A study of the legal problems of state contracts

précédent sommaire suivant

Section 3- Settlement of disputes between states and foreign petroleum companies

As regards settlement of disputes system, it would be important that we can have a glance at clauses which have been included in the contract by the contracting parties to the arbitration clause in the process of the formation or the negotiation of the petroleum contract. As we all know, the sphere of international economic relations (States and foreign private companies) is governed by customary law, which is seen in the USA and UK as the law of state responsibility for the treatment of aliens or alternatively the right to the protection of nationals: this is the International Investment Law or sometimes as the law governing multinational (or transnational) companies. So, talk about the protection of foreign investor (legal persons or foreign oil companies or even foreign investors, individuals) is to mention the problem of inequality in the legal status of the contracting parties in a «state petroleum contract» because the foreign private oil company may not challenge the actions of state owner of oil resources or any entity of the State acting on its behalf when they have a legal dispute before the domestic courts of the host state. that is the reason why we are faced with a practice that we have on the one hand, a state arbitration offer contained in the domestic law, the BITs or IMI [such as ICSID, NAFTA and or the ECT], on the other hand, on a request for arbitration by the foreign private party. Is it about national or international courts? We know that nowadays, in the world of legal settlement of disputes relating to the state petroleum contracts, there is not only a method of arbitration. There are several kinds of arbitrations in accordance with the will expressed by the contracting parties.

1. The host country arbitration proposals contain in:

In any «State petroleum contract», you'll always find the settlement of disputes process with the applicable law. As we said in the previous chapter concerning the applicable law, the same process can be repeated in the method of settling disputes. As we said before, the field of international economic relations between States and foreign private companies are governed by the law of the protection of nationals of other countries i.e. International Investment Law. The new trend within the framework of legal settlement of disputes between both contracting parties, allows today the State, owner of oil resources, during the negotiation or during the various stages of the formation of the contract, to propose to the foreign investor

(i.e. foreign oil company) an offer of arbitration. This offer may be: * either the one that provides the competence of the tribunals of the host state of petroleum investment,* or the one that provides for arbitration contained in the bilateral investment treaties or multilateral [such as ICSID, NAFTA and or the ECT. How about the UNCITRAL arbitral tribunal?

1.1. Domestic Jurisdiction or international arbitration?

Why are we starting to deal with this subject by the competence of the arbitration or the competence of national courts? Well, it's just because the petroleum contract aim wealth or exploitation of petroleum resources in the territory of the host State on Investment and we believe that since the foreign oil company will operate its activities in the territory of the host state, the law and the courts that will govern any legal dispute arising from this agreement will certainly be those of the state. To understand very well this part and to prevent that it looks like a legal literature, we will refer to the clauses inserted in some petroleum contracts between sovereign States and the foreign oil companies, provisions of petroleum codes of some countries, codes of some Conventions relating to the settlement of disputes in terms of investment and case law, etc. Any legal dispute which may arise between a host state of investment and foreign oil company can be solved directly by international arbitrators without exhausting the internal remedies. That the case of the most petroleum contracts and mining contracts. In other words, a court should first take into consideration national law and in this case, international law can intervene only in the event of gap of domestic law on the bone of contention. National courts should first be consulted before resorting to international arbitration. That is exactly what the Article 42-1 of the ICSID (Convention establishing the International Centre for Settlement of Investment Disputes) is specifying, «but if the agreement provides that local law should apply (as indeed do the most petroleum and mining concessions today)-or if it is silent on applicable law - we can not say that the magnitude of contract or its relation to development transforms it into some kind of international contract that involves obligations on the international level different from other contracts. I find no evidence that the host state (or for that matter «home» states) accept that conclusion as international law» such us clearly said Martinus Oscar Schachter⁵⁵. We now understand that international law and international arbitration can be applied only in the second option and therefore can just play the corrective role.

- Petroleum code of the United Republic of Cameroon, Law No. 99/013 of December 22 1999, in its Art. 115.1 states that «all violations of the provisions of this Code and texts taken for its application are governed by Cameroonian courts⁵⁶»;

⁵⁵ Martinus Oscar Schachter, «International Law in Theory and Practice,» Nijhoff Publishers, 1991.

⁵⁶ Code pétrolier de la République du Cameroun, LOI N° 99/013 DU 22 DECEMBRE 1999, dans son Art. 115.1. précise que : « toutes les violations aux dispositions du présent Code et textes pris pour son application relèvent des tribunaux camerounais »

- In the petroleum code of the Islamic Republic of Mauritania on the standard production-sharing hydrocarbon of 1994 proposed to the oil companies, its Art.27.1 and 27.2 concerning the applicable law and terms of stabilization specifies that: «27.1. This Agreement and the Petroleum Operations undertaken within the framework of the aforementioned Contract shall be governed by the laws and regulations of the Islamic Republic of Mauritania; 27.2. The Contractor will be subjected constantly to the laws and regulations of the Islamic Republic of Mauritania in force.⁵⁷»

However, after reading and examined several petroleum codes of different countries, it is rare today to find some state petroleum contracts to refer to domestic arbitration or to the recognition of courts of the host State for fear that the conflict can be settled in a biased way. That is why we can find in several articles of petroleum contracts or codes aforementioned, the recognition of the competence of national law to govern the petroleum contract which will be operated within the territory of the host State, holder of petroleum resources. But as regards the courts capable resolve any conflicts that may arise, we notice that investors resort to international arbitration. The oil law of the Republic of Iraq in its Art.39 D.1 related to the settlement of disputes shares the same vision of national law governing the oil contract, signed between a State and a foreign private oil company, in accordance with the rules of international arbitration proceedings⁵⁸. This is the point that will lead us to consider the next chapter concerning the problem of international arbitration whitin the framework of settlement of disputes.

1.2. BITs (Bilateral Investment Treaties) or IMI (Multilateral Instrument of Foreign Investment) such as ICSID, NAFTA (North American Free Trade Agreement), the Energy Charter Treaty (ECT)

The arbitration is first provided in the arbitration clauses inserted by the contracting parties in the contract. We can find these types of arbitration in bilateral and multilateral treaties. The difference in legal status at the international level between a sovereign state, a subject of international law and holder of oil resources in its soil, and a foreign oil company, devoid of the status of a subject of international law, was already a big problem. In fact, the oil company could not challenge the actions of the State owner, or entity acting on its behalf, if it was before the courts within the state. The protection of the rights of the investor was not really assured. Thus, the ICSID (International Center for the Settlement of Investment Disputes) was created in order to avoid political issues within the framework of bone of contention between States when arise the issue of diplomatic protection made by the State of origin of

⁵⁷ 27.1. Le présent Contrat et les Opérations Pétrolières entreprises dans le cadre dudit
Contrat sont régis par les lois et règlements de la République Islamique de Mauritanie ; 27.2.
Le Contractant sera soumis à tout moment aux lois et règlements de la République Islamique

de Mauritanie en vigueur.

58 REPUBLIC OF IRAQ, AND GAS LAW DRAFTOIL, no... OF 15 FEBRUARY 2007, Art.39 D.1 related to the settlement of disputes In accordance with the Rules of Procedure for Arbitration Proceedings of Paris, Geneva or Cairo for the Settlement of Disputes between States and Nationals of other States and based on the Iraqi law.

the foreign investment. The ICSID was created under the auspices of the World Bank. The ICSID is a specialized agency of the United Nations and is an institution of the World Bank group based in Washington, D.C. It was established in 1966 pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (it is know sometimes as the ICSID Convention or Washington Convention of Mars 18, 1965). This institution help to promote increased flows of international investment, ICSID assists in the mediation or conciliation of investment disputes between governments and private foreign States and Nationals of Other States. And today, in the most of legal disputes concerning the petroleum field, many of the member states of this convention resort to it because a State which signs this agreement by submitting its disputes with investors to ICSID, expressly agree to the principle of Direct arbitration (i.e. the possibility that an international tribunal blame or tell the host state that you're wrong vis-à-vis to a foreign private petroleum corporation). The settlement of disputes can intervene within the framework of the bilateral or multilateral treaties in the field of promotion and protection of foreign investments.

1.2.1. BITs (Bilateral Investment Treaties)

There are, today, several kinds of bilateral treaties concerning the protection of international investment. Generally, they are called by bilateral treaties for the promotion and protection of investments. These types of treaties are signed between two countries. They aim to protect the investments and private investors from each party. Two different countries which agree to sign such a contract make it with the aim of doing a greater protection of the investments of the nationals of both member states. If one of the clauses inserted in the contract is an arbitration clause allowing the parties to resort to bilateral or international arbitration, it is first to avoid that their disputes be settled by the courts of one of the host country of petroleum investment. In many of these bilateral treaties for the protection of petroleum investments, the signatory countries often resort to the arbitration of ICSID (International Center for the Settlement of Investment Disputes), and other states resort to the Rules of Procedure for Arbitration Proceedings of Paris, Geneva or Cairo for the Settlement of Disputes between States and Nationals of other States and based on the Iraqi law. It's now clear that, here, States base their consent to the ICSID arbitration, for example, on the provisions of such bilateral investment treaty (BIT) stipulated with the national state of the investor. It is important to note that several BITs also contain clauses of the Most-Favoured Nation (MFN). These clauses allow the referral to another BIT concluded by the state involved in litigation with a third State, and contain a reference to ICSID arbitration suitable to found the competence of the Tribunal.

- The Republic of Congo (Brazzaville), for example, is an oil producing country and is a member of ICSID. In the aforementioned article 20.1 of production sharing contract of January 7, 2004, relating to the applicable law and dispute resolution contract between the Republic of Congo (represented by the «the Minister of Hydrocarbons Mr. J.B. TATI-LOUTARD) and TOTAL E&P CONGO we find this formulation: «All disputes arising under the contract will be definitively settled in accordance with the Convention On The Settlement Of Investment Disputes Between States And Nationals Of Other States done at Washington, 18 March 1965»;

- Cases of Art. 39 D. 1 of petroleum code of the REPUBLIC OF IRAQ, AND GAS LAW DRAFTOIL, no... OF 15 FEBRUARY 2007, cited above.

Any Member State to the ICSID Convention or a BIT whose its national can be injured by a Member State or one of the Contracting States to the bilateral treaty for non-compliance with the award of ICSID Arbitration and its international obligations for sovereign immunity reasons, has the right to appeal to the International Court of Justice (ICJ). This court may decide to punish the state which does not respect its international commitments by international sanctions⁵⁹.

Today, there are several kinds of bilateral treaties between states within the framework of petroleum contracts. These agreements are signed between the two countries, whose one is the owner of petroleum resources. This is the reason that justify that these agreements to be called «bilateral treaties». These treaties are signed between industrialized countries (which have a significant proportion of exports of «oil capital»), developing countries and rich or poor countries, and holders of petroleum resources. In view of the situation of the fear of the decline or the end of the oil age and any insatiable desire to discover other oil zones not yet discovered and exploited in certain areas, we notice today a substantial increase of petroleum contracts in the field of petroleum investments. But since what interests us here is the problem of disputes settlement, we will immediately analyze the situation.

As regards the issue of settlement dispute in the new trend of modern BITs, we admit and after examining several arbitral cases law within the framework of state contracts and state petroleum contracts, we notice that the countries that signed such treaties resort to direct arbitration rather than resorting to national courts.⁶⁰ Henceforth, with modern BITs, private foreign investors will no longer, as was the practice of traditional BITs, a compulsory and traditional exhaustion of internal legal remedies as prior condition for international arbitration appeal. Such is the case of most of BITs signed by the United States and other countries of the world. In order to protect the investments made by nationals of the countries who are signatories to the agreement to bilateral treaties, foreign investors no longer hesitate, during the negotiation and the period of formation of petroleum contract to include the clause of resort of direct arbitration. What will become if the petroleum contract does not contain an arbitration clause and does not mention the use of direct arbitration? There too, to protect the rights of the foreign investor, especially the private foreign oil companies, with modern BITs, the foreign investors now have the power to decide unilaterally to sue the host state of petroleum investment for arbitration proceedings. The phenomenon of the combination of the law of host State of the investment with the rules of BITs shows that the refusal of the Contracting State to go to arbitration then becomes not only one violation of a contractual stipulation but also of a conventional provision which empowers the State of origin of the foreign private oil company to demand the host contractor state to respect its conventional commitments.

⁵⁹ Art. 64 of ICSID

⁶⁰ That is the case of a BIT signed between the United States - Azerbaijan, in art. IX, «BITs give U.S. investors the right to submit an investment dispute with the treaty partner's government to international arbitration. There is no requirement to use that country's domestic courts.»

It is clear that even if the foreign investor seems to be favored, he does not become a subject of international law. We note also that in the absence of prior agreement between the parties concerning the settlement disputes can only be chosen by the foreign investor. The bilateral treaty between the USA and AZERBAIJAN of 1997 in it Article IX 3-b gives us already an example⁶¹. And the fact is that in most of BITs, even in the absence of a specific written contractual clause in the petroleum contract, private foreign investor (i.e. foreign oil company) now has this unilaterally right to submit the dispute to an arbitral tribunal (or arbitration tribunal). In most of these modern BITs, the consent of the State to resort to direct arbitration, even by the foreign oil company, shall be done in writing.

1.2.2. IMI (Multilateral Instrument of Foreign Investment) such as ICSID, NAFTA
(North American Free Trade Agreement), the Energy Charter Treaty (ECT)

The arbitration contained in the multinational treaties on investment [as ICSID, NAFTA and the ECT] as we said before is one of the elements constituting the offer to arbitration that a sovereign state, owner of petroleum resources during the negotiation or the various stages of the formation of petroleum contract, can propose to a foreign private oil company. In other words, the way of settling disputes between a State and a foreign private company planned in multilateral treaties will lead us to refer here to ICSID arbitration or other forms of arbitrage. Let now analyze how is made the settlement of disputes in multilateral treaties and other forms of arbitrage on the foreign investments. We would like first to remind you that we are dealing with this issue not only in the context of petroleum contracts, but also in the state contracts generally speaking.

1.2.2.1. Arbitration according NAFTA

In the Treaty of NAFTA, its Chapter XI is dealing with investments. When a foreign oil company signs a state petroleum contract for the exploitation of petroleum resources of the host state of this investment, of course, we are dealing here in a petroleum investment. The contract, between a State and a foreign oil company, which just come from this kind of long-term or short-term investment for petroleum exploration or exploitation of the host State, is of course a petroleum contract. It is also true that the big part of our thesis is focused on the petroleum contracts and, since petroleum contracts are state contracts, and also since because we are analyzing the problems of settlement Disputes, it is important for us to get a little bit inspiration about this treaty, i.e. take what is positive for improvement of the mode of arbitration in legal disputes between host states and oil companies in the world.

The arbitration under the NAFTA provides an opportunity to the private investors to choose any form of arbitration specified in the texts, despite any commitment contrary previously agreed with the State. How about the applicable law during the arbitration? To answer this question, we have to know that if the national law of the host country should be taken into

⁶¹ «Each Party hereby consents to the submission of any investment dispute for settlement by binding arbitration in accordance with the choice of the national or company (...) or the mutual agreement of both parties to the dispute (...).»

consideration, one of the provisions of the NAFTA agreement must refer to it. When there is no that reference, the parties must simply respect the relevant rules of international law. Let have a look at its art. 1130 Article 1130 related to place of Arbitration between investor and state: «Unless the disputing parties agree otherwise, a Tribunal shall hold an arbitration in the territory of a Party that is a party to the New York Convention, selected in accordance with: (a) the ICSID Additional Facility Rules if the arbitration is under those Rules or the ICSID Convention; or (b) the UNCITRAL Arbitration Rules if the arbitration is under those Rules.»

The agreement of private parties to the NAFTA arbitration is given in an ad hoc declaration.⁶² This agreement is given a little differently (or wisely) of methods that are in the ICSID face to the BITs and the national laws of the host states of the investment providing for arbitration, and where the consent of the parties is made directly by the request for arbitration. NAFTA does not hesitate to be inspired or take again the provisions of the bilateral treaties over the American and British investments.

When there are violations of certain provisions of the agreement by the host State of the investment, arbitrators can refer to the mechanism for resolving disputes between private parties and the host state. Here is what shows us how to proceed to arbitration according to what we have discovered in an article written by Andrea Giardina⁶³, a professor at the Law school of the University of Rome, «La Sapienza»:

a) under the ICSID Convention if it is applicable, i.e. in case when the State party to the dispute and the State of the investor are parties to the Washington Convention;

b) as an additional mechanism of the ICSID if only one of these both states is a party to the Convention;

c) according to the arbitration rules of UNCITRAL, in other cases. The award requires parties and therefore, of course, the state party to the dispute, which must comply with it without delay (article 1135-1 and 1135-2) of the Agreement. Otherwise, the Commission under Chapter 20 of the Agreement will establish a panel at the request of the State of the investor to notice, at an inter-state level, non-compliance with the award in the part of the State and the violation of the Agreement; it may recommend to the State to enforce the award (section 1135-6). All of the foregoing implies the obligation of Member States under NAFTA to exercise diplomatic protection, both during arbitration between the foreign investor and the State, as against the State which comply with the arbitration award.

The arbitral award shall be binding on the parties in dispute (Article 1135-1) and the three Contracting States (Canada, USA and Mexico) are under an obligation to implement it within their territories (article 1135-5). The Treaty of NAFTA gives guarantees to the investor and

⁶² Chapter Eleven, Article 1121 related to Conditions Precedent to Submission of a Claim to Arbitration.

⁶³ «Clauses de stabilisation et clauses d'arbitrage: vers l'assouplissement de leur effet obligatoire? - Les états dans le contentieux économique international, I. Le contentieux arbitral ».Kluwer Law International, Kluwer Arbitration 2005.

that the execution of the sentence may be applied according to the ICSID Convention, the New York Convention of 1958, or finally the Inter-American Convention of 1975. In a word, we notice that the fact that this treaty uses three different types of arbitration, its mechanism for the recognition and enforcement of arbitral awards is not unique.

It is true that these agreements do not address directly the problems of petroleum contracts, but we think that as regards settlement of the disputes, these examples can give us inspirations in order to improve the system of settlement of disputes between a foreign oil company and the host country of investment.

1.2.2.2. Arbitration according ECT.

The arbitration in the Energy Charter Treaty (ECT) of 1994⁶⁴ also offers an opportunity for private investors to choose one of the forms of arbitration envisaged in the text, notwithstanding any contrary commitment previously agreed with the State. In this ECT, we can note the absence of a provision making any reference to the national law of the host State, as provided, for example, in the Article 42 of ICSID⁶⁵. This provision expresses certainly the will to restrict the application of the domestic law. When the investor, according to the rights that Article 26 of ECT confer to him to have a recourse, if there is need for other options, to choose to resort to judicial or administrative tribunals of the State party to the dispute, or use settlement procedures previously agreed, it is clear that the State will not be subject to diplomatic and / or judicial action from the national State of the investor, during the duration of the proceedings or if he carries out the award. In other words, the treaty ECT provides that if the foreign private investor resort to arbitration provided by Article 26 above, no diplomatic protection could be exercised in his favor against a state that comply to the delivered award. Even within the framework of the ICSID, a State which take part in arbitration and executes the sentence, complies with the obligations arising from the treaty, can not be regarded as being at the origin of a dispute about the application and interpretation of treaty (Article 27) by the national State of the investor.

We know that the treaty of ECT does not have any relationship with the petroleum contracts, but we think that the mode of arbitration of the conflicts, between a host State of the energy investment and a foreign private company can also inspire us very much in the way of settling disputes in the petroleum contracts⁶⁶

Here too, to avoid that the arbitration agreement between the parties could be challenged in the future, the consent of private parties to the chosen form of arbitration should be expressed

⁶⁴ The Energy Charter Treaty « www.encharter.org»

⁶⁵ J.Paulsson, «Arbitration Without Privity,» dans Wälde, «Investment Arbitration under the Energy Charter Treaty from Dispute Settlement to Treaty Implementation», London, La Haye, Boston 1996,p.442 et s.,437

⁶⁶ The "draft" of the MAI will not be discussed here, but its Section D provided on the issue

which attract our attention, the provisions quite comparable to those of the NAFTA and ECT - inspired by the same principles.

in an ad hoc statement⁶⁷ (Article 26). Besides, we notice that article 26 of the EC Treaty, and even the whole Treaty on the settlement of disputes between signatory states and foreign private investors were inspired by modern BITs, particularly the British and American models⁶⁸

This article 26 of EC Treaty abovementioned also confers to the investor the right to unilaterally submit a dispute with a State signatory to international arbitration, even in the absence of specific contractual clause. The signing of the Treaty by the State is a written agreement to submit to arbitration of all disputes relating to investments covered by the Treaty. However, although the unconditional consent to arbitration is given by all other States by investors and by the mere fact of signing the treaty, there are a certain number of countries in this agreement, which do not accept to give their Consent in this way: the first group of countries (listed in Annex ID), does not consent to arbitration if the investor had previously submitted the dispute to one of the first two mechanisms of disputes solution. Another group of states, listed in Annex IA, does not consent to hear disputes relating to the last sentence of article 10 paragraph 1 of the Treaty. This unconditional consent to arbitration by the ECT that all States and all foreign private investors, one of the nationalities of the member states of this Charter, must give is divided on four kinds of arbitrage: ICSID arbitration; the arbitration of the additional mechanism of the CIRDI; arbitration under UNCITRAL Rules; arbitration of the Stockholm Chamber of Commerce. In Article 26, paragraph 6, the arbitrators must, in these four forms of arbitration, decide contentious issues «in accordance with the Treaty and the rules and principles of international law».

The EC treaty goes even further on its rights by grating to the foreign private investor the right to challenge before an arbitration tribunal some legislative changes or some cases law. This view of things is «unattainable» under an American BITs because we know, as stated WÄLDE, that the goal of the United States of America is to preserve at all costs the federal laws not directly related to the investment, and in particular the antitrust legislation, of arbitration disputes; he underlines immediately how certain distinctions can prove to be difficult to operate between action related or not to the investments regime. The same article 26 provides three mechanisms for dispute settlement, according to the choice that investor can make: the resort of any settlement procedure previously agreed with the state, the resort of administrative or judicial courts of the State party to the dispute; the resort to arbitration under the same article⁶⁹. Let us note that the awards delivered by this treaty are obligatorily

⁶⁷ This peculiarity (or special feature) of NAFTA and the Energy Charter Treaty's regimes is highlighted by J. Paulsson, «Arbitration Without Privity»., p. 434 et s.; B. Stern, «Un coup d'arrêt à la marginalisation du consentement dans l'arbitrage international «, Rev. arb., 2000.403, spéc. p. 422 et s., and L. Fadhallah, «Investment Disputes between States and Private Parties: Enhancing Private Access Through International Arbitration», Looking Ahead: International Law in the 21st Century, La Haye, London, New York, 2002, p. 82»

⁶⁸ Th. WÄLDE, International Investment Under the 1994 Energy Charter Treaty (1995), p.

14-15; the author notes that the Treaty make up, between 50 signatory states, more than 2000

bilateral treaties.

⁶⁹ Babadji, Le Traité sur le Charte européenne de l'énergie , AFDI, 1996.872 et s. Sur l'art.
26 du Traité : Poirat, L'article 26 du Traité relatif à la Charte de l'Energie : procédure et

recognized and enforced effectively in all states parties, without delay, in its area. They are also binding on the parties between which it was made (section 26-8). Article 28-3 G of this treaty specify that such recognition and enforcement can never be justified only if the award between state and private investor will comply with the Treaty and with the rules and principles of international law.

1.3. The UNCITRAL (United Nation Commission on International Trade Law) Arbitral tribunal

As regards to arbitration in the UNCITRAL (United Nation Commission on International Trade Law) courts, we think that we are not going to make a long analysis because we have noticed that the competent arbitrators to settle disputes between host states of investment and foreign private investors, for UNCITRAL Courts and the Treaty of NAFTA and also that of EC Treaty, often apply international law. And generally, the same procedures are repeated:

- the suspension and limitation of diplomatic protection;

-the obligation for all Contracting States to respect and enforce the sentences;

- the existence or acknowledgment of a dispute between Contracting States only in the event of disagreement on the application and interpretation of establishing the Agreements;

- the Conformity of the arbitration award to international law , even in the presence of clauses of the choice of law or rules of applicable law and also even particularly, in the presence of stabilization clauses.

2. Direct possibility of initiating proceedings to the international arbitration by the foreign investor: «Arbitration Without Privity» practice.

The international law has changed a lot because today with the new practice of arbitration «without privity,» any natural person or legal entity, in this case, the foreign oil company of a State party to the convention, having contracted with another signatory State may submit any dispute directly with the aforementioned State (or with an agency or subdivision designated to ICSID by the State) before an arbitral tribunal, on the condition that both parties (government and company) have given their written agreement to submit to the Centre of settlement disputes relating to the contract, according to Art. 25 of the Washington Convention⁷⁰ of March 18, 1965. The foreign oil companies today have the right to unilaterally submit or make a direct resort before an international arbitration body. As we are insisting to say that, the foreign oil company does not become a subject of international law but just gets equal opportunity, with the contracting state subject of international law, to resort directly to arbitration before an international body.

règlement des différends et statut des personnes privées , RGDIP, 1998.45 et s. ; Wälde Investment Arbitration under the Energy Charter Treaty From Dispute Settlement to Treaty Implementation , Arbitration International 1996, p. 429 et s.

⁷⁰ Washington Convention, Art. 25. Show « www.worldbank.org/icsid/basicdoc/9.htm» (English text only). Written agreement of the state can be stipulated in the contract, but also in a national law on investment or in a bilateral or multilateral treaty to which the State is a party.

It is clear that the foreign oil company obtains a privileged position by allowing it to choose one or the mechanisms settlement disputes or the form of arbitration among those proposed by the host country of petroleum investment in its request for arbitration (according the ICSID practice based on domestic laws concerning investments and the BITs), or its request for arbitration accompanied by expression of its consent to arbitration (according to the provisions of NAFTA and the Energy Charter Treaty) as explained Andrea Giardina⁷¹, professor at the school of Law at the University of Rome, «La Sapienza». Some lawyers think that the inclusion of an arbitration clause of ICSID, in several petroleum contracts and several covering treaties ensures that internationalization by the introduction of the state of origin of the foreign company within the framework of legal relations founded around an international contract. It is therefore important to remember that the refusal of the Contracting State to go to arbitration becomes not only a violation of a contractual stipulation, but also a breach of conventional provision which empowers the State of origin of the private foreign company to require the host state contractor the compliance with its treaty commitments.

⁷¹ in his article «Clauses de stabilisation et clauses d'arbitrage: vers l'assouplissement de leur effet obligatoire? - Les états dans le contentieux économique international, I. Le contentieux arbitral ».Kluwer Law International, Kluwer Arbitration 2005.