The exploitation of transboundary oil and gas fields has long posed one of the most intricate challenges in international petroleum law. Shared reservoirs, which often extend beneath the borders of two or more states, generate legal uncertainty and competition over petroleum resources among stakeholders. Without a coherent framework, unilateral extraction can not only jeopardize resource efficiency but also escalate into diplomatic disputes. In this context, unitization agreements—contractual arrangements through which parties agree to manage a reservoir as a single operational unit—have emerged as an important mechanism to reconcile sovereignty claims with the imperatives of efficient resource management.

Determining the governing law of such unitization agreements, however, remains a highly complex task. This complexity derives from the intersection of multiple legal systems, the diverse nature of the contracting parties (sovereign states, national oil companies, or private license holders), and the inherent tension between sovereign prerogatives and contractual autonomy. The present article addresses this issue by conducting a comparative analysis of governing law clauses in selected unitization agreements and assessing their compatibility with the Iranian legal framework.

The existing legal literature in Iran and across the globe has predominantly addressed Unitization agreements in a descriptive manner, offering limited structural or comparative analysis. Moreover, the inherently confidential nature of many petroleum contracts further restricts access to actual practices, thereby complicating scholarly inquiry. As a result, there exists a significant gap in systematic research concerning the determination of the governing law applicable to unitization agreements.

The objective of this article is to fill this gap by providing a conceptual clarification of the distinctions between unitization and related legal frameworks such as joint development, pooling, and unit operating agreements while simultaneously examining diverse governing law models in international practice and assessing their compatibility with the Iranian legal system.

This article seeks to fill this gap by:

1. Clarifying the conceptual distinction between unitization, joint development, pooling, and unit operating agreements;

2. Analyzing the plurality of legal orders applied in major unitization agreements (Ghana, Frigg [UK–Norway], Timor-Leste–Australia, and US–Mexico);

3. Assessing the compatibility of these models with Iran’s existing legal framework; and

4. Proposing a flexible, multi-layered structure for determining governing law in Iran’s future unitization agreements.

The research methodology of this article is descriptive-analytical and comparative. It first examines the theoretical concepts related to Unitization and the distinctions among them, followed by an analysis of four case studies—Ghana, the Frigg Field (United Kingdom–Norway), Timor-Leste–Australia, and the United States–Mexico. The comparative findings are then assessed in light of the Iranian legal framework, including the Civil Code, the International Commercial Arbitration Act, and Article 44(a) of the Seventh Development Plan Act.

The study’s central findings are as follows:

1. Conceptual Distinctions Matter: Unitization must be distinguished from pooling (internal aggregation of fragmented landholdings), joint development (temporary cooperation in disputed maritime zones), and unit operating agreements (private contracts implementing unitization treaties). These distinctions directly affect the determination of governing law, as pooling is subject to domestic law, joint development relies primarily on international law, and unit operating agreements often follow national or third-party law.

2. Legal Pluralism is Inherent feature: Unlike traditional petroleum contracts that typically designate a single national law, unitization agreements often involve multiple legal orders simultaneously. This pluralism manifests in two forms:

• Hierarchical pluralism: international law, treaty obligations, and national laws function in layered, complementary fashion.

• Horizontal pluralism: different laws apply concurrently to different aspects of the contract (e.g., one law for operations, another for interpretation).

3. Case Studies Illustrate Diversity:

• Ghana (Jubilee Field): A dual system where Ghanaian law governs operations, while English law governs interpretation.

• Frigg Agreement (UK–Norway): Operations are governed territorially by national laws, while international law governs the treaty framework.

• Timor-Leste–Australia (Greater Sunrise): A hybrid model where operations are divided between national law (Australia) and treaty-based law (Timor Sea Treaty).

• US–Mexico (Gulf of Mexico): A novel framework where states define overarching principles, but license holders negotiate operational unitization agreements under private autonomy.

4. Iranian Law Reflects Ambiguity:

• While Article 44 of the Seventh Development Plan authorizes “joint exploitation agreements,” no comprehensive framework exists for unitization.

• Article 968 of the Civil Code traditionally designates the place of contract formation as the governing law, but modern legislation such as the 1997 International Commercial Arbitration Act acknowledges party autonomy, even in domestic contracts.

• Consequently, Iranian law provides both opportunities and challenges: it recognizes contractual autonomy, yet lacks explicit provisions for unitization agreements, especially in transboundary contexts.

This article makes several contributions to the field of international petroleum law and Iranian legal studies:

• It provides a systematic comparative analysis of governing law clauses in major unitization agreements, an area previously underexplored in the literature.

• It introduces the concepts of hierarchical and horizontal pluralism into the analysis of governing law, offering a nuanced theoretical framework for understanding these contracts.

• It applies these insights to the Iranian context, where the absence of explicit regulation creates both a need and an opportunity for legal innovation.

• It advances the debate on how international best practices can be adapted to domestic legal systems in resource-rich countries.

The findings have both theoretical and practical implications.

• For theory: The recognition of legal pluralism challenges traditional assumptions about the exclusivity of a single governing law. It underscores the need for a multi-dimensional understanding of how international, domestic, and contractual norms interact in complex transboundary arrangements.

• For practice: The study highlights the importance of drafting governing law clauses with precision, taking into account the distinct roles of operational regulation, contract interpretation, and dispute resolution.

• For Iran: The research suggests that Iran must adopt a flexible, multi-layered framework for unitization agreements. This framework should combine national sovereignty with party autonomy, ensure parliamentary oversight for international treaties, and allow the application of international norms where necessary. Such an approach would not only facilitate cooperation with neighboring states but also enhance Iran’s attractiveness to international investors.

In Conclusion, Unitization agreements embody one of the most complex contractual forms in petroleum law, precisely because they sit at the intersection of sovereignty, private autonomy, and international cooperation. The determination of governing law in these agreements cannot be reduced to a single legal order but must embrace pluralism. Comparative analysis shows that states and companies have employed diverse models—territorial, dual, hierarchical, and horizontal—to address this challenge.

For Iran, the path forward requires embracing legal pluralism within a structured, transparent framework. By doing so, Iran can draw upon international best practices while preserving sovereignty and ensuring efficient resource management. A flexible, multi-layered model for governing law is thus not only desirable but necessary for the future of Iran’s transboundary oil and gas cooperation.