Deliberations on Stabilization Clauses in Petroleum Contracts

Stabilization clause is a security and precautionary measure which is incorporated into private contracts by which the states are obliged to avoid modifying or terminating the contract. This study aims at investigating the matter from different dimensions regarding the fact that such measurements differ from one country to another in terms of their reliability. By explaining the scope and describing the types of stabilization clauses, we intend to answer these questions: What is meant by the reliability of a stabilization clause and what are their effects on petroleum agreements. Finally, we will conclude that stabilization clause in petroleum agreements enjoys the required reliability. In case of states’ breaching the contractual obligations containing the stabilization clause, the other party to the contract is entitled to claim for even more and heavier compensations including the loss of profit (lucrum cessans) as well as future interests. International responsibility of states and the fact that they are not exempted from contractual obligations place them within the realm of international legal system.