A Legal Contribution to International Law of Development with a neoliberal approach
(Summary of the doctoral dissertation (PhD in Law) of Zia Oloumi (zia@oloumi.com), Attorney at Law, admitted to practice in France)
Table of content in French
— French <-> English glossary of legal terms used in Oil & Gas industrie [read more]
Abstract: The E&P petroleum contracts were in the heart of the formation of the International Law of Development in the 60’s-70. With a neoliberal approach, the new concept of "sustainable development" renews this branch of law, abandoning the planned economy, which characterized it in the 70's, and giving more places to civil society’s actors. In that way, the petroleum contracts are becoming one of the legal instruments of a new partnership for 'sustainable' development. This new partnership imposes to take under consideration all interests: not only both contracting parties (host State and international petroleum companies), but also the interest of stakeholders. This last affirmation was originally one of the functions of Governments; but in the majority of developing countries, Governments do not represent democratically their populations. Petroleum contracts are becoming the legal framework used more frequently by local populations to sue international companies, instead of States, for ecological damages or human rights violations in the contractual area in which the production takes place.
To supporting our thesis, we have analyzed each model of contracts used currently in developing countries, such as China’s hybrid contracts, Iran’s buy-back contracts, Indonesia's production sharing contracts or PSCs, Thailand’s concession contracts and Brazilian service contracts. After studying each model, it has appeared that in the new approach of the principle of Sovereignty over natural resources, more adapted to the context of globalization, the PSC seems to be the best model. It allows a better legal framework in accordance with the concept of public-private partnership, as defines below. Confirming our approach, developing countries are going to abandon totally the use of service contracts, at the same time of opening their industries to private investors. This model of contracts does not conform to the ideas of partnership, and profit and production sharing. For developing countries which do not have real petroleum industries, the concession model remains more attractive to petroleum companies, even though, it does not preserve their sovereignty over natural resources, as much. The new trends in petroleum contracts are meant to balance the relationship between both public and private parties. For that purpose, the majority of contracts are choosing to internationalize the relationships (for example, the arbitration clauses refer to the rules of the International Center for Settlment of Investment Disputes (ICSID) rather than to the national law and jurisdiction of the host country; at the same time, host countries allow companies better tax conditions).
This being said, the petroleum contracts in their new features, nevertheless do not take into account the principles of ‘sustainable development’. In order to reach this goal, we propose a necessary combined action of the stakeholders (i.e. civil society, petroleum companies and international financial institutions) to force all parties of contracts to respect sustainable development’s principles. Thus, international financial institutions could force both parties of the contracts to integrate into the project some social and ecological components, before giving any financial support and securities. In addition, international petroleum companies could impose upon their affiliates the same social and ecological standards than those applied in developed countries, from where they generally are. But these actions would not be possible without the pressure of the civil society. As a new phenomenon, nongovernmental organizations do not hesitate to sue mother-companies in their home countries for the violation of human rights by their affiliates, as was the case with some American courts (State of New York or State of California).
In our point of view, if the international law of development does not succeed in the 70’s, it is because its first envisioned goal was not analyzed through pragmatic eyes, and the contractual legal frameworks were not taken into consideration. A study of petroleum contracts in their recent evolutions lets us affirm that the substantive law of development should become the legal frameworks of a new partnership organizing the interdependence of a globalize world. In such a world, the main goal of each investment should remain the prosperity of populations, which means simultaneous economic, ecological and social benefits. It appears that after being forgotten by some major authors, the contract as a concept should become one of the most interesting legal instruments in allowing the original goal of the international development law to be achieved.
Key words: E&P contracts – Petroleum Contracts – Sustainable Development – Private Public Partnership for Development – Petroleum Industries – State Contract – International Law of Development – Sovereignty over energy & natural resources.
