THE DRAWING UP OF INTERNATIONAL EXTRACTIVE CONTRACTS (OIL, GAS, MINING) LA REDACTION DES CONTRATS EXTRACTIFS INTERNATIONAUX (PETROLE, GAZ, MINES (original) (raw)

2015, RDAI/IBLJ, No4, 2015

How does one write an extractive contract? How does one write a contract whereby a state grants a company the exclusive right to exploration and/or exploitation and marketing of mineral resources, oil or gas in a given field in exchange for a price, taking account of royalties, taxes and possibly a sharing of production or profit or other obligations of economic or social compensation? The issue has seldom been studied by a discipline that is too often limited to the examination of extractive contracts’ compliance with the rules of nationally or internationally applicable law.1 Legal practitioners2 insist instead on professional practices, the interests of the parties and the ‘‘win– win negotiating paradigm’’. The practice of writing these contracts teaches that their composition aims first to make an extractive industry operation actually operational,3 then to determine the economic balance4 of the activity, which results from the bargaining power of the parties, and only at the end is there any reference to the compliance of the activity within a legal environment, such as mining codes, the Bilateral Investment Treaty, etc. This is also often the order of priority that can be found in the order of the articles of an extractive contract. We therefore propose a concrete method of drawing up extractive contracts by asking three successive questions and will give examples of all the clauses which provide an answer to these questions. First, what is the ‘‘governance’’ of the contract, that is to say, who are the parties to the contract and what is their relationship— and power—in the extractive activity? These introductory clauses may include corporate clauses; the construction consortium and wider group of companies to build the group of contracts (state contract, joint venture, statutes of the joint venture company, subcontracts, Cooperation Committee); but may also include the terms of decision making that allow the operator to implement in concrete terms the industrial and financial operations defined in the work program. Secondly, what is the ‘‘contract economy’’, that is to say, what are the main obligations of the parties in both the senses of essential obligations of the parties and the economic balance of the contract? These might include, in the main body of the contract, object clauses; the rights granted by the state; the work program; the terms of economic compensation; but also the financial covenants, tax clauses, sharing clauses costs and profits, which with industrial requirements, determine the economic balance of the contract. Thirdly, what are the terms that draw the ‘‘normative space’’ of the contract, that is to say, what are the dispute resolution mechanisms and choice of law applicable to these disputes; and the choice of normative hierarchies? Finally we have references to the standard contract clauses; applicable laws; stabilisation; mediation; expertise and arbitration.