Dispute Resolution Mechanisms in the Petroleum Sector


Disputes in the oil and gas industry can arise from several sources: between the host government and its contractor, between the contracting parties within a consortium, between the contractor and its suppliers or sub-contractors or between the host government and a neighbouring state. The legal basis of the dispute may be a contract or on an inter-state treaty. In the petroleum industry, long-term relationships need to be built, and hence the legal relationship should ideally envisage and provide for a private and flexible resolution of possible disputes and breaches of contracts that is enforceable and practical. Often, if a dispute involves a state and a contractor, the parties will seek to resolve the dispute amicably without publicity or the risk of time-consuming procedures and costs that formal legal processes can entail. This topic overview is mainly concerned with disputes that can arise between contractors and governments. It covers the following areas: