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Texaco Overseas Petroleum Co. v. Libya

Arbitration by Professor Rene-Jean Dupuy
104 J. Droit Int’l 350 (1977)


Facts

On September 1, 1973 and February 11, 1974, Libya (defendant) issued decrees nationalizing all of the rights, interests, and property of the Texaco Overseas Petroleum Company (TOPCO) and California Asiatic Oil Company (CAOC) in Libya that had been granted to them jointly by the Libyan government under 14 deeds of concession. TOPCO and CAOC requested arbitration and appointed an arbitrator. However, Libya refused to submit to arbitration and did not appoint an arbitrator. The 14 deeds of concession provided by Libya to the two companies permitted the President of the International Court of Justice (ICJ) to appoint a sole arbitrator to hear and determine the disputes. The Libyan government opposed this practice and argued that the disputes were not subject to arbitration because they involved sovereign acts by Libya. The President of the ICJ rejected these arguments and appointed Professor Rene-Jean Dupuy as the sole arbitrator. The Libyan government refused to participate in the subsequent arbitration proceedings. On January 19, 1977, Professor Dupuy issued an award on the merits in favor of TOPCO and CAOC. He held that the deeds of concession were binding on all parties, that the Libyan government breached its obligations under the deeds of concession, and that the Libyan government was legally bound to perform the deeds of concession according to their terms. The deeds of concession contained a provision stating that the concession would be governed by principles of Libyan law common to principles of international law, and that in the absence of such common principles, then they would be governed by and in accordance with the general principles of law, including those which have been applied by international tribunals. The arbitrator concluded that the nature of the deeds of concession agreement made it an internationalized contract. He then considered the effect and consequences of an internationalized contract on the rights of the parties.

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