BCDR International Arbitration Review
June 2020 – Volume 7 Issue 1
Page 193

Changed Circumstances and Oil and Gas Contracts
Roland Ziadé & Andrew Plump


Actors in the Oil & Gas sector frequently have the experience and foresight to include price adjustment and similar self-regulating clauses in their long-term contracts. It has long been the case in the MENA region that this, coupled with other factors such as the type and size of the companies in the sector and the applicable business and legal cultures, has limited the number of disputes requiring third-party adjudication, notably via international arbitration. However, as the COVID-19 pandemic has entered a second calendar year and continues to roil the world economy and upend established patterns and relationships, it is timely to review the legal landscape in MENA countries in respect of force majeure, hardship and related legal doctrines concerning the potential effects of changed conditions on contracts. This is particularly relevant as a number of these national laws treat the authority of a judge or arbitrator to potentially adjust a contract to maintain or restore its economic equilibrium in the face of unforeseen changed circumstances as a matter of public policy. It is also revealing to see how arbitral tribunals have in fact dealt in the past with other situations of changed conditions affecting Oil & Gas sector contracts in the MENA region and consider the potential implications for emerging and potential disputes, including those which may emerge from disruptions secondary to the COVID-19 pandemic. This review brings into stark relief the vital importance of effective and resilient contractual mechanisms and of careful attention to the choice and significance of the national law to govern such contracts.