{"id":36763,"date":"2008-03-26T16:35:41","date_gmt":"2008-03-26T21:35:41","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/uncategorized\/exploration-in-disputed-territories.html"},"modified":"2008-03-26T16:35:41","modified_gmt":"2008-03-26T21:35:41","slug":"exploration-in-disputed-territories","status":"publish","type":"corporate","link":"https:\/\/corporate.findlaw.com\/litigation-disputes\/exploration-in-disputed-territories.html","title":{"rendered":"Exploration in Disputed Territories"},"content":{"rendered":"
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As U.S. oil and gas exploration companies expand their international holdings and operations, one issue to keep in mind is whether a targeted area of exploration is subject to a territorial dispute between nations. When a dispute arises between competing mineral exploration and exploitation concessions issued by two countries both claiming sovereignty over the same area, the concession holders will likely find themselves in a no-man's land in which no recourse exists in United States courts to resolve the dispute. The two legal doctrines that may preclude consideration of the competing concessions are the political question doctrine and the act of state doctrine.<\/p>

The political question doctrine limits the subject matter jurisdiction of the federal courts. The U.S. Supreme Court in Baker v. Carr<\/i>, 369 U.S. 186 (1962) established the various factors that a court will examine to determine whether the political question doctrine precludes its consideration of nonjusticiable political questions. A dispute that presents a nonjusticiable political question is simply not a case or controversy within the meaning of Article III. Consequently, a court lacks jurisdiction to adjudicate it. See<\/i> Occidental v. A Certain Cargo of Petroleum<\/i>, 577 F.2d 1196, 1203 (5th<\/sup> Cir. 1978). The Fifth Circuit's decision in Occidental<\/i> clearly provides that, where a disputed border between countries requires resolution prior to determining the validity of a concession, the case presents a nonjusticiable political question. The Occidental<\/i> court noted that in order to resolve Occidental's right of possession of the oil, the court would be required to resolve the dispute between the sovereigns over control of the disputed territory. The court then ruled that it was powerless to decide the matter as a political question because resolution of the matter necessarily required resolution of the territorial dispute between the sovereigns. 577 F.2d at 1203.<\/p>

In addition to the political question doctrine, the act of state doctrine may also preclude a U.S. court from considering any claim relating to competing concessions for the disputed territory. The act of state doctrine also reflects a policy that is concerned with the separation of the powers. The doctrine provides that any challenge to the validity of an official act of a foreign sovereign within its jurisdiction is within the exclusive purview of the political branches of the United States government and not the courts. See<\/i> W.S. Kirkpatrick & Company v. Environmental Tectonics Corp.<\/i>, 493 U.S. 400, 404 (1990). The act of state doctrine requires every sovereign to respect the independence of every other sovereign state such that the courts of one country will not sit in judgment on the acts of a government of another done within its own territory. See<\/i> Sabbatino<\/i>, 376 U.S. 398, 416 (1964). Thus, the act of state doctrine requires that the acts of foreign sovereigns taken within their own jurisdiction to be deemed valid. See<\/i> Kirkpatrick<\/i>, 493 U.S. at 409. Typically, a foreign government's act of granting or revoking the right to develop natural resources within its territory is inherently sovereign in nature and is unassailable by a U.S. court. See<\/i> Worldwide Minerals, Ltd. v. Republic of Kazakhstan<\/i>, 296 F.3d 1154, 1164-67 (D.C. Cir. 2002); see also<\/i> M<\/i>OL, Inc. the People's Republic of Bangladesh<\/i>, 736 F.2d 1326, 1328 (9th<\/sup> Cir. 1984). Thus, any action by a sovereign that affects the exploration and expropriation rights of a concession holder in its territory will most likely not be reviewable by a U.S. court.<\/p>

In sum, the political question and act of state doctrines preclude a U.S. court from affording any relief to a potentially aggrieved concession holder whose claim stems from disputed territory. Consequently, a decision by a foreign government to revoke or extend a concession is, as a practical matter, not subject to challenge in a U.S. court.* Thus, a corporation seeking to explore an area subject to a territorial dispute runs the risk that a rival concession holder could wait until the first company establishes the viability of a prospect and then plunder the prospect with the first company having no real recourse for its rival's encroachment or conversion of oil or gas.<\/p>

*This article does not address issues regarding rights accorded to parties under bilateral investment treaties and the alternative dispute resolution processes afforded by those treaties, such as the International Center for the Settlement of Investment Disputes (ICSID).<\/p><\/div>","protected":false},"excerpt":{"rendered":"

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