Review Mechanisms in Natural Resource Contracts
Periodic review mechanisms, provisions in contracts that formally require parties to meet at particular intervals to review the terms of the contract or license and consider whether circumstances have changed since the parties’ initial agreement, are a mechanism that may smooth the process of dealing with inevitable changes in circumstances over the long term of extractive industries contracts.
CCSI has examined the use of built-in review periods in extractive industry contracts as a mechanism for managing investor–host-country relations over the duration of a project. CCSI completed a survey of periodic review mechanisms contained in extractive industry contracts, to analyze how they have been used to date and understand the purposes for which they may usefully be applied. A briefing note sets out the results of this research, identifies issues that have arisen in practice under these mechanisms and suggests a new approach to the drafting of these mechanisms in order to assist policy makers seeking to implement such periodic reviews (also published in the Journal of Sustainable Development Law and Policy).
CCSI is also researching the roles of courts and investor-state arbitration tribunals in affecting the utility, enforceability, and effectiveness of review mechanisms and negotiation obligations in long-term contracts. The weight these legal institutions give to relational features of contracts such as review mechanisms and (re)negotiation obligations can impact and even be determinative of these tools’ utility in practice. CCSI is thus exploring and analyzing how tribunals have treated contractual revision and (re)negotiation provisions in investor-state arbitrations and will offer a comparative perspective by examining how these obligations and mechanisms have been treated in other contexts.