Claims against Iraqi Oil and Gas: Legal Considerations and Lessons Learned

277 Pages·2010·0.956 MB·English

by  Rex J. Zedalis

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CLAIMS AGAINST IRAQI OIL AND GAS
LegalConsiderationsandLessonsLearned
Thisbookpresentsthefirstandonlycomprehensiveexaminationofthe
legal issues surrounding international debt recovery on claims against
Iraqi oil and gas. It offers a snapshot view of Iraq’s outstanding debt
obligations and an analysis of the significance of the theory of odious
debtinthecontextoftheIraqisituation.Thelistoflegalissuesexam-
ined includes relevant provisions of the 2005 Iraqi Constitution, con-
trollingUnitedNationsSecurityCouncilresolutions,pertinentarticles
ofthe2007KurdistanRegionalGovernmentoilandgaslaw(No.22)
and the many nuanced and technical questions raised thereby, legal
pronouncementsofIraqandselectedothernationsthataimtoprotect
Iraqi oil and gas, and general problems associated with recognition
andenforcementofawardsorjudgmentsthatmayinvolvesuchoiland
gasorrevenuesfromtheirsale.Alsodiscussedarethelessonslearned
by the handling of the Iraqi debt experience and the transferability of
those lessons to future situations in which resource-rich nations may
have outstanding financial obligations to other members of the world
communityortheirnationals.
Rex J. Zedalis is a member of the faculty at the University of Tulsa,
CollegeofLaw,wherehehasreceivednumerousawardsforhisexcel-
lent teaching, including an award in 2004 for the university’s most
outstanding professor. He also has been recognized for his extensive
publication record in both U.S. and European international law jour-
nals.HeiscurrentlythePhyllisHurleyFreyProfessorofLawandthe
Director of the Comparative and International Law Center (CILC)
at the University of Tulsa. He has served as a Fellow with, and a
former Assistant Director of, the College of Law’s National Energy
Law & Policy Institute. Professor Zedalis also acted as consultant to
internationalorganizations,foreigngovernments,anddomesticaswell
as international law firms during his thirty-five-year career. Professor
Zedalis is the author of The Legal Dimensions of Oil and Gas in Iraq:
CurrentRealityandFutureProspects.

Claims Against Iraqi Oil
and Gas
LEGAL CONSIDERATIONS AND LESSONS LEARNED
Rex J. Zedalis
UniversityofTulsa
CAMBRIDGEUNIVERSITYPRESS
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(cid:1)C RexJ.Zedalis2010
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noreproductionofanypartmaytakeplacewithoutthewritten
permissionofCambridgeUniversityPress.
Firstpublished2010
PrintedintheUnitedStatesofAmerica
AcatalogrecordforthispublicationisavailablefromtheBritishLibrary.
LibraryofCongressCataloginginPublicationdata
Zedalis,RexJ.
ClaimsagainstIraqioilandgas:legalconsiderationsandlessonslearned/RexJ.Zedalis.
p. cm.
Includesbibliographicalreferencesandindex.
ISBN978-0-521-19350-4(hardback)
1.Debts,External–Lawandlegislation–Iraq. 2.Petroleumlawandlegislation–Iraq.
3.Naturalgas–Lawandlegislation–Iraq. 4.Oilandgasleases–Iraq.
5.Revenuesharing–Lawandlegislation–Iraq. 6.Petroleumindustryandtrade–Iraq.
I.Title.
KMJ3532.Z43 2010
343.567(cid:2)0772–dc22 2009051478
ISBN978-0-521-19350-4Hardback
CambridgeUniversityPresshasnoresponsibilityforthepersistenceoraccuracyofURLsfor
externalorthird-partyInternetWebsitesreferredtointhispublicationanddoesnotguarantee
thatanycontentonsuchWebsitesis,orwillremain,accurateorappropriate.
Thisbookisdedicatedtomywife,Catherine,andmytwosons,Ianand
Bryce, who sustain, humor, and endure me through thick and thin, as
well as to my many teachers, mentors, and colleagues who have served
over the years as models of the academic scholar. Special recognition is
deserved by David S. Clark (Willamette University), Walter Gellhorn
(Columbia University), W. T. Mallison, Jr. (George Washington Uni-
versity), and Oscar Schachter (Columbia University). The support of
the University of Tulsa, College of Law, Faculty Research Fund; the
funding associated with holding the Phyllis Hurley Frey Professorship;
and the encouragement and enthusiasm of the College of Law’s Dean,
JanetKovenLevit,aredeservingofparticularacknowledgment.

CONTENTS
Preface pagexi
PARTONE
1. APre´cisofIraq’sDebts.................................... 3
I. Introduction 3
II. UNCCDebts:ResolvedandHalfPaid 7
III. ContractualDebtfromBorrowingandCommercial
PurchasingActivity 9
IV. CommercialDebtfromPendingGoodsandServices
Contracts 13
V. Conclusion 15
2. TheLegalTheoryof“OdiousDebt”........................ 22
I. Introduction 22
II. EssentialsoftheOdiousDebtTheory 24
III. EarlierApplicationsoftheTheory 28
IV. BasicRulesofStateSuccessionandPreexistingDebt:
Restatement 32
V. BasicRulesofStateSuccessionandPreexistingDebt:1983
Convention 36
VI. HasaCustomaryRuleDevelopedThatIsConsistentwith
WhatAdvocatesofDebtReliefActuallyWant? 40
VII. Conclusion 44
PARTTWO
3. TheDevelopmentandBackgroundofSecurityCouncil
Resolutions1859and1905.................................. 47
I. Introduction 47
vii
viii Contents
II. Resolution986:Post–FirstGulfWarResolution 50
III. Resolution1483:Post–SecondGulfWarCompleteLifting
ofEmbargo 53
IV. Resolution1546:RemovalofInsulationonPost-Transfer
ofSovereigntyContracts 58
V. Resolutions1790(2007)and1859(2008):Extensions 63
VI. Conclusion:Resolution1905 68
4. TheDevelopmentandBackgroundoftheIraqi
MeasuresPermittingDeparturefromEarlierOiland
GasContractualCommitments............................ 71
I. Introduction 71
II. Article141oftheIraqiConstitution 73
III. Article54oftheKRGOilandGasLaw(No.22) 77
IV. ReconcilingArticle141oftheConstitutionwithArticle54
oftheKRGOilandGasLaw(No.22) 81
V. Conclusion 86
PARTTHREE
5. TheConceptsof“Finality,”“Relatedto,”andAssorted
Matters:Article54oftheKRGOilandGasLaw(No.22)
andArticle141oftheIraqiConstitution................... 94
I. Introduction 94
II. TheSignificanceoftheConceptof“Final[ity]” 99
III. TheMeaningof“Relatedto”asUsedinArticle54 102
IV. SubcontractsandOtherThird-PartyArrangements 107
V. Conclusion 112
6. OldOilandGasContractsandThoseofMoreRecent
Vintage:IraqiConstitutionalProtectionsofContract
RightsandTheirSignificanceonLegalClaims............ 116
I. Introduction 116
II. OilandGasContractualArrangementsoftheKRG
Concludedbeforeorafter1992 118
III. ConstitutionalLimitationsonKRGArticle141Powers:
Article23,Second,oftheIraqiConstitutionand
Expropriations 124
IV. ConstitutionalLimitationsInherentinArticles15,23,
First,and26 130
V. Conclusion 134