A ‘new generation’ of sponsorship agreements for deep sea mining operations between The Metals Company (TMC) subsidiaries and their sponsoring states is evolving. On May 29th, 2025 The Republic of Nauru (Nauru) and Nauru Ocean Resources Inc. (NORI) concluded an amended version of their sponsorship agreement (Nauru-SA). Similarly, on August 4th, 2025 the Government of the Kingdom of Tonga (Tonga) and Tonga Offshore Mining Limited (TOML), updated their sponsorship agreement (Tonga-SA).
These legal developments come at a pivotal moment. Since the Executive Order from US-President Trump to unilaterally license permits to mine the international deep seabed, TMC has been widely criticized for their corresponding application by its subsidiary, The Metals Company USA, LLC (TMC USA). The Area, where the US is planning to license, is recognized by 169 states as common heritage of mankind pursuant to Article 136 of the United Nations Convention on the law of the Sea (UNCLOS). Since the International Seabed Authority (ISA) was not able to conclude the Mining Code which will regulate mining the Area in accordance with UNCLOS in its 30th Annual Session 2025, the renewal of the sponsorship agreements comes at a critical time.
Against this backdrop, this article examines how key clauses in the new sponsorship agreements reflect and shape the emerging legal obligations of states in deep sea mining governance. We argue that these agreements may represent not only contractual refinements but a shift in the governance of deep sea mining — with implications that may extend beyond Nauru and Tonga.
Sponsorship agreements
Under UNCLOS, private companies have to be sponsored by a state to mine the Area, which in turn bears responsibility for ensuring their compliance with international law. This duty was clarified in the 2011 Advisory Opinion of the Seabed Disputes Chamber (SDC) of ITLOS, which emphasized that sponsoring states must exercise “due diligence” and have an “obligation to ensure” their contractors’ compliant conduct. In practice, some states go further by concluding sponsorship agreements — contracts that formalize the relationship between the state and the private entity it sponsors. While sponsorship agreements are not expressly provided for in UNCLOS, they serve as a functional bridge between sponsoring state’s international obligations and the private contractor’s activities. Several national seabed mining mineral acts provide legal basis for sponsorship agreements, such as Section 31 International Seabed Mineral Management Decree 2013 (Fiji), Section 27 International Seabed Minerals Act 2015 (Nauru) and Section 82 Seabed Minerals Act 2014 (Tonga). While these frameworks vary, they reflect a common challenge: how to align state oversight with corporate operations in a legally and commercially coherent way. Sponsorship agreements thus play a crucial role and act as a key regulatory instrument to ensure that both parties benefit from the resources located in the Area.
Contractual IIAs for the seabed
While formally sponsorship agreements under UNCLOS, both the Nauru- and the Tonga-SA incorporate legal concepts drawn from the lexicon of international investment law. Most notably, Clause 10 of both texts refers to “expropriation,” “fair and equitable treatment” (FET), and “full protection and security” (FPS) — standards familiar from international investment agreements (IIAs) and investor–state dispute settlement (ISDS). This setup appears designed to replicate the procedural and substantive protections of investment law, despite the absence of investment treaties between Canada (TMC’s home state) and Tonga or Nauru.
These terms carry substantial normative weight, shaped by decades of arbitral jurisprudence. Investment tribunals have interpreted FET to include protection of legitimate expectations, transparency, due process, and regulatory consistency (e.g., Tecmed v. Mexico para. 154; Waste Management II v. Mexico para. 98; Philip Morris v. Uruguay para. 320). Reflecting this jurisprudence, the agreements explicitly require the sponsoring states to provide a “stable and predictable legal framework” and to make decisions “consistently and transparently” in line with investor expectations. Similarly, the FPS standard — once focused on physical security — has been extended in investment arbitration to include legal and regulatory stability (e.g., Azurix v. Argentina para. 408). The agreements codify this approach, stating that FPS entails “complete and unconditional legal protection.” By incorporating this language, the agreement arguably enables TOML and NORI to invoke protections that go well beyond the text of UNCLOS or ISA regulations.
These substantive protections are reinforced by access to international arbitration (Clause 24 Nauru-SA; Clause 25 Tonga-SA). The governing law is that of the seat of arbitration, supplemented by “general principles of international law regarding the protection of foreign investors,” provided these do not diminish the investors’ contractual rights. These clauses open the door to normative ambiguity. While it may refer to customary international law on expropriation and minimum standards of treatment, the agreements already mirror nearly all typical IIA protections. Its practical role may therefore lie in enabling arbitral tribunals to draw upon ISDS case law to interpret these contractual standards — especially FET. Moreover, the qualifier “provided these do not diminish the investors’ contractual rights” appears to steer interpretation toward investor-favourable readings of those principles (e.g., CMS v. Argentina para. 274; Occidental v. Ecuador para. 185).
Interestingly, earlier versions — such as Nauru-SA (2017) — did not include references to general principles of international investment law. Their inclusion in these updated agreements suggests a legal evolution in investor protections, possibly driven by the commercialisation of deep sea mining and ongoing regulatory uncertainty.
Financial remuneration of sponsoring states
Before the amendments, Clause 3 Nauru-SA (2017) provided for a Seabed Mineral Recovery Payment which was paid per Tonne of Polymetallic Nodules recovered from the NORI Contract Area when the exploitation reaches a minimum recovery level (the specific amount remains redacted). This clause created a conventional royalty-style payment tied to exploitation from the ISA-regulated contract area.
In contrast, the new Clause 23.4 Nauru-SA and Clause 24.5 Tonga-SA grant the states a warrant to purchase common shares of TMC and not their respective national subsidiaries. This equity instrument provides the states with a financial participation in US licensed deep sea mining operations. If TMC USA begins mining the Area, Nauru and Tonga receive financial remuneration. The new clauses thus raise significant concerns about Nauru’s and Tonga’s neutrality in terms of US deep sea mining operations in the Area. According to Article 137.1 UNCLOS no claim of sovereignty over the Area shall be recognized. The US’ claim to the Area is based on the freedom of the High Seas and the idea of first come, first serve. This understanding is in breach of UNCLOS and the 1994 Implementing Agreement.
By receiving financial benefits from the US operations, Nauru and Tonga recognize the US’ claim to the Area. Such a breach of their obligations under Article 137 UNCLOS may be challenged before the SDC according to Article 187 UNCLOS, particularly if it is argued that the financial arrangements compromise the integrity of the international seabed regime or enable the circumvention of ISA’s mandate.
A ‘gag order’ for Tonga
A unique clause in the Tonga-SA, imposes an obligation on Tonga, preventing it and any entities under its “effective control” from engaging in conduct that might undermine a TMC subsidiary’s license application or operations in the US, Clause 24.15 Tonga-SA. This includes actions or statements that would “dispute, oppose, obstruct, interfere with or bring into disrepute” the relevant activities “in any international or domestic forum”. Referencing both international and national forums highlights the comprehensive nature of the non-statement obligation. Such forums might range from US administrative bodies to international arbitral tribunals or diplomatic negotiations. By agreeing to such a clause, Tonga voluntarily limits certain sovereign prerogatives, effectively waiving the right to publicly oppose or undermine TMC USA’s activities.
The phrase “under the State’s effective control” is significant in international law, commonly used in the context of state responsibility to attribute conduct of entities to the State (i.e. Article 8 ILC Articles on State Responsibility; Nicaragua v. United States, para. 115). This suggests the Clause aims to bind not only governmental actors but also parastatals, agencies, or possibly state-influenced entities from Tonga. Even though the opening phrase contains a narrow exception — permitting Tonga to act where necessary “to defend its rights or reputation” — the clause is very comprehensive in nature. Tonga only has the option to take necessary protective or reputational actions if it perceives its sovereign rights or standing are under threat. More broadly, it appears as if Tonga does not oppose the actions taken by the US and voluntarily relinquished its sovereign rights to articulated political positions at the international and national stage.
Conclusions
The new clauses in sponsorship agreements for deep sea mining operations between The Metals Company (TMC) subsidiaries and their sponsoring states raise serious questions about transparency, sovereignty, and corporate influence in international governance. While the agreements remain contractually framed, their legal consequences may extend beyond the parties themselves. We are effectively witnessing the emergence of a new generation of sponsorship agreements — instruments that increasingly reflect the logic of international investment law and tilt the balance toward investor protection at the expense of state discretion. This development challenges the foundational principle that the deep seabed is the common heritage of mankind.
Looking ahead, it will be important to monitor how other states approach future sponsorship agreements. Much may depend on whether the ISA and its Members choose to address this growing contractual fragmentation — or whether investor-drafted templates continue to define the legal infrastructure of deep sea mining.
