Resolution of energy disputes through arbitration courts has always been one of the most popular international arbitration cases. According to computed stats, Energy Disputes are responsible for more than 50% of all cases received by arbitral tribunals, according to the ICC. This, therefore, goes out to show how well the energy sector is closely related to Arbitration.
Despite the fact that Arbitration and the energy sector are highly related, there is a growing belief that international Arbitration could do more to quell the grudges that come from parties that have awards against them. one of the major suggestions is that arbitrators should ensure that they have enough knowledge of the energy sector to get a ground knowledge of the issue they are presiding on.
Also, given the sensitivity and complexity of the sector, arbitrators are expected to carry out full disclosure so that there is a clear air during cases.
Types of Energy Disputes That usually arise in Arbitration
Joint Venture and Joint Venture Operating Agreement (JOA) Disputes
As far as the energy sector is concerned, multi-contract transactions such as Joint Venture and Joint Venture operating agreements will always take place and would always be the bedrock in which energy disputes will continue to erupt. This trend is not exactly farfetched as these contracts are set to help parties when set. Joint Venture agreements are extremely effective for allocating risks, increasing capital, and for positive exchange of expertise that engineer the development of the sector.
Joint Venture Operating Agreement (JOA) is a popular type of Joint Venture agreement with which contracting parties to the agreement are used in designating the operator, the joint operating committee, and the technical and commercial framework of the project in question.
Disputes mostly stem up from a JOA when there is disagreement on the required standard of performance/obligation between operators and Non-operators’ parties. Another source of disputes could be in a deadlock in rights when a Joint Venture agreement gives the contracting parties equal power. Also, disputes can arise when a defaulting party refuses or fails to carry out call cash at the expected when the operating partner requests it.
Arbitration courts for energy dispute settlement are usually faced with the JV and JOA cases as much as other cases related to the energy sector.
Review of gas price
Another common issue that leads to energy disputes and arbitration courts is setting gas prices, which is extremely delicate. Unlike commercial Arbitration, when Arbitration courts try to look for the party liable for default of order compensation, gas prices are handled quite differently. The arbitral tribunal must have to determine whether the parties have met the requirements on which price adjustment can be implemented. If the requirement has been met, the arbitrator will be tasked with determining and enforcing the adjustment.
For Gas pricing, the arbitrator must be familiar with the energy sector and have, at the very least, knowledge about the essential principles that guide the market.
Engineering and Construction
Despite engineering and construction being a totally independent sector on its own, disputes on the energy sector also overlap with it. Disputes can arise from the planning, operations, and construction of energy infrastructures. Construction-energy disputes could stem from a commercial perspective as costs and could also involve different states when there are issues of defective imported equipment and delays in arrangements.
State measures and policies
As already stated, energy disputes can also be between states. Usually, arbitration courts for energy dispute settlement are always on cases between states involved in disputes due to grievances about the other regulation policy on gas rates and other energy services that affect it.
Apart from states disputes, foreign investors also take host states where investments are made to the arbitration courts on the allegation that the latter policies triggered an adverse effect on the gains and rights of the investor.
States Disputes On International Boundary
One of the raging disputes the arbitration court is faced with is the issue of boundary energy exploration. These types of disputes involve oil and gas fields that are located in waters and oceanic areas. Generally, states usually go into deadlock disputes on who gets to control underwater gas and oil fields, with the arbitration courts determining whose nation gets to control the field.
Third Parties Disputes in The Energy Sector
Unsurprisingly, disputes in the energy sector is not only limited to the main stakeholders in the contract as third parties could also get into the heat. Third parties dispute usually arises from issues of service providers, subcontractors, and suppliers in JV agreements
The energy sector is one of the most important sectors in international Arbitration and has continued to be responsible for the largest disputes handled by arbitration courts. While there are more ways than energy disputes and arbitration courts can continue to grow in harmony, the relationship as it stands is quite encouraging with the evidence proven with available statistical data.
Arbitration courts for energy dispute settlement will continue to be the popular means to resolve disputes, and it is important that parties going into the Energy dispute contract get the right information.
Several top arbitration firms with highly placed arbitrators can help people get help from an energy contract get the right information and counsel on how an investment law should be drafted. Rattsakuten is one of the major firms with several expert arbitrators in the energy sector who have successfully be able to help clients get the best out of a dispute. Intending Clients can contact the firm management for more enquires on the institution process
Rattsakuten is a leading law firm focused on Commercial Arbitration and Dispute Resolution. Based in Sweden, Rattsakuten handles dispute resolution and Arbitration matters before the SCC (Swedish Chamber of Commerce), ICC, HKIAC, and several other Arbitration tribunals.