Lopsided deal: Legal analysis raises concerns over Tonga's deep-sea mining agreement

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By Ron Rocky Coloma

When Pacific leaders gather to discuss the future of deep-sea mining, the

conversation often centers on economic opportunity. For Tonga, that

promise has come with a complicated legal trade-off now drawing scrutiny

across the region.

A recent legal analysis by the Pacific Network on Globalization, or PANG,

raises questions about a sponsorship agreement between Tonga and Tonga

Offshore Mining Ltd. The report suggests the deal may grant sweeping

protections to the investor while limiting Tonga’s ability to regulate its own

resources.

“It is not possible to select just one provision, as the package of rights, plus

jurisdiction, enforcement and termination, cumulatively create a deeply

problematic agreement,” said Adam Wolfenden, PANG’s deputy coordinator.

“The additional provision that requires Tonga to do all things reasonably

necessary to give effect to TOML having the full benefit of the agreement

is the broadest, most uncertain and most unpredictable.”

The agreement comes at a time when Pacific island countries are weighing the

potential benefits of deep-sea mining against environmental risks and evolving international rules. Discussions are ongoing at the International Seabed Authority, which is still developing a regulatory framework for the

industry.

One of the most significant concerns raised in the analysis involves the location

for dispute resolution. Under the agreement, legal challenges would be heard in Singapore under the U.N. Commission on International Trade Law.

“By moving disputes, Tonga’s legal sovereignty is affected because it removes the final authority of Tongan courts to interpret and decide disputes arising

from the agreement,” Wolfenden said. “It also weakens domestic accountability because arbitration processes tend to be more private than court proceedings, which limits public access.”

The agreement also limits the application of domestic law. Wolfenden noted that Tongan law may be set aside if it conflicts with the company’s rights under

the contract, except for the Seabed Minerals Act as it existed at the time of signing. Future amendments that could affect the company’s interests may be restricted.

Arbitration proceedings under international law are generally less public than

domestic court cases, which could limit oversight by both the public and

lawmakers. “There is no accountability for government to its people or

parliament,” Wolfenden said. “That includes what arguments are made, any

settlements reached and the fiscal commitment of taxpayer funds as

damages.”

The analysis places the agreement within a broader global context,

describing it as similar to older investment treaties that prioritize investor

protections.

“Investors bring most disputes under old bilateral investment treaties because that is easiest,” Wolfenden said. “But statistics from (U.N. Trade and Development) show that disputes under old and new agreements are increasing

in number and scope, especially on natural resources and extraction.”

He added that some countries, such as New Zealand and Australia, have dropped

investor-state dispute settlement mechanisms in newer agreements, signaling ongoing concerns about the system.

Those mechanisms allow investors to bring claims against governments in

international tribunals. According to Wolfenden, the financial stakes in such

cases can be significant.

“About 60 percent of all (investor-state dispute settlement) cases involved damages claims of $100 million and higher, including cases where investors

sought more than $1 billion,” Wolfenden said. “The past decade shows a shift toward higher damages claims and awards.”

Central to the agreement is a clause requiring “fair and equitable treatment"

of the investor. Wolfenden said the wording could limit Tonga’s ability to

adapt its laws over time.

“This requires a stable and predictable legal framework, meaning laws,

regulations, policies and even judicial interpretations do not change from

the time of the original agreement,” he said. “It also requires alignment

with the investor’s legitimate expectations, which can be based on formal

or informal statements by officials.”

Wolfenden said the effect is to lock in the regulatory environment at the

time the agreement is signed, regardless of future developments.

Another provision highlighted in the report relates to the concept of “full

protection and security.” Wolfenden said the clause could be interpreted

broadly, potentially affecting how governments respond to protests or legal

challenges.

“The legal protection provisions requiring the blocking of legal action are

in direct conflict with the right to dissent,” he said, adding that such provisions could have a chilling effect on both public participation and government

decision-making.

“Chill can come from direct threats by the investor, self-censorship by officials or reference to disputes in other countries,” he said. “This is especially likely in areas like critical minerals, where risks are still being understood.”

Supporters of deep-sea mining have pointed to its potential to generate revenue

and support economic development. But the analysis emphasizes the need for caution, particularly given the limited scientific understanding of deep-sea ecosystems.

“In situations where risks are not known, a precautionary approach is

essential because harms to ecosystems and fisheries cannot be undone,”

Wolfenden said. “Governments taking short-term approaches to secure

revenue will have to deal with those longer-term consequences.”

Civil society groups in Tonga have echoed those concerns. Latai Halafihi of the

Civil Society Forum of Tonga warned that moving too quickly could expose the

country to legal and environmental risks.

“Tonga must not be rushed into deep-sea mining at the expense of our sovereignty, environment and future generations,” Halafihi said.

Rev. Ikani Tolu of the Tonga National Council of Churches also called

for a cautious approach, citing knowledge gaps and potential long-term

impacts.

“No doubt deep-sea mining poses significant, largely irreversible ecological

risk and socio-economic uncertainties for Tonga,” he said.

Looking ahead, Wolfenden said Pacific nations should take a more cautious

and locally grounded approach when entering similar agreements. “Pacific

nations have the right to determine their own safeguards and regulatory

approach, grounded in Pacific values rather than those imposed by external

forces,” he said.

He recommended measures such as ensuring free, prior and informed consent

from affected communities, improving transparency in negotiations and conducting independent environmental and scientific assessments before approval.

Wolfenden also noted that many countries in the region support a pause on

deep-sea mining until more is known and clearer international regulations

are in place.

“Governments are seeing the risk of deep-sea mining and want to ensure

that clear regulatory frameworks are established before even considering if

it should proceed,” he said.