TNK-BP, Party Autonomy, and Third-Country Mandatory Rules
Posted: 10 Apr 2015 Last revised: 25 Mar 2016
Date Written: April 8, 2015
This article looks at a recent dispute between British oil major BP plc and its Russian partners in a Russian joint-venture, TNK-BP, which had become the third largest Russian oil company. The dispute was about the alleged breach by BP of a noncompete (or exclusivity) clause in a shareholder agreement that had been signed between offshore legal entities and was governed by English law. Although the clause was arguably contrary to Russian competition law, it was upheld by an arbitral tribunal in Stockholm. The turmoil set off by the dispute ultimately led to the full acquisition of TNK-BP by Rosneft, the state-controlled Russian oil company, for approximately $55bn, and a significant expansion of Russian state control over the oil &gas sector. The article comments on the persistent lack of effect of third-country mandatory rules in transnational contractual practice and the eviction of national laws through cross-border corporate and contractual planning . It calls for increased transparency in systemically important transactions, through publication of court injunctions and large scale arbitral awards (at least in part).
Keywords: Russia, TNK-BP, BP, competition law, ancillary restraints, joint-ventures, international contracts, oil&gas, mandatory rules, international arbitration
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