Oil and Gas Lease Expiration Disputes are Exempt from Arbitration in Ohio

By: Steven R. R. Anderson

Oil and gas leases often contain provisions requiring that disputes be resolved through arbitration. These provisions are generally valid under R.C. 2711.01(A). But, under R.C. 2711.01(B)(1), “controversies involving title to or possession of real estate” are exempt from the general rule laid out in subsection (A).

That being so, the Ohio Supreme Court was recently asked whether “an action seeking a determination that an oil and gas lease has expired by its own terms a controversy ‘involving the title to or the possession of real estate’ so that the action is exempt from arbitration under R.C. 2711.01(B)(1)?”[1]

The Court’s answer? Yes.

In making its determination, the Court cited precedents holding that an oil and gas lease grants the lessee a property interest in land[2]; that an oil and gas lease prevents a landowner from passing title free and clear of all encumbrances[3]; that an oil and gas lease is a transaction affecting title to real estate[4]; and that an oil and gas lease affects the possession of land[5]. The Court concluded that “[a]n action seeking a determination that an oil and gas lease had expired by its own terms is a controversy involving the title to or the possession of real estate and, under R.C. 2711.01(B)(1), the action is not subject to arbitration.”

Read the full opinion here.

[1] French v. Ascent Resources-Utica, L.L.C., 2022-Ohio-869, ¶ 1.

[2] Bohlen v. Anadarko E&P Onshore, L.L.C., 150 Ohio St.3d 197, 2017-Ohio-4025, 80 N.E.3d 468; Harris v. Ohio Oil Co., 57 Ohio St. 118, 48 N.E. 502 (1897).

[3] Karas v. Brogan, 55 Ohio St.2d 128, 378 N.E.2d 470 (1978).

[4] Chesapeake Exploration, L.L.C. v. Buell, 144 Ohio St.3d 490, 2015-Ohio-4551, 45 N.E.3d 185.

[5] Harris, supra; Buell, supra.