The legality, under international law, of the development of United Kingdom oil law

Patrick, John Alexander (1981) The legality, under international law, of the development of United Kingdom oil law. LL.M(R) thesis, University of Glasgow.

Abstract

The 'traditional' law of concessions is regarded as that set out in the case of Aramco v. Saudi Arabia. This has much in common with many Western states' domestic laws of contract and may be summed up by the doctrine of sanctity of contract or 'pacta sunt servanda' as the principle is known in International Law. The ratio of the Aramco case is that even a sovereign state is not entitled to repudiate or unilaterally alter contracts into which it enters in good faith with foreign nationals, except under recognised exceptions such as nationalisation - and then only on certain conditions; further, that such contracts and alleged breaches thereof, may be subject to the scrutiny of the judicial organs applying International Law. There are those who contend that this principle has been altered since Aramco by subsequent events, such as the OPEC revolution, various United Nations General Assembly resolutions, and cases where compromises have been reached, some or all of which are claimed to have brought about changes in the customary international law to the effect that states may exercise their sovereign rights to gain a greater share of the benefits of the exploitation of their natural resources at the expense of the foreign investors developing those resources. Undoubtedly many of the early concessions (such as the one in issue in the Aramco case) resulted in a disproportionate share of the financial rewards of natural resource production being won by the foreign companies rather than the producing states. This was often due to the collective political power of the multinational oil companies. There was therefore a strong moral argument that some compromise be reached and a fairer deal be given to the states involved. Perhaps unfortunately however, law is not necessarily dictated by morality. Moreover the law deals in principles and will inevitably lead to inequitable results in some individual cases, but this does not necessarily mean that the law changes, or even that it should change, at least until the merit of certainty in the law is outweighed by the number or the seriousness of the individual cases of injustice which it causes. It will be shown that the law did not change during the period since Aramco and indeed has been affirmed by recent cases. The U.K. position is then to be examined in the light of the present international law which, it is argued, is still substantially as laid down in the Aramco case. Thus critically studied, it is intended to show that the developments in U.K. legislation in 1975 directed at the oil industry were illegal inasmuch as they constituted unilateral amendments to contracts with foreign nationals (i.e. the licences conferring rights upon many non-U.K. oil companies). It is no objection to this conclusion, and no justification of the Government's actions that the legality of the legislation was not judicially challenged by those affected since the companies affected took the view that their best interests lay in accepting the inevitable and negotiating the least damaging compromise which could be achieved in the circumstances. It is suggested that, even if moral arguments justified derogations in some of the earlier instances of the exploitation of poor, undeveloped states by sophisticated multinational corporations, this could hardly be applied to the situation of the United Kingdom in the 1970s, particularly considering its substantial stake in British Petroleum, one of the "Seven Sisters", and an oil company with as much experience as any other in exploration and production abroad.

• Item Type: Thesis (LL.M(R))
• Qualification Level: Masters
• Keywords: International law
• Date of Award: 1981
• Depositing User: Enlighten Team
• Unique ID: glathesis:1981-72018
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 17 May 2019 13:23
• Last Modified: 17 May 2019 13:23
• URI: https://theses.gla.ac.uk/id/eprint/72018