Background of the study
Business disputes need to be resolved when disputes exist between or among transnational parties. When these disputes are addressed by the use arbitrators via an arbitration clause, this is referred to as international commercial arbitration. This means that parties involved in the dispute resolution opt for a private dispute resolution instead of the court. This means the international commercial arbitration process can only take place if the parties involved agree, select an arbitrator together and a neutral venue so that none of them enjoys s home court advantage.
Statement of the problem
The contractual relationships in the energy arena are made unstable by probably the fluctuation of oil prices, competition and the increasing demands by governments. It seems like understanding means of dispute resolution has not been stressed in an attempt to maintain contract stability. The international commercial arbitration focuses on both conflicts of interests between developing and developed countries as well as the existence of many controversies in international commercial transactions. This may also serve as form of settling commercial conflicts or disputes within a legalistic framework that may exist in contracts of oil and gas. This study is therefore set out to investigate the international commercial arbitration in contracts of oil and gas.
Objectives of the study
The study is set out to achieve the following objective:
- To identify the main issues of international commercial arbitration process with an aim of suggesting improvements.
- To establish whether there is a correlation between forces influencing the oil and gas industry and the market performance of the industry.
The research questions are generated from the objectives stated and these include:
- What are the causes of international commercial arbitration process?
- Do issues arising in the oil and gas industry interrelate with international commercial arbitration process?
Significance of the study
Since colonial times, arbitration seems to have excited as a form of dispute resolution. This study aims at enabling business managers in the oil and gas industries to understand the basic of international oil and gas agreement. The findings of the study will help those business managers who are mainly involved in the negotiation of the terms of international gas and oil contracts. This means the managers will understand the best ways of applying the knowledge with negotiation approaches and techniques that are applicable in an international setting. Bearing in mind that arbitration is normally done behind closest doors that is, between the parties involved in a specific dispute, the study findings will provide valuable insight into how to arbitrate I international commercial disputes. This implies that arbitration will be used as arbitration as a dispute resolution mechanisms.
Oil and gas industry may still have the potential of increased disputes. Arbitration is widely used in the gas and oil industry as a form of dispute resolution. This may be attributed by the fact that the disputes are usually characterized by a technical nature thus the need of an arbitrator with specialist knowledge. Again, the resolution procedures are guided by highly sophisticated contracts usually constructed by professionals. The oil and gas companies operations are international in nature hence the need of international commercial arbitrator.
An arbitration agreement occurs between: the government and oil companies; oil and gas companies, oil and gas operators and service contractors (Stoppi, 2001).
This means that the parties involved are likely to be in business together for a long time and therefore a carefully negotiated process should be put in place to resolve any dispute during the period within which the contract is valid. Arbitration as a form of dispute resolution encompasses each and every aspect of oil and gas activities that we handle.
There is need for managers to negotiate their business growth with customers, supplier’s colleagues and even government. The outcome of these negotiations may have a marked effect upon business and thus the highest level of performance may be experienced. However this approach requires infusion of ideas from professional negotiators. If the oil and gas industries utilize the international commercial arbitration.
The most probable reasons for contracts of oil and gas companies opting for arbitration may be stated as:
- It is established that the awards relating to arbitration are easier to implement and are not slowed down by say court appeal for a long period.
- The neutrality of dispute resolution in that neither party is unwilling to have disputes revolved by other party national courts.
- Confidentiality of the international commercial arbitration process attracts which the disclosure of the terms of resentment.
However, it is important to that one most confusing component of arbitration process is that the awards on the disputes depends upon explanation of the dispute settlement process, the dramatic representation of the process and lastly an in-depth look at low effectively the plan worked in the actual dispute(Potter, 1948). We note that if no arbitration clause in the contract and one prefer arbitration after the dispute has occurred, then he or she will be at the mercy of the other party or parties remember, when the dispute has occurred, one party is likely to make the process of resolving difficult. This means it is necessary to include the arbitration clause in the contract right at the beginning if one feels arbitration will be appropriate at some point. This clause may be noted in memorandum of understanding or whatever agreement.
Oil and gas production and even exploration seems to be seen as technologically and economically intensive in businesses. The commercial success in oil and gas businesses.
The commercial success in oil and gas businesses depends on the changes, uncertainty and the sophisticated business environment (Asouzu, 2001). As stated earlier, international commercial arbitration is the most preferred way for resolving the international dispute including the oil and gas contracts. It is therefore necessary that the dispute resolution practice utilizes the mortal leading local capability.
This will be descriptive study that will be used to describe international commercial arbitration in contracts of oil and gas. The study will use the semi-structured questionnaires to collect data. These questionnaires are preferred for this study because it will enable to collect in-depth information from many respondents at a given time. The questionnaires will be constructed in-line with the objective of the study and research questions. The sample to be considered in this study will comprise of the oil and gas company managers and their contractors. This means the companies or industries will be purposively selected and the respondents will then be randomly selected then the questionnaires will issued to collect the required information. Data analysis will be done by the use of the Statistical Package for Social Sciences (SPSS) and then the results displayed in frequency distribution tables.
Asouzu, AA (2001). Commercial arbitration and African states. Prentice, participation and Institutional development. Cambridge, England: Cambridge university press.
Potter, P.B (1948). An introduction to the study of international organization. New York: Appleton-century-crafts.
Stoppi, M.J (2001). Commercial Arbitration in the Caribbean: A practical guide. Kingstar, Jamaica: University of the West Indies press.