Sanctions and Take-or-Pay LNG Supply Agreements

by Param Bhalerao.

Introduction

The sources of production of liquified natural gas ("LNG") are often located remotely and, as such, are often geographically separated across multiple states from the markets of their consumption, the natural consequence being that contracts for the supply of LNG often cross international borders. Given their transnational nature, the imposition of sanctions is a major circumstance that impacts the parties' abilities to perform their obligations under LNG supply contracts. As such, disputes are inevitable in relation to the impact of sanctions on LNG supply contracts and generally need to be resolved by arbitration, this typically being the contractually agreed dispute settlement mechanism. This article aims to provide a brief overview of LNG supply contracts, how sanctions may impact their performance, and the remedies that might be available to the affected parties.

Sanctions and Take-or-Pay LNG Supply Agreements is part of the TDM 4 (2024) Sanctions and International Arbitration: Impact on Substantive and Procedural Issues (Volume 2) and is available here www.transnational-dispute-management.com/article.asp?key=3081 (sign in to download).