Financial balance of oil contracts in Libya during crises

Abstract

This study aimed to examine the legal framework governing the financial equilibrium of oil contracts in Libya and to analyze the impact of economic, political, and security crises on disrupting this equilibrium, while identifying the legal mechanisms for restoring it under the principles of administrative law and Libyan legislation. The significance of the study lies in the special nature of oil contracts as administrative contracts with strategic and economic dimensions, as well as their long-term duration and substantial investments, which make them highly vulnerable to exceptional circumstances and crises. The study adopted the descriptive-analytical approach by analyzing the legal concepts related to the financial equilibrium of oil contracts, reviewing the opinions of legal scholars and administrative judicial decisions, and examining the relevant Libyan legislation, particularly the Executive Regulation of Administrative Contracts issued by the Libyan Council of Ministers Resolution No. (600) of 2024, in addition to selected comparative judicial applications. The findings revealed that the financial equilibrium is a fundamental principle of administrative contracts and that oil contracts in Libya are directly affected by economic, political, and security crises, which may result in a disruption of their financial equilibrium. The study also concluded that the Doctrine of Unforeseen Circumstances is the most appropriate legal mechanism for restoring this equilibrium and that the Libyan legal system provides a legal basis for its application, despite the need for more specialized legislation governing oil contracts. The study recommends further developing the Libyan legal framework by adopting clearer provisions governing the restoration of the financial equilibrium of oil contracts during crises and by incorporating contractual clauses on renegotiation and risk-sharing, thereby enhancing the stability of oil investments, protecting the rights of the contracting parties, and ensuring the continuity of contract performance in the public interest.