Dispute Resolution In The Oil And Gas Industry

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44 



  
 
 
 
 
Introduction
Because of the special nature of the Energy Sector, disputes between States and disputes between corporations and national governments are likely to arise. Resolution of these disputes may be by way of machinery contained in international Conventions or in domestic legislation passed by national governments.
On the commercial front, many of the dispute resolution processes used in the Oil and Gas Industry will obviously be similar to those used in other areas of international trade. Given the international nature of many of the contractual arrangements in the Industry, it is understandable that, in addition to litigation in national courts, disputes are likely to be resolved by way of international commercial arbitration. For the future, increased use may be made of two other dispute resolution processes. First, Alternative Dispute Resolution (ADR) in its various forms (particularly mediation/conciliation). Second, expert determination. Set out in this section are some of the dispute resolution processes which are likely to be used in the Oil and Gas Industry. (*)




 
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c(1) The sovereignty of a coastal State extends beyond its land, territory and internal waters... to an adjacent belt of sea, described as the territorial sea.
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cEvery State has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles, measured from baseline determined in accordance with its Conventionc.  
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ceach of whom shall be a person experienced in maritime affairs and enjoying the highest reputation for fairness, competence and integrityc$
 
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cas to any matter arising under or by virtue of this licence or as to their respective rights and liabilities in respect thereof then the same shall, except where it is expressly provided by this licence that the matter or thing to which the same relates is to be determined, decided, directed, approved or consented to by the Minister, be referred to arbitration as provided by the following paragraph.c

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The contractual provisions dealing with dispute resolution in commercial contracts are of vital importance. Provision will normally be made as a minimum for the following:
1.Forum: in what country should the dispute resolution process take place? 2.Choice of Law: which country's law is to govern the contract? It is, of course, always open to the parties to provide for a choice of laws rather than a choice of law and to provide that disputes will be resolved by way of reference to general principles of international law or O
   . However, the choice of a national law is likely to be the norm. 3.Dispute Resolution Process: broadly speaking, there are four dispute resolution processes in common use: litigation, arbitration, ADR and expert determination.

If litigation, which country's courts are to have jurisdiction? If arbitration: is this to be institutional or   ? If institutional, which institution? LCIA, ICC, etc.? If ADR, should some form of ADR filter mechanism be inserted in the contract, arbitration then only being triggered off in the event that the ADR process fails? Or is expert determination the appropriate way to resolve disputes?    O     O 

 
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cThe English have always been more given to peaceableness and industry than other people and rather than go so far as London and be at so great charges with attorneys and lawyers, they would refer their difference to the Arbitration of their parish priest, or the Arbitration of Honest Neighboursc: ! 
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cThere are grounds for thinking that LCIA arbitration clauses are nowadays increasingly incorporated into contracts. The new 1985 LCIA Rules are being used world-wide and appear to have achieved world-wide renownc.

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cas a general principle to keep confidential all awards in their arbitration, together with all materials in the proceedings created for the purpose of the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain...c

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c... the most important international treaty relating to international commercial arbitration. Indeed, it may be regarded as one of the major contributing factors to the rapid development of arbitration as a means of resolving international trade disputesc.
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cencouraging the parties to use an alternative dispute resolution procedure if the Court considers that appropriate and facilitating the use of such procedurec

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cThis may involve the Commercial Judge inviting the parties to use ADR at the Case Management Conference or even adjourning the case to encourage and enable the parties to use ADR...c

 


  


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ADR in its various forms has much to offer as a dispute resolution process. But it has to be used sensibly. It is not the answer to every dispute. The client whose products are being counterfeited is unlikely to be impressed by the lawyer who suggests that he try ADR. There will always be situations where an application to a national Court for an order or declaration is the only realistic option available.
The extent of the use of ADR in the Oil and Gas Industry is unclear. The Centre for Dispute Resolution (CEDR), for example, has dealt with petroleum disputes. However, for obvious reasons, specific information is unavailable. 

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;The parties to this agreement agree to have recourse, if necessary, to the ICC International Centre for Expertise of the International
Chamber of Commerce in accordance with the ICC's Rules for Expertisec. 
  



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cno need for a trial-type hearing. Unless the parties agree otherwise, the Expert may conduct investigations independently of the Parties, and make the Decision based on those investigations without reference to the Parties.c

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cThis Expert Determination leads to a decision.... being issued by the Expert. The decision will be final and binding on the Partiesc.

  
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cWhere, pursuant to any provision of this agreement a matter is required to be determined by an Expert, the Expert shall be a reputable person fitted by the possession of expert knowledge and experience for the determination of the matter in question. The Expert shall be appointed by agreement between the Parties or, in default of such agreement, within 30 days after a party has requested the appointment of an Expert, by the President of the Institute of Petroleum of the United Kingdom. Such expert shall determine the matter in question within 60 days after his appointment on the basis of terms of reference agreed between the Parties or otherwise as the Expert shall himself determine, as an Expert and not as an arbitrator and such determination shall be final and binding on the parties...c

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This Act is likely to be of significance to the Energy Industry. In the context of this Conference, its relevance lies in the fact that it will enable contractual provisions relating to arbitration to be made available to third parties.

 


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cthe storm that's arriving is when the thousands and thousands of institutions that exist today seize the power of this global computing and communications infrastructure and use it to transform themselves. That's the real revolution;



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the coordination of a company's purchasing of goods and services. Generally, this entails whittling down suppliers to a core group, then negotiating savings in return for loyalty... Since IBM began to put e-procurement for its office equipment in place three years ago, it has saved an estimated $4 billion. `We'll have gone from six million invoices to nothing by the end of 1999', says Janet Wood, General Manager for e-business solutions at IBMc.
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