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Foreign Office sends letter of support to companies active in Falklands threatened by Argentina

Foreign Secretary Hague: Falklands entitled to develop oil and fishing industries without interference from Argentina

The British government, in a move designed to ease concern among the investment community about the Argentine legal threats, has written to some 15 banks and oil exploration companies operating in the region, reports the Daily Telegraph.

The move comes as Argentina faces international condemnation for its seizure of Spain’s Repsol majority stake in YPF, Argentina’s largest oil company, last week.

In the new letter, the Foreign Office says it is “deeply skeptical” that Argentina would be able to enforce “any penalties” in courts outside its own borders and adds that the government of the Falklands “is entitled to develop” oil and fishing industries in its own waters “without interference from Argentina.”

“The British Government has no doubt about our sovereignty over the Falkland Islands and surrounding maritime areas,” it adds.

News of the letter follows The Sunday Telegraph’s revelation that the Argentine government had written to banks involved in the Falkland oil industry threatening them with legal action. In writing to the banks concerned, including broker Oriel Securities and Royal Bank of Scotland, the Argentine government has sought to not jeopardize the fledgling Falklands’ oil industry.

The letter from the British Foreign Office to banks setting out the Government's position on the Falkland Islands after Argentina threatened sanctions against companies drilling for oil in the British protectorate and their lenders as published in the UK media:

You will be aware of the statement of 15 March by the Argentine Foreign Minister that the Government of Argentina is considering sanctioning companies and other entities involved in hydrocarbon-related activities in the maritime waters of the Falkland Islands. I am writing to set out the British Government’s definitive position on this matter.

We understand that the Foreign Minister has subsequently written to a number of institutions, notifying them that such companies are in violation of Argentine law.

This position would appear to be based on Argentine domestic legislation, specifically the Hydrocarbon Law 25.659. This law was published in Argentina in April 2011 and was formally introduced into law in August last year.

Argentina, however, does not exercise sovereignty over the Falkland Islands, which are an Overseas Territory of the United Kingdom.

Moreover, Argentina’s authorities have no jurisdiction over these matters, and their domestic laws do not apply to the Falklands.

The British Government has no doubt about our sovereignty over the Falkland Islands and surrounding maritime areas. The principle of self-determination, enshrined in Article 1 of the United Nations Charter, underlies our position. There is no question of the UK Government entering into discussions on sovereignty against the wishes of the Falkland Islanders, who have repeatedly made clear their desire to remain British.

Whilst companies involved in any relevant activity may wish to assure themselves by means of independent legal advice, the British Government is deeply skeptical that Argentina will be able to enforce any penalties in the courts of any country outside of Argentina, since to do so would be contrary to basic principles of jurisdiction.

It is our firm conviction that the Falkland Islands Government is entitled to develop both fishery and hydrocarbons industries within its own waters, without interference from Argentina. Falklands’ hydrocarbons exploration is a legitimate commercial venture. We unequivocally support the right of the Falkland Islanders to develop their natural resources for their own economic benefit. This right is an integral part of their right of self-determination, which is expressly contained in the International Covenant on Civil and Political Rights. All hydrocarbons activities on the continental shelf of the Falkland Islands are regulated by legislation of the Falkland Islands Government, in strict accordance with the United Nations Convention of the Law of the Sea.

The British Government has reiterated these points to the Government of Argentina on many occasions, as well as more widely in the region and elsewhere, including at the United Nations. Contrary to Argentine assertions, the United Nations has never taken a view in favor of Argentina’s sovereignty claim, and we will continue to defend our sovereignty of the Falklands whenever and wherever it is challenged by Argentina.

With the exception of a short interruption in 1982, the Falkland Islands have been continually administered, peacefully and effectively, by the United Kingdom for nearly 180 years. We welcome the private sector’s continued interest in hydrocarbons exploration, which we believe has the potential to be lucrative for both the Falkland Islanders and for the companies concerned.

You will of course appreciate that this letter does not impose any legal obligation on or indicate any undertaking or commitment on the part of the United Kingdom Government or the Falkland Islands Government in relation to such exploration, but the FCO is happy to address any further questions you may have.