Legal Institutional Aspects of Interest in Oil and Gas

Question: Discuss about the Legal Institutional Aspects of Interest in Oil and Gas? Answer: There are various resources but among them oil and gas are important resources for human being. Among six core industries in US oil and gas sector is the most important industry. Predominant and pivotal role is played by oil and gas sector in economy of every sphere. There are three division of oil and gas sector. They are: Upstream, Midstream and Downstream. Oil and gas community has online portal that is, OilandGasIQ.com. About 6000 or more than that refined products are made of crude oil and natural gas. In level of competition Oil and gas industry is growing its stagnation, initiation, maturity and growth by its developmental phase (Galvin, 2005). Throughout the world there are various legal contractual concepts of government permitted international oil companies (IOC) where petroleum explorations are carried out. Oil and gas investor needs protection against risk of legal contractual mechanism. Stability and guarantee is proved by legal mechanisms by stabilizing and negotiating legal clauses. Dispute resolution generally provides arbitration manner. Generally dispute arises between IOCs and states. Legal validity is made for the states right to regulate orders stated by law. There are several policies and law which affects the oil and gas industry. All the oil and gas industries work according to some legislative rules. Aspect of those laws covers operational issues, licensing, joint venture, project and service contract, construction, acquisition, disposal, marketing and sales, diligence work and oil and gas transportation. There are some laws and policy as follows: Downstream Energy Law and Policy- The regulation and legislation of this industry are implemented by industries where downstream energy industrial deals take place. This policy is made to restructure the gas and electrical industries where regulators are approached. This legal rule is made to turn environment of work more fluid and better. Policy for natural resources energy and environmental law- International and national environmental power generation, production and consumption of natural resources is dealt with this environmental policy. In production sector many problems regarding transportation of petroleum, mining activities, air pollution, global climate affects can be raised but these problems can be solved by policy of natural resources and energy. Oil and gas investor needs protection against risk of legal contractual mechanism. Stability and guarantee is proved by legal mechanisms by stabilizing and negotiating legal clauses. Dispute resolution generally provides arbitration manner. Generally dispute arises between IOCs and states. Legal validity is made for the states right to regulate orders stated by law in the Supreme Court. This statutory laws and policies should be looked forward to work out the litigations (Chanju Park, 2009). International and relative petroleum law and policy- International petroleum industry is implemented by this law. Host government, Oil Company and investors are main part of this law. International corporate and financial investors discuss things in wide manner face to face in a practical way. For financial development of resources of petroleum stakeholders are much interested. Issues related to taxation such as economic, accountants, lawyers, engineers and geologists are solved in taxation cases. Complex, expensive and risky operations are involved with oil and gas industries. Various types of disputes are found oil and gas industries. Dispute arises in case of equipment related claims, international boundary claims, jurisdiction claim, insurance issue and claim in relation to quality and quantity. The opt for (ADR) Agreed Dispute Resolution referenced dispute to national court in terms of oil and gas industries. Jurisdiction of ADR is done in means of settlement of dispute and litigation which consist of negotiations, mediation, arbitration, conciliation, expert determination and neutral evaluation. Disagreement between two parties which should be determined outside the court forms ADR which is other term of Arbitration. Institutional or ad-hoc arbitration takes place to form International commercial arbitration. An established arbitral institution does not administered ad-hoc arbitration. Institutional arbitration also has some advantages: In this arbitration pre established procedures and rules are defined in a timely ways and manner. Institutional administrative reluctance chooses from record which is proven. There are also many demerits of institutional arbitration, administrative fees can be considered as dispute where actual amount is not defined. Bureaucracy is another reason which is responsible for delays and extra cost for which the response of the parties turn unrealistic. Arbitrators rule outside the arbitrations which are established and dispute takes place in ad hoc arbitration. Cost effectiveness is the example of ad hoc arbitration. It can be said that to do resolution in oil and gas industries despite of litigation arbitration is choose because it has low cost effectiveness and it is a fast process and litigation is cost effective and slow process. Arbitration is preferred in international resolution and it can also be said that dispute in resolution of oil and gas industry is done by ADR method (Biti and Rrugia, 2014). It can be said international commercial arbitration can be proved more preferable than litigation. There are some reasons as follows: Neutrality of process- Several national jurisdictions is involved with the oil and gas contract. Willingness to do the contract is not supported by dispute of court. Contractual agreement is done in terms of neutral arbitration. In the ICC rules confirmation of court shows the common law principle. The court states the IBA rules which can make the works bias free. Commonwealth Coatings Corp. v. Continental Causality Co is awarded in impartiality ground. Party autonomy- ADR generates autonomy degree which is not available under the litigation process other than arbitration process. International commercial arbitration has a fundamental principle that is Party autonomy. National and international laws of arbitration of oil and gas industries follows rules under the law of arbitration. In Article 19(1) of UNCITRAL Model law, it is regulated that, parties are free in subject of provision to make the tribunal of arbitral law and proceedings conducted by law. In United Kingdom Arbitration Act of 1996 stated that the partys freedom should be agreed on the dispute resolved by the parties in oil and gas industries who are forming contract with each other seeing the rules and regulations as per statutory laws made by government. The Supreme Court has stated the autonomy principle that in terms of court appeals decision jurisdiction of ADR is done in means of settlement of dispute and litigation will take place. Cost Effectiveness and speed- Litigation is very costly and slow process unlike to arbitration. It is a lengthy court process. In respect to international arbitration is inexpensive process than arbitration. In petroleum operation interruption is followed in length of time. Arbitration takes less time than litigation. Enforceable of Award- Enforceability award is the greatest merit of arbitration. In terms of international commercial arbitration 149 contracting states in New York is related with enforceability award of arbitrary which is rendered with different states. In Article 16(1) of UNCITRAL Model Law states some law for rules of doctrine of reparability. It states that contract of arbitral clause should be treated as an independent agreement in terms of contract. In arbitration terms between California Asiatic Oil Co. V. Government of Libya Arab republic and Texaco overseas Petroleum Co (TOPCO) connects the arbitral clause (Adams, 2012). Confidentiality of proceedings- Privacy on the ground of proceedings of arbitrariness in ability of disputing parties. The consent of arbitrariness is followed in divulging ways to keep some confidential parts of the litigation. Arbitration Act of 1996 stated that the partys freedom should be agreed on the dispute resolved by the parties in oil and gas industries. This is decided in the cases of arbitrariness. Non-adversarial- This is all a process where dispute settlement takes place. Civil and criminal justice is focussed in non court dispute resolution. In Black law dictionary it is stated that decision making by court is done in a neutral order following relevant laws. Principle is taken by winner in adversarial approach and in non adversarial approach principle is based on winning motive. Oil and gas industry maintains relation with winning principle of arbitration unlike to litigation. There is advantage in terms of maintaining good business relationship in litigation case with the parties ending resolution process of dispute. Parties of oil and gas industries prefer contracts of ADR litigation process because of the several reasons discussed above (Ali and Huang, 2012). Dispute of parties to arbitration is choosing by the resolution process. It can be said arbitrariness is non adversarial process where principle is based on winning motive. Other than UK there are other states where arbitrariness as per law is followed in sections below: The Toronto lawyers said that in oil and gas industries large numbers of joint venture of partnership as arbitrator on domestic ADR firms. Saudi Arabia and Libya are largest suppliers of energy industries from 1960. In 1958 New York and 200 plus countries have taken decision of involvement of arbitration with business parties and they have not chose litigation in terms of dispute resolution. ICSID has started the framework of international arbitration with several countries. Arbitration place and JAMSs Toronto Resolution Centre has applied ratification process in Canada (Hunter, 2000). Norton Rose Fulbrights Hunter said that, it depends on jurisdiction that which is faster arbitration or litigation. But it is also said that in domestic fracases is faster than arbitration of companies in Alberta. The International Chamber of Commerce, the Hong Kong International Arbitration centre and American Arbitration Association has modified rules in hearings. Interim relief can be gained by emergency arbitration. Arbitration is preferred by energy firms because of tribunals choose by duelling parties. PDPs (proved developed reserves) and QCRs (Quality Control Report) after doing research has came to a conclusion that in energy law practices arbitrator is far better process than litigation to resolve disputes (Rangel, 2006). Quotient courtesy is tending civil law system which is made by European counsellors or arbitrators. Both domestic energy disagreement and international energy dispute has taken large growth on Arbitration. Canada fossil fuel industry in ad hoc affairs is busy in operating arbitrary rules to classify the PPA association of gas power electricity generation plants and petroleum and diesel unit. UNCITRAL Model Law states some law for rules of doctrine of reparability. It states that contract of arbitral clause should be treated as an independent agreement in terms of contract. In arbitration terms between California Asiatic Oil Co. V. Government of Libya Arab republic and Texaco overseas Petroleum Co (TOPCO) connects the arbitral clause (Born, 2009). Industrial sector can be said as cradle of international commercial arbitration which takes special development in oil and gas industrial projects. From six to seven decades ADR (Alternative Dispute Resolution) has take wide space with various oil companies. Major contract and deal is done with electricity, oil and gas, wind or solar industries. Instead of litigation arbitrariness is playing in a worldwide basis in propagation term. The cost handled is 265 arbitrations and 18.3 percent which has been increased from 2012. Throughout the world there are various legal contractual concepts of government permitted international oil and gas companies (IOC) where petroleum explorations are carried out. Oil and gas investor needs protection against risk of legal contractual mechanism. Stability and guarantee is proved by legal mechanisms by stabilizing and negotiating legal clauses. Dispute resolution generally provides arbitration manner. Generally dispute arises between IOCs and states. Legal validity is made for the states right to regulate orders stated by law (Savarese, 2015). In this assignment it is discussed that to resolve dispute in international commercial system, arbitration is better process than litigation which is cost effective and faster process. Several articles as per law and sections have been described to proof that the fact is true. Many legal professional has also written it and after much research has analyzed the critical understanding of the mentioned question in the assignment. In several articles the ADR method has been described. Agreed Dispute Resolution (ADR) referenced dispute to national court in terms of oil and gas industries. Jurisdiction of ADR is done in means of settlement of dispute and litigation which consist of negotiations, mediation, arbitration, conciliation, expert determination and neutral evaluation. All these have been clearly stated in broader aspect which is legally stated about oil and gas industries (Halland et al., 2015). References: Galvin, C. (2005). Legal institutional aspects of interest in oil and gas. Ali, S. and Huang, H. (2012). Financial Dispute Resolution in China: Arbitration or Court Litigation?. Arbitration International, 28(1), pp.77-100. Biti, B. and Rrugia, B. (2014). International Commercial Arbitration as an Alternative Method to Solve International Commercial Disputes. AJIS. Born, G. (2009). International commercial arbitration. Austin [Tex]: Wolters Kluwer Law Business. Chanju Park, (2009). Arbitration Agreement and Arbitral Award. HUFS Law Review, 33(4), pp.195-230. Savarese, E. (2015). THE ARBITRAL PRACTICE OF THE INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES (ICSID) IN 2014. The Italian Yearbook of International Law Online, 24(1), pp.431-452. Rangel, V. (2006). Settlement of Disputes Relating to the Delimitation of the Outer Continental Shelf: The Role of International Courts and Arbitral Tribunals. The International Journal of Marine and Coastal Law, 21(3), pp.347-362. Hunter, M. (2000). International Commercial Dispute Resolution: The Challenge of the Twenty-first Century. Arbitration International, 16(4), pp.379-392. Halland, H., Lokanc, M., Nair, A. and Kannan, S. (2015). The extractive industries sector. Washington, D. C.: International Bank for Reconstruction and Development / World Bank Group. Adams, J. (2012). Arbitration Court powers to stay litigation because of arbitration agreements. ac, 1997(1).