CHAPTER 7 ARBITRATION AND GAS PRICING|LNG DISPUTES

• Jurisdiction: United States

International Energy and Minerals Arbitration
(Sep 2013)
CHAPTER 7
ARBITRATION AND GAS PRICING/LNG DISPUTES
George M. von Mehren ¹
Partner, Squire Sanders LLP London
UK/Cleveland, Ohio, USA

GEORGE M. VON MEHREN leads the Squire Sanders International Dispute Resolution Practice Group. The most recent edition of The American Lawyer's Arbitration Scorecard (2013) has recognized Squire Sanders as winning more of the Largest Commercial Arbitration awards than any other law firm in the past decade, including one of the Biggest Arbitration Awards in the world for the period 2011 -2013. George was lead counsel in all of these victories. With more than 30 years of experience in complex adversarial proceedings, George spends 100 percent of his time representing clients in international arbitrations and providing strategic advice for litigation in courts outside the United States. He has an established record of working effectively with counsel from a wide range of countries in Europe, Latin America and Asia to achieve strong results for clients. His recent arbitration experience involves representing clients in cases with multimillion to multibillion US dollar claims. He served as lead counsel in a bilateral investment treaty (BIT) arbitration and a related contract arbitration concerning banking regulatory matters with claims exceeding US$8 billion; a BIT case involving the issuance of GSM licenses; an International Centre for the Settlement of Investment Disputes (ICSID) case involving payments for electricity in Latin America; an ICSID case involving termination of an oil participation contract in a Latin American country; an ICSID case involving the propriety of a nation's criminal and civil investigation of a foreign-owned enterprise; in many cases involving pricing of liquefied natural gas (LNG); various construction cases including an ICC case involving the first privately constructed pipeline in Mexico; and in many cases involving breach of contract claims. A frequent commentator on arbitration-related topics, George recently presented on "Insider Insight: What is the Arbitrator Looking for from Counsel to Achieve a Successful Arbitration?" at C5's Congress on Successfully Negotiating & Renegotiating Long Term Gas Supply Contracts and will be presenting on Arbitration and Gas Pricing/LNG Disputes at the Sprcial Institute on International Energy and Minerals Arbitration in September 2013.

SQUIRE SANDERS

Arbitration & Gas Pricing/LNG Disputes

Rocky Mountain Mineral Law Foundation

International Energy and Minerals Arbitration

Toronto, Canada

September 16-17, 2013

George M. von Mehren

Global Chair, International Dispute Resolution

Squire Sanders

T +44 20 7655 1395

george.vonmehren@squiresanders.com

Unlike most arbitration ....

• Price review arbitration does not involve claims based on allegations of breach of contract or some other duty.

• It is a back-up to negotiations between the parties.

• In a sense, the arbitrators are charged with reaching a commercially reasonable deal to support the parties' continuing relationship.

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some natural gas and LNG supply contractsPrice review arbitration is part of a pricing mechanism for

• Not for spot or short-term contracts.

• Not for end-user markets with a reliable, transparent index for natural gas (e.g., Henry Hub or NBP).

• Found most commonly in Europe (but note that reliable indexes are developing).

• Arbitration may be in the fairly near future for some Asian markets.

Life of a Hypothetical Long-Term Supply Contract (30 Year Term)

• Year 1 - Contract signed with Price Formula based on the price evolution of an oil product or other energy product or a basket of several such products

• Year 5 - First delivery and opportunity for a Regular Price Review

• Years 8, 11, 15, 18, 21, 24, 27, 30, 33 - Additional opportunities for Regular Price...