Renegotiation and Contract Adaptation in International Investment Projects

Abstract

This study focuses on the law and practice with respect to renegotiation of long-term international investment agreements-particularly in the natural resources and energy sector. It analyses the concept of renegotiation in the context of long-term international commercial contracts, and in particular in the upstream petroleum industry. It discusses the reasons governments and companies have for insisting on, and accommodating, renegotiation. It provides a survey of legal issues which are relevant to renegotiation. First, naturally, the question of what law is applicable, and second, how the major legal systems deal with the issue of renegotiation (including international law). The survey then concentrates on how, in practice, particularly in the natural resources industry, governments and companies have dealt with the challenge of renegotiation due to changed circumstances, and it concludes with a recommendation on how reasonable contract partners should accommodate fundamental changes of circumstance.