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.
A number of two-dimensional and three-dimensional seismic surveys suggest that the Lebanon basin has favourable geological prospects and significant potential for hydrocarbon production. The Offshore Petroleum Resources Law seeks to encourage the exploitation of the country's potential offshore resources by providing a regulatory basis for the petroleum sector.
The growing interest in exploring the Lebanese Basin has been stimulated by recent discoveries of massive gas reserves in neighbouring Mediterranean states. Significant deepwater discoveries have encouraged Lebanon to act quickly, passing legislation and commissioning a number of two-dimensional and three-dimensional surveys to determine the potential of the geological prospects.
Careful consideration must be given when selecting a choice of law clause, as the circumstances in which an arbitration agreement can bind a third party differ from jurisdiction to jurisdiction. Under Lebanese law, a third party may find itself bound by an arbitration agreement in a number of cases, including on the basis of its relationship with one of the signatories to the arbitration clause.
Including: International treaties; Legislation; Arbitral bodies and other entities; Interaction with court system; Drafting arbitration agreements; Enforceability of arbitration agreements; Kompetenz-kompetenz; Arbitrability; Consolidation and separability; Third parties; Starting the process; Interim relief; Procedural rules; Awards; State immunity.
Lebanon's patent legislation dates back to 1924. In 2000 new provisions were added in order to bridge legislative gaps. The amendments have expanded the scope of patent protection, increased the term of patents, and defined the rights of the patent holder and the damages that will be awarded in case of infringement.
A law on the merger of insurance companies has had positive effects on an industry which used to be perceived as unreliable and disorganized. As a result of the law, smaller, less efficient insurance companies that struggled to make a profit have been able to survive by merging with larger companies. The industry is now providing higher-quality services and regaining consumer confidence.