Choice of Law Provisions when Drafting Arbitration Provisions for International Oil and Gas Agreements
Article from: TDM 2 (2006), in International Commercial Law
In 1987, a Texas court applying New York law awarded Pennzoil Company over $7 billion in actual damages and $1 billion in punitive damages in a lawsuit against Texaco, Inc. That case, which sent one of the world's largest oil companies at the time into bankruptcy, is an example of the importance of choice of law. A key issue in the case was New York's requirement that binding agreements, even if preliminary, carry a duty of good faith performance. No such duty exists under Texas law. Would the result have been different if Texas law applied? Although the Pennzoil case is often ...