The State’s Authority to amend and terminate Oil Contracts
Dr. Abdul Wahab Mohammad Al-Sada
Assistant Professor, Department of Private International Law
College of Law, Taiz University, Yemen
Abstract:
This study examines the extent of the state’s authority to amend and terminate oil contracts. This issue occupies great importance for countries in various fields, and the most important problems are: when is it permissible for the state to amend or terminate oil contracts? This research paper aims to show cases of modification and termination of oil contracts, in a way that does not contradict the policy of attracting investments. The study used three scientific approaches, namely: the descriptive approach, the analytical approach, and the comparative approach between the Egyptian and Yemeni oil contracts, with guidance from the laws of other countries. The research axes are represented in the statement of the most important cases of amending or terminating oil contracts, namely: expiration of the period, emergency circumstances, force majeure, and termination based on public order.
The study concluded with a number of results, the most important of which are: The presence of the state as a party to the oil contract gives it some powers of public law, which has made the principle of the sanctity of the contract lose much of its appeal, in light of the principle of states’ sovereignty over their natural resources. The administration has the authority to amend its oil contracts and terminate them under certain conditions, and emergency circumstances in Arab countries are a strong reason to reconsider the terms of those contracts and are considered one of the general legal principles. Force majeure has a special concept. It must happen during the initial research period, or an extension of it, and continue for at least six months. The study also concluded with several recommendations, the most important of which are: the necessity of controlling and expanding cases of termination of the oil contract within the contract, similar to Article (119-1) of the amendment of the French Mining Law of 2017, which added the case of non-payment of financial dues to the state for more than two years, violation of public order, and inactivity. stipulating the application of the theory of contingencies in the contract; because some arbitration provisions consider it a contractual principle, and that the term of the contract be five years, instead of terminating the contract in the public interest, which the arbitration considers an illegal termination. Another issue is to reformulate the theory of force majeure and absorb the state of economic emergency within emergencies.
Keywords: oil concession contract, administrative contracts, emergency conditions, force majeure, and public order.