The Council of Ministers recently launched the second offshore licensing round for oil and gas exploration in numerous blocks. It also approved the updated tender protocol and approved updates to some articles of the model exploration and production agreement. The Lebanese Petroleum Administration has invited interested companies to combine their bidding efforts by forming consortiums. This article examines the pre-qualification process and reviews how bids will be assessed up until the award stage.
In a notable decision, the Beirut Appeal Court highlighted the requirements that shareholders must meet in order to submit claims against their company or its chair or directors. In its decision, the court held that while shareholders' personal rights are protected by their ability to challenge their company's management through an individual or company action, their claims should be restricted to damage which they have personally suffered and limited to their participation in the company.
Preventing corruption is a key challenge faced by the oil and gas sector worldwide. This is particularly true in developing countries, as the high level of financial resources generated by recent discoveries can create a breeding ground for corruption and abuse. Lebanon recently took a major step towards achieving transparency and accountability in this regard when it adopted Law 84 on Transparency in the Oil and Gas Sector.
In a drawn-out dispute between the Kataeb Political Party and The Modern Media Company (MMC), the Beirut Supreme Court has confirmed that ownership of a trademark or trade name is acquired through use and not through registration with the relevant authorities. However, the MMC believes that the court made a serious error in its decision and has thus appealed to the country's highest court.
In line with Lebanon's pro-alternative dispute resolution attitude, a further option in the form of judicial mediation was recently made available to parties through the implementation of Law 82. Judicial mediation offers an alternative mechanism for settling disputes in an efficient, fair, timely and confidential manner and should help to lessen the increasingly overwhelming workload faced by judges.
Due to its status as a commercial hub, Lebanon has its fair share of disputes arising from commercial representation agreements, particularly those concerning compensation for the termination of such agreements. However, while recourse to the court system is well established as the traditional method of settling this type of dispute, significant controversy remains regarding their submission to arbitration.
Disputes are a significant risk in any energy project. As such, the Cabinet recently issued a model exploration and production agreement for petroleum activities. However, production-sharing contracts such as the agreement have frequently been the subject of international commercial and state investment disputes. It is therefore questionable whether the dispute resolution mechanism provided in the agreement allows for the efficient management of any potential disputes that may arise.
The new government recently approved two draft application decrees which are part of the final package of legislation necessary to resume the long-awaited tendering process for oil and gas exploration and production in Lebanon. The tendering process commenced in 2012 with a call for interested companies to pre-qualify. Although the first tendering round was launched in April and May 2013, the process came to a halt pending the approval of the draft decrees.
There has been an ongoing debate in Lebanon recently over whether it should establish a national oil company (NOC). While some emerging countries have benefited from NOCs, in other countries they have been the victims of corruption. As such, before establishing an NOC, Lebanon should thoroughly study the benefits of its establishment, as well as its role and allocated budget.
OW Bunker's restructuring triggered a number of cases involving shipowners or operators that contracted with OW, but were physically supplied bunkers by a third party. Recent Lebanese case law has put pressure on shipowners, as the maritime lien principle gives creditors the right to arrest a ship even if the shipowner is not the debtor. This puts shipowners in the untenable position of having two different parties demand payment for the same debt.
Whether parties in a contractual dispute can apply for a liquidated damages adjustment to reflect actual damages is a hot topic. If the contract does not stipulate a pre-designated liquidated damages amount, courts can increase or decrease the amount of damages being sought. However, the inclusion of such a pre-designated amount acts as an upper limit and limits the courts' power to lowering the amount of damages recoverable by the claimant.
In 2013 Lebanon commenced and concluded the initial pre-qualification licensing round for offshore oil and gas exploration, which was based on a draft model exploration and production agreement (EPA). This update focuses on the dispute resolution mechanism provided in the draft model EPA and the issues that may arise in the face of divergent interests of the parties involved.
Recent discoveries in the eastern Mediterranean Sea may constitute the world's largest natural gas find. The Lebanese government has accordingly committed to resuming oil and gas exploration as soon as possible, by ratifying two decrees concerning the delineation of blocks to be opened for bidding and the model exploration and production agreement.
In September 2015 47% more containers were shipped through the Port of Beirut than in the same month in 2014. Since much seaborne trade is containerised, there has been a notable increase in containerised cargo claims in recent years. Carriers are in most instances well prepared to defend these claims and limit their liability according to the various applicable laws and regulations.
Bunker fuel constitutes a fundamental part of and one of the largest expenses in ship operations; in difficult market conditions, this causes bunker suppliers and traders to face delays in payment, non-payment or requests to provide credit terms. Ship arrest may thus be a suitable remedy for unpaid bunker traders. The Lebanese judicial system has contributed greatly to the country's status as a ship arrest-friendly jurisdiction.
A series of recent decisions of the Beirut Court of First Instance has affirmed the Lebanese judiciary's liberal approach to arbitration. In each case, the court intervened in an arbitration proceeding to preserve the validity of an arbitration agreement when it had been called into question. Issues considered include invalid terms within arbitration agreements and formal insolvency proceedings involving parties to arbitration.
The Lebanese authorities have managed to survive pressure from the global community to replace the Banking Secrecy Law, although they have enacted new laws and regulations and set up special commissions to combat money laundering, tax evasion and other criminal activities. However, a new challenge has emerged: as of July 2014, financial institutions must comply with the US Foreign Account Tax Compliance Act.
In Lebanon, the debate surrounding the immunity from execution of arbitral awards granted to international organisations and state bodies recently gained further prominence following a landmark decision of the Lebanese Execution Bureau. The bureau's decision is welcome, as it reflects the arbitration-friendly stance of Lebanese courts and legal doctrine.
Effective and transparent dispute resolution methods are as imperative in Lebanon as they are in any other jurisdiction. The principal instrument governing the enforcement of international arbitral awards in Lebanon is the New York Convention, but both the Code of Civil Procedure and the courts also play a crucial role in protecting the integrity of the arbitral process.
The latest hydrocarbon developments indicate that Lebanon is on its way to becoming a key player in the Middle Eastern oil and gas industry. The nomination of the board of directors of the Petroleum Administration Authority has led to major progress ahead of the launch of the first offshore oil and gas licensing round, while a recently discovered oil reservoir has stirred the optimism of investors.