. 22, 2011.

While conservative estimates suggest a viable recovery of 3.5 billion barrels of oil, the British Geological Society has suggested that 60 billion barrels are recoverable from the islands’ exclusive economic zone. Consequently, British companies have commenced exploration and appraisal operations that have “outraged” Argentina, which has accused the United Kingdom of stealing its resources. Brian SwintOil Grab in Falkland Islands Seen Tripling U.K. Reserves, Jan. 20, 2012, Bloomberg Businessweek. Recent escalations in the region indicate the significance of the sovereignty dispute for energy companies deciding to invest in the Falklands. The United Kingdom has posted Prince William to the islands, along with its most advanced nuclear-missile warship. Martin Walker, The Falklands Again, United Press International, Feb. 13, 2012. Argentina has taken its protest of the British oil campaign to the United Nations, citing British militarization in the region. Argentina Takes Falkland Islands Protest to UN, The Guardian, Feb. 10, 2012. And the United States, whose companies are investing in the Falklands, has endorsed British sovereignty over the islands. Steve Hawkes, US firm's £1bn for Falklands Oil, The Sun, Jan. 22, 2012.

For companies pursuing oil exploration and drilling in the region, these events jeopardize not only geopolitical stability, but also millions in investments.


History of the Falkland Islands Dispute
Although the Americas were first discovered by the Europeans in 1492, the Falklands were not discovered until the following century. Some claim that England discovered the islands in 1592; others suggest that either Spain or France discovered them earlier. Ian Strange, The Falkland Islands 25 (1972); Julius Goebel, The Struggle for the Falkland Islands: A Study in Legal and Diplomatic History 1–34 (1927). While there is disagreement as to which state discovered the islands, it is well established that France settled on East Falkland in 1764, although Spain protested the settlement and subsequently purchased the Falklands from France in 1767. J.C.J. Metford, Falklands or Malvina? The Background to the Dispute, 44 Int’l Aff. 463, 467 (1968).

In 1765, a year after the French settlement, the United Kingdom claimed the islands and established a settlement on West Falkland. Rupert Glover, International Law in the Falkland Islands, 1982 New Zealand L. J. 191 (1982). The British too were ousted by Spain by 1774, but not before leaving behind a plaque reiterating British rights. The islands then became part of the Spanish Viceroyalty of the Río de la Plata until Argentina gained independence in 1816 and proclaimed, in 1820, that it had succeeded to all the rights of Spain over the Falklands. The United Kingdom protested this proclamation in 1829 and seized control in 1833. Goebel, supra at 433–456. In 1982, Argentina unsuccessfully attempted to recapture the Falklands. Since then, the United Kingdom has exercised sovereignty over the Falklands, which is currently designated a non-self-governing territory since 1946 under the U.N. Charter.

Claiming the Falklands: International Legal Principles
Territorial sovereignty encompasses the right of states to govern their territory without any interference from other states. Defining territorial boundaries is important because states govern the rights to develop natural resources within their boundaries. International law provides 12 theoretical modes through which a state may acquire or lose territory; the relevant ones in the case of the Falklands include (a) discovery, (b) occupation, (c) cession and succession, and (d) acquisitive prescription. For each of these modes, international law in force at the time the dispute arose will determine whether Argentina or the United Kingdom owns the Falklands. Island of Palmas (U.S. v. Neth.), 2 Rep. Int’l Arb. Awards 829 (1928).

In the Seventeenth and Eighteenth centuries, finding new territory alone was insufficient to establish title. Island of Palmassupra at 845–46. Rather, to acquire title through discovery, states had to make symbolic gestures (declarations, geographical notes, construction of crosses and plaques, etc.) to generate inchoate title, which needed to be perfected “by an actual and durable taking of possession within a reasonable time.” Id. at 845; Arthur Keller et al., Creation of Rights of Sovereignty through Symbolic Acts: 1400–1800 148–49 (1938).

To establish sovereignty by discovery, Argentina would have to demonstrate that Spain, its predecessor, perfected title or purchased perfected title from France. However, there is no historical evidence proving that either Spain or France discovered the Falklands, symbolically annexed them to obtain inchoate title, and perfected that title within a reasonable time. The first evidence of “possession” is the 1764 French settlement on East Falkland. Because the Falklands were discovered in 1592 or earlier, any inchoate title lapsed before France settled on the Falklands. The same is true for the United Kingdom. Consequently, discovery does not resolve the legal status of the Falklands.

Occupation is the appropriation of a territory that is not subject to the sovereignty of another state. Robert Jennings, The Acquisition of Territory in International Law 20 (1963). Sovereignty claims based on occupation require (1) evidence of a state’s intention and will to act as a sovereign, and (2) exercise of authority that is peaceful, actual, continuous, and sufficient to confer valid title. Legal Status of Eastern Greenland (Nor. v. Den.), 1933 P.C.I.J. (ser. A/B) No. 53, 45–46 (Apr. 5); Humphrey Waldock, Disputed Sovereignty in the Falkland Islands Dependencies, 25 Brit. Y.B. Int’l L. 311, 334–35 (1948). Because occupation must be peaceful to acquire title, it cannot occur if a state usurps another state’s sovereignty. In other words, only uninhabited areas can be occupied.

France first settled on East Falkland in 1764, and the United Kingdom claimed the islands a year later. Arguably, the French satisfied the two elements of occupation and acquired title over the Falklands in 1764. France displayed the intent and will to act as sovereign over the islands and exercised its sovereignty by establishing a settlement and administering the islands. But because Spain contested French authority over the islands and later purchased the islands, French sovereignty over the Falklands may not be continuous. Nevertheless, France would have better title than the United Kingdom under the occupation principle.

The United Kingdom’s argument is weaker because the Falklands were not uninhabited territory subject to acquisition through occupation. By establishing a settlement in West Falkland, the United Kingdom arguably usurped French sovereignty. Additionally, the United Kingdom’s reign over the islands was not continuous; it was ousted by Spain in 1774 and thus could not have displayed sovereign authority sufficient to obtain valid title.

Cession and Succession
Cession is the formal transfer of title to territory from one state to another, usually in the form of a treaty of sale or territorial exchanges. Peter Malanczuk, Akehurst’s Modern Introduction to International Law 148 (1997). Defects in the ceded territory’s title remain with the successor state because the transferor may not transfer more rights than it possesses. Island of Palmassupra at 842. Here, cession is relevant due to the transfer of the Falklands from France to Spain. France arguably obtained valid title through occupation and ceded the islands to Spain in 1767, transferring all its rights. Spain never formally ceded the islands to Argentina—there is no treaty transferring the Falklands from Spain to Argentina—but Argentina may have succeeded to Spain’s interest when it gained its independence.

Whether Argentina succeeded to Spain’s interest depends on the principle of uti possidetis juris, under which colonial boundaries are maintained when post-colonial states are created after gaining independence. Tomás Bartos, Uti Possidetis. Quo Vadis?, 18 Aust. Y.B. Int’l L. 37, 39 (1997); Land, Island and Maritime Frontier Dispute (El Sal. v. Hond.), 1992 I.C.J. 351, ¶41 (Sept. 11). This practice has frequently been applied to determine the boundary of post-colonial states on the basis of territory that came under their control to the exclusion of the colonizing state. Steven Ratner, Drawing a Better Line: Uti Possidetis and the Borders of New States, 90 Am. J. Int’l L. 590 (1996).

Argentina has a strong argument to claim that all territory that was administered as part of the Viceroyalty of the Río de la Plata under Spanish control—which included the Falklands—became part of Argentina when it gained independence in 1816. Although Argentina did not claim title to or administer the islands until 1820, there was no requirement to take control to the exclusion of the United Kingdom because it was never the colonizing state. Rather, Argentina was required to take control of the territory that previously formed Spain’s colony in South America. Because Argentina took such control before the United Kingdom returned to claim the Falklands, Argentina has a valid argument that it succeeded to Spain’s rights over the Falklands as of 1820.

Acquisitive Prescription
Although Argentina may claim sovereignty under its succession theory, its claim would likely fail against acquisitive prescription. Under acquisitive prescription, title is established when one state adversely possesses territory of another, thereby extinguishing that state’s title. D. O’Connell, International Law 422 (1970). Acquiring title under this principle requires: (1) exercise of possession without recognizing another state’s sovereignty over the territory, (2) peaceful and uninterrupted possession, (3) publicly displayed possession, and (4) lasting possession. D.H.N. Johnson, Acquisitive Prescription in International Law, 27 Brit. Y.B. Int’l L. 332, 333–35, 347 (1950). The United Kingdom’s possession of the Falklands since its return in 1833 satisfies these conditions. It has defended the Falklands against Argentine claims and possessed them publicly and peacefully for over 150 years, an adequate time period according to Boundary between British Guiana and Venezuela, 89 B.F.S.P. 57, 60 (Oct. 3, 1899).

Additionally, Argentina may have acquiesced to the United Kingdom’s adverse possession of the Falklands because where state action should prompt a response—such as occupying a disputed territory—failure to respond may be considered acquiescence. Ian Brownlie, Principles of Public International Law 151 (6th ed. 2003); Eritrea-Yemen Arbitration,Phase I Award, ¶152 (Perm. Ct. Arb. 1998); Sovereignty over Pedra Branca (Malay. v. Sing.), 2008 I.C.J. 130, 75 (May 23). Argentina may argue that it responded with consistent diplomatic protests, and some scholars argue that any conduct indicating lack of acquiescence removes from possession its peaceful and uninterrupted status. Oppenheim’s International Law 706–07 (Robert Jennings & Arthur Watts eds., 9th ed. 1992). However, the majority rule is that mere protests do not suffice indefinitely; they become useless without further efforts to arbitrate the dispute. Johnson, supra 342; Chamizal Arbitration (U.S. v. Mex.)in 5 Am. J. Int’l L. 782, 806–07 (1911). Argentina’s diplomatic protests over around 150 years—until 1982 when Argentina’s military invaded the Falklands—is likely insufficient to disrupt British possession. Therefore, while certain modes of acquiring territory are slightly more favorable for Argentina, acquisitive prescription provides the United Kingdom with a robust claim over the islands.

The Role of Self-Determination in Resolving the Dispute
Under international law, the right to self-determination does not form a mode of acquiring or losing title to territory. Nevertheless, it is an important factor in the dispute between Argentina and the United Kingdom because the Falklands constitute a non-self-governing territory. Although inhabitants of non-self-governing territories were intended to exercise self-determination, it is unclear whether the Falkland Islanders possess such a right. The United Kingdom supports this right because the Islanders’ decision will buttress the United Kingdom’s sovereignty claim.

Generally, every state must promote the right to self-determination, which gives a “people” the right to freely determine its political status. Declaration on Principles of International Law Concerning Friendly Relations and Co-Operation Among States, G.A. Res. 2625, at 123, U.N. Doc. A/8028 (1970). Independence is the prescribed mode of implementing self-determination rights. Declaration on the Granting of Independence to Colonial Countries and Peoples, G.A. Res. 1514, at 66, U.N. Doc. A/4684 (1960); Western Sahara, Advisory Opinion, 1975 I.C.J. 12, 32 (Oct. 16). However, a “people” may choose association or integration with an independent state. Declaration on Friendly Relations, supra at 123–24.

The Islanders’ right to exercise self-determination does not depend on the resolution of the territorial dispute between Argentina and the United Kingdom. See James Fawcett, General Course on Public International Law, 132 Recueil des Cours 365, 388 (1971); Henry Richardson, Self-Determination, International Law and the South African Bantustan Policy, 17 Colum. J. Transnat’l L. 185, 190 (1978). Rather, it hinges on whether the inhabitants are considered a “people” so as to trigger the right to exercise self-determination. Although there is no agreed definition of a “people” under international law, proposed definitions include populations of sufficient size, ethnicity, with historic ties to a territory, and an identifiable and unique cultural tradition. Michla Pomerance, Self-Determination in Law and Practice 18–22 (1982); Robert Friedlander, Proposed Criteria for Testing the Validity of Self-Determination as It Applies to Disaffected Minorities, 25 Chitty’s L.J. 335, 336 (1977). The U.N. Special Rapporteur on the right to self-determination found that two core elements of a “people” had emerged: (1) a population with a clear identity and unique characteristics, and (2) a relationship with a territory. Aureliu Cristescu, The Right to Self-Determination: Historical and Current Development on the Basis of United Nations Instruments ¶¶269–79, U.N. Doc. E/CN.4/Sub.2/404/Rev.1 (1981). Facially, the Islanders do not satisfy these conditions: the Islanders share a cultural heritage with the United Kingdom—English is the official language, 70 percent of the Islanders are of British decent, and affiliation with the Church of England is prominent—but the Falklands are geographically distinct from the United Kingdom. Additionally, because the Islanders are descendents of settlers instead of indigenous people subjugated under colonial rule, self-determination may not apply. The right to self-determination has been limited to situations where people are subjected “to alien subjugation, domination and exploitation.” Declaration on Friendly Relations, supra at 124; Garth Nettheim, ‘Peoples’ and ‘Populations’: Indigenous Peoples and the Rights of Peoplesin The Rights of Peoples 119–20 (James Crawford ed., 1988). It is unlikely that the British governance of the Islands qualifies as subjugation, domination, or exploitation under international law.

While defining the Islanders as a “people” able to exercise self-determination poses a challenge to the United Kingdom’s interest, Argentina’s interest in preventing self-determination is not without challenges. Argentina claims that exercising self-determination would damage its territorial integrity and dismember its territory into smaller units. This argument alone, however, is unlikely to prevent the Islanders from exercising self-determination because (1) questions remain regarding Argentina’s title to the Falklands, and (2) the United Nations has allowed self-determination to prevail over territorial integrity when it finds “a strong feeling” among the inhabitants that “separate personalities [of territories] should be respected,” as is the case here. Question of the Future of Rwanda-Urundi, G.A. Res. 1579, at 34, U.N. Doc. A/4684 (1960). Still, the Islanders will be faced with the issue of defining themselves as a “people,” which both complicates and does little to resolve the territorial dispute between Argentina and the United Kingdom.

Resolving the Territorial Dispute: Available Avenues?
Oil and gas companies investing in the Falklands pursuant to contracts with the British government must recognize the risks of investing in disputed territory, even where the legal arguments favor the United Kingdom over Argentina. Although the United States has suggested the states should maintain the status quo, resolving the territorial dispute is in the best interest of both states, especially in light of recent interest in the Falklands’ natural resources. Argentina has fervently maintained its claims over the islands after British companies began investigating natural resources around the islands, while the United Kingdom has signaled it will protect its investment in and sovereignty over the islands by deploying Royal Air Force and royal family member Prince William to the Falklands. These events suggest that the situation will only worsen once oil and gas is produced from around the islands. Resolving this territorial dispute through diplomatic channels as soon as practicable, therefore, is the best option.

Although the International Court of Justice (ICJ) has been adjudicating territorial disputes for decades, it lacks jurisdiction over the U.K.-Argentine dispute. Argentina has not recognized the court’s compulsory jurisdiction, and thus, it may not bring a claim before the ICJ against the United Kingdom; likewise, the United Kingdom cannot force adjudication before the ICJ. Moreover, these states are not parties to any treaties under which territorial-sovereignty claims could be submitted to the ICJ. If the ICJ is to resolve the issue, either (a) both parties would have to submit the dispute to the court; or (b) the United Nations would need to submit a request for an advisory opinion on the matter, which is non-binding. This means, essentially, that the states will either have to resolve their dispute through diplomatic means or jointly submit this matter to an international judicial body.

U.N. Secretary-General Ban Ki-moon has urged the two countries to enter into settlement talks, which Argentina has accepted, but the United Kingdom has not. Considering that energy companies are continuing to invest in the Falklands on the authority of the British government, it would be beneficial for the United Kingdom to enter into settlement discussions for long-term stability within the region. Until the two states resolve their dispute, companies developing oil and gas around the islands will continue to face the risks (or at least account for the dispute in their risk analyses) associated with investing in the disputed territory.

Keywords: litigation, energy litigation, United Kingdom, Argentina, oil exploration

M. Imad Khan is an associate at Vinson & Elkins LLP in Houston, Texas.

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