Gulf Petro Trading Co. v. Nigerian National Petroleum Corp.

512 F.3d 742, 2008 U.S. App. LEXIS 256, 2008 WL 62546
CourtCourt of Appeals for the Fifth Circuit
DecidedJanuary 7, 2008
Docket06-40713
StatusPublished
Cited by31 cases

This text of 512 F.3d 742 (Gulf Petro Trading Co. v. Nigerian National Petroleum Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gulf Petro Trading Co. v. Nigerian National Petroleum Corp., 512 F.3d 742, 2008 U.S. App. LEXIS 256, 2008 WL 62546 (5th Cir. 2008).

Opinion

KING, Circuit Judge:

This appeal is the latest round in a long-running dispute, previously submitted to arbitration in Switzerland, arising out of a contract to salvage “slop oil” generated by the operations of Nigeria’s state-owned oil company. Plaintiffs-appellants — a Texas oil company, its subsidiary, and its principals — appeal the district court’s dismissal of their complaint against the Nigerian company and various associated individuals. The district court concluded that it lacked subject matter jurisdiction over the lawsuit, which it determined to be a collat *744 eral attack on a foreign arbitral award. It alternately concluded that suit against certain of the parties was barred on foreign sovereign immunity and personal jurisdiction grounds. For the reasons set out below, we conclude that this lawsuit was properly dismissed for lack of subject matter jurisdiction, as we agree that it represents a collateral attack on a foreign arbi-tral award. We therefore do not consider the district court’s alternate holdings. AFFIRMED.

I. BACKGROUND

The origins of this dispute lie in a 1993 joint venture agreement between Petrec International, Inc. (“Petrec”), and Nigerian National Petroleum Corporation (“NNPC”), whereby Petrec was to undertake reclamation and salvaging of slop oil discarded by NNPC in the course of its daily operations in Nigeria. Petrec is a wholly owned subsidiary of Gulf Petro Trading Company, Inc. (“GPTC”), a Texas oil field services company. NNPC is owned by the government of Nigeria. The agreement called for the creation of a Nigerian company, Petrec (Nigeria) Limited (“PNL”), which was to be jointly capitalized and owned by Petrec and NNPC. Petrec and NNPC agreed to submit any disputes arising out of the agreement to arbitration.

After NNPC allegedly failed to contribute its share of capital to PNL and refused to provide access to the areas needed to conduct the salvaging operations, Petrec initiated arbitration proceedings with the Chamber of Commerce and Industry of Geneva in 1998. The arbitration proceedings were phased, such that the panel would first consider issues of jurisdiction and liability before, if necessary, determining damages. After some delay and two evidentiary hearings, the panel issued a “Partial Award” on July 5, 2000, finding that Petrec had standing to pursue its claims and that NNPC had failed to contribute its share of capital to PNL. However, the panel further found that the joint venture agreement did not confer exclusive rights to all of NNPC’s slop oil on PNL, as Petrec had argued. Rather, NNPC’s obligation was only to make available enough slop oil to keep PNL’s operations viable and profitable.

In January 2001, the panel held a hearing for the purpose of determining the quantum of Petrec’s damages. At this hearing, NNPC challenged the panel’s jurisdiction and Petrec’s standing by producing a copy of a Texas certificate of incorporation showing that an entity identified as “Petrec International Inc.” had been incorporated in Texas on February 28, 2000, well after execution of the joint venture agreement and the demand for arbitration. On October 9, 2001, the panel issued a “Final Award,” holding that Petrec lacked capacity to maintain its claims against NNPC. Additionally, the panel stated in dictum that had Petrec been able to sustain its claims, its damages would have been much lower than demanded in light of a variety of factors, including the panel’s earlier determination in the Partial Award that the joint venture agreement did not confer exclusive rights to all of NNPC’s slop oil on PNL.

Petrec challenged the Final Award in the federal court of Switzerland on grounds that it violated Swiss arbitration law and public policy, but the Swiss court upheld the panel’s decision in April 2002. Petrec next filed a lawsuit in the Northern District of Texas, seeking, inter alia, confirmation of the Partial Award, in which the panel had found in Petrec’s favor on some aspects of the question of NNPC’s liability, and a determination of damages. The district court dismissed the action for lack of subject matter jurisdiction. See *745 Gulf Petro Trading Co. v. Nigerian Nat’l Petrol. Corp., 288 F.Supp.2d 783 (N.D.Tex.2003). The court reasoned that in seeking confirmation of the Partial Award, Petrec was effectively requesting that the Final Award be set aside or modified, actions that the court was precluded from taking by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention,” or “Convention”). 1 Id. at 792-93. The court also determined that doctrines of res judicata and international comity precluded it from revisiting the Swiss court’s decision not to vacate the Final Award. Id. at 794-95. This court affirmed the decision of the district court in an unpublished opinion.

In September 2005, GPTC, Petrec, and principals James S. Faulk and James W. Faulk (collectively, “Gulf Petro”) brought this action in the Eastern District of Texas, alleging that the Final Award was procured by fraud, bribery, and corruption. Gulf Petro has what is purportedly a March 18, 2002, letter from Chief Sena Anthony, NNPC’s general counsel, to Andrew Berkeley, one of the arbitrators, detailing the payment of a $25 million bribe. According to the letter, this payment was authorized by various individuals within NNPC and was to be shared by the three arbitrators in return for delivery of a favorable award to NNPC in the slop oil arbitration. Gulf Petro also alleges that Berkeley and Ian Meakin, another arbitrator, engaged in a variety of undisclosed dealings and ex parte communications with NNPC that cast doubt on their impartiality as arbitrators in the matter.

Gulf Petro named as defendants NNPC, Anthony, Prince Bola Ajibola, formerly Nigeria’s High Commissioner to the United Kingdom, Jackson Gaius-Obaseki, formerly NNPC’s Group Managing Director, Robert Clarke, outside counsel to NNPC, and the three arbitrators, Berkeley, Mea-kin, and Hans van Houtte. In six separate counts, Gulf Petro sought relief under: (1) the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq. (three counts); (2) the Texas Deceptive Trade Practices Act (“DTPA”), Tex. Bus. & Comm.Code § 17.46 et seq.; (3) Texas common law fraud; and (4) the Texas common law tort of civil conspiracy. In a seventh count, Gulf Petro sought to nullify (i.e., vacate) the Final Award under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq.

NNPC, Anthony, Ajibola, Obaseki, and Clarke filed a motion to dismiss, asserting lack of subject matter jurisdiction on account of the New York Convention and foreign sovereign immunity, as well as lack of personal jurisdiction. 2 The district court granted the motion in a March 15, 2006, order. The court first concluded that under the Convention it lacked subject matter jurisdiction to modify or vacate the Final Award.

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Bluebook (online)
512 F.3d 742, 2008 U.S. App. LEXIS 256, 2008 WL 62546, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gulf-petro-trading-co-v-nigerian-national-petroleum-corp-ca5-2008.