The Challenges of Alternative Dispute Resolution Processes in the Oil Industry of Developing Countries

Abstract

From the early 2000s, huge volumes of oil and gas deposits have been discovered in many African states such as Tanzania, Uganda and Kenya.  As is the case with other developing Oil producing states (such as Nigeria, Angola etc) these states would enter into contracts with foreign oil companies (FOCs) from developed countries for oil extraction as a result of their lack of capital and technical knowledge for oil exploitation.   In disputes arising from such contracts FOCs have traditionally shown a preference for the Alternative Dispute Resolution Process (ADR) either personal to the contract or set by international instrument.   ADR is a range of procedures that serve as alternatives to traditional litigation through the courts for the resolution of disputes, generally involving the intercession and assistance of a neutral third party.  This article compares the advantages of the ADR processes with the disadvantages of the ADR processes in disputes between FOCs and states and argues that the ADR process is unsuitable for disputes between FOCs and states.