BP (Libya) Ltd v Astro Protector Compania Naviera SA, Sincat and Linoco

• Jurisdiction: Italia
• Date: 12 Marzo 1973
• Court: Regional Tribunal (Italy)

Italy, Court of Syracuse.

BP Exploration Company (Libya) Ltd.

and

Astro Protector Compania Naviera SA, Sincat and Linoco

Relationship of international law and municipal law Recognition and enforcement of foreign laws Expropriation legislation allegedly contrary to international law Whether entitled to recognition in Italian courts Public policy Act of State doctrine Whether Italian courts entitled to question compatibility of expropriation legislation with international law Pursuit actions Ownership of oil extracted from concession area after expropriation of concession Ownership governed by lex rei sitae Property in oil only acquired on extraction Whether extraction pursuant to allegedly unlawful expropriation confers title

Expropriation Compensation Lack of effective compensation Discrimination Whether expropriation unlawful Effect of unlawful expropriation Whether a nullity Whether ownership of expropriated property affected Ownership of oil extracted from concession area after expropriation of concession The law of Italy

Summary: The facts:In 1957 Nelson Bunker Hunt was granted Concession No. 65 (the Concession) to explore, extract and sell oil in a designated area of Libya. In 1960 the BP Exploration Company (Libya) (BP) acquired a half share in the Concession. On 7 December 1971, without notice, the Libyan Government enacted a law nationalizing the Concession and transferring it to the State-owned Arab Gulf Exploration Company. This was said to be in retaliation for action taken by the British Government in the Gulf. BP argued that the nationalization was null and void on the ground that it was discriminatory and failed to provide for the payment of equitable compensation within a reasonable time. BP therefore claimed that it continued to be entitled to a share in any oil extracted from the Concession area. On 11 December 1971 arbitration proceedings were instituted by BP.1 On 30 December 1971, having obtained information that a cargo of crude oil on board a tanker bound for a refinery terminal in Italy originated from the Concession area, BP successfully applied to an Italian judge for the provisional attachment of samples of the oil on board the vessel and the documents identifying the origin of the cargo, in order to enable BP subsequently to assert title to the oil. In January 1972 BP instituted proceedings for the confirmation of the attachment and for recovery of the oil. Sincat, the Italian company responsible for refining the oil cited in the writs, argued

that it was not a proper defendant since the oil was neither its property nor in its possession and the cargo belonged to the State-owned Libyan National Oil Corporation (Linoco). Linoco was joined as a defendant and did not dispute that the oil had been acquired by it from the Arabian Gulf Exploration and originated from the Concession area

Held:BP's claim to the oil was rejected and the attachment was vacated.

(1) Under Libyan law, the ownership of property was governed by the law of the place where the property was located. The Libyan Petroleum Law 1955, under which the Concession had been granted, provided that oil deposits were the property of the State and that no one could extract oil except pursuant to a permit or contract of concession. These provisions and their application in this case corresponded to analogous provisions in Italy and were therefore in conformity with Italian public policy.

(2) In accordance with the Libyan Petroleum Law, the rights acquired by BP under the Concession only enabled it to acquire ownership of the crude oil at the moment of extraction. Since BP had not itself extracted the oil in dispute, it could not have acquired ownership of it under Libyan law. That was decisive in the present case. The reasons why BP had been unable to extract the oil related to facts occurring outside Italian territory which were both beyond the scope of the present proceedings and irrelevant. Even if the nationalization was contrary to Italian public policy, this fact could not alter the outcome of the proceedings.

The following is the text of the relevant part of the judgment of the Court:

History of the ProceedingsBy petition dated 30 December 1971 the BP Exploration Company (Libya) Limited, with its registered office in London, made claim to the President of this Court that it was the owner together with Nelson Bunker Hunt of a 50 per cent share in a concession for exploration and exploitation of hydrocarbon deposits in an area known as the southern part of the Calanseio. The concession, which related more particularly to a deposit known as Sarir, bears...