Connecting the dots: International arbitration and submarine cables

Fishing activity, anchor drag, and natural hazards can interfere with submarine cable integrity with potentially significant impacts. Increasingly, geopolitical and other international developments have underscored that the dual character of submarine cables exposes them and their stakeholders to considerable risks connected with intentional damage to cables.  

This article focuses on public-private partnerships (PPPs), broadly construed, which are increasingly mooted as a means of addressing the challenges facing those who manage, maintain, and rely on submarine cables for data transmission.  In a PPP, States can contribute land rights, permits, and policy and regulatory stability and the private sector can harness and share technical expertise, and access finance.  

This article begins by outlining some of the key commercial arrangements and legal rules which govern submarine cable projects. It goes on to discuss how international arbitration could help stakeholders mitigate associated risks.

 More generally, the importance of PPPs for submarine cable projects as a means to help deal with contemporary challenges has been emphasised by both commentators and States. A January 2025 statement released on behalf of the US and the eight Nordic-Baltic States noted that they had discussed identifying "opportunities for [PPPs] to improve repair and maintenance fleet capacity, including through security of supply chain mechanisms, consortium investment and development funding mechanisms".⁶

Applicable legal framework for use of the ocean

Leaving aside the web of contractual relationships, PPP models have been adopted for submarine cable projects in the context of a complex applicable legal framework. Submarine cables can run through a diverse set of geographic zones, meaning that the legal rules at play can vary depending on the precise section of a given cable in question. In particular, where submarine cables pass through international waters, they cannot solely be governed by national legislation. The suitability of the current international legal regime to address the myriad of challenges that States and other stakeholders currently face in relation to all aspects of submarine cables, is the subject of an ongoing study by the International Law Association Committee on Submarine Cables and Pipelines under International Law.⁷

A key touchstone is the UN Convention on the Law of the Sea (UNCLOS). Adopted in 1982, UNCLOS sets out a regime governing all uses of the oceans and their resources. UNCLOS has 170 States Parties, and many of its provisions have been recognised as reflecting customary international law.

UNCLOS distinguishes between a coastal State's territorial sea (a zone up to 12 nautical miles from the coastal baseline), where the coastal State has sovereignty, and the continental shelf beyond that.⁸ By default, each State is entitled to a continental shelf extending up to 200 nautical miles from the coastal baseline, which may extend further if a "natural prolongation of its land territory" can be identified.⁹ UNCLOS provides all States with a general freedom to lay submarine cables on the continental shelf, subject to, amongst other things, the right of coastal States to take "reasonable measures" for continental shelf exploration and natural resource exploitation.¹⁰ A similar general freedom is accorded to States for the laying of submarine cables on the bed of the high seas beyond the continental shelf.¹¹

While these freedoms have supported the expansion of global submarine cable networks, certain commentators have suggested that the UNCLOS regime does not sufficiently equip States to protect submarine cables against intentional and unintentional damage.

Coastal States do not have sovereignty over maritime zones beyond their territorial seas. The sea above a coastal State's 200 nautical mile continental shelf will fall within that State's Exclusive Economic Zone (EEZ). Articles 56(1)(a)-(b) of UNCLOS only recognise the "sovereign rights" of coastal States connected with the exploration, exploitation, conservation and management of natural resources and other economic activities in the EEZ, as well as jurisdiction for limited purposes such as the protection of the marine environment.

States' enforcement powers are further attenuated in the high seas beyond EEZs. Article 92(1) of UNCLOS exclusively accords the flag State with jurisdiction over ships flying its flag on the high seas, "save in exceptional cases expressly provided for in international treaties or in this Convention".

Indeed, UNCLOS enshrines the right of all States to freedom of navigation through both EEZs and in the high seas.¹² This is subject to certain obligations, but UNCLOS lacks express provisions like those of the 1884 Convention for the Protection of Submarine Telegraph Cables,¹³ which permit warships to demand official proof of a vessel's nationality where there is "reason to believe" that it damaged a submarine cable wilfully or through culpable negligence in a manner which might disrupt communications. UNCLOS includes the obligation to render such conduct a punishable offence, but this is directed at ensuring States regulate ships flying their flag or persons already subject to their jurisdiction.¹⁴

So far as addressing attacks on submarine cables and other submarine infrastructure, it has recently been argued that these could be framed as piracy, as defined in Article 101 of UNCLOS, in order that "attacks on subsea cables and pipelines could qualify as acts of piracy, allowing all states to board, search, and seize vessels engaged in or suspected of such attacks, as well as apprehend and prosecute those responsible".¹⁵ Others have suggested cable protection zones,¹⁶ development of a specific treaty to address perceived gaps in the legal regime, expansion of the powers of coastal States in the EEZ, or granting universal jurisdiction over assertions of intentional sabotage.

Given the importance of submarine cables to global communications, implicating economies worldwide as well as defence and security, it is expected that there will be further development in this area. 

Addressing questions of risk allocation – in development and afterwards

A number of risk allocation questions arise in a PPP submarine cable transaction – contractual arrangements must be clear, with appropriate dispute resolution provisions. The State involved in the project must set out a suitable regulatory environment – one which encourages private sector investment and rewards innovation, and that is sustainable over the long term. The most significant risk borne by the private partner concerns completion of the works on time and on budget, particularly if there is difficult terrain onshore and offshore, and where specialist vessels (of which there are a limited number globally) and equipment have to be available in suitable weather conditions and within specific laying windows (including by reference to environmental circumstances, such as the migration of certain wildlife).

Submarine cables are designed to be resilient but once the cable is laid, it is then vulnerable to accidental and deliberate interference. It may be possible for stakeholders to rely on commitments made by a State supporting the project to assist in maintaining its security. The ability of a State to make such commitments would be subject to the limitations imposed by UNCLOS discussed above, as well as from other sources of international law. Nevertheless, certain States are increasingly prepared to take a more proactive role in this regard. For example, the North Atlantic Treaty Organisation launched its Operation "Baltic Sentry" in January 2025, involving the deployment of vessels and drones in the Baltic Sea to monitor critical infrastructure and deter sabotage.¹⁷

Relevant commitments could in principle be given effect through investment protection guarantees made by a State under an applicable investment treaty. While much would depend on the precise circumstances at issue, relevant guarantees could include those of full protection and security, fair and equitable treatment, and "umbrella" clause protections. Various jurisdictional conditions would need to be satisfied, including that the submarine cable investment is hosted within the "territory" of the host State for the purposes of the investment treaty. The Model US Bilateral Investment Treaty (2012)'s definition of "territory" covers:

"the territorial sea and any area beyond the territorial sea of the Party within which, in accordance with customary international law as reflected in the United Nations Convention on the Law of the Sea, the Party may exercise sovereign rights or jurisdiction".  

Where investment treaty protection is not available, it may be possible to persuade a State involved in a submarine cable project to give comparable guarantees in contractual form, potentially involving a mix of monitoring and early alert measures, information sharing, and advisory guidance on the prevailing security situation.

However, it will be important for stakeholders contemplating obtaining security commitments from a State partner to consider what bearing this might have on allocations of risk elsewhere in the contractual framework.¹⁸

Given the imperfections in current global submarine cable governance, force majeure provisions are likely to serve as an important protection for data transmission service providers in contracts with customers relying on the submarine cable. While these contracts may already cover "sabotage" as a recognised class of force majeure event, force majeure provisions often require the party declaring force majeure to establish that it could not reasonably have avoided the impact of the event in question. A service provider will hence wish to avoid any suggestion that by negotiating security commitments from a State, it has assumed responsibility for guarding against what would otherwise be circumstances beyond the provider's reasonable control. Another factor that may need to be considered in the context of force majeure is the service provider's potential inability to make repairs without permits from a State or States. Delays may be caused by bureaucracy, and/or additional (potentially) non-UNCLOS compliant requirements (such as fees and guard boats for repairs beyond the territorial sea). The location of the repairs may also be critical. The relevant section of cable may be difficult to access or delays may occur if the repair needs to take place in an area where the maritime boundary is disputed.¹⁹

What role for international arbitration in disputes concerning submarine cables?

Stakeholders need to be sufficiently equipped to deal with the risk of a multitude of disputes arising in the context of submarine cable projects, particularly considering the complex commercial and legal context described above. Such disputes can be the knock-on consequence of third-party conduct, for instance in situations of cable damage, but can also arise simply because participants' interests are different or because they evolve, particularly over the course of a long-term project.

While it will be important for dispute resolution provisions to reflect the issues at stake – including by featuring escalation processes where appropriate - international arbitration provides an important dispute resolution mechanism which may be well suited to submarine cable PPP disputes. Arbitration:

• offers a neutral dispute resolution forum, which may provide a useful compromise option for parties which would otherwise prefer to litigate before their respective national courts, especially if one or more potential counterparties are States or State-associated entities.
• may facilitate enforcement against counterparty assets abroad, enhancing its utility as a tool to hold counterparties to commitments in relation to, for instance, security or other matters.
• could assist in the resolution of disputes between project consortia members in a discrete, private manner, which may facilitate the maintenance of commercial relationships for the duration of the submarine cable project.

Notwithstanding, careful attention should be given to the design of the project's contractual framework to ensure that the value international arbitration can bring is maximised.

Disputes may arise in different contracts and between different stakeholders. For example, if a subcontractor claims to the project company to be entitled to extra payment or extra time, this may give rise to a dispute between the project company and the State concerning the same issue (or vice versa – the State may reject an upstream claim for extra payment or time, with the consequence that the project company rejects the claim submitted by the subcontractor). It will be important to ensure that these related, or linked, disputes can be resolved in the same forum, to minimise the risk of inconsistency of outcome.

Further, stakeholders should take care in considering the entities which will be the constituent members of the submarine cable project consortium or similar structure. This is likely to be driven primarily by commercial factors, but leaving an important affiliate of a contracting party outside the scope of an arbitration agreement may create difficulties in consistent and efficient resolution of disputes.²⁰

Dealing with particular issues associated with contracting with States and State-associated entities

The examples discussed above are only a brief indication of the various ways in which State, as contracting authority, and State-associated entities can be involved in submarine cable projects adopting a PPP model. Even with the best intentions, it is conceivable that disputes may arise between States or State-associated entities (such as a State-owned JV partner) and their private partners. This is particularly the case given the speed (some might say haste) at which some submarine cable projects develop and the differing interests at play. States seek to satisfy strategic, security, diplomatic, and development objectives, while private sector stakeholders are driven by commercial imperatives. States and their private sector partners may also have differing views on more operational issues, such as the ways in which a submarine cable network can be compromised and what is an adequate level of redundancy.

While escalation provisions may assist with resolving disputes, it is possible that a formal dispute resolution procedure will be needed (and one should always be included). Those contracting with States or State-associated entities should be aware of related issues which can arise in connection with State immunity.

It will normally be advisable to include a comprehensive waiver of immunity provision in any contract with a State or State-associated entity, under which an express waiver is given of both immunity from jurisdiction and immunity from enforcement and execution. Dealing insufficiently with State immunity can lead to serious difficulties in securing and enforcing favourable decisions against such counterparties.

If it is not possible to secure the inclusion of a comprehensive waiver, the use of an arbitration clause may help parties fall within recognised exceptions to State immunity. In the UK, s. 9(2) of the State Immunity Act (SIA) 1978 specifies that a State which is party to an arbitration agreement is "not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration". A separate waiver will still be required to cover immunity from enforcement and execution, and in line with s. 13(3) SIA, provision should also be made for the State's consent to the granting of interim and injunctive relief.

Conclusion

The UN General Assembly recognised in December 2024 that "that submarine cables… are vitally important to the global economy and national security of all States". The General Assembly noted that "these cables… are susceptible to intentional and accidental damage" and called upon States "to take measures to protect submarine cables and pipelines and to fully address issues relating to [them] in accordance with international law".²¹

Amid these challenges, PPPs are likely to continue serving as an influential model for submarine cable projects. While the varied parties involved and the interplay of international law, domestic law and commercial structures will present stakeholders with a range of risks, international arbitration coupled with careful attention to project structuring provides an important avenue to help manage them effectively.