UK publishes guidance backing companies that do business with the Falkland Islands

The British government has released guidance on Tuesday aimed at companies and individuals engaged in economic activity in the Falkland Islands or supplying goods and services to the territory. The Foreign, Commonwealth and Development Office, in collaboration with the Department for Business, Innovation, Science and Trade, produced the document, which follows Argentina's recent criminal complaint against five companies involved in the Sea Lion oil project.

The guidance covers three categories: those operating within the islands, those supplying goods or services, and those involved in the economy's development, including natural resource exploitation.

London firmly asserts its sovereignty over the Falkland Islands and surrounding waters, asserting that it will not discuss the matter unless islanders express a desire to do so. The archipelago has peacefully and effectively been administered since 1833, apart from the 1982 conflict, and Argentina holds no sovereignty or jurisdiction over the islands, with domestic law not applying.

The guidance adopts UK government positions, which Argentina contests, asserting that courts outside Argentina lack jurisdiction over these measures.

The document emphasizes that UK law governing hydrocarbon activities on the continental shelf is based on Falkland Islands legislation and the Law of the Sea Convention. However, it explicitly states that the guidance does not constitute legal advice and urges companies receiving Argentine correspondence to seek independent counsel.

The FCDO Overseas Territories and Polar Directorate, located at King Charles Street, London SW1A 2AH, can clarify the UK's position for any company in need, including subsidiaries and suppliers facing pressure in third countries.

Decree 868/2026, enacted on September 4, gives Argentina's foreign ministry authority to enforce Law 26,659, granting ten business days for a defense and ten more for a ruling, with public bodies required to report potentially prohibited conduct within five business days. Restrictions may apply to direct and indirect shareholders, affiliated entities, and certain suppliers, explaining why investment funds, banks, and a shipping company are among those targeted.

Argentina currently has 60 administrative proceedings open, with no penalties imposed, and filed a criminal complaint on September 7, which carries penalties of five to ten years. None of the allegations have been proven.

The guidance notes that previous Argentine actions did not hinder the islands' economic growth, stating that in 2012, Argentina barred five companies for twenty years, while in 2015, a prosecutor ordered the seizure of over US$156 million in international equipment, including vessels, platforms, and bank accounts. The Legislative Assembly of the Falkland Islands welcomed the publication, largely echoing the guidance's wording.

Argentina maintains sovereignty over the islands; in the 2013 referendum, 99.8% of voters opted to remain a British overseas territory.