Fundamentals & models of compensation valuation based on market approach and it's implementation in oil and gas industry arbitration

Volatility in Oil industry, makes disputes in investment agreements. Compensation valuation is Most critical factor in resolving disputes. One of famous compensation valuation is market approach which has pros and cons. Price volatility in share market, non-comparability of previous transactions and unfair prices are obstacles of using this approach in using in arbitration valuation. Calculating average of prices, Ratio normalization and considering differences of companies, are solutions for using this approach which was described in this survey. Normally, Market approach price is more than Asset based approach and less than Income based approach. In Iran oil industry, Just we can use Ratios and for implementing this method, lots of modifications are required and this makes difficult to have agreement by tribunal of arbitration for using this method.