The Legal Regime of India's Exclusive Economic Zone

The Legal Regime of India's Exclusive Economic Zone: Rights, Jurisdiction, and Application of Domestic Law

Introduction

The Exclusive Economic Zone (EEZ) is a maritime zone of critical importance, granting coastal states specific sovereign rights and jurisdiction over a vast expanse of the sea. For India, with its extensive coastline, the EEZ represents a significant area for resource exploitation, economic development, and strategic influence. This article provides a comprehensive analysis of the legal framework governing India's EEZ, drawing upon domestic legislation, international conventions, and judicial pronouncements. It examines the nature of India's rights within the EEZ, the distinction between sovereign rights and full sovereignty, the mechanisms for applying Indian domestic laws to this zone, and the interpretation of these complex legal issues by Indian courts.

The Concept and Demarcation of the EEZ under Indian Law

International Framework: United Nations Convention on the Law of the Sea (UNCLOS), 1982

India is a signatory to the United Nations Convention on the Law of the Sea (UNCLOS), 1982, which provides the foundational international legal framework for maritime zones. Article 55 of UNCLOS defines the EEZ as "an area beyond and adjacent to the territorial sea, subject to the specific legal regime established in this Part, under which the rights and jurisdiction of the coastal State and the rights and freedoms of other States are governed by the relevant provisions of this Convention" (UNCLOS, 1982, Art. 55, as cited in Pride Foramer v. Union Of India And Others, Bombay High Court, 2001, and Republic Of Italy Thr. Ambassador ... v. Republic Of Italy Thr Ambassador, Supreme Court Of India, 2012). Article 57 specifies that the EEZ "shall not extend beyond 200 nautical miles from the baselines from which the breadth of the territorial sea is measured" (UNCLOS, 1982, Art. 57).

Crucially, Article 56 delineates the rights, jurisdiction, and duties of the coastal State in the EEZ. It grants the coastal State: "(a) sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to the sea-bed and of the sea-bed and its subsoil, and with regard to other activities for the economic exploitation and exploration of the zone, such as the production of energy from the water, currents and winds; (b) jurisdiction as provided for in the relevant provisions of this Convention with regard to: (i) the establishment and use of artificial islands, installations and structures; (ii) marine scientific research; (iii) the protection and preservation of the marine environment; (c) other rights and duties provided for in this Convention" (UNCLOS, 1982, Art. 56, as cited in Aban Loyd Chiles Offshore Limited And Another v. Union Of India And Others, Supreme Court Of India, 2008). UNCLOS also mandates that the coastal State, in exercising its rights in the EEZ, "shall have due regard to the rights and duties of other States" (UNCLOS, 1982, Art. 56(2)).

Domestic Legislation: The Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976

India codified its rights and jurisdiction over maritime zones through The Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 (hereinafter "Maritime Zones Act, 1976"). Section 7 of this Act specifically addresses the EEZ. Section 7(1) declares that "India has an exclusive economic zone which is an area beyond and adjacent to the territorial waters, and the limit of such zone is two hundred nautical miles from the baseline." This is consistent with UNCLOS, as noted by the Supreme Court (Republic Of Italy Thr. Ambassador ... v. Republic Of Italy Thr Ambassador, Supreme Court Of India, 2012).

Section 7(4) of the Maritime Zones Act, 1976, mirrors UNCLOS Article 56 by granting India:

  • Sovereign rights for exploring, exploiting, conserving, and managing natural resources, both living and non-living, as well as for other economic activities like energy production.
  • Exclusive rights and jurisdiction to authorize, construct, operate, and maintain artificial islands, offshore terminals, installations, and structures.
  • Exclusive jurisdiction to authorize, regulate, and control marine scientific research.
  • Jurisdiction for the protection and preservation of the marine environment and prevention of marine pollution.
  • Other rights recognized by international law.

Nature of India's Rights in the EEZ: Sovereign Rights v. Sovereignty

A fundamental aspect of the EEZ regime is the distinction between "sovereign rights" and "sovereignty." While India exercises full sovereignty over its territorial waters (extending up to 12 nautical miles from the baseline), its authority in the EEZ is characterized as sovereign rights for specific purposes, primarily economic exploitation and related jurisdictional powers. This distinction has been consistently emphasized by Indian courts.

The Bombay High Court in Pride Foramer v. Union Of India And Others (Bombay High Court, 2001) observed, quoting legal commentary, that "the coastal State has in this zone only sovereign rights of exploitation of the resources of the zone and not sovereignty in the sense of territoriality or dominium. Exclusiveness attaches to resources exploitation only but does not incorporate the notion of reducing the area to the exclusive ownership or title of the coastal State. It is a resources linked concept of sovereignty in a restricted sense sans the incidents of territoriality." This view was affirmed by the Supreme Court in Aban Loyd Chiles Offshore Limited And Another v. Union Of India And Others (Supreme Court Of India, 2008).

Similarly, the Bombay High Court in Commissioner Of Customs v. Noble Asset Co. Ltd. & Ors. (Bombay High Court, 2008) stated that "the territorial waters, Contiguous Zone, Continental Shelf and EEZ are not part of the territory of India but India exercises sovereign rights in respect of the territorial waters, on the continental shelf and also certain sovereign rights within the EEZ." This was reiterated in The Commissioner Of Sales Tax, Maharashtra State, Mumbai Applicant v. M/S Pure Helium (India) Ltd. (Bombay High Court, 2012), which noted that sovereignty in the EEZ "is qualified with reference to the purpose for which sovereign rights are recognized... and does not incorporate a territorial ownership of the coastal state over the area."

The Calcutta High Court in Burn Standard Company Limited v. Assistant Collector Of Central Excise, Midnapore Division & Others (Calcutta High Court, 2005) also opined that "complete and full sovereignty of this country is not extended upto any point from the baselines. According to him, complete sovereignty of this country which includes political and economic is extended only upto territorial waters... The sovereignty in limited sphere for the purpose of exploration and extraction of mineral resources has been extended upto exclusive economic zone."

Rights and Freedoms of Other States

Consistent with the limited nature of sovereign rights, Section 7(9) of the Maritime Zones Act, 1976, provides that in the EEZ and the airspace above it, "ships and aircraft of all States shall, subject to the exercise by India of its rights within the zone, enjoy freedom of navigation and overflight" and other internationally lawful uses of the sea related to navigation and communication, compatible with international law. This aligns with UNCLOS Article 58, which preserves such freedoms for other states in the EEZ.

Application of Indian Domestic Laws to the EEZ

The application of India's domestic laws to the EEZ is not automatic. It is contingent upon specific legislative action by the Central Government.

The Mechanism of Extension: Section 7(7) of the MZA and "Designated Areas"

Section 7(6) of the Maritime Zones Act, 1976, empowers the Central Government to declare any area of the EEZ as a "designated area." Subsequently, Section 7(7) allows the Central Government, by notification in the Official Gazette, to "make such provisions as it may deem necessary with respect to... (b) any other matter, including the security of India, the protection of artificial islands, offshore terminals, installations and other structures and devices in any designated area, or the protection of the marine environment or the conduct of marine scientific research in any designated area, ... (c) the regulation of entry into and passage through the designated area of foreign ships by the establishment of fairways, sealanes, traffic separation schemes or any other mode of ensuring freedom of navigation which is not prejudicial to the interests of India." More broadly, it allows the extension of "any enactment for the time being in force in India or any part thereof... to the exclusive economic zone or any part thereof... with such restrictions and modifications as it thinks fit."

This power of extension is crucial. As observed in Burn Standard Company Limited (Calcutta High Court, 2005), the EEZ "cannot be brought within the purview of the applicability of any Act unless the Central Government by notification... specifically provides so."

Customs Law in the EEZ

The Customs Act, 1962, has been extended to designated areas in the Continental Shelf and EEZ through notifications issued under the Maritime Zones Act, 1976. The Supreme Court in Aban Loyd Chiles Offshore Limited And Another v. Union Of India And Others (Supreme Court Of India, 2008) extensively discussed this. The Court held that "the designated areas of the continental shelf and the exclusive economic zone become a part of the territory of India for limited purposes. The natural consequence of such declarations and the extension of the Customs Act... to these designated areas is to introduce the customs regime to such areas resulting in the levy and collection of customs duties on goods imported into these areas as if these areas are a part of the territory of India." Consequently, oil rigs operating in such designated areas are not considered "foreign going vessels" under Section 2(21) of the Customs Act, 1962, and are not entitled to consume imported stores thereon without payment of customs duty under Section 87 of the Act. This affirmed the earlier decision of the Bombay High Court in Pride Foramer v. Union Of India And Others (Bombay High Court, 2001).

The Gujarat High Court in Larsen & Toubro Ltd. v. Union of India (Gujarat High Court, 2011), citing Aban Loyd, reiterated that "if mineral oil is extracted or produced in the exclusive economic zone or continental shelf and is brought to the mainland, it will not be treated as import and, therefore, no customs duty would be leviable. Likewise, goods supplied to a place in the exclusive economic zone or continental shelf will not be treated as export under the Customs Act and no export benefit can be availed on such supply." The principles from Commissioner Of Customs (Preventive), Mumbai v. M. Ambalal And Company (Supreme Court Of India, 2010), regarding the strict interpretation of exemption notifications and that smuggled goods do not qualify as "imported goods" for exemptions, would apply to goods illicitly brought into such designated areas of the EEZ from foreign locations, as these areas are deemed part of India for customs purposes.

Fiscal Laws in the EEZ (Income Tax, Service Tax, Central Excise)

Similar to customs law, other fiscal laws have been extended to the EEZ and Continental Shelf. In Commissioner Of Income-Tax v. Ronald William Trikard And Others (Madras High Court, 1994), the Madras High Court upheld the applicability of the Income-tax Act, 1961, to salaries received by non-resident individuals for services rendered on oil rigs in the Continental Shelf of India, pursuant to a government notification extending the Act to these areas.

The applicability of service tax to activities in the EEZ/Continental Shelf has also been subject to specific notifications. The Bombay High Court in Greatship (India) Ltd. v. Service Tax (Bombay High Court, 2015) and the CESTAT in SHELF DRILLING INTERNATIONAL INC v. COMMR.SERVICE TAX- VII MUMBAI (CESTAT, 2022) discussed various notifications (e.g., Notification No. 1/2002-ST, Notification No. 14/2010-ST) that extended the Finance Act, 1994 (governing service tax) to installations, structures, and vessels in the Continental Shelf and EEZ. The case of Indian National Shipowners Association v. Union Of India & Ors. (Bombay High Court, 2008) highlighted that initially, service tax provisions were not extended to designated areas in the CS/EEZ, unlike Central Excise and Customs, underscoring the necessity of specific extension for each fiscal levy.

Regarding Central Excise, the Gujarat High Court in Larsen & Toubro Ltd. (Gujarat High Court, 2011) confirmed that "Any mineral oil produced in the exclusive economic zone or continental shelf will be chargeable to Central Excise duty, as goods produced in India."

Criminal Jurisdiction in the EEZ

The extension of Indian criminal law to the EEZ and the exercise of jurisdiction by Indian courts is a complex issue, significantly clarified by the Supreme Court in Republic Of Italy Through Ambassador And Others v. Union Of India And Others (Supreme Court Of India, 2013), commonly known as the Enrica Lexie case. The incident involved the death of Indian fishermen on an Indian vessel, allegedly due to firing from an Italian vessel in India's Contiguous Zone/EEZ. The Supreme Court held that "the Union of India has jurisdiction to proceed with the investigation and trial of the petitioners (Italian Marines)" and that "the State of Kerala has no jurisdiction to investigate into the incident." It affirmed that India's domestic laws, as extended to the EEZ, do not contradict UNCLOS, and India retains authority to prosecute for crimes committed within its EEZ, particularly when they impact Indian nationals or vessels, provided there is no conflict with international obligations. The Court also determined that the Italian marines were not entitled to sovereign immunity under the circumstances.

Earlier, in Chern Taong Shang And Others v. Commander S.D Baijal And Others (Supreme Court Of India, 1988), the Supreme Court upheld the conviction and confiscation of foreign fishing vessels for violating provisions of the Maritime Zones Act, 1976, and related rules prohibiting fishing by foreign vessels in specified areas of India's EEZ. This case demonstrated the enforcement of specific Indian regulations within the EEZ.

Conclusion

India's legal regime for its Exclusive Economic Zone is a carefully constructed framework based on the principles of UNCLOS, 1982, and effectuated through the Maritime Zones Act, 1976. The regime grants India significant sovereign rights for economic exploration and exploitation, alongside jurisdiction over related activities, while respecting the freedoms of navigation and overflight for other nations. Indian courts have consistently interpreted these provisions to affirm India's rights, while carefully distinguishing "sovereign rights" in the EEZ from the "full sovereignty" applicable to territorial waters. The mechanism of extending domestic laws, including customs, fiscal, and penal statutes, to the EEZ or designated areas within it by specific notification is a cornerstone of this regime, effectively treating such areas as part of India for the limited purposes of the extended enactments. Landmark judgments have clarified jurisdictional boundaries, the scope of applicable laws, and the balance between national interests and international obligations, thereby shaping a robust legal framework for the governance of India's vital Exclusive Economic Zone.