According to a Texas Lawyer article published this week, the arbitration of energy sector disputes has dramatically increased across Texas in recent years. In EnergyBuzz: Arbitration for Energy Disputes, Scott D. Marrs and Andrew B. Barton state that horizontal drilling and fracking in Texas may result in “complex energy disputes that often cross jurisdictional boundaries.” At the same time, many arbitral forums such as the American Arbitration Association have recently revised their rules in an effort to limit discovery and further streamline the arbitration process. This means individuals working in the energy sector now enjoy an enhanced opportunity to tailor their often diverse contracts to include an effective alternative dispute resolution clause:
… Because binding arbitration is a creature of contract, the arbitration provision can be tailored for the energy sector. This is important to keep arbitration from becoming the mirror image of litigation. The appropriate provision can prohibit court filings, identify the arbitration rules that will be followed (such as the American Arbitration Association or The International Centre for Dispute Resolution rules), provide for confidentiality, dictate the law that will be followed, require the arbitrators to have extensive experience in the applicable energy sector, limit the type of discovery or experts allowed, limit the type of damages that can be awarded, limit the length of time any arbitration proceeding can last, and if desired, can in many circumstances provide for limited appellate review.
Good arbitration clauses are good for business. Failure to consider a tailored arbitration provision (and engaging arbitration savvy energy lawyers who understand that what works in a court may not work in arbitration) is failing to meaningfully mitigate the legal and political risk associated with these long-lead projects.
What do you think? Disputing would love to hear your thoughts!
Photo credit: theglobalpanorama / Foter / CC BY-SA
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