Investigating the Role and Limitations of the Principle of Autonomy of Will in the Formulation of Domestic and International Oil Contracts

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Barati Alireza; Fijan Mohammad Bagher

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Journal: Encyclopedia of Comparative Jurisprudence and Law Year:2025 | Volume:3 | Issue:3 Page(s): 1-18

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Title

Investigating the Role and Limitations of the Principle of Autonomy of Will in the Formulation of Domestic and International Oil Contracts

Author(s)

Barati Alireza | Fijan Mohammad Bagher | Issue Writer Certificate

Keywords

Freedom of contract

oil contracts

jus cogens

comparative law

public ownership of resources

sustainable development

Abstract

The principle of autonomy of will, as one of the fundamental principles of contract law, allows the parties to a contract to freely make decisions regarding the conclusion, stipulation of terms, and execution of the contract within the framework of the governing laws. This principle, rooted in liberal thought and jurisprudential doctrines such as the rule of "al-nas musallatūn ‘alā amwālihim" (people have dominion over their property), plays a pivotal role in oil contracts, which are considered among the most complex and significant types of international agreements. oil contracts are typically concluded between states, as the owners of underground resources, and large multinational corporations, as investors and operators of exploration and extraction activities. Despite the prominent status of the principle of autonomy of will, its implementation in oil contracts faces numerous limitations. The most significant of these include mandatory rules, public order, public ownership of natural resources, environmental requirements, energy security considerations, and obligations arising from international treaties and regulations. This study, employing a descriptive-analytical method and a comparative legal approach, first explores the theoretical foundations and historical background of the autonomy of will in both domestic and international law. It then elaborates on the role of this principle in the formulation of oil contracts and proceeds to analyze its limitations within the Iranian legal system, while comparing it with the legal systems of France and Germany. Findings indicate that although contractual freedom is a recognized principle in all legal systems, in the domain of oil, due to the sovereign, economic, and environmental significance of this resource, it is invariably accompanied by binding frameworks and constraints. Finally, the study proposes strategies for creating a balance between contractual freedom and legal, political, and environmental considerations, in order to both safeguard national interests and facilitate the attraction of investment and the development of international cooperation.

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