Lex petrolea in international arbitration—a very English dissent

Abstract

Abstract This article begins by supplementing the existing criticism which rejects the recognition of lex petrolea as an autonomous system of law. It then proceeds to discuss the practical application of lex petrolea as ‘substantive law’ in international arbitration disputes. This is inspected through the lens of international and comparative law, although sections of the article focus specifically on English law. The author presents three practical conclusions. First, although parties to an arbitration may elect the rules of lex mercatoria and (by analogy) lex petrolea to govern the merits of their dispute under the lex arbitri of most Civil Law European jurisdictions, this is not possible in England under the Arbitration Act 1996. Secondly, an arbitrator may not disapply the parties’ choice of substantive law and instead resolve the dispute through the application of lex petrolea. Such a decision will likely result in the annulment of the award. Thirdly, awards relating to petroleum disputes are incapable of creating binding precedent and therefore do not create indissoluble rules of private international law. Moreover, proponents of lex petrolea such as Bishop and Childs have failed to identify any novel rules of customary international law through their doctrinal study of petroleum related arbitral awards.