B. Jensen and Y. Abul Failat, Oil and Gas Joint Operating Agreements - Default Provisions, A Dilemma by Default

English law is often the law of choice in complex and high value contracts where issues such as remedies, default, limitation of liability and financing are paramount. Further, English law affords JV partners comfort that their JV agreement will be construed in accordance to its own terms and cannot be declared void on technical grounds as no codified structure exists. However, as the attitudes of the English courts remain uncertain on the question of forfeiture and whether such a remedy would be held to be a penalty, JV partners must tread carefully when agreeing the default provisions in their JOA. Therefore whilst it may be tempting for JV partners to choose the alternative default provisions to forfeiture (namely, withering options and buy-out provisions) on the pretext that this will bring JV partners on safer ground, these provisions themselves may in fact hide some risks more commonly associated with outright forfeiture clauses.

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