Arbitration Agreements: Common Drafting Errors in the Formulation of Clauses in Energy Dispute
Tahkim Sözleşmeleri: Enerji Anlaşmazlıklarındaki Hükümlerin Formülasyonunda Görülen Yaygın Taslak Hataları
Indre DAPKEVICIUTE
This paper focuses on the drafting errors in the formulation of arbitration clauses and the significance for the energy sector, more specifically the oil and gas industry. It is argued that the risk of drafting errors can be reduced. Three drafting errors that are most significant to the industry - due to the implications they pose - are examined: complex narrow or imprecise language, arbitration rules and seat of arbitration. It is emphasised that oil companies should, at contract negotiation and drafting stages, place primary focus not just on the financial benefits and the deal before them but most importantly on the formulation and incorporation of an arbitration clause. A suggestion of how the drafting risk may be reduced is offered and future challenges for drafting are identified.
Arbitration, Clauses, Drafting, Errors, Energy.
Bu makale tahkim hükümlerinin formülasyonunda görülen taslak hataları (drafting errors) ve bu hataların özellikle petrol ve gaz endüstrisi olmak üzere enerji sektörü için önemini konu etmektedir. Taslak hatalarının azaltılabileceği iddia edilir. En önemli üç taslak hatası -yönelttikleri etkileri bağlamında- bu makalede incelenmiştir: karmaşık-dar ya da belirsiz dil (complex narrow or imprecise language), tahkim kuralları (arbitration rules), tahkimin bağlı olduğu yargı alanı (seat of arbitration). Petrol şirketlerinin sözleşme müzakere ve hazırlık aşamalarında, tahkim maddelerinin formülasyonu ve inkorporasyonuna mali kazançlar ve anlaşmalardan daha fazla odaklanması gerektiği vurgulanır. Bu makalede, taslak hatalarının nasıl azaltılacağı konusunda bir öneri dile getirilmiş ve bu manada, gelecekte karşılaşılması muhtemel sorunlar tespit edilmiştir.
Tahkim, Hükümler, Taslaklama, Hatalar, Enerji.
I. INTRODUCTION
‘You cannot simultaneously prevent and prepare for war.’1
-Albert Einstein
International arbitration has become the established method of dispute settlement in commercial sectors, particularly in the energy industry. Disputes arising out of energy contracts are often complex and result in high litigation fees and the breakdown of the professional relationship between the parties making arbitration a superior alternative. It is therefore advisable for the parties to include arbitration clauses – clause compromissoire - in their contracts prior to a dispute arising, as it is more difficult to draft a submission agreement after a dispute has arisen. This ensures that the issue is dealt with efficiently and allows the professional relationship to continue. It has indeed been the rising trend to include arbitration clauses in energy contracts. However, it has not been without problems. In fact, at times inclusion of an arbitration clause may cause more problems than it resolves2 and a poorly drafted clause may be ‘worse than no clause at all.’3 This is primarily due to the errors arising out of arbitration clause drafting at the time when the energy contract is being drawn up. Energy disputes are complex and therefore having a flawed clause, however small the flaw, has potential to have devastating consequences. Arbitration clauses have often received less attention compared to the other clauses during drafting of contracts because the parties direct their focus on the financial benefits and sealing the deal whilst failing to seriously consider a likely scenario of a dispute arising. This means that clauses are often formulated carelessly – either lacking detail or being too extensive – resulting in a possibility of a long and expensive litigation battle not just over the initial contractual dispute but also an additional dispute vis-à-vis the arbitration clause. It is therefore crucial for the parties to carefully consider the types of disputes that may arise out of their energy contracts and how an arbitration clause could fit into the contract and deal with those disputes. Knowledge of the complex arbitration rules, together with the needs of the parties, – including treaties, national laws and institutional rules - are essential to be able to formulate a rigorous clause that will not be regarded as pathological when it is triggered by a dispute.
