Foreign companies considering investment in post-war Iraq should be advised that deals signed with the US-dominated occupying authority could be invalid in international law.

Speaking last week in Brussels at a conference organised by the American Bar Association's section of international law and practice, Pieter Bekker, an attorney with White & Case in New York - who was formerly a staff lawyer at the International Court of Justice at The Hague - told delegates that there was particular doubt over the validity of deals done in relation to oil reserves.

Mr Bekker said: 'The legal status of contracts concluded during an occupation and exceeding the length of the occupation is uncertain, especially if such contracts relate to the occupied state's natural resources.'

Mr Bekker said accepted concepts of international law would not consider the Coalition Provisional Authority (CPA) - the US-dominated body charged with rebuilding Iraq - as having the authority to sign long-lasting contracts.

'When doing business now in Iraq, it will be very important to determine at first who is the contracting party,' he explained.

'In international law, the US government and its military are not agents of the Iraqi Republic.

The US and the UK are occupying powers but not agents.

Saddam has been deposed but the sovereign state of Iraq still exists in international law.'

He indicated that contracts signed by the CPA could eventually be discarded by a future democratically elected Iraqi government.

According to Mr Bekker, under international law, the US and its allies cannot increase the rate of extraction of oil from Iraq above the pre-invasion level.

Likewise, the US cannot export oil directly to the US and it cannot use oil for non-military purposes.

However, the coalition overthrow of the Iraqi regime has had some business benefits, reported David Melamed, a French lawyer with the New York office of Gide Loyrette Nouel.

He said foreign companies will be allowed to hold assets in Iraqi businesses, something which had been forbidden under Saddam.

'It is one certainty that there will be a more liberal business regime,' he said, however, warning that the current banking system is in total disarray.

'Putting it right must be a priority of the occupying authorities.'

Jonathan Ames