PRICE REVIEW ARBITRATIONS – HISTORICAL DEVELOPMENT, RECENT TRENDS AND FUTURE DISPUTES
Price review arbitrations are disputes about whether – and how – the contract price under a gas or liquified natural gas (LNG) sale and purchase agreement (SPA) should be adjusted. In the last 20 years, gas price reviews have become a common part of international arbitration.
Such disputes arise from a disconnect between the price at which gas is bought and sold under an SPA, and the price prevailing in the market at a given time. That misalignment creates competing economic incentives: sellers seek to preserve margins by aligning the contract price with their upstream costs and expected returns, while buyers seek pricing that reflects downstream market conditions and allows profitable resale or consumption. At its most basic, gas price reviews seek to determine what the appropriate value or price (depending on the relevant contractual standard) for the LNG or gas is in the market. There are numerous reference points for the ‘value’ and ‘price’, such as the wholesale level, end-user level, industrial users or more recently the price reflected at hubs.
The rise of gas price review arbitrations has gone hand-in-hand with the integration and development of liberalised gas markets in the European Union (EU), including the emergence of virtual trading hubs. Those include the Dutch Title Transfer Facility (TTF) the leading pricing benchmark for North-West Europe and indeed many other European countries, the French point virtuel d’échange de gaz, the British National Balancing Point and the German Trading Hub Europe GmbH, among others.
Apr-Jun 2026 issue
Quinn Emanuel Urquhart & Sullivan UK LLP