Enforcing stabilization of international energy contracts

摘要

Periods of high gas prices often herald repudiation of international energy contracts as host governments seek a greater profit share from international oil companies (IOCs) under various contrived theories, raising the question of the utility of stabilization clauses in such agreements.Stabilization clauses were introduced to reduce political risk and preserve the fiscal regime in international energy contracts, and while they provide psychological comfort to investors based on international arbitration precedents, such comfort may be misplaced absent an international anchor to ensure enforcement. This article posits that stabilization clauses should be coupled with a well-drafted arbitration provision to provide the requisite bridgernto international arbitration. Alternatively, IOCs should consider bilateral investment treaties to provide a nexus to international arbitration. To the extent practicable, IOCs should seek to bind the state, not just the national oil company and obtain waiver of sovereign immunity. Otherwise, the seeming comfort of stabilization clauses could become a nightmare when IOCs wake to the late realization of domestic dispute resolution with attendant risks.