Excalibur v Gulf Keystone: a victory for common sense
Commercial common sense has prevailed after a long trial of Excalibur’s opportunistic claims against Gulf Keystone, with the Commercial Court dismissing all claims against Gulf Keystone. The Commercial Court has given clear guidance on a number of key issues for the oil and gas industry, including in particular that a joint bidding agreement (JBA) does not give rise to a partnership and does not create fiduciary duties. Also, a JBA does not confer rights in respect of an exploration licence or production sharing agreement granted as a result of a successful bid. Such rights may only be enforced by parties to such contracts.
In summary, the risk of litigation of this nature can be mitigated by drafting a JBA so that (i) it is subject to English law and the jurisdiction of English courts or arbitration; (ii) it expressly excludes any intention that the JBA contains or gives rise to a partnership or any relationship creating a fiduciary duty; and (iii) the JBA ends on grant of an exploration licence, product sharing agreement or unsuccessful bid.
The facts and some suggestions as to the appropriate legal and commercial responses are discussed in greater detail below…
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