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65 Cards in this Set
- Front
- Back
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List Six methods of acquiring titles
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o Occupation
o Accretion o Prescription o Voluntary cession o Treaties of peace o Forced recession/conquest |
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What is the Truman Proclamation
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o The natural resources of the subsoil and seabed of the continental shelf beneath the high seas but contiguous to the coast of the U.S. as appertaining to the U.S. subject to its jurisdiction and control
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UNCLOS
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o Art. 5: the normal baseline for measuring the breadth of the territorial sea is the low-water line along the coast
o Art. 6: in the case of islands the low-water line is measured from the end of reefs o Art 15: where two states are opposite each other, neither state is permitted to extend its territorial sea beyond the median line between the nations |
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UNCLOS ARt. 56
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o Art. 56: EEZ – the coastal State has sovereign rights for the purpose of exploring and exploiting, conserving, managing the natural resources, of waters subjacent to the seabed and its subsoil, and with regard to other activities for the economic exploitation and exploration of the zone, such as the production of energy
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UNCLOS Art. 74
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o Art. 76: Continental Shelf – the continental shelf of a coastal State comprise the seabed and subsoil of the submarine area that extend beyond its territorial sea throughout the natural prolongation of its land territory to the outer edge of the continental margin, or to a distance of 200 nautical miles from the baseline from which the breadth of the territorial sea is measured where the outer edge of the continental margin does not extend up to that distance
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CLCF
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o Commission on the Limits of the Continental Shelf (CLCF): has rules and procedures for approving a State’s claim to an extended continental shelf and margin
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Territorial Waters
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o 3 mi. state limit
o 12 mi. territorial waters • The U.S. wanted 3 miles b/c they wanted freedom of the seas (spying and transit) o 24 mi. contiguous zone: the contiguous zone, in which a state could continue to enforce laws in four specific areas: pollution, taxation, customs, and immigration o 200 mi. maximum distance under UNCLOS o 350 mi. is the absolute maximum |
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Why U.S. doesn't ratify UNCLOS
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o The U.S. is one of the few nations who have not ratified UNCLOS b/c of objections to the deep-seabed regime which gives authority over the area to the International Deep Seabed Authority and which contains several provisions dealing with technology transfer and development limitations that the US opposes
• Only signed with regard to fish stocks |
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Continental Shelf
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The continental shelf is defined as the natural prolongation of the land territory to the continental margin’s outer edge, or 200 nautical miles from the coastal state’s baseline, whichever is greater. State’s continental shelf may exceed 200 nautical miles until the natural prolongation ends. However, it may never exceed 350 nautical miles from the baseline; or it may never exceed 100 nautical miles beyond the 2,500-meter isobaths
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How much is in a: barrel, Ton, MCF
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o Barrel—41 gallons
o Ton—7 barrels o MCF—1,000 cubic feet |
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LNG/CNG/LPG
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o LNG: Liquefied Natural Gas; frozen
o CNG: Compressed Natural Gas; no more than 300 pounds of pressure; used in gas o LPG: Liquid Petroleum Gas – propane; room temp |
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Fracking
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Fracturing refers to a method used by producers to extract more natural gas from a well by opening up rock formations using hydraulic or explosive force. Advanced fracturing techniques are enhancing producers' ability to find and recover natural gas, as well as extending the longevity of older wells
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Proven Reserves
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volumes that have already been discovered and are readily available for production and delivery; are reserves that can be produced with existing wells and perforations, or from additional reservoirs where minimal additional investment (operating expense) is required
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Possible Reserves
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Possible reserves are attributed to known accumulations, which have a less likely chance of being recovered than probable reserves. This term is often used for reserves, which are claimed to have at least a 10% certainty of being produced. Reasons for classifying reserves as possible include varying interpretations of geology, reserves not producible at commercial rates, uncertainty due to reserve infill, projected reserves based on future recovery methods
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Oil in Place
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referring to the oil in place before the commencement of production; Oil in place must not be confused with oil reserves that are the technically and economically recoverable portion of oil volume in the reservoir.
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Common Heritage of Mankind
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seabed (i.e., the seabed beyond the limits of national jurisdiction), parts of which are believed to be rich in minerals, is not subject to national appropriation and has been designated a “common heritage of mankind” by the Declaration of Principles Governing the Seabed (1970) and the Law of the Sea treaty
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Foreign Direct Investment
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foreign corporate investment in a host country that increases development; standards of living; contributes to overall GDP
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Unitization
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Used when there is a presence of reserves that crosses national boundaries. In such a situation, the countries may enter into a treaty requiring joint development by their licensees.
o Unitization is the consolidation of interests covering all or part of a common source of supply. Take multiple owners from multiple interests to produce it for a joint benefit according to some determined formula |
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Joint Development Zone
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o The Joint Development Zone is an area between Nigeria and Sao Tome & Principe speculated to be rich in oil and gas reserves. No country can individually explore the resources in the zone without interfering in the maritime boundary of the other country. This fact necessitated the two countries to come up with the idea of developing a joint development authority for purposes of developing the economics potentials of the zone.
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Farmout
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o The company may have other drilling prospects that it rates higher in terms of the potential profit vs. the risk. It therefore may choose to spend its available capital on the other prospects and farmout this one to another operator
o Farming out is a risk-reducing financing mechanism. When operator A farms the property out to operator B, B bears all drilling costs while A retains some form of interest in the revenue stream if oil or gas is found. This might be an over riding royalty interest (e.g. 1/8 of B’s 7/8). An override, like landowner’s royalty, is a “carried interest. |
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Farmee/Farmor
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in a farmout agreement, a lessee of oil and gas properties farms out the obligation to drill to the farmee in exchange for a right to payout plus additional compensation for the risks incurred. The farmee also receives an undivided share of some part of the surrounding acreage.
Cf: unlike farmout agreements, Production Sharing Agreements contemplate an involvement of a State oil company or other govt. agency as the manager of the venture. |
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Checkerboard Farmout
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• another type of farmout mechanism is for A to divide the lease into a checkerboard pattern and allow B to earn full rights to every other square by drilling a well on it. This shifts the exploration risk to B. If a discovery is made, however, it’s highly likely that the field will extend onto the offsetting squares retained by A. A can then proceed directly to development drilling without having to drill the more risky exploration wells.
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Operators Agreement
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An agreement between parties who own a working interest in a well that sets out responsibilities and duties of the operator and non-operators, including drilling the test well and subsequent wells, and sharing of expenses and accounting methods
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Joint Operating Committee
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usually led by the operator
o host country will usually add provision that says once oil is found you must set up JOC with 51% control in host country |
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Operator's Lease
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operator can seize part of your gas if you don’t pay your bills
o if you are overseas you need some other device • operator keeps track of the bills and offsets it against the oil production when drilling overseas to ensure payment o what if costs exceed oil being produced • letter of credit – pay bank .5% and get letter that says under certain circumstances they will pay X amount of money |
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Production Agreement v. Concession
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o Concession contracts: Under a concession contract, the oil company owns the assets and the facilities and receives the entire production. In return, it assumes operating risks, all costs and capital expenditure and pays the State, which owns the subsurface mineral resources, a production-based royalty, income tax and any other taxes provided for under local legislation
o Production Sharing Contracts: a production sharing contract (PSC) sets out the procedures for sharing production and stipulates the arrangements for cooperation between the company or consortium holding the license and the host country, usually represented by a national oil company. This means that the national oil company has input in operational decisions, recognition of costs and how the production sharing is calculated. The consortium conducts and finances all the exploration, development and production operations at its own risk. In return, it receives a percentage of production known as cost oil, whose sale enables it to recoup its expenses (capital and operating expenditures). The remaining production, known as profit oil, is then shared with the host country or the national oil company according to percentages and procedures that vary by country. |
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Service Contracts
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: the operating contractor is paid on a $/bbl basis to conduct the operations under the close supervision of the govt.—usually through the national oil company. The govt. also provides all capital and the contractor has no ownership interest in the oil and gas produced
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Tax v. Royalty
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Companies would pay a royalty on any oil produced, together with a profits tax (which can have expenditure offset against it). In some cases there are also various bonuses and ground rents (license fees) payable to the government - for example a signature bonus payable at the start of the license. Licenses are awarded in competitive bid rounds on the basis of either the size of the work program (number of wells, seismic etc) or size of the signature bonus.
o if you have a very high royalty it can reduce the govt. take • 70% is usual govt. take o royalty is a pre-expense item which is usually not deductable; however, a tax is deductable |
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AMI
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Area of Mutual Interest: o Area around your block where the operator and everyone else commit that if they get a lease in the area they have to share
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Discretionary Awards
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• DISCRETIONARY: In this case the HC meets with companies in which it has confidence and negotiates an arrangement either of the 3 above. The UK uses this method. It generally excludes newer and smaller companies and it requires honesty on the HC side to work
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Forum Non Conveniens
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o court can reject jurisdiction and dismiss the case if it will be easier or more judicially efficient to bring the case in an alternative forum (e.g. access to evidence, witnesses, cost/time of travel)
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Gilbert Test
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• The private factors are:
1. Relative ease of access to proof 2. Availability of witness subpoenas 3. Cost of getting witnesses 4. Possibility of view of premises if called for • The public factors are: 1. Court congestion 2. Local interest in having local controversies decided at home 3. Forum familiarity with substantive law 4. Unfairness of burdening citizens with jury duty for case unrelated to forum |
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Bremmen Case
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• The forum-selection clause, which was a vital part of the towing contract, is binding on the parties unless respondent can meet the heavy burden of showing that its enforcement would be unreasonable, unfair, or unjust.
• “It is settled . . . that parties to a contract may agree in advance to submit to the jurisdiction of a given court, to permit notice to be served by the opposing party, or even to waive notice altogether.” |
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Arbitration Agreements Benefits
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• Reasons for arbitration
Not public—you don’t want the stockholders to know about some embarrassing incident Discovery—very long and expensive Hostility—in trial you can’t talk to the other side, only their attorney, in arbitration you can Rush to the courthouse—in arbitration where you will file is already decided, so the party suing can’t pick a forum that is beneficial to them at the detriment to the other, avoid jurisdictional fights, avoid forum shopping |
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FCPA--Who
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Who -- The FCPA potentially applies to any individual, firm, officer, director, employee, or agent of a firm and any stockholder acting on behalf of a firm. Individuals and firms may also be penalized if they order, authorize, or assist someone else to violate the antibribery provisions or if they conspire to violate those provisions.
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Issuer and Domestic Concern
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An "issuer" is a corporation that has issued securities that have been registered in the United States or who is required to file periodic reports with the SEC.
A "domestic concern" is any individual who is a citizen, national, or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the United States, or which is organized under the laws of a State of the United States, or a territory, possession, or commonwealth of the United States. |
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FCPA - Corrupt Intent
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o Corrupt intent -- The person making or authorizing the payment must have a corrupt intent, and the payment must be intended to induce the recipient to misuse his official position to direct business wrongfully to the payer or to any other person.
o Payment -- The FCPA prohibits paying, offering, promising to pay (or authorizing to pay or offer) money or anything of value |
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Business Purpose Test
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o Business Purpose Test -- The FCPA prohibits payments made in order to assist the firm in obtaining or retaining business for or with, or directing business to, any person. The Department of Justice interprets "obtaining or retaining business" broadly, such that the term encompasses more than the mere award or renewal of a contract. It should be noted that the business to be obtained or retained does not need to be with a foreign government or foreign government instrumentality
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FCPA - Affirmative Defense
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• There is an exception to the antibribery prohibition for payments to facilitate or expedite performance of a "routine governmental action."
• A person charged with a violation of the FCPA's antibribery provisions may assert as a defense that the payment was lawful under the written laws of the foreign country or that the money was spent as part of demonstrating a product or performing a contractual obligation. |
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Indigenous Title
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o What does the Mabo case mean regarding the continuing use for indigenous land
• the effective result of the judgment was to make irrelevant the declaration of terra nullius, or "land belonging to no-one" which had been taken to occur from the commencement British colonization in 1788, and to recognize a form of native title. The Murray Islanders had a strong sense of relationship to the islands and regarded the land as theirs. All of the judges, except Justice Dawson, agreed that: there was a concept of native title at common law; the source of native title was the traditional connection to or occupation of the land; the nature and content of native title was determined by the character of the connection or occupation under traditional laws or customs; and native title could be extinguished by the valid exercise of governmental powers provided a clear and plain intention to do so was manifest. |
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Usufructory Right
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• Right to take fruit off the tree, but not cut down the tree
• Right to occupancy • Can’t sell the land • Right to ejectment |
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Native Title
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• there was and is a continued beneficial legal interest in land held by local indigenous Australians which survived the acquisition of title to the land by the Crown at the time that the Crown acquired sovereignty of Australia
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Alien Tort Claims Act
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- The Supreme Court held in Sosa v. Alvarez that the ATCA provides a cause of action for violations of international norms that are as "specific, universal, and obligatory" as were the norms prohibiting violations of safe conducts, infringements of the rights of ambassadors, and piracy in the 18th century.
- Courts have found torture; cruel, inhumane, or degrading treatment; genocide; war crimes; crimes against humanity; summary execution; prolonged arbitrary detention; and forced disappearance to be actionable under the ATCA - The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." - This statute is notable for allowing United States courts to hear human rights cases brought by foreign citizens for conduct committed outside the United States. |
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UNOCAL Case
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- P got money b/c they defeated motion for summary judgment – if client has to put on a case before a jury you usually can work out a settlement
- Plaintiff must show that a non-state actor exercised control over the government's decision to commit a violation. - In September 1997, 13 Burmese villagers filed suit against Unocal and their parent company, the Union Oil Company of California under the ATCA for alleged human rights violations, including forced labor, in the construction of the Yadana gas pipeline project in Myanmar, formerly Burma. - In December 2004, Unocal agreed to settle after a motion for summary judgment failed in U.S. District Court. |
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Sosa Case
(explain the Souter majority decision and the Scalia minority decision and say which is better and why) |
- In Sosa, the Supreme Court held that the ATS does grant a cause of action, but only for any action "which violates definable, universal and obligatory norms" of international law
- The plaintiff in Sosa, Alvarez, brought a claim under the ATS for arbitrary arrest and detention. Alvarez had been indicted in the United States for torturing and murdering a DEA officer - When the United States was unable to secure Alvarez's extradition, it paid Sosa, a Mexican national, to kidnap Alvarez and bring him into the United States. - Alvarez claimed that his "arrest" by Sosa was arbitrary because the warrant for his arrest only authorized his arrest within the United States. - The Ninth Circuit, applying the "specific, universal, and obligatory" test, held that Alvarez's abduction constituted arbitrary arrest in violation of international law. - The Supreme Court reversed, however, finding that the ATS only provides a cause of action for violations of those international norms "defined with a specificity comparable to the features of . . 18th-century paradigms . . . ." - The Court went on to hold, "[A] single illegal detention of less than a day, followed by the transfer of custody to lawful authorities and a prompt arraignment, violates no norm of customary international law so well defined as to support the creation of a federal remedy." - Finally, the Court held that future courts should also consider certain principles limiting the recognition of a cause of action under the ATS, including "case-specific deference" to the political branches on questions of foreign policy |
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Service buy-back agreement
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o At the end of the service contract, the host country will bill you for the oil
o At the end you have a right to buy back 70% of the oil you found at the market price o Example is in Iran o Oil company doesn’t care there is a continued supply in Iran, as they can buy oil anywhere |
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Stabilization Clause
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• Most important clause is the stabilization clause
o If the govt. changes the law, the contract will be done so there is no economic loss to the company |
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Terms in the contract that the OIC wants
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• Stabilization clause
• Compulsory arbitration • Waiver of Soveriegn immunity • Profit Repatriation • Import and general tax exemption |
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Operator
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Entity responsible for negotiating with the host country
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Difference between a farmout and an operating agreement
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• A farmout is a contract by which one party earns an interest in an oil and gas lease owned by another, while an operating agreement is entered into to define the rights and duties of parties who already own joint interests in a lease or a drilling unit and to combine those interests for joint operations
• Another distinction is that the farmee “carries” (one party carries another by advancing the costs of the operation and later reimbursing itself out of production) the farmor for all or a portion of the drilling costs in a farmout |
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Farmin
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describes a farmout agreement from the vantage of the transferee who is receiving the assignment of an interest in the concession in exchange for undertaking certain drilling and development obligations
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Joint Operating Agreements
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o Two main functions
• (1) to establish the basis for sharing rights and liabilities among the parties • (2) to provide for the manner in which operations will be conducted by a designated operator subject to the supervision of an operating committee • usually the committee has substantial power |
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Fiduciary Duty
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o Common law courts in the U.S. and elsewhere have on occasion fount that the operator may owe a fiduciary duty to the non-operating working interest owners notwithstanding the language in the contract
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Sole Risk Operations
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o Sole risk provisions – allow parties to undertake a project rejected by a majority of the operating committee or under a non-consent clause permitting dissidents to avoid participation in a project approved by the committee
o Arise because of the initial uncertainty of mineral deposits o JOA allow parties to elect to participate or not in many operations as they are proposed |
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Preferential Right to Purchase
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typically requires any party to the operating agreement who has agreed to sell all or a portion of its interest subject to the agreement to a third party to offer that interest to the parties to the operating agreement
o Most controversial part of a JOA o Usually the seller must provide written notice to the other parties of the terms of the prospective sell that triggers a period of time in which the parties may match the terms of the sale and receive the interest that was being sold o Purpose: (1) it assures the holder of the right the opportunity to acquire further interests in the area covered by the agreement; and (2) it gives the parties to the JOA the power to control the entry of parties who may be neither financially or technologically capable of complying with the agreement |
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Area of Mutual Interest
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an agreement between or amount parties to a farmout agreement or a JOA or other agreement by which the parties attempt to describe a geographical area within which they agree to share certain additional leases or other interests acquired by any of them in the future
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Arbitration
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resolving disputes by one or more third persons who derive their powers from agreement of the parties and whose decision is binding upon them
o Benefits: expensive discovery, distance, adversarialness, communication, damage to the relationship between the parties, allow a veil of secrecy |
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Model Clause
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“all disputes arising in connection with the present Agreement shall be finally settled under the Rules of Conciliation and Arbitration of the Intl. Chamber of Commerce, by one or more arbitrators appointed in accordance with said rules”
o Each side gets to appoint one arbitrator o Language is English o Choice of Law is the American system o Chairman will be appointed that is not a national of either party o Place of arbitration shall be NYC o “judgment on the award of the arbitrators may be entered in any court having jurisdiction thereof or having jurisdiction over one or more of the parties or their assets” |
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ICSID
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Intl. Convention on the Settlement of Investment Disputes—a formal arbitral institutionalized body to decide disputes
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Arbitration Organizations
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o London Court of Arbitration, Intl. Chamber of Commerce, American Arbitration Assoc.
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"mini-trial"
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• Can also put a non-binding “mini-trial” clause in an arbitration agreement whereby the parties can preset their cases before a neutral party who then provides an assessment of the case to show their strengths and weaknesses
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Forum Non Conveniens Test
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1) ease of access to proof; (2) availability of compulsory process for attendance of unwilling; and (3) the cost of obtaining attendance of will witnesses; also (4) possibility of ease of view of the premises and all other practical problems
o The plaintiff’s Choice of Forum shall rarely be disturbed |
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FSIA
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• (1) FSIA
• sovereign immunity – assumption that sovereigns are equal and should not be subject to suit in the courts of another jx • the district courts of the U.S. shall have original jx w/out regard to amount in controversy of any nonjury civil action against a foreign state • states are not immune from the jx of foreign courts insofar as their commercial activities are concerned • “commercial activity” means either a regular course of commercial conduct or a particular commercial transaction. The commercial character shall be determined by reference to the nature of the course of conduct or particular transaction • a commercial activity must have substantial contact with the U.S. • if a commercial act is conducted outside the U.S. by a foreign state they are immune unless that act causes direct effect in the U.S. |
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Political Questions Doctrine
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• U.S. courts will not answer political questions
e.g. does this island belong to Iran |
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Act of State Doctrine
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• courts of the U.S. will refrain from examining the validity of a taking by a foreign state of property w/in its own territory
• Hickenlooper Amendment: overrides the act of state defense if a country expropriates property in violation of international law |
