Energy Arbitrations in the Middle East

In summary

This article introduces the reader to the manner in which energy is produced, managed, preserved and treated in the Middle East, before undertaking an in-depth analysis of arbitration trends in the context of energy disputes. Finally, the areas of dispute that cause or impact current energy arbitrations and future energy disputes are explored.

Discussion points

• Ownership and management of natural resources in the Middle East
• Arbitration trends in the context of energy disputes in the Middle East
• Current and potential areas of dispute in energy arbitration in the Middle East

Referenced in this article

• UAE Federal Law No. 6 of 2018
• Qatar Law No. 2 of 2017
• DIFC-LCIA
• SCCA
• ICC

Introduction

The Middle East is synonymous with energy. It has just under half of the world’s oil reserves and just above one third of the world’s gas reserves.^[1] In terms of oil reserves, Saudi Arabia has the largest reserves in the region and the second largest reserves in the world.^[2] Thereafter, the second-largest oil reserves in the region are in Iran (fourth globally), followed by Iraq (fifth globally), Kuwait (seventh globally) and the United Arab Emirates (UAE) (eighth globally).^[3]

The Middle East is the world’s largest oil producing region.^[4] It accounts for around a third of global oil production^[5] and is responsible for roughly a third of global oil exports.^[6] Saudi Arabia is the largest oil producing nation in the region (third globally), followed by Iraq (fifth globally), the UAE (seventh globally) and Iran (eighth globally).^[7]

The Middle East is also home to the largest natural gas reserves in the world.^[8] Within the region, Iran has the largest proven gas reserves (second globally), followed by Qatar (third globally), Saudi Arabia (eighth globally) and then the UAE (ninth globally).^[9]

The region is the third largest producer^[10] of natural gas in the world. In 2019, and notwithstanding the imposition of sanctions, Iran remained the largest producer of natural gas in the region (third globally), followed by Qatar (fourth globally) and then Saudi Arabia (ninth globally).^[11]

This richness in resources and success in production has underpinned much of the economic development in the region in recent decades.

Prior to the crisis caused by the covid-19 pandemic, global energy demand was estimated to increase by 25 per cent by 2040^[12] and by 12 per cent between 2019 and 2030.^[13] Unsurprisingly, the growth in global energy demands have dropped by 5 per cent in 2020.^[14]

While global energy demands are estimated to be lowered in the short term, some analysts have estimated them to return to pre-covid-19 levels between 2021 and 2023.^[15]

In line with this, the Middle East is expected to retain a significant share of oil and gas in its primary energy demand, with oil production remaining constant and gas production increasing by 50 per cent.^[16]

Owing to the significance of the size and proportion of its oil and gas resources, and the likely increase in demand for energy in the near future, the Middle East has started to look to other sources of energy, including nuclear,^[17] coal^[18] and renewables.^[19]

As the nature of the Middle East’s energy resources expands, the nature and scope of disputes arising from projects relating to these resources will also be impacted.

Ownership and management of resources

Of fundamental importance in relation to the region’s energy sector, and disputes that may flow from it, are how rights to own and manage resources are allocated by local law and through various contractual structures involving the state, state-owned entities and international partners.

Ownership

As a starting point, natural resources in the region are generally owned by the relevant state. In Qatar, Law No. 3 of 2007 regarding the Exploitation of Natural Wealth and Resources, which regulates the ownership of the state’s natural resources, stipulates that natural resources are deemed the public property of the state.^[20] Saudi Arabia, Kuwait, Bahrain, Syria, Yemen and Oman also vest ownership rights to natural resources in the state.^[21] In the UAE, which is made up of seven emirates, the Constitution stipulates that the natural resources and wealth in each emirate are the public property of that emirate; that is, the energy resources of the UAE are not owned at the state level and, instead, each individual emirate owns its own energy resources.^[22] As a result, and for the most part, there is little dispute as to the ownership of a state’s resources in the Middle East.

However, there is scope for disagreement as to who may exercise that right on behalf of the state or its peoples. In Iraq, the state’s oil and gas resources are owned by ‘all the people of Iraq in all the regions and governorates’.^[23] The federal government in Iraq takes the position that it is the sole representative of the people and has the exclusive right to explore, develop, extract, exploit and utilise Iraq’s oil and gas resources. The governing authority of the federal Kurdistan region of Iraq (the KRG), disagrees with this view and considers that it is the federal regions and provinces (as defined in the Iraqi Constitution) that have the right to explore, develop, extract, exploit and utilise Iraq’s oil and gas resources within their territories. While this issue could have been clarified with the entering into force of the Iraqi Federal Oil and Gas Law, which has existed in a draft form from as early as 2007,^[24] its failure to come into effect continues to leave this issue unresolved.^[25]

The complexities surrounding the question of who has the relevant rights to explore, develop, extract, exploit and utilise Iraq’s oil and gas resources in the areas controlled by the KRG has led to disputes. For example, Iraq commenced an International Chamber of Commerce (ICC) arbitration, claiming more than US$250 million in damages, against Turkey and its state-owned pipeline operator, BOTAS, because, among other things, BOTAS purchased oil directly from the KRG, without consent from the Iraqi ministry.^[26]

Management: the role of national oil companies

In respect of oil and gas resources, for the most part, states in the Middle East have created national oil companies (NOCs) to manage, at the least, their upstream requirements. Notable examples of NOCs include the following:

• Saudi Arabian Oil Company (Aramco): Saudi Arabia’s state-owned national petroleum company manages the upstream, midstream and downstream components of Saudi Arabia’s crude oil and natural gas. Aramco is the world’s largest oil and gas company.^[27] Following its historic initial public offering (IPO) in 2019, it raised approximately US$25.6 billion to become one of the world’s most valuable listed companies.^[28] Despite oil prices falling during the pandemic, Aramco appears to have navigated its way through the carnage better than the rest and notably continued its commitment to pay shareholders an annual dividend of US$75 billion.^[29]
• Abu Dhabi National Oil Company (ADNOC): Abu Dhabi, which has the vast majority of hydrocarbon reserves in the UAE, created ADNOC to produce, manage, preserve and trade these reserves.^[30] ADNOC manages approximately 95 per cent of the UAE’s proven oil reserves and 92 per cent of the country’s gas reserves.^[31] ADNOC’s board of directors is comprised of members of the recently created Supreme Council for Financial Economic Affairs, responsible for all matters related to the financial investment and economic, petroleum and natural resources affairs in Abu Dhabi.^[32]
• Qatar Petroleum: Qatar’s NOC manages upstream, midstream and downstream oil and gas operations in Qatar^[33] and acts as the state’s investment arm in the oil and gas sector both domestically and internationally.^[34]
• Iraqi Ministry of Oil/Iraqi National Oil Company (INOC): INOC was reconstituted in 2018^[35] and a decree transferred the ownership of nine state-owned oil companies from the Ministry of Oil to INOC.^[36] In January 2019, however, the law establishing INOC was challenged before Iraq’s Federal Supreme Court and was declared, in part, to be unconstitutional.^[37] At present, the Iraqi Ministry of Oil continues to control and supervise the oil and gas exploration process in Iraq.^[38] INOC is expected to be operational by the third quarter of 2021 or the first quarter of 2022,^[39] and in September 2020, Iraq’s oil minister was named as the head of INOC.^[40]
• Iranian Ministry of Petroleum: the Iranian Ministry of Petroleum controls all issues pertaining to the exploration, extraction, exploitation, distribution and exportation of crude oil and oil products with a number of NOCs (including the National Iranian Oil Company, National Iranian Gas Company, National Iranian Oil Refining and Distribution Company and the National Petrochemical Company)^[41] that enter into contracts on behalf of the state.

These NOCs will, for the most part, enter into commercial agreements with private, often international, entities in order to assist with some or all of their upstream, midstream and downstream needs.

In respect of upstream arrangements, these agreements take a variety of forms. Middle Eastern countries use different types of structures for their upstream contracts. States are free to choose the type of contractual structure that suits their needs and reflects the strength of their bargaining position (with contracts sometimes developing as a hybrid of different forms). Structures that have typically been adopted in the region are:

• concession agreements in the UAE, under which the state has permanent sovereignty over hydrocarbons and only grants legal title to petroleum to the international oil company (IOC) partner once recovered at the wellhead;^[42]
• risk service contracts in Iraq, including technical service contracts for producing fields and production service contracts for development and producing fields under which the contractor is not entitled to any share of production, but can elect to have the service fee paid in kind in oil;^[43]
• production sharing agreements in the KRG,^[44] under which the contractor is entitled to a share of production to recover the costs of petroleum operations and a proportion of remaining production, which is shared with government;
• exploration and production sharing agreements in Qatar, or, particularly in respect of gas projects, development and production sharing agreements;^[45] and
• historically, risk service ‘buy-back’ contracts in Iran, but more recently, contracts have been modelled on the Iran Petroleum Contract, a new generation of upstream oil and gas contracts that are more incentivising to foreign investors.^[46]

The terms of these agreements vary significantly across states and, in some cases, within states themselves. They will generally, however, contain some form of dispute resolution clause.

The type of dispute resolution clause will vary depending on the relative strength of the parties and their sophistication and experience in dealing with disputes. For the most part, dispute resolution clauses in energy-related contracts typically provide for some form of arbitration.^[47]

Arbitration of energy disputes in the Middle East

Types of arbitration

The precise nature of the arbitration agreements contained in the contracts between states or their NOCs, and the relevant counterparty, is often confidential. In the Middle East, few states make their model agreements, or the agreements once entered, publicly available. As a result, it is not possible to identify specific and clear trends in relation to arbitration agreements in energy contracts related to the Middle East. However, some documents are publicly available. From these, a preference for arbitration under the ICC is evident.^[48]

Reflecting this preference, energy disputes accounted for approximately 16 per cent of the ICC’s 2019 caseload.^[49] However, parties to energy agreements are not only choosing ICC arbitrations. In 2019, energy and resources disputes constituted 22 per cent of the London Court of International Arbitration’s (LCIA) caseload.^[50]

Energy arbitrations involving Middle Eastern parties or otherwise relating to the region are also commenced through the investor-state dispute settlement processes found in bilateral or multilateral investment treaties (BITs and MITs).

Currently, there are 471 BITs in force in the Middle East.^[51] Arbitrations under the ICSID Convention and the UNCITRAL Arbitration Rules are the most preferred options for investor-state disputes.^[52]

Three notable MITs for the region are the Organisation of Islamic Cooperation Agreement of Promotion, Protection and Guarantee of Investments (the OIC Agreement), the Arab League’s Unified Agreement for the Investment of Arab Capital in the Arab States (the Arab League Agreement) and the Energy Charter Treaty (ECT). Both the OIC Agreement^[53] and the Arab League Agreement^[54] provide that, in certain circumstances, disputes relating to them shall be resolved through arbitration. Neither agreement specifies any arbitral institution or rules. To date, there have been 15 reported arbitrations relating to the OIC Agreement^[55] and six relating to the Arab League Agreement.^[56]

The ECT is notable for its lack of Middle Eastern state signatories. From the region, only Jordan and Yemen are contracting parties to the ECT. However, Iran, Iraq and the UAE have signed the International Energy Charter,^[57] which is often seen as the first step towards acceding to the ECT.^[58] If more states from the Middle East do sign the ECT, a spike in the number of investor-state disputes brought against Middle Eastern states can be expected.^[59]

Trends

Arbitration, the energy industry and the Middle East are all undergoing significant changes. Some likely key trends are discussed below.

Increasing ties to the relevant state jurisdiction

There is an increasing desire among states and state-owned entities to ‘localise’ arbitration clauses where possible. The extent that this localisation of arbitration clauses will happen in practice will depend, in large part, on the nature of the deal, the parties and their relative bargaining power. An example of this localisation is found in Egypt’s model concession agreement. This model agreement requires that disputes are either dealt with in the Egyptian courts or, in respect of certain matters between the Egyptian General Petroleum Company and the relevant contractor, resolved through arbitration according to the rules of the Cairo Regional Centre for International Commercial Arbitration (CRCICA) and, unless otherwise agreed by the parties, the place of the arbitration will be Cairo. This requirement to use either the national courts of Egypt or arbitration under CRCICA is a clear step away from the use of the more traditional arbitral institutions. It remains to be seen how far the Egyptian government will be willing to move in respect of adopting Cairo as the seat of any arbitration.

Jordan’s model production sharing agreement also demonstrates a desire to localise arbitrations. Unlike Egypt’s model agreement, Jordan’s model production sharing agreement does not require the use of any domestic arbitral institution (it refers to the ICC Rules). However, it does require that any arbitration be seated in Amman, Jordan, such that the Jordanian arbitration law is applicable and the Jordanian courts have supervisory jurisdiction over the arbitration.

In Saudi Arabia, a high order issued by the president of the Council of Ministers in 2019 declared that government bodies and state-owned companies that wished to settle their disputes with foreign investors through arbitration, and who had the necessary approvals to do so, should, in certain circumstances, have the arbitration conducted within Saudi Arabia at the Saudi Center for Commercial Arbitration (SCCA) or at another licensed Saudi arbitration centre.^[60]

As NOCs and governments in the Middle East become more familiar with arbitration and more confident in their dispute resolution choices, it is likely that this trend towards the localisation of arbitration will continue in respect of energy arbitrations in the region.

Enhancing the appeal of international arbitration in the region

At the same time as wanting to localise their arbitration clauses where possible, some states in the Middle East are taking significant steps to increase the appeal of arbitration in their jurisdiction.

Legislative changes

Most notable in this regard are the efforts of the UAE government, which has introduced a series of far-reaching legislative changes designed to increase the appeal of arbitration in the UAE.

These include the long-awaited new arbitration law, the Federal Law No. 6 of 2018 (the Federal Arbitration Law), which came into force on 16 June 2018. It replaces the 15 articles of the UAE Civil Procedure Code, articles 203 to 218, which had previously governed arbitrations seated in the UAE. The Federal Arbitration Law, based on the UNCITRAL Model Law, has had the effect of modernising the UAE’s arbitration framework and, in many ways, bringing it in line with international standards. The Federal Arbitration Law applies to any arbitration seated in ‘onshore’ UAE (unless otherwise agreed by the parties), including any arbitrations already on foot when the law came into effect.^[61] One of the significant changes brought about by the Federal Arbitration Law is the inclusion of express provisions relating to interim measures.^[62] In addition, the Federal Arbitration Law clarifies the process for enforcing UAE arbitral awards with a fast-tracked and overhauled procedure.

In February 2019, new regulations came into force regarding the enforcement of foreign arbitral awards in the UAE.^[63] These regulations are a positive step, and they are being put into effect by the relevant UAE courts. In March 2019, for example, the Sharjah Court recognised a foreign arbitral award as being capable of enforcement pursuant to these new regulations.^[64]

In addition to the Federal Arbitration Law, the UAE government also made another significant arbitration-related legislative change in September 2018 when the UAE repealed article 257 of the UAE Penal Code. Article 257 had placed arbitrators in the UAE at risk of imprisonment if they did not maintain ‘integrity’ and ‘impartiality’ in their capacity as arbitrators. Its chilling effect on arbitrations in Dubai was significant – some of the most experienced arbitration practitioners refused to sit as arbitrators in Dubai-seated arbitrations while the law was in place.

With a modern and UNCITRAL Model Law-based arbitration law in place, and the risk of criminal conviction and imprisonment now abated, it seems likely that there will be an increased push by domestic companies, whether private or public, to try and use Dubai as the seat of their arbitrations more frequently, including in the energy sector.

There have also been notable legislative changes in Qatar. In 2017, Qatar introduced a new arbitration law that applies to all arbitrations taking place in Qatar.^[65] Based on the UNCITRAL Model Law, Qatar’s new arbitration law modernises the previously outdated arbitration legislation and aligns it with international standards. The new arbitration law clarifies the position in respect of interim measures, just as the UAE’s Federal Arbitration Law does.^[66]

In 2018, the Iraqi government announced its intention to accede to the New York Convention.^[67] In November 2019, the Cabinet of Iraq approved a recommendation to expedite the legislation on Iraq’s accession to the New York Convention.^[68] On 4 March 2021, the Iraqi parliament ratified Iraq’s accession the New York Convention.^[69] Given that this is a recent development, it is yet to be seen how the Iraqi courts will apply the principles of the New York Convention.^[70] This is a significant step taken towards improving perceptions of Iraq as an arbitration-friendly jurisdiction and may well result in an increase in energy arbitrations connected to Iraq.

Saudi Arabia has made a sustained effort over the course of the past decade to make itself a more arbitration friendly jurisdiction. In 2012, Saudi Arabia passed a new arbitration law issued under Royal Decree No. M/34, and, in 2013, enacted a new enforcement law pursuant to Royal Decree No. M/53. In 2016, Saudi Arabia established the SCCA, and, in 2017, enacted executive regulations aimed at clarifying certain key provisions of the arbitration law. Thereafter, in April 2020, the Commercial Franchise Law came into force in Saudi Arabia. This piece of legislation expressly gives parties the option to arbitrate their disputes arising out of franchise agreements, among other dispute resolution forums.^[71] These moves have signalled the Kingdom’s increased acceptance of international arbitration as a forum to resolve disputes relating to Saudi Arabian parties and disputes pertaining to Saudi Arabia.

Institutional progress

As well as legislative changes, arbitral institutions in the region have continued to develop and flourish such that it is becoming more realistic for parties to choose to seat or otherwise connect their arbitration clauses in energy contracts to the region.

In the UAE, the financial free zones, which are empowered to create their own specific legal and regulatory framework in respect of all civil and commercial matters,^[72] continue to flourish. These zones are an integral tool in ensuring that the UAE is perceived as an arbitration-friendly jurisdiction. One financial free zone, the Dubai International Financial Centre (DIFC), has its own system of laws based on common law. Where there are gaps in the DIFC law, or where there are conflicts, English law applies. In particular, the DIFC has its own arbitration law, DIFC Law No. 1 of 2008, as amended by DIFC Law No. 6 of 2013.^[73] The key arbitral institution within the DIFC is the DIFC-LCIA. The DIFC-LCIA is ‘essentially a joint venture between the DIFC and the London Court of International Arbitration’.^[74] In 2021, the DIFC-LCIA released updated rules of arbitration, which closely follow the LCIA Rules as amended in 2020.

The Abu Dhabi Global Market (ADGM) is another financial free zone with its own common law legal system^[75] and an independent court system.^[76] The ADGM has incorporated English common law and certain English statutes into its own legal system.^[77] Like the DIFC, the ADGM has its own arbitration law, the ADGM Arbitration Regulations 2015, as amended by Amendment No. 1 of 2020.^[78] The ADGM contains the ADGM Arbitration Centre: a state-of-the-art hearing centre open to all arbitrations regardless of the institutional rules that govern the underlying arbitration^[79] and has also enacted its own arbitration guidelines.^[80] In 2021, the ICC opened up its fifth case management office in the ADGM.^[81] The courts of both the DIFC and the ADGM are known to be arbitration-friendly.

Parties to energy contracts who wish to connect their arbitration clauses with the region in some way, but who remain sceptical of the onshore courts and their attitude to arbitration, can and do localise their arbitration agreements by electing to use the DIFC-LCIA rules or by seating their arbitrations within the DIFC or the ADGM. This trend is likely to continue.

In Saudi Arabia, the SCCA has made substantial progress. From its launch in 2016, it has dealt with claims amounting to over 375 million Saudi riyals with parties from France, the United Kingdom, the United States and Germany.^[82] Although still in its early stages, considering the amount of state support that the SCCA is receiving, and the dominance of the energy sector in Saudi Arabia, it seems likely that the SCCA will handle an increasing number of Middle Eastern-related energy arbitrations in the future.

There have also been positive modernising developments at arbitral institutions in Iran and Bahrain, though it remains to be seen whether these will have any material effect on energy arbitrations related to the region.^[83]

Third-party funding

Historically, the provision of third-party funding (TPF) in respect of disputes where the substantive or procedural laws pertain to the Middle East or where enforcement actions could be carried out in the Middle East, be it in litigation or arbitration, has not been common.

However, this position is changing. The recent global changes towards TPF of disputes, the rise of the use of arbitration in the Middle East, the development of certain parts of the Middle East as arbitration-friendly jurisdictions and the ever-increasing cost of international arbitration, all point to a likely increase in the use of TPF for Middle East-focused international arbitrations. In view of the potential amount of recovery for funders, energy arbitration and construction arbitration pertaining to energy projects are expected to remain particularly attractive to funders.

The DIFC has already made some provisions in respect of TPF^[84] and, in April 2019, the ADGM issued its litigation funding rules.^[85]

Areas of dispute in the energy sector

The nature and scope of the rights and obligations of the parties pursuant to the underlying contracts between them will continue to form the basis for energy arbitrations related to the Middle East. While the disruption to the global economy caused by covid-19 will be the predominant feature of energy disputes in the short to mid-term, the region will continue to see disputes on the scope of rights and obligations in respect of payment (including take-or-pay clauses), stabilisation clauses, local content requirement clauses, price review clauses, termination rights and force majeure clauses. In addition, it is likely that some of the following factors will have some impact on future energy disputes within the region.

Covid-19

The effects of covid-19 have had and will continue to have a reverberating impact in the energy sector. These have resulted in disputes where parties attempt to attain relief from their contractual obligations by invoking force majeure, termination provisions, frustration and change in law. To what extent parties will be allowed to avail of these legal remedies in arbitration is yet to be seen. However, it is worth noting that the threshold for the parties to avail of force majeure under the region’s civil code laws does warrant that the obligation must be rendered wholly impossible, rather than merely excessively onerous. While the former would result in extinguishing parties’ obligations completely, the latter may result in a moderation of the parties’ obligation to the extent that the arbitral tribunal deems reasonable, at its discretion.^[86] Both of these legal provisions are likely to be extensively relied upon and invoked by disputing parties in energy arbitrations in the region post covid-19.

Covid-19 has also delayed expansion plans of NOCs in the region. Qatar Petroleum, for example, pushed back its North Field LNG Expansion Project by up to six months due to the pandemic^[87] and has recently awarded the EPC contracts for this to a joint venture of Chiyoda and Technip for the construction of four LNG mega-trains, and to Samsung C&T for the LNG storage and loading facilities.^[88] Similarly, Aramco has delayed two large expansion projects at the Marjan and Berri Complexes in an attempt to tighten its capital spending.^[89] In Kuwait, the impact of covid-19 led to the government’s decision to cancel plans to construct the Al Dabdaba solar plant to be developed by the Kuwait National Petroleum Company, although there are reports that this suspended project will now be merged with an existing plant.^[90] In tandem with delays of expansion plans, social distancing measures may also result in slower progress on ongoing construction and infrastructure projects in the energy sector, which will likely to lead to disputes between subcontractors and contractors on account of such delays.

The global economic recession triggered by covid-19 along with the looming uncertainties on China’s economic recovery has also invariably led to a decrease in oil prices. The knock-on effect of the tighter finances of the oil-producing and oil-exporting countries in the region is discernible. For example, Saudi Arabia’s prioritised efforts to combat and mitigate the effects of covid-19 towards its citizens, residents and businesses meant that it was not able to offer financial assistance to Lebanon’s deteriorating economy, as initially planned.^[91] This resulted in Lebanon defaulting, for the first time in history, on a US$1.2 billion bond payment.^[92] Jordan could have potentially followed this trend, but was timely assisted by the International Monetary Fund’s four-year Extended Fund Facility programme of US$1.3 billion.^[93] Notwithstanding the various financial packages offered, the economic crisis of the hard-hit countries could only worsen in the post covid-19 recovery period, likely leading to an uptick in disputes in the region.

Politics

The current political context will continue to shape the basis and form of future Middle Eastern energy arbitrations.

The recent rapprochement between Qatar and Saudi Arabia, the UAE, Egypt and Bahrain from the political situation that commenced in July 2017 will likely have a positive impact in serving to reduce potential disputes between Qatar and the other nations involved in the diplomatic crisis. This is especially true in circumstances where Qatar had continued to export LNG to these states and the region throughout the crisis.^[94]

Other political developments that will also affect the energy industry in the Middle East and may cause disputes include:

• the oil price war between Saudi Arabia and Russia in 2020, which led to an unprecedented drop in global oil prices;^[95]
• the continuing conflict in Syria;^[96] and
• civil unrest in Iraq.^[97]

Prior instability in the region has led to energy-related arbitrations. For example, three Indian companies successfully brought ICC proceedings against Yemen and its Ministry of Oil and Minerals in relation to force majeure declarations that they made as a result of the Arab Spring protests in Yemen.^[98] Investor-state claims have also been made in relation to regional instability. For example, in 2019, a UAE investor, Trasta Energy, commenced arbitration against Libya claiming that Libya failed to protect its investment in an oil refinery during the Arab uprising.^[99]

The resolution of ongoing border disputes will also have an effect on future energy relations and disputes. The unresolved maritime border dispute between Israel and Lebanon has made oil exploration in the disputed area impossible.^[100] Given the recent normalisation deal signed between the UAE, Bahrain and Israel at the time of writing, there is also a possibility for ADNOC to become involved as ‘a significant part of the solution to the Lebanon-Israel maritime dispute.’^[101] A similar dispute between Saudi Arabia and Kuwait was drawn to a close in December 2019, which enabled the renewed production of 500,000 barrels of crude per day.^[102]

Sanctions

The withdrawal of the United States from the Joint Comprehensive Plan of Action (JCPOA) in 2018, led to the reimposition of US sanctions on Iran that same year. The sanctions included, among other things, prohibitions on the purchase of petroleum, petroleum products or petrochemical products from Iran, conducting or facilitating any significant financial transactions with the Central Bank of Iran or any other Iranian financial institution, and investments in or dealings involving Iran’s energy industry.^[103]

There is no doubt that the reimposition of these sanctions caused disruption to the energy industry. Notwithstanding the advance notice and the temporary waivers that were given to eight countries (China, Greece, India, Italy, Taiwan, Japan, Turkey and South Korea),^[104] it will not be surprising for arbitrations to be commenced relating to the impact of these sanctions on energy transactions. The introduction by the European Union of its own blocking statute in respect of the US sanctions may further complicate any disputes arising from this.

With the recent change of administration in the United States, the scene is set for the revival of the JCPOA and, concomitantly, for the relaxing or lifting of sanctions on Iran.^[105] While there has not been any conclusive steps taken to relax or lift those sanctions at the time of writing, this is likely to follow in the coming months. If indeed so, this would necessarily follow steps taken by the members of the JCPOA to reverse the economic harm caused by the sanctions.

Infrastructure development

The infrastructure required to service the levels of oil and gas production coming from the Middle East is vast. Power plants, offshore platforms, drilling rigs, LNG terminals and trains, oil and gas pipelines, refineries, transport vessels and roads are all integral parts of the energy infrastructure. Infrastructure requirements for coal and renewable developments are also significant. Issues relating to the time, costs, quality and scope of the works with respect to energy-related infrastructure projects and the subsequent decommissioning of these projects have consistently led to arbitrations. In particular, questions relating to the design and construction of facilities are issues that frequently emerge in such disputes. Indeed, as recently as 2018, Qatar Petroleum’s subsidiary, Barzan Gas Company, brought ICC arbitration proceedings against Hyundai Heavy Industries regarding alleged problems with the pipeline that Hyundai had installed.^[106] Where infrastructure, such as pipelines, cross international borders, the complexity of the project increases due to the need for the participation or consent of multiple states.

Environmental issues

Climate change and other environmental concerns are having an increasing impact on the energy industry. Climate change-related disputes (both commercial and investment),^[107] including disputes related to increased environmental regulation, will likely increase. Bahrain has already faced a claim in respect of the construction of the state’s first recycling plant in which it alleged, among other things, that the construction company failed to obtain the necessary environmental permits.^[108]

Disputes may also arise from transitions within the oil and gas industries to address environmental challenges. Among other things, it is likely that disputes may arise in or involving Middle East parties connected to carbon capture and storage (CCS) technology. The UAE boasts the world’s first commercial-scale industrial CCS project in Abu Dhabi^[109] and in Saudi Arabia, Aramco has set up a pilot project that uses CCS technology.^[110] The increased application of CCS in the region may result in disputes, especially in the context of transboundary CCS projects.^[111]

In addition, disputes in or involving Middle East parties connected to carbon trading schemes may also develop. In 2019, the Dubai Regulatory Committee for Petroleum Products Trading was formed and, in 2018, Saudi Arabia announced plans to launch its own carbon trading scheme.^[112] The use of such schemes in other parts of the world has already resulted in disputes relating to over-registration, issuance or revocation of carbon credits, decisions and disagreements over bookkeeping and the erroneous transfer of credits;^[113] accordingly, it is not unlikely that similar disputes may arise in relation to any Middle East-based carbon trading schemes that are developed.

Technology

The energy industry, like many others, is being reshaped by new technologies. The pace at which the industry is adopting these technologies varies. In the Middle East, many key participants in the energy industry have been keen supporters and adopters of emerging technologies.

ADNOC in particular is keen to promote and adopt technological change. Working with IBM, ADNOC has piloted a block chain-based automated system to track quantities and financial values of the transactions among ADNOC’s operating entities.^[114]

Aramco has similarly embraced technology. One of its subsidiaries, Saudi Aramco Energy Ventures (SAEV), is dedicated to investing in companies that develop technologies that are of importance to Aramco.^[115] In 2019, SAEV invested in Data Gumbo, a company that developed a blockchain platform to streamline smart contracts and reduce disputes relating to payments among other things.^[116]

Considering the focus on technology in the energy industry in this region, an increase in the number of technology-related energy disputes is to be anticipated. In particular, a mismatch in expectations from parties to these sorts of deals^[117] may well lead to disagreements that result in arbitrations.

Belt and Road Initiative

China’s Belt and Road Initiative (BRI) is having a significant impact in the Middle East.

Energy makes up a significant part of the China’s trade and investment in the Middle East.^[118] In 2019, for example, China State Construction Engineering Cooperation Middle East signed a deal with Petrofac Emirates to work on phase two of ADNOC’s Qushawira Field Development.^[119] In the same year, China National Offshore Oil Company signed an agreement with ADNOC relating to upstream exploration and development, refining and the LNG trade.^[120]

China’s energy investments do not just relate to oil and gas. In 2019, it was announced that a coal power plant was under construction in Dubai and would be owned, pursuant to a joint venture, by Dubai Electricity and Water Authority, Saudi Arabia-based ACWA Power, China’s Harbin Electric and the Silk Road Fund.^[121] Financing is said to have come from, among others, the Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, China Construction Bank and the Silk Road Fund.^[122]

It is inevitable that there will be some disputes resulting from these economic ties. Notwithstanding China’s obvious commitment to mediation as a form of dispute resolution,^[123] it seems likely that some of these disputes, which will likely relate to large-scale cross-border projects, will result in international arbitrations. Investor-state disputes will likely be resolved according to the disputes procedures set out in the applicable treaties. In addition, certain arbitral institutions have positioned themselves to be well-placed to administer BRI-related arbitrations. For example, the ICC, which now has a case management office in the region in the ADGM, has created a Belt and Road Commission to support BRI disputes.^[124]

Funding

In this region, both governments and the private sector play a significant role in financing energy projects.

Financing related to energy projects will continue to be the subject of arbitrations in the region. This is particularly the case where finance is provided through complex arrangements by multiple and international parties. Moreover, novel forms of financing for energy projects in the region are emerging. For example, a UAE solar utility company based in Dubai was able to raise approximately US$700,000 through a Middle East-based crowdfunding platform.^[125] These platforms, especially in the early period when investors and owners are exploring new ground, are likely to lead to disputes.

Conclusion

Energy and the Middle East has been and will remain synonymous for the foreseeable future. The underlying nature of Middle Eastern energy disputes will likely remain, for the most part, the same, albeit the triggers may be different. The impact of covid-19, coupled with the collapse of oil and gas prices juxtaposed against the need to preserve cash flow, will translate to companies in the energy sector operating under heightened insolvency risks. While an uptick in the number of energy disputes in the region is expected, there is also likely to be an increase in the restructuring of companies taking place during and in the aftermath of covid-19, be it through internal agreements or by way of formal insolvency proceedings.

^* The authors acknowledge the contribution of Jane Rahman to previously published versions of this article.

Notes

^[1] BP Statistical Review of World Energy 2020, pp. 14, 32, https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2020-full-report.pdf (last accessed 28 February 2021).

^[2] ibid, p. 14.

^[3] ibid.

^[4] ibid, p. 17.

^[5] ibid.

^[6] ibid, p. 30.

^[7] ibid, p. 17. Saudi Arabia is the second largest oil producing nation globally when it comes to oil producing capabilities per day. Ibid,

p. 16.

^[8] ibid, p. 32.

^[9] ibid, p. 32.

^[10] ibid, p. 32.

^[11] ibid, p. 34.

^[12] World Energy Outlook 2018, Executive Summary, International Energy Agency, 13 November 2018, p. 1, https://www.iea.org/news/world-energy-outlook-2018-examines-future-patterns-of-global-energy-system-at-a-time-of-increasing-uncertainties (last accessed 16 February 2021).

^[13] World Energy Outlook 2020, Executive Summary, International Energy Agency, p. 18, https://iea.blob.core.windows.net/assets/80d64d90-dc17-4a52-b41f-b14c9be1b995/WEO2020_ES.PDF (last accessed 25 February 2021).

^[14] ibid., p. 17.

^[15] ibid., p. 17.

^[16] ibid., p. 17.

^[17] The UAE plans to have at least 6 per cent of its electricity generated from nuclear power by 2050. UAE federal government website, Federal governments’ strategies and plans, UAE Energy Strategy 2050, https://government.ae/en/about-the-uae/strategies-initiatives-and-awards/federal-governments-strategies-and-plans/uae-energy-strategy-2050 (last accessed 27 February 2021). A reactor at the UAE’s first, and the world’s largest (upon completion), nuclear plant was recently confirmed as ready to begin operations. ‘UAE Nuclear Power Plant’s First Reactor Ready for Operation’, The Arab Weekly, 2 February 2020, https://thearabweekly.com/uae-nuclear-power-plants-first-reactor-ready-operation (last accessed 27 February 2021). Saudi Arabia has similar plans. By 2032, Saudi Arabia is aiming to build at least two large nuclear reactors; these reactors are expected to provide approximately 15 per cent of the state’s power by 2040. Robert Mason and Gawdat Bahgat, ‘The Arab Gulf States Institute in Washington, Civil Nuclear Energy in the Middle East: Demand, Parity and Risk’, 11 April 2019, https://agsiw.org/wp-content/uploads/2019/04/Mason_Bahgat_Civil-Nuclear_ONLINE-1.pdf, p. 14 (last accessed 25 February 2021).

^[18] According to one report, coal is expected to satisfy 2 per cent of the total energy demand in the region by 2040. BP Energy Outlook 2019, Insights from the Evolving transition scenario – Middle East, 2019, p. 1 https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/energy-outlook/bp-energy-outlook-2019-region-insight-global-et.pdf (last accessed 28 February 2021). Construction of coal-based power plants is already underway in the UAE and Iran, while Oman has announced plans for new coal-fired generators. ‘Hassyan Clean Coal Project, Dubai’, Power Technology, https://www.power-technology.com/projects/hassyan-clean-coal-project-dubai/ (last accessed 28 February 2021); ‘Iran to Construct 1st Coal Power Plant’, MEHR News Agency, 14 December 2016, https://en.mehrnews.com/news/122017/Iran-to-construct-1st-coal-power-plant (last accessed 28 February 2021); Andrew Roscoe, ‘EXCLUSIVE: Oman sets target for coal project tender’, MEED, 19 August 2018, https://www.meed.com/exclusive-oman-sets-target-issue-tender-coal-project/ (last accessed 28 February 2021). In Jordan, a power plant powered by coal and petroleum coke with a net capacity of 30MW commenced operations in 2019. Manaseer Group website, News, 16 September 2018, https://www.manaseergroup.com/News/manaseer-cement-industry-launches-operations-of (last accessed 26 March 2021).

^[19] In 2018, 867 MW, less than 1 per cent of the region’s power, came from renewable sources. However, 7000MWs of renewable energy projects is reported to be in the pipeline in the region. Renewable Energy Market Analysis: GCC 2019, IRENA, p. 49, https://www.irena.org/publications/2019/Jan/Renewable-Energy-Market-Analysis-GCC-2019 (last accessed 28 February 2021). The renewable power sector was the only energy source to grow its share of the power market globally during the covid-19 pandemic and analysts expect renewable energy capacity in Middle East to more than double within the next five years. Notable projects in the region include the world’s largest solar farm in the UAE, Saudi Arabia’s first wind farm and Qatar’s 800-MW solar power plant. Claudia Carpenter and Dania Saadi, S&P Global Platts, ‘Gulf Arab countries speed ahead with renewables projects despite fossil fuels boon’, 30 September 2020 (last accessed 27 March 2021). Major IPP projects awarded in UAE, Qatar and Oman are estimated to increase the renewable energy capacity in the MENA region. International Energy Agency, Renewables 2020 Analysis and Forecasts to 2025, November 2020, p. 30, https://www.iea.org/reports/renewables-2020/renewable-electricity-2#abstract (last accessed 26 March 2021).

^[20] Law No. 3 of 2007 Regarding the Exploitation of Natural Resources and its Sources, article 2.

^[21] Saudi Arabia Basic Law of Governance of 1992, article 14; Constitution of Kuwait, 1962 (Reinstated 1992), article 21; Constitution of the Kingdom of Bahrain, 2002, article 11; Constitution of the Syrian Arab Republic, 2012, article 14; Constitution of the Republic of Yemen, 2001, article 8; Sultani Decree No. (101/96) Promulgating the Basic Statute of the State, article 11.

^[22] Constitution of the United Arab Emirates, 1971, article 23.

^[23] Constitution of the Republic of Iraq, 2005, article 111.

^[24] The Federal Oil and Gas Draft Law, the Iraqi Parliament Version, English Translation, http://www.iraq-businessnews.com/wp-content/uploads/2011/10/CoR-Draft-Oil-and-Gas-Law-English-Version-by-IEI.pdf (last accessed 25 February 2021).

^[25] Despite being approved by the Council of Ministers, the draft law was never enacted because of differences over its terms. Christopher B Strong, ‘The Oil and Gas Law Review: Iraq’, https://thelawreviews.co.uk/title/the-oil-and-gas-law-review/iraq (last accessed 25 February 2021).

^[26] Kyriaki Karadelis, ‘Iraq claims against Turkey over Kurdish oil exports’, Global Arbitration Review, 26 May 2014, https://globalarbitrationreview.com/article/1033414/iraq-claims-against-turkey-over-kurdish-oil-exports (last accessed 28 February 2021).

^[27] ‘Factbox: Saudi Aramco-the oil colossus’ Reuters, 4 November 2019, https://www.reuters.com/article/us-saudi-aramco-ipo-factbox/factbox-saudi-aramco-the-oil-colossus-idUSKBN1XE18Z (last accessed 25 February 2021).

^[28] Marwa Rashad, Saeed Hasan, Stephan Kalin, ‘“Vindication” – Saudi Arabia hails 10% debut jump in Aramco shares’, Reuters, 11 December 2019, https://www.reuters.com/article/us-saudi-aramco-ipo-markets/vindication-saudi-arabia-hails-10-debut-jump-in-aramco-shares-idUSKBN1YF0LC (last accessed 28 February 2021).

^[29] Frank Kane, ‘How Saudi Aramco IPO proved a game changer in a tumultuous year for oil’, Arab News, 16 December 2020, https://www.arabnews.com/node/1778021/business-economy (last accessed 16 February 2021).

^[30] ADNOC website, Who We Are, https://www.adnoc.ae/en/about-us/who-we-are (last accessed 28 February 2021).

^[31] U.S-U.A.E Business Council, The UAE Oil and Gas Sector Recent Updates, January 2019, p. 6, http://usuaebusiness.org/wp-content/uploads/2019/01/U.A.E.-Oil-and-Gas-Sector.pdf, (last accessed
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^[32] Abu Dhabi Government Media Office website, Khalifa bin Zayed issues an Emiri decree to form the Board of Directors for the Supreme Council for Financial and Economic Affairs, 27 December 2020, https://www.mediaoffice.abudhabi/en/government-affairs/khalifa-bin-zayed-issues-decree-Board-of-Directors-Supreme-Council-Financial-Economic-Affairs/ (last accessed 27 March 2021). ADNOC website, Our Story, ADNOC Board of Directors, https://www.adnoc.ae/our-story/adnoc-board-of-directors (last accessed 27 March 2021).

^[33] Qatar Petroleum website, About QP, https://qp.com.qa/en/AboutQP/Pages/AboutUs.aspx (last accessed 28 February 2021).

^[34] Decree Law No. 10 of 1974 on the Establishment of Qatar Petroleum, article 6(4).

^[35] Ahmed Rasheed, ‘Iraq Parliament votes to create national oil company: lawmakers’, Reuters, 5 March 2018, https://www.reuters.com/article/us-iraq-oil/iraq-parliament-votes-to-create-national-oil-company-lawmakers-idUSKBN1GH1XB (last accessed 28 February 2021).

^[36] ‘Iraq transfers ownership of nine state oil companies to new National Oil Company’, Reuters, 18 October 2018, https://www.reuters.com/article/us-iraq-oil/iraq-transfers-ownership-of-nine-state-oil-companies-to-new-national-oil-company-idUSKCN1MS27E (last accessed 28 February 2021).

^[37] Samya Kullab and Staff, ‘Supreme Court rules against INOC law’, Iraq Oil Report, 23 January 2019, https://www.iraqoilreport.com/news/supreme-court-rules-against-inoc-law-36306/ (last accessed 28 February 2021); Robert Mogielnicki, ‘One Year On, the Iraqi National Oil Company is Everything and Nothing’, The Arab Gulf States Institute in Washington, 1 October 2019, https://agsiw.org/one-year-on-the-iraqi-national-oil-company-is-everything-and-nothing/ (last accessed 28 February 2021).

^[38] John Lee, ‘Oil Ministry Pauses Transfer of Oil Cos to INOC’, Iraq Business News, 22 October 2018, https://www.iraq-businessnews.com/2018/10/22/oil-ministry-pauses-transfer-of-oil-cos-to-inoc/ (last accessed 28 February 2021).

^[39] Rowena Edwards, ‘Iraq to revive national oil company by 1Q22’, Argus, 20 October 2020, https://www.argusmedia.com/en/news/2151791-iraq-to-revive-national-oil-company-by-1q22 (last accessed 28 February 2021).

^[40] Jennifer Gnana, ‘Iraq appoints oil minister as head of its national oil company’, The National, 16 September 2020, https://www.thenationalnews.com/business/energy/iraq-appoints-oil-minister-as-head-of-its-national-oil-company-1.1078609 (last accessed 28 February 2021).

^[41] Islamic Republic of Iran Ministry of Petroleum website, About MOP; Companies, https://en.mop.ir/home/ (last accessed 27 March 2021).

^[42] Adam Powell, ‘Understanding Petroleum regimes in the MENA region’, Al Tamimi & Company Law Update, February 2018, https://www.tamimi.com/law-update-articles/understanding-petroleum-regimes-mena-region/ (last accessed 28 February 2021).

^[43] Tariq Shariq, ‘PSAs Vs Service Contracts, The Case of Iraq’, MEES, 21 February 2014, https://www.mees.com/2014/2/21/op-ed-documents/psas-vs-service-contracts-the-case-of-iraq/9427e060-656f-11e7-a8b1-7f90c264c496 (last accessed 28 February 2021).

^[44] Ministry of Natural Resources Kurdistan Regional Government website, Publications, Contracts, Signed PSCs, https://gov.krd/mnr-en/publications/contracts/ (last accessed 27 March 2021).

^[45] Qatar Petroleum website, QP Operations, https://qp.com.qa/en/QPActivities/QPOperations/Pages/QPOperations.aspx (last accessed 28 February 2021).

^[46] ‘Iran awards $1.3 bil contract to develop 2 oil fields’, S&P Global Platts, 9 February 2020, https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/020920-iran-awards-13-bil-contract-to-develop-2-oil-fields (last accessed 28 February 2021). Fazel M. Farimani, Xiaoyi Mu, Hamed Sahebhonar and Ali Taherifard, ’An economic analysis of Iranian petroleum contract’, Petroleum Science 17, 1451–1461 (2020), 31 July 2020, https://doi.org/10.1007/s12182-020-00486-2 (last accessed 28 February 2021).

^[47] Corporate Choices in International Arbitration, Industry Perspectives, 2013 International Arbitration Survey, Queen Mary University and PWC, http://www.arbitration.qmul.ac.uk/research/2013/ (last accessed 26 March 2021). Based on the findings of the 2018 Queen Mary survey, this trend is likely to continue: ‘It is widely known that arbitration is very prominent in the energy sector and our finding strongly confirms that trend: a large majority of 85 per cent of the respondent group believe that the use of international arbitration is likely to increase even more in the future.’ 2018 International Arbitration Survey: The Evolution of International Arbitration, White & Case, Queen Mary and School of International Arbitration, p. 29, http://www.arbitration.qmul.ac.uk/media/arbitration/docs/2018-International-Arbitration-Survey---The-Evolution-of-International-Arbitration-(2).PDF (last accessed 26 March 2021).

^[48] For example, article 37.4 of the Technical Service Contract for the Rumaila Oil Field between South Oil Company of the Republic of Iraq, BP Iraq NV, Petrochina Company Limited, and Oil Marketing Company of the Republic of Iraq refers to ICC arbitration, http://platformlondon.org/documents/BP-CNPC-Contrac-Oct-8-2009.pdf (last accessed 28 February 2021). Contracts involving international companies in Qatar are increasingly providing for arbitration with the ICC rules most commonly adopted. Developing renewable energy projects – A guide to achieving success in the Middle East (3rd Ed.) January 2016, p. 66, https://www.pwc.com/m1/en/publications/documents/eversheds-pwc-developing-renewable-energy-projects.pdf (last accessed 28 February 2021).

^[49] ICC Dispute Resolution 2019 Statistics, p. 15, https://iccwbo.org/publication/icc-dispute-resolution-statistics/ (last accessed 26 March 2021).

^[50] LCIA, 2019 Annual Casework Report, p. 6, https://www.lcia.org/LCIA/reports.aspx (last accessed 26 March 2021).

^[51] The following counties in the region have BITs in force: Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Palestine, Syria, UAE, Yemen. United Nations Conference on Trade and Development website, Investment Policy Hub, https://investmentpolicy.unctad.org/international-investment-agreements/by-economy (last accessed 16 February 2021).

^[52] Dispute Settlement Provisions in International Investment Agreements: a large sample survey, p. 18, http://www.oecd.org/investment/internationalinvestmentagreements/50291678.pdf (last accessed 16 February 2021), p. 65, https://unctad.org/en/PublicationsLibrary/diaeia2013d2_en.pdf (last accessed 16 February 2021).

^[53] Agreement on Promotion, Protection and Guarantee of Investments among Member States of the Organization of the Islamic Conference. Article 17, https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/2399/download (last accessed 17 February 2021); Joel Dahlquist and Luke Eric Peterson, ‘Governments Working To Rein In Use Of OIC Investment Treaty’s Investor-State Arbitration Offer’, IA Reporter, 3 April 2019, https://www.iareporter.com/articles/governments-working-to-rein-in-use-of-oic-investment-treatys-investor-state-arbitration-offer/ https://www.iareporter.com/articles/governments-working-to-rein-in-use-of-oic-investment-treatys-investor-state-arbitration-offer/ (last accessed 17 February 2021).

^[54] The Arab League Agreement further provides that where an award is not made within the required period, the dispute may be referred to the Arab Investment Court, based in Cairo. Unified Agreement for the Investment of Arab Capital in the Arab States. Article 27, https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/2394/download (last accessed 28 February 2021).

^[55] Luke Eric Peterson, ‘OIC Round Up: An Update on Pending Arbitration Cases Lodged Under the OIC Investment Agreement’, IA Reporter Investment Arbitration Report, 11 August 2020, https://www.iareporter.com/articles/oic-round-up-an-update-on-pending-arbitration-cases-lodged-under-the-oic-investment-agreement/ (last accessed 28 February 2021); Trasta Energy Limited v The State of Libya, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/979/trasta-v-libya (last accessed 17 February 2021) Hilal Hussain Al-Tuwairqi and Al-Tuwairqi Holding v Pakistan, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/987/al-tuwairqi-v-pakistan (last accessed 17 February 2021); beIN Corporation v Saudi Arabia, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/940/bein-v-saudi-arabia (last accessed 17 February 2021); Hesham Talaat M. Al-Warraq v The Republic of Indonesia, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/426/al-warraq-v-indonesia (last accessed 17 February 2021); Kontinental Conseil Ingénierie v Gabonese Republic, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/678/kci-v-gabon (last accessed 17 February 2021); Ali Alyafei v Hashemite Kingdom of Jordan (II), https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/781/alyafei-v-jordan-ii- (last accessed 17 February 2021); D.S. Construction FZCO v Libya, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/775/d-s-construction-v-libya (last accessed 17 February 2021); Omar Bin Sulaiman Abdul Aziz Al Rajhi v The Sultanate of Oman, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1025/bin-sulaiman-v-oman (last accessed 28 February 2021); Itisaluna Iraq LLC, Munir Sukhtian International Investment LLC, VTEL Holdings Ltd, VTEL Middle East and Africa Limited v Republic of Iraq, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/796/itisaluna-iraq-and-others-v-iraq (last accessed 28 February 2021); Navodaya Trading DMCC v Gabonese Republic, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1071/navodaya-v-gabon (last accessed 28 February 2021); Qatar Pharma and Ahmed Bin Mohammad Al Haie Al Sulaiti v Kingdom of Saudi Arabia, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/981/qatar-pharma-and-al-sulaiti-v-saudi-arabia (last accessed 28 February 2021); Qatar Airways Group Q.C.S.C. v Kingdom of Bahrain, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1059/qatar-airways-v-bahrain (last accessed 28 February 2021); Qatar Airways Group Q.C.S.C. v Arab Republic of Egypt, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1060/qatar-airways-v-egypt (last accessed 28 February 2021); Qatar Airways Group Q.C.S.C. v Kingdom of Saudi Arabia, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1057/qatar-airways-v-saudi-arabia (last accessed 28 February 2021); Qatar Airways Group Q.C.S.C. v United Arab Emirates, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1058/qatar-airways-v-united-arab-emirates (last accessed 28 February 2021).

^[56] Mohamed Abdulmohsen Al-Kharafi & Sons Co v Libya and others, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/408/al-kharafi-v-libya-and-others (last accessed: 28 February 2021); Ali Alyafei v Hashemite Kingdom of Jordan (I), https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/620/alyafei-v-jordan-i- (last accessed 17 February 2021); Qatar Airways Group Q.C.S.C v Kingdom of Bahrain, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1059/qatar-airways-v-bahrain (last accessed 28 February 2021); Qatar Airways Group Q.C.S.C v Arab Republic of Egypt, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1060/qatar-airways-v-egypt (last accessed 28 February 2021); Qatar Airways Group Q.C.S.C v Kingdom of Saudi Arabia, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1057/qatar-airways-v-saudi-arabia (last accessed 28 February 2021; and Qatar Airways Group Q.C.S.C v United Arab Emirates, https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/1058/qatar-airways-v-united-arab-emirates (last accessed 28 February 2021).

^[57] Energy Charter website, Process, International Energy Charter (2015), Overview, https://www.energycharter.org/process/international-energy-charter-2015/overview/ (last accessed 27 March 2021).

^[58] International Energy Charter, FAQ: What is the relationship of the International Energy Charter to the European Energy Charter and the Energy Charter Treaty, p. 21, https://www.energycharter.org/fileadmin/DocumentsMedia/Legal/IEC_AR.pdf (last accessed 17 February 2021).

^[59] By December 2019, the Energy Charter Secretariat had tracked 128 publicly known cases where the ECT was invoked. The bulk of these disputes were brought before ICSID, followed by the Stockholm Chamber of Commerce (SCC), ad hoc arbitrations under UNCITRAL Rules and the Permanent Court of Arbitration. International Energy Charter website, List of Cases, https://www.energychartertreaty.org/cases/list-of-cases/ (last accessed 17 February 2021).

^[60] Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka, ‘Commercial Arbitration: Saudi Arabia’, Global Arbitration Review, 2 April 2020, https://globalarbitrationreview.com/insight/know-how/commercial-arbitration/report/saudi-arabia (last accessed: 28 February 2021).

^[61] Article 2 of the UAE Federal Arbitration Law, Essam Al Tamimi and Sara Koleilat-Aranjo, Commentary on the UAE’s New Arbitration Law, Al Tamimi & Company Law Update, June–July 2018, https://www.tamimi.com/law-update-articles/commentary-on-the-uaes-new-arbitration-law/ (last accessed 17 February 2021).

^[62] Jane Rahman and Shanelle Irani, ‘Is the Introduction of Interim Relief: A Relief?’, Al Tamimi & Company Law Update, September 2018, https://www.tamimi.com/law-update-articles/is-the-introduction-of-interim-relief-a-relief/ (last accessed 17 February 2021).

^[63] Cabinet Decision No. 57 of 2018. See Mosaab Th. Aly and Zane Anani, ‘Enforcement of Foreign Arbitral Awards in the UAE: Paving the way for a New Enforcement Regime’, Al Tamimi & Company Law Update, December 2018–January 2019, https://www.tamimi.com/law-update-articles/enforcement-of-foreign-arbitral-awards-in-the-uae-paving-the-way-for-a-new-enforcement-regime/ (last accessed 17 February 2021).

^[64] Al Tamimi & Company website, News, https://www.tamimi.com/news/first-foreign-arbitration-award-recognised-and-enforced-in-sharjah-under-new-uae-enforcement-regime/ (last accessed 17 February 2021).

^[65] Law No. 2 of 2017 issuing the Law of Arbitration in Civil and Commercial Matters (the Qatar Arbitration Law), http://www.gcccac.org/images/english-pdf/Law_of_Arbitration_in_Civil_and_Commercial_Matters_Qatar.pdf (last accessed 17 February 2021).

^[66] Qatar Arbitration Law, Article 17(3), http://www.gcccac.org/images/english-pdf/Law_of_Arbitration_in_Civil_and_Commercial_Matters_Qatar.pdf (last accessed 17 February 2021).

^[67] Noor Kadhim, ‘Finally, Iraq Says Yes to the New York Convention’, Kluwer Arbitration Blog, 13 March 2018, http://arbitrationblog.kluwerarbitration.com/2018/03/13/scheduled-15-march-better-late-never-iraq-embraces-new-york-convention/ (last accessed 17 February 2021); Government of Iraq website, ‘The Cabinet approves Iraq’s accession to the New York Convention on international arbitration’, 25 April 2018, https://gds.gov.iq/cabinet-approves-iraqs-accession-new-york-convention-international-arbitration/ (last accessed 17 February 2021).

^[68] John Lee, ‘Iraq Ratifies New York Convention on Arbitration’, Iraq Business News, 19 March 2021, https://www.iraq-businessnews.com/2021/03/19/iraq-ratifies-new-york-convention-on-arbitration/ (last accessed 27 March 2021).

^[69] Thomas Snider, Al Tamimi & Company Insights, 26 March 2021, https://insights.tamimi.com/post/102gu64/iraqi-parliament-ratifies-accession-to-new-york-convention (last accessed 27 March 2021).

^[70] John Lee, ‘Cabinet pushes for Int’l Arbitration Convention’, Iraq Business News, 28 November 2019, https://www.iraq-businessnews.com/2019/11/28/cabinet-pushes-for-intl-arbitration-convention/ (last accessed 17 February 2021).

^[71] ‘Saudi Arabia: Cabinet Issues New Law on Commercial Franchise’, Global Legal Monitor, 5 March 2020, https://www.loc.gov/law/foreign-news/article/saudi-arabia-cabinet-issues-new-law-on-commercial-franchise/ (last accessed 25 February 2021).

^[72] Federal Law No. 8 of 2004 regarding the Financial Free Zones, article 3(2).

^[73] DIFC website, Arbitration Law DIFC Law No. 1 of 2008, https://www.difc.ae/business/laws-regulations/legal-database/arbitration-law-difc-law-no1-2008/ (last accessed 28 February 2021).

^[74] As described by the then-chief justice of the DIFC, Sir Anthony Evans, DIFC-LCIA Arbitration Centre website, Overview, www.difc-lcia.org/overview.aspx (last accessed 17 February 2021).

^[75] ADGM Courts website, ADGM Courts Legislative Framework, https://www.adgm.com/legal-framework (last accessed 17 February 2021).

^[76] ibid.

^[77] ibid.

^[78] ADGM Arbitration Centre website, Arbitration Regulations, https://en.adgm.thomsonreuters.com/rulebook/arbitration-legislation (last accessed 28 February 2021).

^[79] Abu Dhabi Global Market, ADGM Arbitration Centre, Arbitration Guidelines, https://www.adgmac.com/wp-content/uploads/2019/09/ADGM-Arbitration-Centre-Guidelines.pdf (last accessed 27 March 2021)

^[80] ADGM Courts website, ADGM Arbitration Centre, the state-of-the-art arbitration hearing facility in Abu Dhabi, commences full operations, 17 October 2018, https://www.adgm.com/media/announcements/adgm-arbitration-centre-the-state-of-the-art-arbitration (last accessed 25 February 2021).

^[81] ‘ICC Court opens in Abu Dhabi’, Global Arbitration Review, 4 January 2021, https://globalarbitrationreview.com/icc-court-opens-in-abu-dhabi (last accessed 25 February 2021).

^[82] Saudi Center for Commercial Arbitration, Institutional Arbitration in the Kingdom: A National Vision, Report on the work and activities of the Saudi Center for Commercial Arbitration, p. 15, https://sadr.org/assets/uploads/SCCA_Report_Eng.pdf (last accessed 17 February 2021).

^[83] In March 2018, the Tehran Regional Arbitration Centre launched a set of arbitration rules which are essentially based on the UNCITRAL Arbitration Rules 2010, Tehran Regional Arbitration Centre website, Rules, http://trac.ir/rules-of-arbitration/ (last accessed 17 February 2021). In October 2017, the Bahrain Chamber for Dispute Resolution updated its arbitration rules. Foutoun Hajjar and John Gaffney, ‘Seven years in Bahrain: The Bahrain Chamber for Dispute Resolution updates its Arbitration Rules,’ Al Tamimi & Company Law Update, November 2017, https://www.tamimi.com/law-update-articles/seven-years-bahrain-bahrain-chamber-dispute-resolution-updates-arbitration-rules/ (last accessed 17 February 2021).

^[84] In 2017, the DIFC courts issued Practice Direction No. 2 of 2017, which sets out the requirements for funded parties to observe in respect of their relationships, interactions and contracts with funders in legal proceedings in the DIFC courts. DIFC Courts website, Practice Directions, https://www.difccourts.ae/about/practice-directions/practice-direction-no-2-of-2017-on-third-party-funding-in-the-difc-courts (last accessed 17 February 2021).

^[85] ADGM Courts website, media, announcements, https://www.adgm.com/media/announcements/abu-dhabi-global-market-courts-issue-litigation-funding-rules (last accessed 17 February 2021); Al Tamimi & Company website, News, https://www.tamimi.com/news/adgm-enacts-litigation-funding-rules-2019/ (last accessed 17 February 2021).

^[86] Mohamed S Abdel Wahab, Construction Arbitration in the MENA Region, The Guide to Construction Arbitration (3rd Ed), Global Arbitration Review, p. 388.

^[87] ‘Samsung C&T lands EPC contract for North Field Expansion project’, Hydrocarbons Technology, 2 March 2021, https://www.hydrocarbons-technology.com/news/samsung-ct-contract-north-field-expansion (last accessed 27 March 2021).

^[88] Katie MacQue and Daniel Lalor, ‘Qatar Petroleum delays start-up of North Field LNG expansion due to COVID-19, S&P Global Platts, 7 April 2020, https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/040720-qatar-petroleum-delays-start-up-of-north-field-lng-expansion-due-to-covid-19 (last accessed 25 February 2021).

^[89] ‘PROJECTS: Kuwait to merge solar power projects’, Zawya, 5 January 2021, https://www.zawya.com/mena/en/projects/story/PROJECTS_Kuwait_to_merge_solar_power_projects-ZAWYA20210105081323/ (last accessed 27 March 2021).

^[90] ‘Aramco delays expansion projects due to COVID-19 impacts’, Technical Review Middle East, 6 October 2020, https://www.technicalreviewmiddleeast.com/business-a-management/business-a-management/aramco-delays-expansion-projects-due-to-covid-19-impacts (last accessed 25 February 2021).

^[91] Mohammed Soliman, ‘COVID-19, the oil price war, and the remaking of the Middle East’, Middle East Institute, 8 April 2020, https://www.difc.ae/business/laws-regulations/legal-database/arbitration-law-difc-law-no1-2008/ (last accessed 28 February 2021).

^[92] ibid.

^[93] IMF website, Press Release No. 20/371, IMF Executive Board Concludes First Review Under Jordan’s Extended Fund Facility Arrangement and Rephases Access to Address the Impact of COVID-19, 4 December 2020, https://www.imf.org/en/News/Articles/2020/12/15/pr20375-jordan-imf-executive-board-concludes-first-review-under-jordans-eff (last accessed 28 February 2021).

^[94] Ed Reed, ‘Kuwait signs up LNG supplies from Qatar’, Energy Voice, 6 January 2020 https://www.energyvoice.com/oilandgas/middle-east/215662/kuwait-signs-up-lng-supplies-from-qatar/ (last accessed 17 February 2021). Qatar continues to supply the UAE with natural gas through the Dolphin Pipeline. ‘Qatar Petroleum renews shared oilfield concession pact with UAE’, Reuters, 13 March 2018, https://www.reuters.com/article/us-qatar-emirates-oil/qatar-petroleum-renews-shared-oilfield-concession-pact-with-uae-idUSKCN1GP12R (last accessed 17 February 2021). In March 2018, Qatar Petroleum and ADNOC renewed their concession agreement with Japan’s United Petroleum Development Co and Bunduq Company Ltd in respect of the development and operation of the Al-Bunduq offshore oilfield. ‘Qatar Petroleum renews shared oilfield concession pact with UAE’, Reuters, 13 March 2018, https://www.reuters.com/article/us-qatar-emirates-oil/qatar-petroleum-renews-shared-oilfield-concession-pact-with-uae-idUSKCN1GP12R (last accessed 17 February 2021).

^[95] ‘The 2020 Russia-Saudi Arabia Oil Price War Explained’, KVB Prime, 28 April 2020, https://kvbprime.medium.com/2020-oil-price-war-explained-b2548a9f7b65 (last accessed 25 February 2021).

^[96] Tom O’Connor, ‘U.S. and Russian Duelling Roadblocks Create Friction Near Syria’s Oil and Gas Regions’, Newsweek, 22 January 2020, https://www.newsweek.com/us-russia-forces-syria-oil-region-1483527 (last accessed 28 February 2021).

^[97] Among other things, maintaining supply during the protests is difficult. Khalid Al Ansary, Kadhim Ajrash, Zaid Sabah, ‘Iraqi Oil Fields Halts as Reform-Driven Protests Escalate’, Bloomberg, 19 January 2020, https://www.bloomberg.com/news/articles/2020-01-19/iraqi-oil-field-halts-as-protests-calling-for-reforms-escalate (last accessed 28 February 2021).

^[98] Jack Ballantyne, ‘Award against Yemen enforced in US’, Global Arbitration Review, 8 October 2018, https://globalarbitrationreview.com/article/1175394/award-against-yemen-enforced-in-us (last accessed 17 February 2021).

^[99] Alison Ross, ‘UAE investor in Libya brings claim under Islamic treaty’, Global Arbitration Review, 11 January 2019, https://globalarbitrationreview.com/article/1178986/uae-investor-in-libya-brings-claim-under-islamic-treaty (last accessed 17 February 2021).

^[100] ‘Lebanon’s Berri: Israel violating water borders in oil exploration’, Reuters, 6 February 2019, https://www.reuters.com/article/us-lebanon-israel-oil/lebanons-berri-israel-violating-water-borders-in-oil-exploration-idUSKCN1PV1QV (last accessed 17 February 2021).

^[101] Mustafa Abu Sneineh and Adam Chamseddine, ‘Israel and Lebanon’s border dispute could give the UAE a Mediterranean foothold’, Middle East Eye, 13 February 2021, https://www.middleeasteye.net/news/uae-israel-lebanon-gas-mediterranean-foothold (last accessed 25 February 2021).

^[102] Stanley Reed, ‘Saudi Arabia and Kuwait Settle Dispute Over Oil Fields’ New York Times, 24 December 2019, https://www.nytimes.com/2019/12/24/business/saudi-arabia-kuwait-oil.html (last accessed 17 February 2021).

^[103] ‘US unleashes sanctions on Iran, hitting oil, banking and shipping’, BBC News, 5 November 2018, https://www.bbc.com/news/business-46092435 (last accessed 17 February 2021).

^[104] In May 2019, the United States ended exemptions from US secondary sanctions for major importers of Iranian oil. ‘Six charts that show how hard US sanctions have hit Iran’, BBC News, 9 December 2019, https://www.bbc.com/news/world-middle-east-48119109 (last accessed 17 February 2021).

^[105] Ali Vaez, ‘The effect of US sanctions on Iran was global – and a global effort must end them’, The Guardian, 22 January 2021, https://www.theguardian.com/commentisfree/2021/jan/22/effect-us-sanctions-iran-global-effort-end (last accessed 28 February 2021).

^[106] Jung Min-hee, ‘Hyundai Heavy Involved in Multi-billion-dollar Dispute with Qatari Firm’, Business Korea, 27 March 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=21278 (last accessed 26 March 2021).

^[107] At its broadest, climate change-related disputes have been defined by the ICC Task Force as ‘any dispute arising out of or in relation to the effect of climate change and climate change policy, the United Nations Framework Convention on Climate Change (“UNFCC”), and the Paris Agreement.’ International Chamber of Commerce, Commission on Arbitration and ADR, ICC Commission Report, Resolving Climate Change Related Disputes through Arbitration and ADR, p. 8. https://iccwbo.org/content/uploads/sites/3/2019/11/icc-arbitration-adr-commission-report-on-resolving-climate-change-related-disputes-english-version.pdf (last accessed 17 February 2021)

^[108] Cosmo Sanderson, ‘ICC Tribunal throws out claim against Bahrain’, Global Arbitration Review, 16 January 2020, https://globalarbitrationreview.com/article/1213198/icc-tribunal-throws-out-claim-against-bahrain (last accessed 17 February 2021).

^[109] Robin Mills, ‘Gulf States can lead the way with carbon capture’, The National, 3 December 2017, https://www.thenational.ae/business/energy/gulf-states-can-lead-the-way-with-carbon-capture-1.680938 (last accessed 17 February 2021).

^[110] Saudi Aramco website, Creating Value, Technology development, Global research centers, carbon management, https://www.saudiaramco.com/en/creating-value/technology-development/globalresearchcenters/carbon-management (last accessed 17 February 2021).

^[111] UNFCCC, Transboundary carbon capture and storage project activities (Technical paper), 1 November 2012, https://unfccc.int/resource/docs/2012/tp/09.pdf (last accessed on 17 February 2021).

^[112] Rania El Gamal, ‘Saudi Arabia plans to launch carbon trading scheme’, Reuters, 30 October 2019, https://www.reuters.com/article/us-saudi-investments-energy/saudi-arabia-plans-to-launch-carbon-trading-scheme-idUSKBN1X91M1 (last accessed 17 February 2021).

^[113] Lisa Hodes Rosen and Adrienne Bossi, ‘Due Process Rights in the Carbon Markets’ (2011) 11 Climate L Rep 9,12. (last accessed 17 February 2021).

^[114] ‘ADNOC has Implemented IBM Blockchain Technology to Streamline Daily Transactions’, World Oil, 12 October 2018, https://www.worldoil.com/news/2018/12/10/adnoc-has-implemented-ibm-blockchain-technology-to-streamline-daily-transaction (last accessed 17 February 2021).

^[115] Saudi Aramco Energy Ventures website, https://www.saev.com/ (last accessed 17 February 2021).

^[116] ‘Data Gumbo Secures $6M in Series A Funding from Venture Arms of Leading International Oil & Gas Companies’, Business Wire, 7 May 2019, https://www.businesswire.com/news/home/20190507005752/en/Data-Gumbo-Secures-6M-Series-Funding-Venture (last accessed 17 February 2021).

^[117] A recent study found that nine out of 10 senior oil and gas executives said they had not been able to meet expectations around digital transformation and had not yet seen value being delivered. Cristina Lago, ‘Middle East Oil and Gas CIOs confront digital Transformation Hurdles’ CIO, 14 November 2019, https://www.cio.com/article/3453438/middle-east-oil-and-gas-cios-confront-digital-transformation-hurdles.html (last accessed 4 February 2021). Carla Sertin, ‘Digital can unlock $1.6 trillion of value for oil and gas, if you know how to use it’, Oil & Gas Middle East, 15 November 2020, https://www.oilandgasmiddleeast.com/37244-digital-can-unlock-16-trillion-of-value-for-oil-and-gas-if-you-know-how-to-use-it (last accessed 27 March 2021).

^[118] Saudi Arabia was the top supplier of China’s crude oil in 2019. Notwithstanding US sanctions, China also purchased Iranian oil. Muyu Xu and Chen Aizhu, ‘China oil imports from top supplier Saudi Arabia rise 47% in 2019: customs’, Reuters, 31 January 2020, https://www.reuters.com/article/us-china-economy-trade-oil/china-oil-imports-from-top-supplier-saudi-arabia-rise-47-in-2019-customs-idUSKBN1ZU0EH (last accessed 21 February 2021). In 2018, as well as from Saudi Arabia, China imported significant amounts of crude oil from Iraq, Oman, Iran and Kuwait - all of whom were in the top 10 countries that supplied crude oil to China that year. The UAE was number 11. ‘Top 15 Crude Oil Suppliers to China’, World Stop Exports, 28 January 2020, http://www.worldstopexports.com/top-15-crude-oil-suppliers-to-china/ (last accessed 17 February 2021).

^[119] ‘Chinese construction firm wins $130mln contract in Abu Dhabi’, Zawya, 21 February 2019, https://www.zawya.com/uae/en/story/Chinese_construction_firm_wins_130mln_contract_in_Abu_Dhabi-SNG_138376278/ (last accessed 28 February 2021).

^[120] ‘UPDATE 1-China/Abu Dhabi oil firms sign exploration refining agreement’, Reuters, 22 July 2019, https://www.reuters.com/article/china-emirates-adnoc/update-1-china-abu-dhabi-oil-firms-sign-exploration-refining-agreement-idUSL4N24N2E1 (last accessed 17 February 2021).

^[121] ‘Hassyan Coal-Fired Power Plant, Dubai’, NS Energy, https://www.nsenergybusiness.com/projects/hassyan-coal-fired-power-plant-dubai/ (last accessed 17 February 2021).

^[122] ibid.

^[123] Bruce Love, ‘China Belt and Road disputes set to fuel mediation’s global rise’, Financial Times, 14 August 2019, https://www.ft.com/content/71288fe2-9e6f-11e9-9c06-a4640c9feebb (last accessed 17 February 2021).

^[124] ICC website, Dispute Resolution, https://iccwbo.org/dispute-resolution-services/belt-road-dispute-resolution/belt-and-road-commission/ (last accessed 17 February 2021).

^[125] JD Alois, ‘Largest Equity Crowdfunding Round in the MENA Region: Enerwhere Lists on Eureeca’, Crowdfund Insider, 30 October 2017, https://www.crowdfundinsider.com/2017/10/123831-largest-equity-crowdfunding-round-region-enerwhere-lists-eureeca/ (last accessed 17 February 2021).