Commentary by Anthony Connerty (Head of the IDR Group) on the control of national resources and the challenges for international dispute resolution. Published in Amicus Curiae – Journal of the Society for Advanced Legal Studies at the Institute of Advanced Legal Studies. The Journal is produced by SALS at the IALS (Institute of Advanced Legal Studies, School of Advanced Study, University of London)

Connerty, Anthony

English

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Contents Issue 76 Winter 2008RESOLVING THE RESOURCENATIONALISM STRUGGLEThe control of national resources and the challenges forinternational dispute resolution formed the subject of aconference at Charles Clore House on October 31attended by members of international law firms andrepresentatives of commercial organisations such as majoroil companies, together with Middle East delegates.Organised jointly by the Institute and the IDR Group, theconference was opened by Professor Avrom Sherr, Directorof the IALS, and an overview was given by the head of theIDR Group, Anthony Connerty.The Institute needs no introduction to readers of thisjournal, but a brief mention should be made of the IDRGroup1. The Group, a small body of international disputeresolution specialists, was launched in April 2008 at aReception in the Houses of Parliament where the AttorneyGeneral was guest speaker. Membership of the Group ismade up of arbitrators, lawyers and other professionalsfrom a number of countries around the world. Theexperience of the Group reaches into the state level ofinternational dispute resolution – various members havesat as judges and arbitrators in the International Court ofJustice (ICJ) and the Permanent Court of Arbitration(PCA) in The Hague, the International Tribunal for theLaw of the Sea in Hamburg (ITLOS), and theInternational Centre for Settlement Disputes inWashington DC (ICSID).Members also act as advocates and arbitrators worldwide ininternational arbitrations conducted under the Rules ofthe major international commercial arbitral institutions.Attached to the Group is a panel of consultants – expertsin areas of significance to international dispute resolutionsuch as petroleum, mining and metals.Members of the Group participating in the conference wereAnthony Connerty, Lord Anderson of Swansea, AndrewBerkeley, Professor Munir Maniruzzaman, Rt Hon DonaldMcKinnon, Judge Thomas Mensah, David Branson, JohanGernandt and Professor Derek Roebuck. Other speakerswere John Hardiman of Sullivan & Cromwell and JohnTrenor of Wilmer Hale. The conference was sponsored bySullivan & Cromwell and supported by BIICL (BritishInstitute of International and Comparative Law) and OGEL(Oil, Gas & Energy Law Intelligence).Divided into three sessions chaired by Lord Anderson, SirHenry Brooke and Sir Anthony Evans, the conferencespeakers considered the conference’s central theme underthree heads:• The issue of resource nationalism.• Whether “good offices” can assist in relation toresource nationalism.• Whether established international dispute resolutionbodies have a role to play in resolving disputes betweenresource-rich countries and consuming countries – canthese traditional “western” bodies satisfy non-westerncountries that they will receive a fair and unbiasedhearing?ISSUE OF RESOURCE NATIONALISMResource nationalism is a term which has come intogeneral use in recent years. But it refers to a perennialtension between the sovereign possessors of naturalresources and foreign enterprises which, historically atleast, had a monopoly of the technical and economiccompetences efficiently to exploit them. This tension canwork constructively, resulting in the formation of nationalcorporations which can enter into long term mutuallybeneficial partnership with the foreign enterprises andwhich, in time, develop their own competence. But,sometimes, it manifests itself as conflict. Although resourcenationalism is not confined to oil and gas resources, it isthe energy industry that plays a prominent role in resourcenationalism issues – and oil and gas featured significantly inthe conference.The resource nationalism struggle is seen in fairly starkterms in the efforts of oil-rich producing countries to revisethe basis of agreements made with nationals of consumingcountries. The issue of resource nationalism raises a numberof problems, including state sovereignty, fair compensationin the event of expropriation, stabilisation clauses – and themethod of dealing with claims arising as a result of thebreach of stabilisation clauses. Resolution of such claimsmight be by way of litigation in national courts or arbitrationunder the rules of one of the international commercialarbitral institutions: or by ad hoc arbitration or arbitrationunder the provisions of an investment treaty such as the1995 International Convention on the Settlement ofInvestment Disputes – the ICSID Convention.ArticlesLegal services in NW England: the changing landscape 3Lawyers and legal services in NW England 4The Legal Services Act – a perspective from the LegalServices Ombudsman for England and Wales and theLegal Services Complaints Commissioner 7Advocacy as an important public service 11Legal services: opportunities and challenges 14Law centres and the future of community-basedlegal services 17Institute News 20Articles (cont’d)Draconian and manifestly unjust: how the confiscationregime has developed 22The end of blasphemy law 25Dutch company and partnership law: some proposedchanges 281 Information on the IDR Group can be seen at www.idrgroup.orgAn example was given by Anthony Connerty in hisconference overview of a dispute involving (i) astabilisation clause (ii) expropriation (iii) ICC arbitration(iv) ICSID arbitration and (v) proceedings in a nationalcourt. The Mobil Cerro Negro v Petroleos de Venezuela case camebefore the English High Court in early 2008. Theunderlying dispute between the parties involved claims byMobil against Venezuela’s state-run oil company, Petroleosde Venezuela. Claims were for breaches of a participationagreement to explore the Cerro Negro oilfield in theOrinoco Belt in Venezuela. The Venezuelan governmenttook control of Mobil’s 41.7 per cent stake in the projectin accordance with new Venezuelan legislation which“migrated” oil interests held by foreign companies tocompanies which were at least 60 per cent Venezuelanowned. In response, Mobil commenced an ICC arbitrationagainst Petroleos, in addition to commencing an ICSIDarbitration against Venezuela. In January 2008 Mobilobtained a worldwide freezing order in the English courtsunder section 44 of the Arbitration Act 1996. The orderwas claimed in support of an ICC arbitration in New York.On a subsequent successful application by Petroleos to setaside the freezing order, Mr Justice Walker said that it wasconvenient to refer to the Venezuelan legislation dealing withthe “migration” of non-Venezuelan oil interests to companieswhich were at least 60 per cent Venezuelan owned as the“expropriation legislation”. The judge commented on thesums of money involved: the book value of the national oilcompany of Venezuela was US$56 billion “in the sense ofthousand million. I am not aware of any previous freezingorder made by the courts of England and Wales against acompany which said that its net assets had a book value of thissize.” He went on to say that the order which had been madehad frozen assets worldwide up to a value of US $12 billion:“I am not aware of any previous freezing order made by thecourts of England and Wales for a total sum of this size.”The type of difficulties which can be raised by resourcenationalism was vividly illustrated by Andrew Berkeley inthe first of the conference sessions chaired by LordAnderson of Swansea: “should, or could, a profit sharingagreement made in respect of new discoveries when theprice of oil was $10 per barrel still apply later, when thedevelopments have been made and the price of oil hasincreased six or ten fold?”“GOOD OFFICES” AND RESOURCENATIONALISMCan “good offices” assist in resolving resource nationalismproblems? Judge Thomas Mensah, the first President of theInternational Tribunal for the Law of the Sea in Hamburg,stressed that international law places an obligation on allStates to settle their disputes through peaceful means. Hegave an example of the use of good offices in relation to aland and maritime border dispute between two States: theCameroon – Nigeria case. A century-old dispute over theoil-rich Bakassi peninsula and other areas promptedmilitary clashes in the early 1990s between Cameroon andNigeria. Turning to international law and the UN toprevent further conflict, both sides agreed to abide by a2002 decision of the International Court of Justice,delineating the 1,600-kilometer land and maritime borderbetween the countries. The United Nations had providedgood offices and technical assistance in helping to ensurethat the parties peacefully implement the ICJ decision.ROLE OF ESTABLISHED INTERNATIONALDISPUTE RESOLUTION BODIES INRESOURCE NATIONALISM ISSUESSir Anthony Evans, a former judge of the English Court ofAppeal who is currently the Chief Justice of the DubaiInternational Finance Centre Court, chaired the thirdconference session. This produced some lively debate.While most speakers were of the opinion that establishedinternational dispute resolution bodies do have a role toplay in dealing with issues of resource nationalism, DavidBranson adopted a different view. He took Latin and SouthAmerica as his example: “In 1868, Argentine jurist CarlosCalvo asserted that South America should require foreigninvestors to adjudicate their disputes in the local courts.The point was simple—foreign courts or ‘diplomaticprotection’ favoured powerful nations over weak nations.”He said that the position in 2008 is that “South Americangovernments have formed UNASUR, a dream to form theSouth American equivalent of the European Union. Theyno longer want to submit natural resource decisions toarbitration in ICSID or ‘Northern’ countries. They want tohave decisions made in the region – the resumption of theCalvo doctrine.”FUTURE DEVELOPMENTS IN THERESOLUTION OF RESOURCE NATIONALISMDISPUTES?All three of the conference sessions provoked questionsand discussions between speakers and the audience:discussion which is likely to continue given the re-emergence of resource nationalism issues in various partsof the world. The overall view of the conference was thatthe existing international dispute resolution bodies doindeed have a role to play in resolving resource nationalismconflicts. These bodies include both those at the inter-statelevel, such as the ICJ, PCA, ITLOS and ICSID, and thosein the field of international commercial arbitration, such asthe International Chamber of Commerce, the LondonCourt of International Arbitration, and the ArbitrationInstitute of the Stockholm Chamber of Commerce.The dispute resolution process most discussed wasinternational arbitration: but it was clear from the sessionchaired by Sir Henry Brooke that good offices can have asignificant role to play, particularly in disputes betweenstates. We must wait to see whether other internationaldispute resolution organisations and other dispute resolutionprocesses will emerge to assist in the resolution of resourcenationalism disputes. For example, will the creation of theUnion of South American Nations (UNASUR) result inamongst other things the provision of a dispute resolutionsystem catering for Latin and South America?Anthony ConnertyHead of the IDR Group2Amicus Curiae Issue 76 Winter 2008

Resolving the resource nationalism struggle

https://journals.sas.ac.uk/amicus/article/download/1182/1065

Resolving the resource nationalism struggle

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