Recognition and Enforcement of Energy Arbitral Awards

Abstract

Commercial disputes as with other facets of human interaction are inevitable. In the early
oil and gas market era, unilateral action was the order of resolving disputes. With the
exponential growth in the global energy market, disputes have consequently become more
incremental and their resolution, more nuanced to ensure minimal or nil disruptions to
operational activities. A mechanism that accommodates the character and resolution of such
disputes is arbitration. This is so because it accommodates expert determinants in what has
become a very technical and complex area, and which requires expert guidance for its
resolution. However, the incursion of stringent regulations into settlement of disputes has
become a point of challenge to arbitral awards in the energy sector, making the recognition
and enforceability of energy awards more complex. This article examines how to effectively
navigate the interstices of recognition and enforcement of energy arbitral awards. In
particular, it examines the impact of section 50 of the National Power Sector Reform Act
2005 and section 11 of the Petroleum Act on adjudication of energy disputes in Nigeria,
especially on the arbitrability of tax disputes in Production Sharing Contracts (PSCs). This
article demonstrates that before arbitration clauses are inserted in contracts of parties in the
energy sector, recourse should be had to the possible effect of statutory regulations on such
disputes which may oust the jurisdiction of the arbitrator(s), and consequently make otiose
the enforcement of the arbitral award made pursuant thereto.