Abstract
Hydrocarbons projects involve multiple parties, including sovereign states and corporations, to operate expensive, complex and high-risk activities. Alternative dispute resolution (ADR) is often preferred more by the parties than litigation to ensure the smooth running of the projects. ADR refers to all mechanisms of dispute settlement other than litigation such as negotiation, mediation, adjudication, and arbitration. The Asian International Arbitration Centre (AIAC) or formerly known as the Kuala Lumpur Regional Centre for Arbitration (KLRCA) is the main institution that administers and resolves all commercial arbitration disputes in Malaysia. This research argues that, due to the technicalities and complexity of operations in the oil and gas sector, there is a need to set up a special arbitration centre for oil and gas under the AIAC to handle and resolve the industrial disputes. Furthermore, by establishing the centre, it can help to promote the AIAC as the choice of arbitration hub, especially within the Organization of the Petroleum Exporting Countries (OPEC). In doing so, it is necessary to pass a special legal framework to enable the establishment of the centre. It may function as a roadmap by the key players of the oil and gas sector to recourse in resolving disputes. The methodology employed by this research is carried out in a prescriptive, comparative and analytic manner.
Highlights
Hydrocarbons projects involve multiple parties, including sovereign states and corporations, to operate complex, costly, high-risk jobs (1)
Whilst Malaysia is profoundly depending on the resources from the oil and gas, it is exceptionally significant that both local and foreign industry players who undertake the project in Malaysia will be assured “with a fast, cost-effective and efficient manner in which to resolve their disputes which inevitably arise from time to time” (9)
Despite the existence of legal framework embracing alternative dispute resolution which has been already in place, it is argued that the current legal framework is not comprehensive to resolve matters pertaining to oil and gas disputes in Malaysia
Summary
Hydrocarbons projects involve multiple parties, including sovereign states and corporations, to operate complex, costly, high-risk jobs (1). In this context, the oil and gas sector is exposed to various types of disputes such as international maritime boundary claims, claims over jurisdiction, expert determination, environmental claims, regulatory issues, and trade restriction (2, 3). It may be argued that, given the technical nature and complexity of disputes that may arise in the oil and gas sectors (4), there is a need to set up an independent arbitration centre for oil and gas under the AIAC to resolve the matters. It aims to address the problems and legal issues arising from Alternative Dispute Resolution (ADR) in the petroleum industry in Malaysia. The paper proposes a new legal framework special legal framework to enable the establishment of the centre by drawing inspiration from other jurisdiction
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