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.
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.
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.