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Vol 21 No 9 Sept/Oct 2016

Book of the Month

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Goode on Commercial Law

Edited by: Ewan McKendrick
Price: £170.00

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International Energy Investment Law: Stability Through Contractual Clauses

ISBN13: 9789041134110
Published: January 2011
Publisher: Kluwer Law International
Country of Publication: The Netherlands
Format: Hardback
Price: £83.00

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Contemporary legal practice has developed powerful contractual mechanisms to mitigate the political risks attendant on energy projects. However, until now most of what we know about the contractual management of these risks has been based on theoretical literature and the facts of cases rather than careful empirical study.

This one-of-a-kind book breaks new ground. The author presents the results of a questionnaire-based survey circulated to the main players in the petroleum sector, revealing actual existing contractual risk management techniques and showing a true picture of the political risk situation in the petroleum sector.

Going far beyond an analysis of the literature, the research includes in-depth interviews with specialist lawyers and representatives of companies who have not only a theoretical knowledge but practical experience with the problems of host government interventions, as well as with international petroleum negotiators, members of international organizations in the petroleum business, and dispute settlement bodies.

Important questions answered in detail include the following:-

  • What tools are available to manage political risks?
  • What are the differences between developed and developing countries in terms of political risks?
  • Will indirect expropriation be more common than direct expropriation in the twenty-first century?
  • What are the basic legal requirements for a lawful taking of investors’ property under international law?
  • How does a lawyer distinguish between legitimate non-compensable regulation and indirect expropriation?
  • Do stabilization clauses have a legal and functional value in international petroleum contracts?
  • Does international law recognize the binding effect of stabilization clauses as a limitation on a state’s overeign powers?
  • Can renegotiation clauses provide stability for petroleum investment contracts?
  • What is the contribution of governing law and ADRs in political risk management?
This is the only book that brings the rare and valuable knowledge and quasi-trade secrets of energy experts and practitioners to lawyers and negotiators handling transnational energy projects. It analyses the contractual clauses currently used by international investors to protect investments, the underlying philosophy, history, strengths, and weaknesses of each type of contractual clause, and the effectiveness of ADRs in reducing the risks. The doctrines and empirical findings that in this incomparable book open the door to truly effective use of these clauses.

International Investment Law, Energy and Natural Resources Law
Part I The Risks
Chapter 1 General Introduction and Framework of the Research
Chapter 2 Political Risks Arising from the Intervention of Host States A Way of Taking Over: Indirect Expropriation

Part II Managing Political Risks
Chapter 4 Stabilization Clauses: A Way of Managing of Political Risks
Chapter 5 Flexibility of Contractual Relations in Energy Projects: Renegotiation Clauses
Chapter 6 Examining Modern Renegotiation (Equilibrium) Clauses in Petroleum Contracts
Chapter 7 Choice of Law and Alternative Dispute Resolution (ADR) Clauses: Empirical Insights
Section I: Choice of Law Clauses
Section II: ADR Clauses

Part III Conclusion and Implications
Chapter 8 Conclusion and Implications
Appendix 1 The Questionnaire
Appendix 2 Some of the Omitted Research Findings
Appendix 3 Forced Divestment of Petroleum Production
Appendix 4 The Millennium Wave
Appendix 5 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (ICSID)
Appendix 6 The Energy Charter Treaty (ECT) (Excerpt)
Appendix 7 North American Free Trade Agreement (NAFTA) (Excerpt)
Appendix 8 ASEAN Agreement for the Promotion and Protection of Investment