Legal Analysis of Force Majeure Clauses in Oil and Gas Law and Upstream Contracts of Iran's Oil and Gas Industry

Document Type : ISI

Authors

1 PhD of oil and gas law, faculty of law and political science, university of Tehran, Tehran, Iran.

2 Assistant Professor, Faculty of entrepreneurship, University of Tehran, Tehran, Iran.

3 PhD student in private law, faculty of law, University of judicial sciences and administrative services, Tehran, Iran.

Abstract

The upstream contracts of the oil and gas industry, due to the nature and specific characteristics of this industry, have unique characteristics that distinguish this type of contract from other types of international commercial contracts. Complexity, uncertainties, and instabilities have always existed in the oil and gas industry in the upstream sector, i.e., exploration, development, and production stages. Due to the long term of these contracts, it is always possible for events beyond the will and power and prediction of the parties to occur, which may temporarily or permanently create obstacles or delays during the implementation of these contracts. In this case, the continued existence of the contract requires the parties to determine their rights and obligations in the event of force majeure events. Accordingly, the force majeure condition is one of the most important conditions in oil contracts. Iran, as one of the countries with huge oil and gas resources, needs contracts in which the force majeure condition is considered to manage this industry in the upstream and downstream sectors.
In this research, with an analytical view, we have given a description of the developments in the inclusion of the force majeure condition in the legal system governing the upstream industry of Iran's oil and gas industry. In this context, the laws and regulations governing this industry and the concluded upstream contracts from the point of view of the force majeure condition, we have investigated to answer this main question:
Therefore, if we want to divide the history of the force majeure condition in the upstream contracts of the oil and gas industry, we must consider the existence of three different periods. The first period was the period of neglect and failure to include the force majeure condition in the contracts, which starts from the beginning of the formation of the oil contractual system in Iran, especially in the concession contracts such as Darcy's and Reuter's concessions, until before the nationalization of Iran's oil and gas industry. The second period is when the force majeure condition appeared in the oil Act of 1957 and as a result, this condition was included in most of the upstream contracts concluded between 1950 and 1978. The third period is of great importance to the condition of force majeure and is the time period after the Islamic revolution. It is well-considered and the condition related to force majeure becomes one of the most extensive conditions of oil contracts in this period. In this course, regarding the formal and substantive conditions of force majeure, the conditions of realization and the requirements for citing it, the examples of force majeure and its constituent elements, the effect of force majeure on the life of the contract, the costs incurred, the rights and obligations of the parties and how suspension or termination of the contract and exemption from contractual liability due to the occurrence of force majeure are precisely and explicitly included in oil contracts.
 

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References

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Journal Of Researches Energy Law Studies
Volume 8, Issue 2
March 2023
Pages 421-436

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