EENR conference examines international dispute resolution

Panel

Timothy McCrum, a partner with Crowell & Moring, moderated a panel discussion of how investors can protect themselves against the risks of fracking bans.

Nov. 13, 2014 -- Legal scholars and practitioners from across the United States and around the world explored the subject of international dispute resolution in the oil and gas sector recently in a conference co-hosted by the Environment, Energy & Natural Resources Center at the University of Houston Law Center.

Julian Cardenas, LL.M. ’11, a visiting scholar at the Law Center, served as co-chair of the conference.

 

Jacqueline Lang Weaver, A.A. White Professor of Law and interim director of the EENR Center, welcomed the 65 participants, including faculty from the U.S., Europe, and Latin America as well as arbitration experts from four Houston-based law firms and eight out-of-town firms. Julian Cardenas Garcia, LL.M. ’11, a visiting scholar at the Law Center, served as co-chair of the Oct. 31 conference held at the Hilton University of Houston on campus.

The day-long conference titled, “Oil and Gas Investment Arbitrations: Protecting Oil and Gas Projects against Political Risk,” was divided into four panels:

  • “Structuring Oil and Gas Investments in Mexico:”
    The discussion focused on articles 20, 21 and 22 of the new Hydrocarbons law, the applicability of Bilateral Investment Treaties and NAFTA. In particular, Article 20 deals with administrative rescission which allows Mexican authorities to terminate upstream contracts in a number of cases exempt from arbitral review.  The panel agreed that Article 20 made BIT structuring essential for future investments in the oil and gas sector. It was noted that current legislative efforts by Mexico had the effect of undoing Mexico’s longstanding reluctance under NAFTA to exempt oil and gas investments from various protections.
  • “May national oil companies efficiently breach their contracts? The problem of applicable law:”
    Recent arbitrations in the international oil and gas industry have highlighted the problem of extreme price fluctuations, costing investors. Despite the origin and variety of laws governing transnational oil and gas transactions, the consensus was that it is not permissible to breach a contract because it violates basic principles of good faith recognized in international law, comparative law, and arbitral jurisprudence.
  • “Frack that! Can investment treaties provide effective protections against fracking bans?”
    Panelists noted the growing number of jurisdictions imposing outright bans on hydraulic fracturing while others are enacting stringent environmental regulations. They discussed various risk mitigation strategies, including a case in Romania in which regulation was deemed to be arbitrary when founded on mere fear and national preference.
  • “Hey, that was my oil! Structuring against the risk of adverse continental shelf decisions:”
    Panelists discussed investor rights and remedies when affected by a border dispute such as Russia’s annexation of the Crimea. It was suggested that such disputes would not easily fit the adjudicative mode of international law and instead should look to the legislative mode for resolution.

Conference logoCo-sponsors of the six-hour CLE conference along with the EENR Center were the Washburn Oil and Gas Law Center and the International Law Institute. Co-Chairs with UHLC’s Cardenas were Ian Laird, of Crowell & Moring LLP, (Georgetown ILI), and Frédéric Sourgens, Washburn Oil and Gas Law Center.

Participants included:
Panel 1:  “Structuring Oil and Gas Investments in Mexico:”  Fernando Cano, Squire Patton Boggs; Ricardo Colmenter, Entra Consulting; Jose Luis Herrera Vaca, Hogan Lovells; and Francisco Rivero, Reed Smith, and a UHLC Adjunct Professor.
Panel 2:  “May national oil companies efficiently breach their contracts?  The problem of applicable law:”  Mark Stadnyk, Norton Rose Fulbright; Jennifer Smith, Baker Botts; Alfredo De Jesus O. , University of Paris Sud-CREDIMI; Diego Gosis, Gomm & Smith; Suyash Paliwal, White & Case; and Jennifer Price, King & Spalding.

Panel 3:  “Frack that! Can investment treaties provide effective protections against fracking bans?”  Timothy McCrum, Crowell & Moring; Sebastian Manciaux, CREDIMI-France; David Exstrum, Lario Oil & Gas Co.; David Pierce, Washburn; Teddy Baldwin, Baker & McKenzie; and Barclay Nicholson, Norton Rose Fulbright.

Panel 4:  “Hey, that was my oil! Structuring against the risk of adverse continental shelf decisions:”  Jennifer Permesly,  Chaffetz Lindsey; Hugh Carlson, Three Crowns; Tai-Heng Cheng, Quinn Emanuel; Günther Handl, Tulane Law School; Jonathan Gimblett, Covington & Burling; and Baiju Vasani, Jones Day.

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