Lex Petrolea and International Investment Law: Law and Practice in the Persian Gulf

Description

Lex Petrolea and International Investment Law: Law and Practice in the Persian Gulf offers readers a detailed analysis of jurisprudence on the settlement of upstream petroleum disputes between host states in the Persian Gulf and foreign investors. Dr Nima Mersadi Tabari considers the historical, political, and socio-economic roots of the existing frameworks and levels of protection offered to foreign investors. With particular focus on petroleum-related disputes, he initially delivers a comprehensive survey of the jurisprudence of international investment law and investment treaty arbitration. Following on from this, in three dedicated chapters, the author provides in-depth analysis of the legal regimes governing the matter in the major producers of the region: Saudi Arabia, Iraq, and Iran. A key resource for all professionals working on legal issues arising from foreign direct investments in natural resources, this book draws a detailed picture of the legal regime governing the upstream sector in the most important geographical region for the international oil and gas sector. Cover Half Title Title Copyright Dedication TABLE OF CONTENTS Foreword Acknowledgements Abbreviations and symbols Cases and arbitral awards International instruments Municipal instruments CHAPTER 1 INTRODUCTION 1.1 Background Iran Saudi Arabia Iraq Cooperation and competition Riyadh–Tehran Baghdad–Tehran Riyadh–Baghdad Similar resource endowments and “club memberships” Organisation of the Petroleum Exporting Countries Gulf Cooperation Council Arab League Organisation of Islamic Cooperation Dealing with the faithful Legal risk National oil companies Admission of FDI Domestic litigation v alternative dispute resolution Political and social risk Attracting foreign investment International investment law and foreign direct investment in hydrocarbon resources 1.2 Definitions On the term “international investment law” Investment dispute Investment treaty arbitration Arbitration without privity International investment law as a field of legal scholarship Investment treaty General rules of international law Customary international law General principles of law Judicial decisions, arbitral awards and doctrines Common law of investment protection The Darwinian common law paradigm On the term “lex petrolea” 1.3 Scope of the book 1.4 Outline and methodology of the book Historical development Legal pluralism Common law of investment protection The common law hypothesis International law The compliance hypothesis The paradox of compliance with double standards Major hydrocarbon producers as subjects of the study Working assumptions and goals CHAPTER 2 INTERNATIONAL INVESTMENT LAW 2.1 Background International investment law: A law made for FDI Early jurisprudence and state–state investment disputes The Great War and the first wave of nationalisation Permanent Court of Arbitration, ad hoc tribunals and mixed claims commissions Permanent Court of International Justice Decolonisation and the second nationalisation wave Iran–US Claims Tribunal International Court of Justice 2.2 Development of the international investment law Foreign direct investment: Emergence and evolution FDI in ancient times FDI and colonial empires FDI in the modern era Early investment disputes and their resolution A law governing all nations for all times Jus gentium The Caliphate and the Ummah Lex mercatoria Conflict of laws Treatment of aliens Laws for foreign men and foreign lords Jizya Things which belong to men in common Injury to the state of nationality Diplomatic protection Definition and origin Espousal of diplomatic protection as assertion of the right of the injured state Diplomatic protection, gunboat diplomacy and capitulation Colonial stigma The imminent peril exception Diplomatic protection as a method of protecting FDI Evolution of the standard of treatment Common standard of civilised nations Calvo doctrine Calvo clause Neer standard Hull rule Codifying the treatment and protection standards Early attempts From protection of foreign property to promotion of international economic development Abs–Shawcross Draft Harvard Draft Treaties of friendship, commerce and navigation New international economic order Bilateral investment agreements Early BITs OECD Convention on Protection of Foreign Property The BIT revolution International Centre for Settlement of Investment Disputes The convention and the centre Dispute resolution under ICSID ICSID additional facility The future of ICSID Multilateral investment treaties OECD WTO Energy Charter Treaty Chapter 11 of the North American Free Trade Agreement World Bank guidelines on the treatment of FDI 2.3 International investment dispute-resolution regime In pursuit of peaceful dispute resolution Investor–state arbitration under investment treaties Consent to arbitration Arbitration without privity Methods of consent Fork-in-the-road clause Cooling-off period Applicable law in investment treaty arbitration Lex arbitri Law applicable to the arbitration agreement Lex causae International law Domestic law Decisions of domestic courts Treaty interpretation The Vienna Convention of the Law of Treaties Recognition and enforceability New York Convention ICSID 2.4 Ambit of protection in international investment law Foreign investor Nationality of natural persons Genuine connection test Nationality of natural persons in investment treaty arbitration Nationality of legal persons Formalistic test Control test Ownership De jure control versus de facto control Direct and indirect control Piercing the corporate veil Shell corporations Nationality of convenience Round-tripping and migration of companies Denial of benefits Rights of shareholders Investment Interpretation of the term “investment” Umbrella clause ICSID jurisdiction Consent Jurisdiction ratione personae Jurisdiction ratione materiae The “duck” test The double-barrel test 2.5 Substantive protections in international investment law National treatment The test: Appropriate comparator Most favoured nation treatment The test: Appropriate corresponding treatment obligation Expropriation Partial expropriation Indirect expropriation The sole effect doctrine The test: Substantial deprivation Creeping expropriation Non-compensable state measures Lawful expropriation Fair and equitable treatment Legitimate expectations Denial of justice Transparency Arbitrary and discriminatory actions Full protection and security Scope of application Legal protection Moral damages CHAPTER 3 LEX PETROLEA 3.1 Background Ubi societas, ibi ius Unique identity Unique challenges Inherent risks Risks inherent in E&P projects Risks inherent in E&P agreements Risks associated with sovereignty and applicable law Upstream hydrocarbon agreements Production sharing contracts Risk service contracts Concessions Tax royalty contracts Energy Charter Treaty Two faces of Janus Internationalisation International and quasi-international character Party autonomy Permanent sovereignty Stabilisation clause Renegotiation and adaptation Force majeure clause Hardship clauses Renegotiation clause 3.2 Ambit of protection in lex petrolea Upstream enterprise as investment Attribution of the conduct of the national hydrocarbon company to the host state 3.3 Substantive protections in lex petrolea National treatment and most favoured nation treatment Expropriation Fair and equitable treatment CHAPTER 4 IRAN 4.1 Background 4.2 Iranian oil; a historical perspective Age of concessions Reuter concession Hotz and the Persian Bank Mining Corporation Tobacco uprising D’Arcy concession Burmah Oil Company and the concessions syndicate Anglo-Persian Oil Company Constitutional revolution Russo-Japanese war Constitutional monarchy Civil war 1919 Anglo-Iranian agreement Armitage–Smith agreement Fall of the Qajar 1933 agreement Anglo-Iranian Oil Company Oil and free speech The Shah is exiled, long live the Shah The calm before the storm Nationalisation The old man’s dream The old man’s nightmare Anglo-American coup d’état The consortium Joint ventures Risk service contracts St Moritz purchase and sale agreement Islamic revolution The imposed war National Iranian Oil Company Economic and financial sanctions Security Council resolutions US sanctions EU regulations Impact: To evade, or to avoid, that is the question 4.3 The legal regime governing Iranian oil and gas Islamic Republic of Iran Constitution 1979 (as amended in 1989) Islamic republic’s political and legal regime Guardianship of the jurist State structure Leader Majles and the Guardian Council Expediency Council President and the cabinet Judiciary Economic model and ownership of natural resources Petroleum Act of 1987 Five-year development plans Foreign Investment Promotion and Protection Act 2002 Foreign Investment Board Overview of FDI protection under FIPPA Iranian foreign investment framework and the model bilateral investment treaty Investment Investor Standard of treatment Expropriation and nationalisation Compensation Dispute resolution Iranian buy-back contract Remuneration and cost recovery Risks Supervision Environment, employment law, training, health and safety Dispute resolution and applicable law 4.4 Iran: Conclusion Iranian FDI protection regime Iranian upstream FDI protection regime CHAPTER 5 IRAQ 5.1 Background 5.2 Iraqi oil; a historical perspective The Ottoman years Turkish Petroleum Company Young Turks Drawing lines in the sand Faisal of Syria to Faisal of Iraq The Iraq Petroleum Company The 1925 concession Basra Petroleum Company Mosul Petroleum Company Of kings and officers The Al-Ahali coup The infant king The second British invasion Watbah 1948 Arab–Israeli war First oil boom The Baghdad Pact The republic of Iraq The dictator Rise of the Baathists Nasserist revival Saddam and the Tikritis Second oil boom Persian bête noire Gulf wars How to deal with creditors Known unknowns and the invisible WMDs Nationalisation of Iraqi oil Getting the upper hand In pursuit of control Iraq National Oil Company Early risk service contracts Soviet aid The final step Complete state control 5.3 The legal regime governing Iraqi oil and gas State structure Executive Legislature Federalism Judiciary Ownership and management of resources Revenue distribution Iraqi foreign investment framework Investment Law 13 Investment and investor Standard of treatment Hydrocarbon Law drafts INOC and Federal Oil and Gas Council Contracts Review The first and second bidding rounds The third and fourth bidding rounds Dispute resolution 5.4 Kurdish oil The Kurdish question Kurdistan regional government and ownership of Kurdish oil Management Revenues Kurdish foreign investment framework Kurdistan Investment Law 4 (2006) Kurdistan Oil and Gas Law 22 (2007) and Model PSC 5.5 Iraq: Conclusion Iraqi FDI protection regime Kurdistan and FDI protection Iraqi upstream FDI protection regime Kurdistan and upstream FDI protection CHAPTER 6 SAUDI ARABIA 6.1 Background 6.2 Saudi oil; a historical perspective Puritans of Najd Aal-Sheikh and Aal-Saud The brothers Birth of the petro-state 1933 concession ARAMCO The billionaire Renegotiation Tale of two concessions Saudi Aramco Age of reform 6.3 The legal regime governing Saudi oil and gas State structure King and constitution Basic law Council of Ministers Consultative Council Judiciary Diwan Al-Mazalim Saudi foreign investment framework WTO Investment law Investor and investment Admission Treatment BITs Investment and investor Treatment Dispute resolution Alternative dispute resolution ICSID 6.4 Saudi Arabia: Conclusion Saudi FDI protection regime CHAPTER 7 CONCLUSION 7.1 Common law of FDI protection 7.2 Lex petrolea 7.3 Conclusion Appendix A: Model Iranian buy-back contract Bibliography I Arabic resources II English resources III French and Latin resources IV Persian resources V Online databases and websites Index