1. Oil & Gas Arbitrations in the Middle East & North Africa

2. 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)

3. 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

4. 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

5. 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

6. 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

7. Oil & Gas Arbitrations in MENA
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