Iraq Oilfields Challenge - Legal Opinion

By Dr. Sami Shubber, founder of Hamourabi Office in Baghdad, Iraq.

For more details about this case, please click here.

1. The Iraqi Ministry of Oil awarded a contract to BP and China National Petroleum Co. (SINOPEC) in 2009 for the development of the Rumaila oilfield. A lawsuit has been filed before the Iraqi Supreme Court by a former Iraq MP alleging that the BP contract violated the Iraqi Constitution of 2005. The legal bases for this allegation are not available to us.

2. The Iraqi Ministry of Oil has replied to the said allegation to the effect that: (1) the constitutional requirement for the approval of the Council of Representatives (the Iraqi Parliament) only applies to international treaties and agreements between the State of Iraq and other States, so commercial contracts between the Regional Oil Company (ROC) and the International Oil Companies (IOCs) do not need such approval; and (2) the Technical Service Contracts (TSC) were awarded under the proposed Hydrocarbons Law, although this has not yet been approved by the Council of Representatives.

3. The arguments of the parties to the case have to be examined against the background of the Iraqi Constitution. The first point to be made is that the Iraqi Constitution provides for the separation of powers of the federal authorities, namely, the executive, legislative and the judicial authorities (Article 47 of the Constitution). Each authority exercises its functions and jurisdiction on the basis of the separation of powers. Accordingly, each one of these authorities is fully entitled to function according to the jurisdiction granted to it by the Constitution, and independently of the other authorities. The second point is that there are certain executive actions which have to be approved by the legislative authority (the Council of Representatives). These actions are enumerated in Article 61 of the Constitution. They include, inter alia, the ratification of treaties, the appointment of senior judges, ambassadors, and senior army officers.

4. The award of the TSC to BP has to be examined against those constitutional provisions. First, it is a measure taken by part of the executive authority, i.e., the Ministry of Oil, in the exercise of its functions. Therefore, there appears to be no illegal exercise of power by the Ministry, hence no violation of the Constitution appears to have been committed. Secondly, the award of the TSC to BP is not one of the actions of the executive that has to be approved by the Council of Representatives. Such actions are expressly enumerated in Article 61 of the Constitution. Therefore, it would seem clear that such contracts need not be approved by the Council of Representatives. It may be observed that to subject such contracts to the approval of the Council of Representatives could cause a great deal of delay in the approval process, which would prevent the beginning of the commercial operation of the oil company concerned. This state of affairs may not be in the public interest.

5. In the light of the foregoing, it seems reasonable to suggest that the award of the TSC to BP is not illegal and does not seem to violate any provisions of the Constitution. However, it does seem odd that the Ministry of Oil has relied on a non-existent law, the proposed Hydrocarbons Law, from a legal point of view, in support of its case. For the proposed Law does not have any legal effect until it is approved by the Council of Representatives and published in the Iraqi Official Gazette, (Articles 61 and 129 of the Constitution).It is submitted with respect that this argument is not sound in law.

6. It would be fair to say the lawsuit under consideration is probably politically motivated. It does not seem to have legal merits and therefore is likely to be rejected by the Iraqi Supreme Court.

Sami Shubber, Lic.en Droit, Baghdad, LL.M.,London, Ph.D. in International Law, Cambridge, Barrister-at-Law (Gray’s Inn) and Member of the Iraqi Bar, is the founder of Hamourabi Office in Baghdad and Geneva, and was formerly Senior Legal Officer for the World Health Organisatio (WHO). He is the author of several books on International Law, and has teaching experience at the University of Baghdad, the University of Cambridge, and the University of Geneva.

His latest book is entitled 'The Law of Investment in Iraq'.

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