The Efficiency of the Settlement Dispute Resolution Method in Oil Contracts

Document Type : ISI

Authors

1 MA. in, Faculty of Law and Political Science, Azad University, Khorramabad Branch, Iran.

2 Assistant Professor, Department of Law, Faculty of Law and Political Science, Islamic Azad University, Khorramabad Branch, Iran.

Abstract

Introduction
Dispute resolution plays a crucial role in the continuity and economic efficiency of petroleum projects, which are typically complex, multinational, and long-term in nature. In the context of the global energy industry, petroleum contracts often face challenges such as price volatility, execution costs, and scheduling delays. These factors frequently give rise to contractual disputes that, if not resolved efficiently, may halt multi-billion-dollar projects.
Conciliation, as one of the oldest and most flexible mechanisms of alternative dispute resolution (ADR), offers an amicable, low-cost, and confidential framework for resolving conflicts. Compared with judicial litigation or arbitration, conciliation allows the parties to preserve commercial relationships while achieving quick and pragmatic solutions. This research investigates the effectiveness of conciliation as a dispute resolution mechanism in petroleum contracts, comparing it with other ADR techniques such as mediation, arbitration, and FIDIC dispute adjudication boards.
Method
This study adopts a comparative–analytical legal research method, integrating doctrinal analysis with empirical case-based evaluation. The analysis focuses on Iranian petroleum law and compares it with international frameworks, particularly the UNCITRAL Conciliation Rules and FIDIC contract principles. The research involves qualitative interpretation of legal norms, judicial precedents, and scholarly commentary to assess the practical applicability of conciliation in Iran’s petroleum sector.
Conclusions
Conciliation represents an efficient and sustainable mechanism for dispute resolution in petroleum contracts, especially when contrasted with costly and time-consuming litigation or arbitration. Its strengths lie in flexibility, confidentiality, speed, and relationship preservation. However, for its optimal application in Iran, certain legal and institutional reforms are recommended:

Codification of procedural rules aligned with UNCITRAL standards to ensure legal certainty and enforceability.
Clarification of “important cases” under Article 139 of the Constitution to avoid bureaucratic delays in petroleum-related settlements.
Pre-authorization mechanisms within petroleum contracts, enabling ministerial approval in advance for conciliation clauses.
Training and accreditation of specialized conciliators familiar with oil and gas projects.
Integration of conciliation within multi-tier dispute resolution clauses, preceding arbitration or litigation.

Implementing these reforms will strengthen Iran’s legal framework, enhance investor confidence, and align the country’s petroleum dispute resolution system with international best practices. Ultimately, conciliation not only resolves conflicts but also safeguards long-term cooperation, ensuring the continuity of vital energy projects and the economic interests of all parties involved.

Keywords

Main Subjects

References

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Journal Of Researches Energy Law Studies
Volume 11, Issue 1
September 2025
Pages 145-166

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