ICEA launches report on energy sector dispute resolution

The ICEA, a joint venture of the Scottish Arbitration Centre and the Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee (CEPMLP), is working to identify dispute resolution preferences in the energy sector with a view to drafting dispute resolution rules tailored to the sector’s needs.

The Initial Report on Dispute Resolution in the Energy Sector was launched at the Global Forum on Dispute Resolution for Oil & Gas Industry.

The research phase consisted of “an online questionnaire, accompanied by debate and discussion with industry and professional figures at various events and conferences”, according to ICEA co-director and CEPMLP director Professor Peter Cameron.

The key findings of the initial report include:

“Strong support for early procedures to resolve disputes. Overall, respondents were against mandatory cooling off periods, albeit a narrow majority of in house counsel respondents were in favour. However, there was very strong support for mandatory high level negotiation, with over 80% of respondents in favour.A high number of respondents were in favour of sanctions for failure to comply with early dispute settlement procedures.”

“The most important factor for parties when considering a dispute process is the expertise of the decision maker, closely followed by neutrality.”

“Arbitration by a clear margin, especially when hybrid arbitration processes are taken into account. However, mediation also ranked well. Very few respondents ranked litigation as their first choice. There was significant support for hybrid processes, such as med-arb and arbitration with a conciliation process.”

“The single most important factor for most respondents was that the seat nation was a signatory of the New York Convention. The next most important first choice factor was the reputation of the local courts for probity.”

“The ability to nominate arbitrators was the most important factor. This was followed closely by confidentiality. The least important factor to parties was the nationality of the arbitrators, suggesting that it is the seat, rather than the nationality of arbitrators which counts in the neutrality stakes.”

“Confidentiality was an important factor to respondents, with 80% of respondents favouring confidentiality in proceedings. Just under half of those favouring the kind of enhanced confidentiality and anonymity offered by certain jurisdictions.”

“There was a clear preference in favour of fees being set by the administering institution.”

“There was also a strong preference for fees being set on an hourly rate basis.”

“A sizeable minority responded positively to this proposition.”

Andrew Mackenzie, secretary general of the ICEA, said: “We are delighted to be publishing our Initial Report on Dispute Resolution in the Energy Sector…”

“I would like to take this opportunity to thank all those working in the energy sector who completed our questionnaire, and those who have provided advice and support to us throughout the project.

“In the report we have outlined a set of dispute resolution principles based on our findings. In the next stage of our work, we will be seeking feedback on this report, our findings and our proposed dispute resolution principles for commercial disputes. Indeed, we welcome any comments.”