Arbitration: The Underused Alternative for Oil and Gas Disputes
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Arbitration clauses are a staple in international energy contracts and oil and gas cases are the largest category of cases filed with ICSID, the World Bank’s arbitration division (26 percent of recent cases filed, 39 percent counting other energy cases). Likewise, oil and gas cases frequently come before panels of all major international arbitration institutions. Yet the oil and gas industry too often avoids arbitration. Two widely used oil and gas form contracts—the AAPL Joint Operating Agreement and the Producers 88 oil and gas lease—almost never mention arbitration.
This article looks at why lessees, lessors, equity investors, operators, and other oilfield parties should consider wider use of arbitration.
Arbitration is better than commonly believed. The benefits of arbitration often outweigh the costs. Myths about delay, cost, and risk because of a limited ability to appeal are overblown and have led to an inefficient avoidance of this flexible consensual procedure.
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