Economic balance of international contracts in the light of renegotiation with emphasis on oil contracts

Subject Areas : Journal of Law and Politics

Adham Haghgozar ¹ , Ali Rostamifar ² , Najad Ali Almasi ³

1 - PhD student in private law, Qeshm Branch, Islamic Azad University, Qeshm, Iran.
2 - ssistant Professor, Department of Private Law, Qeshm Branch, Islamic Azad University, Qeshm, Iran
3 - Professor, Department of Private Law, Science and Research Unit, Islamic Azad University, Tehran, Iran.

Received: 2023-02-14 Accepted : 2023-05-27 Published : 2023-06-20

Keywords: Price revision, economic balance, renegotiation, economic developments, oil rights,

Abstract :

The special characteristics of oil contracts require that these contracts always have economic stability and balance. Disruption of the economic balance in these contracts will bring harmful results both economically and legally. Generally, the stakeholders of the oil sector prefer to use the renegotiation clause to prevent the disruption of the economic balance of these contracts. Sometimes, despite not foreseeing this condition, one of the parties, who is basically an investor, will request renegotiation and in the results of establishing an economic balance (although this request will not necessarily mean reaching an agreement and an effective result) and the other party will also have the right to make such a request, but in any case, the parties must use their efforts in good faith to achieve the desired result, but the mere failure to achieve the result will not be a license to demand or compensate the other party. The question is, how can renegotiation lead to the establishment or effect of economic balance in oil contracts? In other words, how can the fundamental change of economic conditions in oil contracts be resolved with the condition of renegotiation. The findings of this research show that with the loss of profitability of oil projects, the contracts have undergone a fundamental change, and to maintain the stability of the contract and the continuity of the project, there will be no other choice but to resort to renegotiation to establish economic balance; In any case, renegotiation requires the goodwill of the parties.