The present study addresses some aspects related to the most important kind of ADR [Alternative dispute resolution) in oil contract which is the arbitration. Oil contract here means the agreement between the host state and the private law person ( national or foreigner) by which the private law person is entitled to drill and exploit the oil and gas in the territory of the host state. Oil contracts have a special nature, beside that they are different from other kinds of contracts mainly because they are concluded between a public law person in the host state (usually, governmental entities represent the state itself] and a private law person, which is the investor. These contracts usually aim to contribute in the economic development of the host country. Therefore, they serve community at large not only the two contracting party. In order to decide the type of contract of oil that is mostly appropriate to the host country, we have to examine the implications of these contracts. It is also important to consider the main target that a country is aiming to achieve. What is more important is not the name and the type of contract but the contractual terms included in such type of agreements . the host state then can protect its full rights by including some terms in the contract regardless of the type of this contract and whether it is a joint – venture agreement or a contractorization one, as long as the two agreements share the same elements and achieve the same goals. The study also maintains that the amicable methods of dispute resolution could improve the relationship between the disputant parties in oil contract , and it may create a common understanding to avoid any kind of disagreement. However, the international commercial arbitration remains to be the most acceptable method among other types of ADR, because of the ability settle the dispute by final decision. Also the thesis examine the different approaches regarding the applicable law on the disputes of oil contract. Some scholars believe in the application of the national law, while others prefer to apply the law of the contract itself, which means the terms had been stated by the contracting parties. There is also an attitude to apply of rules of natural law and justice or the lex mercatoria and another attitude prefer to apply the international law. After all I believe that the national law of the host state is the most appropriate law to the oil contract, for many.