Petroleum Arbitration

313 Pages·2016·22.11 MB·English

Petroleum Arbitration: Applicable Law and Appropriate Arbitral Forum (A
Study of Petroleum Disputes in Arab Countries)
Alsaidi, Abdullah Mohammed

The copyright of this thesis rests with the author and no quotation from it or information
derived from it may be published without the prior written consent of the author

For additional information about this publication click this link.
http://qmro.qmul.ac.uk/jspui/handle/123456789/1844

Information about this research object was correct at the time of download; we occasionally
make corrections to records, please therefore check the published record when citing. For
more information contact [email protected]
Petroleum Arbitration:
Applicable Law Appropriate Arbitral Forum
and
(A Study Petroleum Disputes in Arab Countries)
of
Abdullah Mohammed Alsaidi
A Thesis Submitted in Fulfilment the Requirement for the Award
of
Doctor Philosophy Queen Mary, University London
of of at of
February 2004
BL
UNW.
Abstract
Petroleum in in
the
maintains a primary role world energy market as well as
the daily life livelihood Arab
and of petroleum countries, since these countries are
highly dependent from
the this
upon revenues exploitation and export of resource.
Therefore, the industry is fraught interests,
petroleum with conflicts of primarily
between developing
petroleum exporting countries and petroleum companies
by their home developed The
sustained states, most of which are countries. majority
disputes have been by have been
of settled arbitration, most of which controversial.
The question of the applicable law to the merits of a dispute is intimately
to the tribunals. The
related controversies surrounding arbitral prevailing perspective
during the 20`h to today, that host
of western scholars century, and still an extent was
law inadequate, host Therefore,
these
state was and state courts were partial. scholars
held dispute between host be
any arising a state and a petroleum company should
dealt international dispute be far from host
the
with as an and should settled away
by laws host
than that the
state's court and governed or rules other of state.
This
thesis the the
examines past and present of petroleum arbitration,
determining
the to
perceptions and practice, and aims suggest a modified method of
the law to disputes. It that to the
applicable petroleum argues contrary previous
the legal infrastructure host has developed the
allegations, of states over years and
law disputes. It further
today to the
offers an adequate govern merits of petroleum
The focuses
thesis
suggests a semi-localisation approach. only on arbitration as a
disputes, limits itself Arab
to
method of resolving such and petroleum countries.
The have
thesis that their
argues petroleum contracts own characteristics and
therefore be to the ICSID Convention to
should not automatically subject or other
investment The is for
principles of arbitration. time ripe the establishment of a
institution disputes
specialised to undertake the settlement of arising out of petroleum
transactions.
2
TABLE OF CONTENTS
Table
9
of abbreviations
.................................................................................................
Table
11
of cases
..............................................................................................................
Index laws, legislations
16
of and conventions
.............................................................
General Introduction The Issue Stated
20
-
.................................................................
PART ONE: INTRODUCTION
24
..................................................................................
Chapter One: Themes, Hypothesis Methodology 25
and
........................................
1.1. Themes 29
................................................................................................................
..
1.2. Hypothesis 3 3
........................................................................................................... ..
1.3. "Institutional" (reflection) 37
approach
....................................................
1.4. Methodology 43
....................................................................................................... ..
Chapter Two: The Development Petroleum Arbitration 45-
of
............................. ..
1.1859 to 1950 45
........................................................................................................... ..
1.1. The 46
early period century
-19th
............................................................... ..
1.2. Early 20th 47
century
.................................................................................... ..
1.3. The American Factor the Post-World War One Distribution 48
and
........... ..
1.4. World War Two Period 51
........................................................................... ..
2.1951- to 52
present
.................................................................................................... ..
2.1. Post World War Two Period 52
................................................................... ..
2.2. The Early Nationalisation 53
....................................................................... ..
2.3. The OPEC 55
establishment of
.................................................................... ..
2.4. Bilateral Investment Treaties 55
...................................................
2.5. The Energy Charter Treaty 57
.....................................................
3. The Development Petroleum Arbitration 59
of
.......................................................... ..
3.1. Notion 60
of petroleum arbitration
.............................................................. ..
3.2. `Early(cid:30) Disputes 61
...................................................................................... ..
3.3. From hoc to institutional ICSID 62
ad arbitration
-
..................................... ..
3.4. Main 63
characteristics of petroleum arbitration
......................................... ..
3.5. Are disputes investment disputes? 65
petroleum
...........................................
4. Concluding 68
remarks
.................................................................................................
PART TWO: THE APPLICABLE LAW TO THE MERITS OF PETROLEUM
DISPUTES 70
...................................................................................................................
Introductory
71
remarks
...........................................................................
Chapter One: The Practice Examined-The Case Law 74
.......................................
Introductory
74
remarks
....................................................................................................
2.1. Petroleum Development Ltd. Sheikh Abu Dhabi 75
v. of
.........................................
(a) The facts
75
......................................................................................................
(b) The dispute 77
the
nature of
............................................................................
(c) Applicable law 79
............................................................................................
(d) Concluding
80
remarks
....................................................................................
2.2. Ruler Qatar International Marine Oil Company Ltd 82
of v.
.....................................
3
(a) The facts 82
......................................................................................................
(b) The dispute 83
the
nature of
............................................................................
(c) Applicable law 84
............................................................................................
(d) Concluding 86
remarks
....................................................................................
2.3. Saudi Arabia Arabian American Oil Company (ARAMCO) 87
v.
...........................
(a) The facts 87
......................................................................................................
(b) The the dispute 88
nature of
............................................................................
(c) Applicable law 91
............................................................................................
(d) Concluding 94
remarks
....................................................................................
2.4. Libyan Cases 97
.........................................................................................................
97
Introductory
remarks
........................................................................................
2.4.1. BP Exploration Company (Libya) Limited the Government the
of
v
Libyan Arab Republic 97
......................................................................................
(a) The facts 97
..................................................................................................
dispute 100
(b) The the
nature of
......................................................................
102
(c) Applicable law
......................................................................................
2.4.2. Texaco Overseas Petroleum Company California Asiatic Oil
and
105
Company the Government the Libyan Arab Republic
of
v.
...........................
105
(a) The facts
................................................................................................
dispute 105
(b) The the
nature of
......................................................................
Applicable law 106
c).
......................................................................................
2.4.3. Libyan American Oil Company (LIAMCO) the Government the
of
v.
108
Libyan Arab Republic
....................................................................................
108
(a) The facts
................................................................................................
dispute 109
(b) The the
nature of
......................................................................
110
(c) Applicable law
......................................................................................
112
Concluding
remarks
.......................................................................................
Oil Company
State Kuwait The American Independent
2.5. Government of the of v.
115
(AMINOIL)
................................................................................................................
115
(a) The facts
....................................................................................................
116
dispute
(b) The the
nature of
..........................................................................
118
(c) Applicable law
..........................................................................................
119
Concluding
remarks
...................................................................................................
122
Chapter Two: The Theories Examined
..............................................................
122
Introductory
remarks
..................................................................................................
122
1.1. Determination the Applicable Law
of
.................................................................
1.1.1. Determination of the applicable law by the parties (party autonomy). 122
(a) How the the law 124
parties choose
............................................................
127
(b) Limitations to
party autonomy
.............................................................
(c) Party in Islamic law (Shari äh) 128
autonomy
............................................
(i) Party in Shari'ah 128
autonomy
............................................
(ii) Conflict laws (party in Arab 131
of autonomy) codifications.........
(d) Concluding 132
remarks
..........................................................
1.1.2. Determination the law by the 133
of applicable arbitrators
........................
(a) Introductory 133
remarks
............................................................................
(b) How the the law (the 134
arbitrators choose applicable methods)
..............
1) The lex fori in determination law 136
the the
as a guide of applicable
....
2) Application laws
of the conflict of system of the country which would
have had jurisdiction in 136
the
absence of an arbitration clause
................
4
3) Application of the closest connection rules either to the parties or to
(s) 137
the to the
arbitrator or place of enforcement
.....................................
4) Cumulative laws (Tronc
application of relevant conflict of rules
13 8
com m un)
.................................................................................................
5) Application laws by the
the
of conflict of system established
139
arbitrators
...............................................................................................
6) Application international law 139
of general principles of private
..........
7) The direct law (voie directe) 139
application of a substantive national
...
8) Application law 140
of a non-national standard
.......................................
(c) Limitations 140
on arbitrators' choice
.........................................................
1.1.3. Determination law by in
the the
of applicable arbitrators petroleum
disputes 141
...........................................................................................................
(a) Delocalisation 142
theory
............................................................................
143
(b) Localisation
theory
...............................................................................
147
(c) Semi-Localisation theory
.....................................................
149
1.2. Applicable law
substantive
.................................................................................
149
Introductory
remarks
................................................................
1.2.1. Public international law 150
........................................................................
(a) The international law 150
notion of public
..................................................
international 151
(b) Are treaties?
petroleum agreements
................................
(c) The in 154
approach practice
.......................................................................
1.2.2. Transnational law (or lex 156
mercatoria)
..................................................
157
(a) The lex
notion of mercatoria
................................................................
(b) Does the lex mercatoria constitute a genuine legal system? 158
................
(c) The in 160
approach practice
.......................................................................
law by 163
1.2.3. General
principles of recognised civilised nations
...................
law 165
(a) The the
notion of general principles of
..........................................
independent legal 166
(b) Do these principles constitute an system?
...............
169
in
(c) The
approach practice
.......................................................................
174
1.2.4. Quasi-international
agreements
............................................................
175
(a) The
notion of quasi-international agreements
......................................
176
in
(b) The
approach practice
......................................................................
177
1.2.5. UNIDROIT Principles
.........................................................................
177
(a) What UNIDROIT Principles?
are
.........................................................
(b) The in 178
approach practice
......................................................................
(c) Can these Principles 180
govern petroleum contracts?
...............................
1.2.6. National law 181
.........................................................................................
(a) Which law 181
national
..........................................................
(b) Shari 'ah law 184
as national
....................................................
186
1.2.7. Concluding
remarks
.............................................................................
PART THREE: THE NEW TRENDS CONCERNING PETROLEUM
190
ARBITRATION
.........................................................................................................
Chapter One: Doctrinal Background: Sovereign Immunity Public
and
Policy 191
.................................................................................................................
191
Introductory
remarks
..................................................................................................
1. Sovereign immunity 191
...............................................................................................
1.1. Immunity from jurisdiction 194
.....................................................................
1.2. Does immunity? 195
to
submission arbitration constitute a waiver of
..........
1.3. Immunity from 19 8
execution
........................................................................
5
1.4. Distinction between
201
a public act and a private act
..................................
1.5. Is the industry
203
petroleum
a commercial activity?
...................................
2. Public
policy 208
..........................................................................................................
Introductory
remarks 208
......................................................................................
2.1. The
209
notion of public policy
.................................................................
2.2. The in Islamic law
notion of public policy 210
.........................................
2.3. The
212
role of public policy
.....................................................................
2.4. The levels
215
of public policy
..................................................................
2.4.1. Domestic international
215
public policy and
public policy
..............
2.4.2. Substantive its
public policy and overlapping with mandatory
rules 219
........................................................................................................
(a) Substantive
220
public policy
..............................................................
(b) Mandatory
222
rules
............................................................................
(c) To does
225
what extent public policy overlap with mandatory rules?
Concluding
225
remarks
...................................................................................................
Chapter Two: The Solution the International Centre for Settlement
of
of
Investment Disputs (ICSID)
228
................................................................................
Introductory
228
remarks
..................................................................................................
1. Composition ICSID
229
of
...........................................................................................
1.1. Administrative Council
230
...........................................................................
1.2. Secretariat
230
................................................................................................
1.3. The Panels
231
...............................................................................................
2. Jurisdiction ICSID
231
of
.............................................................................................
2.1. Consent
the 232
of parties
..............................................................................
2.2. Identity (ratione
the 237
of parties personae)
................................................
2.3. Nature dispute (ratione
the 240
of
materiae)
.................................................
(a) Legal dispute 240
.........................................................................................
(b) Investment 241
............................................................................................
2.4. Jurisdiction ICSID BITs 243
of under
.............................................
3. The law 245
applicable substantive
..............................................................................
3.1. Which law the 246
can contracting parties choose
........................................
3.2. Hierarchy laws (national international) 247
of or
..........................................
4. Why Petroleum Disputes Fall Directly Jurisdiction ICSID251
the
should not under of
Concluding
255
remarks
...................................................................................................
Chapter Three: Development Host States Laws National
of at and
International Level
256
...............................................................................................
Introductory
256
remarks
..................................................................................................
1. The Organisation the Petroleum Exporting Countries (OPEC) 257
of
.........................
1.1. The OPEC
257
evolution of
...........................................................................
1.2. Principal OPEC
260
aims of
..........................................................................
1.3. Resolution the 16th OPEC Conference (Resolution XVI. 90) 261
of
............
2. Rules Arab
263
of some petroleum countries
...............................................................
2.1. Legislation
263
...............................................................................................
2.2. Practice
267
....................................................................................................
Concluding
269
remarks
...................................................................................................
Conclusion Proposal
270
and
...................................................................
Bibliography
280
.................................................................................
6
his dedicated
? is fattier, left
thesis to the
memory of my who us so sudderc4y.
9Lcknow(edgment
Misters
I Dr. Loukas A for
to Professor sultan DM Lew
am grateful
and
,
for
the thesis
supervising and considerad(e assistance andguidance.
for her
I in
am alsogratefuf to my mother constant pray order to seize the moment,
daughter for
to
and my wife and my patiently tolerating my absence and waiting
for
endlessly my return.
8
Table
of abbreviations
AAA American Arbitration Association
AC Law Reports, House Lords (Appeal Cases)
of
AJIL American Journal International Law
of
Arbitration Arbitration, Journal Chartered
the
of
Institute Arbitrators
of
ASA Bulletin Swiss Arbitration Association Bulletin
ASIL Proceedings American Society International Law.
of
Proceedings
BYIL British Yearbook International Law
of
ICJ International Court Justice
of
FSIA Foreign Sovereign Immunity Act (USA)
GAFTA Grain Feed Trade Association
and
International Chamber Commerce
ICC
of
International Chamber Commerce
ICC Bulletin
of
International Court Arbitration Bulletin
of
International Council for Commercial
ICCA
Arbitration
International Comparative Law
ICLQ
and
Quarterly
ICSID International Centre for Settlement
of
Investment Disputes
ICSID Rep International Centre for Settlement Investment
of
Disputes Reports
ILA International Law Association
ILM International Legal Materials
ILR International Law Reports
Iran-US CTR Iran-US Claims Tribunal Reports
J Int'l Arb Journal International Arbitration
of
9