TEXACO vs.

LIBYA
Texaco Overseas Petroleum Company
v.
The Government of the Libyan Arab
Republic

FACTS
The arbitration originates from fourteen
Deeds of Concession concluded between
1955 and 1968 between Libya and Texaco.
The majority of the Deeds of Concession
were modified by consent of all parties in
1963, 1966, 1970 and 1971. The purpose of
the modifications was to bring the
Concessions into line with the amended
Libyan Petroleum Laws (originally 1955,
amended by RoyalDecrees).

FACTS

In 1973 to 1974, The Libyan government took

nationalization measures. The legality of such measures
was challenged by the companies, particularly under
intangibility and stabilization provisions in Clause 16.
'1. The Libyan Government, the (Petroleum) Commission
and the competent authorities in the Provinces shall take all
the steps that are necessary to ensure that the Company
enjoys all the rights conferred upon it by this concession,
and the contractual rights expressly provided for in this
concession may not be infringed except by agreement of
both parties.
2. This concession shall be interpreted during the period of
its effectiveness in accordance with the provisions of the
Petroleum Law and the Regulations issued thereunder at the
time of the grant of the concession, and any amendments to
or cancellations of these Regulations shall not apply to the
contractual rights of the Company without its consent'.

Applicable Law
Clause 28
This concession shall be governed by and
interpreted in accordance with the principles of
the Law of Libya common to the principles of
international law and in the absence of such
common principles then by and in accordance
with the general principles of law, including
such of those principles as may have been
applied by international tribunals.

 Libya argues that with respect to

nationalization, municipal law should govern
and not international law.
Several UN G.A. resolutions were invoked by
both parties. Thus the court had to look into
the legal value and validity of such
resolutions and their binding effect to the
parties.

Issues:
Binding Nature of the Deeds of Concession
Did the parties have the rights to choose the law to
govern their contract?
Did the Libyan Government, in adopting the
nationalization measure breach its obligations under
the contracts?
Administrative contract
Sovereignty
Present state of international law & resolutions
concerning natural resources adopted by the United
Nations
Is the Libyan Government required to perform and give
full effect to the Deeds of Concession?
Restitutio in Integrum

HELD
The Sole Arbitrator pronounces and decides
that...
Deeds of Concession are binding upon the
parties
Libyan
Government,
in
adopting
the
nationalization measure breach its obligations
under the contracts.
Libyan Government is legally bound to
perform and give full effect to these contracts.