Most of the energy projects require the involvement of more than one country and multinational energy companies. The construction of natural gas pipelines and nuclear power plants can be given as an example of these cross-border energy-related construction projects. Similarly, nuclear power plants also require the involvement of more than one country and experienced energy companies from all around the world.  Apart from the natural gas pipeline and nuclear power plant projects, renewable energy projects such as wind and solar projects are also conducted by multinational companies through the investment contracts signed by the host States (see Impreglio v Argentina,). Therefore, the law which applies to these energy projects, having international characters, cannot be limited to the law of one country. 

More importantly, the contracts signed concerning these energy projects generally contain dispute resolution forums requiring the resolution of the disputes between the host States and the energy companies through international arbitration. Here, it may be worth noting that the nature of this international arbitration differs due to the characteristic of the dispute.  If this is a dispute which directly arose between the host state (where the investment was made) and the energy company (foreign investor), from an energy-related investment project, this dispute would generally be considered as an investment dispute and the relevant energy company may consider initiating an investment arbitration case against the host state. On the other hand, if this dispute is about a revision of the long-term gas price and/or supply of gas or petroleum, between private or state companies, then commercial arbitration shall take place to solve this dispute.

The Energy Charter Treaty (ECT) provides a multilateral framework for energy cooperation that is unique under international law. It is designed to promote energy security through the operation of more open and competitive energy markets while respecting the principles of sustainable development and sovereignty over energy resources.

Arbitral Institutions for Energy Dispute

 There are several institutions through which an arbitration can be conducted, they include; London Court of International Arbitration, The International Court of Arbitration of the ICC, the International Centre for Dispute Resolution established by the American Arbitration Association, the International Centre for Settlement of Investment Dispute, etc. The parties to arbitration agreement may decide to use arbitral institution or adopt ad hoc arbitration and decision emanating thereof shall bind the parties (see Ras Pal Gazi v. FCDA, )

One of the significance of arbitration is the freedom of parties to decide on the process and the willingness to accept the award as conclusive, final and binding, though some may use the outcome of arbitration as the means for litigation through application for setting aside an award. There are several cases of arbitration in oil and gas in industry (see International  Petroleum Refining & Supply SDAD Ltd v Elpis Finance SA).

The case of Nigeria v P & ID is very good example. The case involved disagreement between Nigeria and P&ID over failed attempt to execute agreement with respect to the production of natural gas. P&ID agreed to procure land, provide personnel and all facilities while the Nigerian Government agreed to provide the product for processing. The agreement failed and P&ID activated arbitration in London and obtained award against the Nigeria. The Nigerian Government applied to set the award aside on the basis that the agreement was tainted with fraud. The case is pending before the Arbitration Court in London.

Globally, the Courts have upheld the agreement of parties to submit to arbitration in several matters; see Heritage Oil an Gas Ltd v Uganda National Revenue Authority, The Hub Power Co. Ltd v Pakistan WAPD, FIRS v NNPC, The Owners of the M.V Lupex V. N.O.C.S.L, Lanco v Argentina, Kaney v. UTC, Klockner v. Cameroon, Lesotho Highlands v Impreglio SPA, Lovelock Ltd v. Exportless, etc.