Settlement of petroleum disputes through arbitration in Saudi Arabia and the other Arab Gulf countries : problems and prospects

Abstract

This study is an attempt to explore the circumstances under which petroleum disputes settlement through arbitration had been provided for in the petroleum concession agreements in the Arab Gulf Co-operation Countries. The evolution of the arbitration clauses and agreements contained in those concessions had been discussed and compared with the reasons and dubious interpretations often given by the Western arbitrators sitting in arbitral tribunals to determine petroleum-related disputes involving not only the Gulf Countries but also different other oil producing countries. The study showed how the biased opinions of the arbitrators in petroleum disputes gave rise to the rejection of the arbitration mechanism in favour of other means of dispute settlement such as unilateral actions and collective renegotiations of the concession contracts, which eventually afforded the Gulf countries to achieve control of their petroleum industry in the middle of the 1970s. It has been found nevertheless that as a result of the confrontation between the developed and developing countries over the control of natural resources, arbitration of State contract-related disputes, along with the other traditional standards of investment protection and compensation have been brought back in an unprecedented vigour under institutional systems of arbitration such as International Centre for the Settlement of Investment Disputes (ICSID).