INTRODUCTION
Today more than ever throughout the world, everyone is aware,
according to some petroleum specialists that this product would become rare or
disappear probably by 2040s or 2050s. On the basis of the date of January 1,
20061, the oil reserves of our planet still had,
probably, between 35 and 42 years of reserves. These world reserves of oil were
presented as follow: Middle East 57.6%, North America 16.5%, Central and South
America 8%, Africa 7.9% and 10% for other parts of the World. Let us note that
this projection does not take into account possible technological advances. But
according to specialists' in the sector, the reserves could actually be much
more important. They are even likely to double thanks to unconventional
resources. So what is it exactly? The heavy oil is essentially localized for
example in Venezuela2 and in Canada. A type of
crude oil more difficult and expensive to operate but which could multiply
reserves of Canada and make it the second country in terms of oil reserves
after Saudi Arabia. You see well that oil still has beautiful days in front of
it.
So throughout our planet, several petroleum contracts were
signed, are being signed and much more will be signed between several petroleum
companies and the various states. The economic competition of leadership
between the economic powers, is felt between the industrialized and emerging
countries like China (which has become since 2003, the second crude oil
consumer in the world, behind the United States and in front of Japan), India,
Brazil and many others which are becoming major consumers of crude oil
necessary to the rapid growth of their economies. Not only these cases, but
discoveries of petroleum reserves becoming increasingly important in oil
producing countries and non-oil producing countries, attract our attention. The
fear and the end of "the era of the whole oil" which are announced with as
consequences the depletion of large petroleum reserves in the world seem to
create other situations. These situations today push several States and
companies to multiply petroleum investments. These investments often lead to
the juicy petroleum contracts, signed today during the peace periods, the war
periods or postwar periods. This is the case of the
1 According to a report presented
by a French journalist, Marie-Sophie Carpentier, in his «journal de l'
economie» for TV5.
2 The fifth largest exporter
of oil and holder of the first gas reserves in South America estimated at 4.15
billion m3. Venezuela is the Andean country, where 26 companies operate oil
companies, including Total (France), British Gas (UK), Petrobras (Brazil),
Exxon Mobil (USA) or Repsol (Spain)
most petroleum contracts signed in Iraq, Kuwait, Congo
Brazzaville, Angola, Sudan, etc. Several industrialized countries, with high
technology of Petroleum Research are multiplying their research in this domain
in order to control the petroleum strategic areas in the world. The new
emerging countries such as China is also noticed in several petroleum contracts
signed in recent years by its petroleum companies with many oil-producing
countries such as Iran, Saudi Arabia and some countries in Africa where its 1/3
of crude oil comes from Sudan, Algeria and the "oil emirates" of the gulf of
Guinea: Nigeria, Angola, Equatorial Guinea, Sao Tome & Principe, Gabon and
Congo Brazzaville. So petroleum contracts are signed between host States and
foreign petroleum companies or between states, with many different agreements
such bilateral or multilateral ones for the protection of private foreign
investment.
But in front of all these agreements, several disputes with
different origins always emerge between the petroleum multinational or
transnational companies and the sovereign host States, owners of petroleum in
their subsoil. Some states may even modify or deliberately violate the terms of
certain clauses of petroleum contracts prior to their regime. Some may seek
renegotiation or revision of the previous petroleum contracts (This is the case
of Venezuela of Hugo Chavez, Russia of Vladimir Vladimirovich Putin, and so
on.). Can we choose this option? Several lawyers are thinking about the legal
regime of such contracts before and after its coming into force by the
contracting parties, namely the applicable law and dispute settlement
mechanisms in these conflicts between sovereign states, the only subjects of
international law and foreign companies that do not have international legal
personality required. Therefore arises at the international level, the issue of
the protection of foreign investments at any time and in any circumstance in
compliance or legality and in compliance with contractual commitments (national
or international) undertaken between the contracting parties .
The protection of investments can be seen as the whole of
principles and rules of national and international law, which have as object to
prevent or repress any public attack made by a State against an international
investment, in this case against a private foreign investor. In international
practice, and more specifically in the field of economic relations and economic
development agreements, contracts between a state, a subject of international
law, and foreign private entity (companies, corporations or multinational), are
signed. The main problem in such contracts called «State contracts»
is that any foreign investor (the foreign private petroleum company) which
contract with a State seeks legal formulas which will enable him to minimize
potential risks that can result from the nature of its contracting party facing
the vicissitudes of the evolution of international law, of legislative
administrative arbitrariness, and we can also ask ourselves the question to
know what really is the legal nature of the State because there are some
subdivisions in each state, which also lead to a lot of problems. That's why
the company will seek through the clause of choice of law, in the process of
the formation of these state contracts, to negotiate with the host state the
insertion of some clauses which are intended to neutralize the domestic law.
The aim of these kinds of practices is to avoid that the contract being
governed by the law and the jurisdictions of the host state. It's possible by
providing or choosing as choice-of-law clause either the national law of the
host state by inserting the stabilization clause of law, arbitration clauses,
and intangibility
clauses3, or by the use of a
national stabilized law (it's indeed the case of majority of several petroleum
contracts), by a combination of the host state law with the principles of
international law (in its various formula of course) or general principles of
law or Pacta Sunt Servanda or the transnational law upheld by a big network of
BITs (Bilateral Investment Treaties) and TMIs (Multilateral/regional
instruments of Investment Treaties). We also have to take an account the
arbitration clause (arbitration clause) which is in the process of formation of
state contract. We would therefore be before a practice of arbitration "without
privity" based on the one hand on a State offers arbitration contained in the
domestic law, BITs or IMI [such as ICSID, NAFTA and the Energy Charter Treaty
(ECT), on the other side on a request for arbitration by the foreign private
party according to the recent evolution of International law.
The evolution of state contracts spark off sharp criticisms
between different trend (doctrine, precedential, legislative) of the Third
World countries (defending a position that the petroleum contracts must be
governed by the domestic law of the host State of the investment), and the
developed countries. We can refer to various cases law of the Permanent Court
of International Justice4 (PCIJ), the predecessor
of the International Court of Justice 5(I.C.J)
The origin of the phrase "state contract" is not new. it has a
doctrinal origin whose paternity would be surely the British F.A Mann to have
employed it for the first time in his study published in
19446 Even though it dealt with an issue of
International loan7. however according to the
French doctrine, the phrase was used in 1924, before the publication of the
above mentioned article of Mann, also about international borrowing without
guaranteeing in the legal literature that this first appearance acted on the
concept State Contract. But, since this debate is in line within the scope of
the international investments law, and even if the term State contract has
emerged about another category of contracts to the international borrowings
i.e. the borrowings of a State to creditors
abroad8. We have to emphasize that it was precisely
about investment contracts that the concept of State contract has expanded. It
became familiar about investments, more specifically about the petroleum
investments9.
3 See Prosper Weil, Les Clauses
de Stabilisation ou d'Intangibilité Insérées dans les
Accords de Développement Economique, in MELANGES OFFERTS A CHARLES
ROUSSEAU 301, 307- 08 (A. Pedone éd., 1974)
4 Affaire des « Emprunts
serbes et brésiliens »du 12 juillet 1929
5 Affaire de l' «
Anglo-Iranian Oil Co » du 22 juillet 1952, Rec.1952, p.93 ; affaire de la
sentence « Aramco »DU 23 Août 1958, R.cr.D.I.p.1963,
p.272s.
6 Article entitled «The Law
Governing State contracts», BYBIL, 1944.11
7 Ch. Leben « Retour sur la
notion de contrat d'Etat et sur le droit applicable à celui-ci »in
mélanges offerts à Hubert et Thierry. L'évolution du droit
international, Paris, Pedone, 1998, p.249
8 It is about such contracts
that F.-A. Mann, has used the term state contract, see, "The law governing
state contracts», BYBIL, 1944, p. 11 resumed in F.-A. Mann, Studies in
International Law, op. cit. p. 178-210. But, below, see the contribution of Mr.
Kamto who located phrase «Contract State» at G Jèze, in a
course at the Hague in 1925, also about public borrowing. See also G.R also
Delaume, Des stipulations de droit applicable dans les accords de prêt
et de développement économique et de leur rôle , RBDI,
1968, p. 336-364
9 See the different disputes
emerged between the host states and the petroleum
The debate is therefore emphasized on the issue of legal
regime of such contracts called petroleum contracts. They are the kind of
contracts between a State, subject of international law and owner of the right
of access to all its resources, namely all its petroleum, existing in its
subsoil of the land, islands, internal waters, territorial sea, exclusive
economic zone and continental shelf to the whole of it
territory10, and a foreign private company
(petroleum company) in the field of natural resources. Any State is sovereign
in international law and therefore competent to exert full authority over its
subsoil susceptible of containing resources and that any access to its
petroleum by any petroleum company goes through the signing of a contract with
the State itself as a subject of international law or public persons acting on
their behalf (to the notable exception of the rights of access to the private
sub-soil in the USA.). The state, in international law recognized sovereign, is
not subject to a higher authority and therefore has no superior. This assertion
of state sovereignty to be subject to international law according to the
evolution of international law on the petroleum investment (petroleum
contracts), have been challenged or have been call into question by the concept
of state contract during the politico-legal storms of the Sixties and
seventies. Even before the Second World War in the 1938s, the phenomenon of
Soviet nationalization and above all Mexican nationalization had shaken the
legal order of State contracts. After the Second World War, the emergence of
new nations with the phenomenon of decolonization called into question the
basis of such petroleum contracts qualified structurally unequal. The assertion
of Sovereignty of natural resources, legally supported by the resolutions of
the UN General Assembly, namely Article 626 (VII) to the States recognized the
sovereign right, the right to freely exploit their wealth and natural
resources. That's why, this trend became incompatible with the respect for the
property rights of foreigners. The petroleum investments in this sector, were
no longer protected, no longer considered as a norm of international law. The
investments security was not guaranteed any
more11.
To better understand the meaning of this thesis, we can ask
ourselves one question which is, in what legal regime state contracts, more
specifically petroleum contracts must be governed in order to protect them from
the violations resulting from the host states of investment. This issue will
lead us to analyze the most important points of these researches in the
applicable law and the settlement of disputes of petroleum state contracts.
This is the reason which justifies our studies on the legal problems of
state contracts and more precisely petroleum contracts. Our research
will have three parts: the First is about the State contracts and
petroleum contracts. In this part, the main discussion will be about
the content and the
concessionaries and the famous sentences of the 1950s and
1960s: Abu Dhabi, Qatar, Sapphire, Aramco; P. Weil, in the Problems relating to
contracts between a state and an individual «Problèmes relatifs aux
contrats passés entre un Etat et un particulier», RCADI, 1969,104;
i-F. Lalive, Contrats entre Etats ou entreprises étatiques et personnes
privées. Développements récents , RCADI, 1983-III, pp.
28-29.
10 All these resources are the
property of this state under it sole management
11 L'Assemblé
générale] Recommande à tous les États Membres,
lorsqu'ils exerceront leur droit d'utiliser et d'exploiter librement leurs
richesses chaque fois qu'ils le jugent souhaitable pour leur progrès et
leur développement économique, de prendre dûment en
considération, dans la mesure compatible avec leur souveraineté,
la nécessité de maintenir le courant des capitaux dans des
conditions de sécurité et dans une atmosphère de confiance
mutuelle et de coopération économique entre les nations.
nature of state contracts and petroleum contracts' definition
and different types of petroleum contracts, their formation, their content and
their negotiations. The Second part is about the content, the
nature and the potency of the special clauses contained in the state
contracts and petroleum contracts. This part mainly focuses on certain
special clauses, like the stabilization clause, the arbitration clauses,
intangibility clause etc., which the contracting parties have to insert in the
state contracts and petroleum contracts. The Third part is about the
Settlement of disputes: we'll examine the applicable law, and the
competent jurisdictions or arbitration tribunals in case of violation of
Petroleum contract. In this part, we'll analyze if the petroleum contract can
be governed by national or international law or by other special order of law.
We'll examine if the violation of these contracts can be settled by domestic or
international jurisdictions or by international arbitration.
Chapter I - State Contracts and Petroleum contracts
Section 1- The definition of State contracts
Sovereign State Foreign Private
Company
State Contract
Sign Contract
State contract, this is the expression that a lot of ink has
been spilled over in the legal world. What is a state contract?
Well, it's just a contract on the one hand, one of the parties
and not two, to avoid of course a confusion to a contract between states, is a
sovereign state, a subject of international law, and on the other hand, the
private person which can be one or more private citizen (s) of another State,
in particular company or multinational or transnational companies. We
have to know that in our case, it's not about a contract between states even if
the term "State" seems to take you into this idea of a contract between states.
It's not also about a treaty between states because a state contract is
different from other types or categories of international contracts. Even if
this agreement is signed
between a State and a foreign private person in the territory
of the host state of the investment and may in one way or another resemble to a
government contract12, the State contract can not
be confused with a government contract. We know that the phrase "state
contract" was invented by the doctrine. It applies to contracts between a state
and a private citizen or company of another State. It appeared to qualify the
investment contracts in the field of exploration and production of natural
resources, notably petroleum contracts resulting from petroleum
investments13.
To understand this chapter, we will first examine the
difference the state contract and other contracts different from other forms of
contracts and secondly, the petroleum contracts. Although the state contracts
are sometimes called international contracts, they are very different from
other types of contracts:
1-State contract, different from the investment
contracts
Although the state contracts became widespread much in the
field of investment contracts, and more specifically in the
field of petroleum investments, it is important to know that the
investment contracts benefit a particular regime, that is to
say - participate in the "economic development" of the host
State. This is what one called elsewhere by «economic
development agreements» from the 1960s and 1970s,
obliging foreign companies to the construction of railways, roads,
schools, hospitals, electricity, Building cultural sites, etc.
These kinds of agreements are signed between States and Aliens.
Under no circumstances and in a direct way we can say that all
investment contracts concluded between a State and a foreign company are
qualified State contracts14. The state contracts
meet a number of specific criterions including: the existence of stabilization
clauses of the contract, the terms of intangibility, arbitration clauses, the
clauses of applicable law, the clauses of competence or arbitration,
etc. If any kind of investment contract doesn't contain the specific
criterions that we can find in the state contract (stabilization clause,
intangibility clause, arbitration clause, etc...), this contract can not be
called state contract because a State contract must be sign between the
sovereign State and foreign private company and of course contain these
different clauses aforementioned. An investment contract is also seen as a
contract under which an institutional investor deposits a lump sum of money (as
a pension fund) with an insurance company that guarantees the return of
principal and a specific amount of interest at the end of the contract term
also: such a contract considered as an investment «purchased a guaranteed
investment contract».
12 The government contract is
called «le contrat administratif» in France.
13 See disputes emerged
between the host states and the petroleum concessionaries and the famous
sentences of 1950s and 1960s: Cases Abu Dhabi, Qatar, Sapphire, Aramco as cited
as P. Weil, in the Problems relating to contracts between a state and an
individual «Problèmes relatifs aux contrats passés entre un
Etat et un particulier», RCADI, 1969,104.
14 Such as precise Prof Charles Leben in his
article "« l'évolution de la notion de contrat d'Etat-les Etats
dans le contentieux économique international, l. Le contentieux arbitral
»
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