## Facts

- Tesoro Petroleum Corporation, a U.S. oil company, and Trinidad and Tobago entered a joint venture to purchase and develop oil fields in Trinidad and Tobago.
- The joint-venture agreement provided that, after five years of operations, either party could request dividends up to 50% of net earnings after tax.
- The parties also executed multiple side agreements governing aspects of the venture.
- A dispute arose after years of operations, including Trinidad and Tobago’s refusal to approve declarations of dividends for 1981 and 1982.
- The main agreement included a clause submitting disputes to ICSID procedures.
- Tesoro filed a request to initiate ICSID conciliation on August 26, 1983, attaching the main agreement and related agreements and describing the dispute.
- The parties agreed to a single conciliator; the process proceeded on written submissions, with the conciliator determining that no oral hearing was necessary.
- A conciliation report with a recommended solution was issued on November 27, 1985; the case is recorded as settled, and the report is not publicly available.

## Issues

1. Whether Trinidad and Tobago was contractually obliged under the joint-venture and related agreements to permit dividend declarations for 1981 and 1982 within the contractual ceiling.
2. Whether, and in what manner, an ICSID conciliation commission may evaluate the parties’ relative merits and likely adjudicatory outcomes to formulate settlement recommendations.
3. Whether the ICSID Conciliation Rules permit the commission to resolve the matter on written submissions without an oral hearing and with a single-member commission.

## Decision

- The conciliator issued a report recommending terms intended to resolve the parties’ dispute.
- The recommendation was informed by an evaluation of the parties’ positions and their likely success in arbitration or court proceedings.
- The parties subsequently negotiated and reached a settlement, terminating the conciliation.
- No binding merits determination or public text of the recommendation is available.

## Legal Principles

- ICSID conciliation produces nonbinding recommendations aimed at amicable settlement rather than an enforceable award on the merits.
- A conciliation commission may use an evaluative method, including assessment of legal and factual strengths and likely adjudicatory outcomes, to support settlement.
- ICSID conciliation procedure permits flexibility in commission composition (including a single conciliator) and in process design, including reliance on written submissions without an oral hearing where appropriate.
- Where the conciliation report remains confidential, the case’s public significance is chiefly procedural and institutional rather than a source of articulated substantive rules.

## Conclusion

The ICSID conciliation arising from a joint-venture dispute over dividend approvals concluded with a recommended solution that facilitated settlement; the case is chiefly cited for demonstrating evaluative, flexible conciliation procedure rather than for any publicly stated ruling on contract interpretation.


Tesoro Petroleum Corp. v. Trinidad & Tobago, ICSID Case No. CONC/83/1 (1985)