Dispute Resolution Mechanisms in the Petroleum Sector

11. Conclusion

The causes of disputes listed above are not exhaustive. There are many other issues which may result in a dispute among the parties of a petroleum contract or between a host state and a foreign investor. A more comprehensive overview of the causes of conflict in the extractives sector is provided in the conflict and extractives topic overview. This paper only covers the most commonly occurring types of disputes.

For a foreign investor, a key question will be whether such disputes are to be referred to the country’s normal courts and tribunals or to a separate non-domestic agency such as an international tribunal. When signing a contract or investment treaty, it is advisable for both industry and host governments to analyse the potential for disputes and identify the most appropriate dispute resolution procedures. Since it is not possible to make provision for all the circumstances that may arise, the parties are advised to agree on a dispute resolution mechanism as early as possible, preferably as soon as the dispute arises, and if possible to take a clearly defined multi-tier approach to the dispute, starting with the non-adjudicative, most constructive and objective approach to ensure that business relationships are maintained during the dispute resolution process.