Oil & Gas Arbitrations in the Middle East & North Africa

O&G ICC Arbitrations in MENA Review of oil & gas arbitration cases at ICC International Court of Arbitration between 1988 and 2012 There were 450 oil & gas arbitrations in total at ICC Court during that time period Database search found 11 oil & gas cases from MENA region That was less than 3% of total ICC oil & gas cases during that time period MENA countries had up to 67% of crude oil proven reserves and up to 52% of natural gas proven reserves in world during that time period No correlation between O&G reserves and number of disputes “ICC Oil and Gas Cases in the MENA Region” ICC ICArb. Bulletin, Vol. 25, Issue 2. p. 21, (2014)

MENA O&G Arbitration Cases Amounts in dispute ranged between US$ 4 million to US$ 10 billion There was one state investment dispute involving a production sharing contract Remaining 10 cases were commercial disputes between companies involving: 3 seismic/drilling contracts 3 construction infrastructure claims 4 sales contracts for crude oil, natural gas or LNG No joint venture disputes

MENA O&G Arbitration Cases Even though there has been recent increase in ICSID investment cases and commercial arbitrations in MENA region, there were small number of O&G commercial arbitrations during report period Number of ICC cases did not reflect size of oil & gas industry in MENA region Possible reasons include: Tradition of sulh (settlement) and musalaha (reconciliation) in region, rather than courts or arbitration Dominance of national oil companies in region, which encouraged settlement of claims rather than using arbitration Requirement to use local courts or local arbitration institutions, rather than international arbitration institutions

Shari’ah and Arbitration Arbitration has long history in Islamic World under Shari’ah The Qur’an approves of arbitration Prophet Mohammed used arbitration in tribal dispute over Black Stone in Ka’ba Shari’ah allows freedom of contract and applies general rule: “All is permitted unless specifically prohibited” Those prohibitions are generally: Gharar (speculation or uncertainty) Riba (interest or usury) Arbitration awards that violate Shari’ah prohibitions may be unenforceable in local Islamic courts Limitations on kinds of damages that can be claimed under Shari’ah: Actual, direct damages claimable if quantifiable and established with certainty No speculative damages, lost profits or loss of use Liquidated damages may be unenforceable if considered penalty

Arbitration in Islamic World GCC countries have moved from outright hostility to gradual acceptance of international arbitration by: Respecting right of parties to manage dispute resolution process without interference from courts Providing greater flexibility in choosing arbitrators, arbitral rules, institutions, seat of arbitration, governing law and language Accepting principles of Separability and Competence/Competence Basing national arbitration laws on UNCITRAL Model Arbitration Law However, parties need to be aware of many procedural hurdles to get international arbitration awards recognized & enforced in local courts, including requirements to: Requirement of special power of attorney to agree to arbitrate Properly sign and attest award locally Submit award in Arabic to local courts within limited time periods Attribute award to authority of state or monarchy

Oil & Gas Arbitrations in MENA Thank You