Expert Determination in International oil & Gas Disputes: The Impact of Lack of Harmonization in Reserves Classifications Systems and Uncertainty in Reserves Estimates

Abstract

Abstract The resolution of international oil and gas commercial disputes in regards to reserves determination is frequently relegated to the final and binding determination of an expert. Although expert determination (ED) is often the preferred dispute resolution method because of the technical nature of the issues and the appeal of a more timely decision than international arbitration, expert determination does not enjoy the same level of recognition or enforceability as an international arbitral award. Also, in the particular technical dispute area of reserves expert redetermination, lack of harmonization of classification systems in reserves estimates brings additional issues to consider in international oil and gas commercial disputes. This paper is a review of current literature in the areas of expert determination in international oil and gas technical disputes, reserves classifications utilized throughout the international industry and uncertainty in reserves estimates. It will focus on the uncertainties which arise with the use of expert determination in international oil and gas disputes. These uncertainties relate to the immaturity of international law in the area of expert determination and to the lack of harmonization of reserves classification in the international oil and gas industry. The uncertainty of the factors related to expert determination in the resolution of international oil and gas reserves disputes, however, does not mitigate the effectiveness of this dispute resolution method. Rather, with knowledge of the uncertainties, expert determination may be utilized more effectively to resolve the financially weighty reserves disputes of international oil and gas agreements.