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Permalink Reply by Jack Straw on August 21, 2012 at 9:57am

The typical Arbitration Clause calls for:

the Landowner to choose one arbitrator (from a list of qualified arbitrators),

the O&G Operator to choose one arbitrator (from a list of qualified arbitrators),

the two arbitrators to choose a third (mutually acceptable) arbitrator (from a list of qualified arbitrators).

 

My concern regarding Arbitration has to do with my fear that "the odds are with the house". Athough the arbitrators are supposed to be "neutral", enlightened self interest can come into play.

 

As a Landowner, you will (at most) only use Arbitration once in lifetime.

An O&G Operator will likely submit to Arbitration much more frequently.

An O&G Operator will likely know (through experience) which arbitrators are "industry friendly".

An O&G Operator will likely know (through experience) which arbitrators are "Landowner friendly".

An O&G Operator will obviously choose an arbitrator they know to be "industry friendly".

An O&G Operator will likely only accept a third arbitrator they know to be "industry friendly".

 

There is a strong possibility that you start out with the deck stacked against you.

An individual arbitrator knows that the job representing the Landowner will likely be the only occassion that they work for that Landowner. Once employed by the Landowner, there will not be any repeat business from this source.

An individual arbitrator knows that the job representing the O&G Operator will likely result in repeat business - should they vigorously support the O&G Operator.

And, the mutually agreed upon third arbitrator knows that his best opportunity to obtain future business is to side with the entity that is most likely to need such services in the future - the O&G Operator.

An arbitrator representing the Landowner knows that too vigorous/successful a defense of the Landowner would prejudice the O&G Operator against them(potentially closing the door for future business as the O&G Operator's arbitrator or as a third arbitraitor agreeable to the O&G Operator).

  

If the Landowner is unlucky; it will start out as 3:0, against him.

I think that the best the Landowner can hope for is 2:1, against him.

 

Those odds suck; particularly with Binding Arbitration, as there is no recourse through appeal.

 

My prejudice is that if a Landowner goes into Binding Arbitration, they likely have already lost.

 

There is a reason why O&G Operators insert a "Binding Arbitration Clause" into their "Boilerplate" Leases.

 

All IMHO,

                  JS

 

 

 

 

 

 

 

 

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Permalink Reply by Dave on August 21, 2012 at 10:09am

food for thought

Attachments:

• Gas Lease Termination Issues.pdf, 1.5 MB

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Permalink Reply by Gunner Ostergard on August 21, 2012 at 6:17am

WLW

What was the procedural error and what eventually blew their case out of the water?

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Permalink Reply by WLW on August 21, 2012 at 12:39pm

Gunner

The Plaintives rested their case and my attorney requested a Directive Verdict from the evidence that they presented. They then wanted to introduce more evidence which the Judge denied. The appellate judges found this to be an error, even though we all knew the new evidence was garbage.

They were trying to claim that a second well that was in production, owned by a different company, held the lease on this well. I found papers filed at the court house that the landowner at the time had signed, stating that the second well was NOT on the same forty acres, as the first. The case was then dropped.

I will start a discussion on some current issues with leases. Please give me your thoughts.

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