From Aberdeen (IF): There has been a spike in major oil and gas arbitration cases for settling complex legal disputes.
Legal firm Pinsent Masons said one leading arbitration body had received double the number of energy-related cases in 2013 than the previous year.
The number of oil and gas matters lodged last year with the London Court of International Arbitration (LCIA) jumped to 45 from 22 – the highest figure in five years and surpassing a 2010 peak which saw a total of 40 cases.
Parties from more than 27 different nations, including the UK, US, Russia and Brazil, lodged claims in 2013. Pinsent Masons said the upsurge in referrals underlined the UK’s status as one of the go-to destinations for international energy companies seeking to settle complex commercial disputes, and also highlighted an increasing regularity of disputes in the sector.
Scott Johnston, an Aberdeen-based dispute resolution expert at Pinsent Masons, said the rising number of cases was indicative of the changing shape of the global energy market.
"Over a number of years, in which we have experienced changing levels of demand, high crude prices and continued geopolitical uncertainty across a number of jurisdictions, this has resulted in volatility in the market, which ultimately drives a surge in complex disputes," Johnston said .
"Oil and gas operations span the globe, exposing companies to a range of challenging legal and political environments."
The legal specialist said that the UK’s reputation for providing confidential, impartial arbitration expertise has resulted in the oil and gas and wider energy industry coming to the LCIA, while the relatively new Scottish Arbitration Centre is also attracting energy-related disputes.
Arbitration bodies around the world are often used to resolve disputes with sovereign states, as the rules of arbitration allow for greater confidentiality than public courts and there is less concern about political interference.
Pinsent Masons said recent disputes resolved using international arbitration included Spanish energy giant Repsol's $5 billion compensation settlement from Argentina relating to the alleged misappropriation of its assets in the country, i.e. renationalisation of its stake in the state company YPF.
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