370 F.3d 65 (D.C. Cir. 2004), 03-7118, Gulf Resources America, Inc. v. Republic of Congo

Docket Nº:03-7118.
Citation:370 F.3d 65
Party Name:GULF RESOURCES AMERICA, INC. and Gulf Resources Corporation, Appellants, v. REPUBLIC OF THE CONGO, Appellee.
Case Date:June 08, 2004
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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370 F.3d 65 (D.C. Cir. 2004)

GULF RESOURCES AMERICA, INC. and Gulf Resources Corporation, Appellants,

v.

REPUBLIC OF THE CONGO, Appellee.

No. 03-7118.

United States Court of Appeals, District of Columbia Circuit

June 8, 2004

Argued April 13, 2004.

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Appeal from the United States District Court for the District of Columbia (No. 98cv02978).

Stuart H. Newberger argued the cause for appellants. With him on the brief were Clifton S. Elgarten, Dana C. Contratto, and Beth Nolan.

Michael R. Lazerwitz argued the cause and filed the brief for appellee.

Before: EDWARDS, SENTELLE and TATEL, Circuit Judges.

OPINION

HARRY T. EDWARDS, Circuit Judge:

The Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602-1611 (2000), includes a provision pursuant to which foreign states may waive their sovereign immunity from suit in the courts of the United States. See id. § 1605(a)(1). This case involves the applicability of that provision to a contract dispute involving plaintiffs-appellants Gulf Resources Corporation ("Gulf"), a Panamanian corporation with its primary place of business in Beirut, Lebanon, and Gulf Resources America, Inc. ("Gulf America"), a wholly owned subsidiary of Gulf with its principal places of business in Washington, D.C. and Los Angeles, and defendant-appellee the Republic of the Congo ("Congo"). (Throughout this opinion, Gulf and Gulf America are referred to collectively as "Gulf" or "appellant.")

The dispute here arises out of the sale and resale of in-kind oil royalties owed to Congo by a subsidiary of an Italian oil conglomerate extracting oil from Congolese oil fields. At the heart of the dispute are several written agreements pursuant to which Congo sold certain of the royalty oil owed to Congo by the Italian producer to Gulf and Gulf's U.S. business partner. Acting through its business partner, Gulf agreed to sell the Congolese royalty oil back to the Italian producer at market prices. Gulf paid Congo in advance for the oil that it purchased. The Italian company was to pay Gulf as the oil was produced. When it had paid Gulf for just over a

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quarter of the oil that Gulf had purchased from Congo, the Italian producer, allegedly following instructions from Congo, redirected to Congo the payments due to Gulf. Thus, Gulf complains that Congo received payments owed to Gulf from the Italian producer. In essence, Gulf alleges that Congo received double payment for nearly three quarters of the royalty oil that Congo sold to Gulf: Congo was paid once in advance by Gulf and then again by the Italian producer.

Gulf filed suit in District Court alleging causes of action in contract and tort (including conversion and interference with contract) against Congo. Gulf sought damages and an accounting. Congo moved to dismiss under Federal Rule of Civil Procedure 12(b)(1) asserting sovereign immunity. Gulf argued that the District Court should exercise jurisdiction under FSIA's waiver provision, § 1605(a)(1), or under the second clause of the commercial activity exception, § 1605(a)(2). The District Court dismissed the complaint without prejudice, rejecting Gulf's several theories in support of its waiver argument, as well as its argument in support of a commercial activity exception. Gulf Resources Am. v. Republic of Congo, 276 F.Supp.2d 20 (D.D.C.2003).

We reverse the judgment of the District Court and remand the case for further proceedings. We find that Congo contractually waived sovereign immunity with respect to Gulf's claims in this case. Having waived sovereign immunity, Congo lost its immunity from jurisdiction pursuant to 28 U.S.C. § 1605(a)(1). In light of this finding, we need not address Gulf's contention that Congo also lost immunity under the commercial activity exception in FSIA.

I. BACKGROUND

A. The Original Purchase Agreement

In April 1993, a U.S. corporation, Occidental Congo Inc. ("Occidental"), signed a Purchase Agreement with Congo, pursuant to which Congo was to provide Occidental with 50 million barrels of "royalty oil" in exchange for $150 million and Occidental's assistance with an economic "structural adjustment program." Purchase Agreement (Apr. 28, 1993), reprinted in Joint Appendix ("J.A.") 119-35. Agip Recherches Congo ("Agip"), a subsidiary of Italian oil conglomerate ENI SpAaan, and Elf Congo S.A., a subsidiary of French conglomerate Elf Aquitaine, had previously agreed to pay the royalty oil to the Congo in exchange for the right to operate various Congolese oil fields. See id. Arts. 1.1-1.3, at 3-4, J.A. 121.

Several provisions of the Purchase Agreement are of particular relevance here. First, in Article 9, the parties explicitly contemplated Occidental's assignment of its oil interests. That provision states:

Occidental shall have the right to assign ... its interest in this Agreement without first obtaining the approval of the Government provided that any assignment to a third party other than to an affiliate of Occidental shall require the prior written consent of the Government which consent shall not be unreasonably withheld. Any request for such consent shall state the main terms of such assignment. Any such assignment ... shall be promptly notified to the Government.

Id. Art. 9, at 8, J.A. 128. Second, the agreement contained an explicit acknowledgment that the transactions contemplated by it were commercial in nature. Id. Art. 10.1(j), at 10, J.A. 130. And it included an explicit waiver of sovereign immunity. Id. Finally, the agreement provided that all disputes which could not be resolved amicably would be settled through

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arbitration following the rules of the International Chamber of Commerce in Paris, France. Id. Art. 11.1, at 10, J.A. 130.

B. Amendment of the Purchase Agreement

In February 1994, Occidental and Congo amended the Purchase Agreement. Amendment to Purchase Agreement (Feb. 19, 1994) ("Amendment"), reprinted in J.A. 154-62. The Amendment accomplished a number of things. It provided that the royalty oil that Congo had agreed to provide to Occidental would come entirely from various Agip operations, eliminating Elf from the transaction. Id. Art. 2.1, at 1-2, J.A. 154-55. The Amendment referred to this newly designated oil as "substitute oil." Id. Arts. 1, 2.1, at 1-2, J.A. 154-55. More significantly, the Amendment contained a provision in which Congo "directed that Occidental assign to Gulf" the right to take a specified percentage of the royalty oil "under the Purchase Agreement...." Id. Art. 9.2, at 7-8, J.A. 160-61. The Amendment indicated that this assignment was a consequence of the fact that Occidental informed Congo that Gulf, as Occidental's joint venture partner, was to undertake the structural adjustment program that Occidental had agreed to perform pursuant to the Purchase Agreement. Id. The Amendment also made clear that the waiver of sovereign immunity, contained in the Purchase Agreement, together with other warranty provisions, applied mutatis mutandis to the substitute oil. Id. Art. 6.2, at 6, J.A. 159.

C. Implementation of the Amended Purchase Agreement

Four days after the Amendment was signed, Congo and Occidental executed a one-page protocol, which stated: "Reference is made to the Amendment, dated 19 February 1994 (the 'Amendment'), to the Purchase Agreement dated April 28, 1993, between the Government and Occidental." Protocol (Feb. 23, 1994) (February Protocol), reprinted in J.A. 174-75. The Protocol clarified that, notwithstanding Article 9.2 of the Amendment (pursuant to which Congo "directed that Occidental assign to Gulf" the right to take a specified percentage of the royalty oil "under the Purchase Agreement"), Congo and Occidental agreed that the portion of the identified royalty oil delivered to Gulf would not be counted against the 50 million barrels that Congo had sold to Occidental. See id., J.A. 174. In addition to being signed by representatives of Congo and Occidental, the Chairman of Gulf indicated, by his signature, that Gulf had "received and approved" the document. Id., J.A. 175.

Several weeks later, on May 2, 1994, Congo and Gulf signed their own protocol pertaining to the assignment of royalty oil to Gulf. Protocol (May 5, 1994) (May Protocol), reprinted in J.A. 176-79. This protocol explicitly referred to the Purchase Agreement and Amendment signed by Congo and Occidental and specified that "[t]he terms used in this Protocol shall have the same meaning as defined in the Purchase Agreement as amended, modified and supplemented by the Amendment." Id. at 1, J.A. 176. The protocol first expressly acknowledged Occidental's assignment of rights to Gulf, as directed by Congo. Id. ¶ 1, at 1, J.A. 176. It then established that Gulf's rights under the assignment in the Amendment equaled 10 million barrels of oil for which Gulf was to pay Congo $30 million. Id. ¶ ¶ 1-2, at 1-2, J.A. 176-77. (Approximately seven months later, Congo and Gulf agreed to limit the sale to five million barrels for the first $15 million paid by Gulf. See Complaint ¶ 25, at 9, J.A. 33.)

Also on May 2, 1994, Congo, Occidental, and Gulf signed a letter agreement stating that Gulf would take over Occidental's obligations

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to advise Congo on a structural adjustment program. Id. ¶ 22, at 8, J.A. 32. In conjunction with the letter agreement, Congo and Gulf executed a Structural Adjustment Program Service Agreement stating "that Gulf would provide the Congo with some consulting services relating to the financial management and implementation of the Congo's structural adjustment program." Id. "The Congo directed Occidental to work out with Gulf any compensation due Gulf for Gulf's performance of Occidental's obligations under the structural adjustment program." Id. ¶ 23, at 9, J.A. 33.

D. Agips' Purchase of the Royalty Oil

Gulf's complaint alleges that Congo directed Agip to begin delivering royalty oil to Occidental and Gulf in August 1994. Id...

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4 practice notes
  • 5 F.Supp.3d 25 (D.D.C. 2013), Civ. 09-2170 (RJL), Belize Social Development Ltd. v. Gov't of Belize
    • United States
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    ...Corp. v. Islamic Republic of Iran, 672 F.3d 1066, 400 U.S.App. D.C. 1 (D.C. Cir. 2012); Gulf Res. Am., Inc. v. Republic of Congo, 370 F.3d 65, 361 U.S.App. D.C. 434 (D.C. Cir. 2004); El-Hadadv. United Arab Emirates, 216 F.3d 29, 342 U.S.App. D.C. 138 (D.C. Cir. 2000); Wye Oak Tech., Inc. v.......
  • The Waiver Exception
    • United States
    • The Foreign Sovereign Immunities Act Deskbook The Fsia and subject matter jurisdiction
    • 23 Mayo 2013
    ...or otherwise) from jurisdiction of any court” constituted explicit contractual waiver); Gulf Resources America, Inc. v. Republic of Congo, 370 F.3d 65, 72-74 (D.C. Cir. 2004) (agreement waived “beneits and protections of any nature). 8. Cf. Argentine Republic v. Amerada Hess Shipping Corp.,......
  • 452 F.3d 883 (D.C. Cir. 2006), 05-7030, Rong v. Liaoning Province Government
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the District of Columbia Circuit
    • 7 Julio 2006
    ...order dismissing an action brought Page 888 under FSIA on the ground of sovereign immunity. Gulf Res. Am., Inc. v. Republic of the Congo, 370 F.3d 65, 70 (D.C. Cir. 2004). FSIA is "the sole basis for obtaining jurisdiction over a foreign state in our courts." Peterson v. Royal Kin......
  • Strategic Technologies Pte, Ltd. v. Republic of China (Taiwan), 051007 DCDC, 05-2311 (RMC)
    • United States
    • Federal Cases United States District Courts District of Columbia
    • 10 Mayo 2007
    ...Strategic Tech's allegations do not bring this case within an exception to immunity. See Gulf Res. of Am., Inc. v. Republic of the Congo, 370 F.3d 65, 70 (D.C. Cir. 2004) (burden of proof rests upon sovereign state claiming A. Implied-Waiver Exception Under FSIA, a foreign state is not immu......
3 cases
  • 5 F.Supp.3d 25 (D.D.C. 2013), Civ. 09-2170 (RJL), Belize Social Development Ltd. v. Gov't of Belize
    • United States
    • Federal Cases United States District Courts District of Columbia
    • 11 Diciembre 2013
    ...Corp. v. Islamic Republic of Iran, 672 F.3d 1066, 400 U.S.App. D.C. 1 (D.C. Cir. 2012); Gulf Res. Am., Inc. v. Republic of Congo, 370 F.3d 65, 361 U.S.App. D.C. 434 (D.C. Cir. 2004); El-Hadadv. United Arab Emirates, 216 F.3d 29, 342 U.S.App. D.C. 138 (D.C. Cir. 2000); Wye Oak Tech., Inc. v.......
  • 452 F.3d 883 (D.C. Cir. 2006), 05-7030, Rong v. Liaoning Province Government
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the District of Columbia Circuit
    • 7 Julio 2006
    ...order dismissing an action brought Page 888 under FSIA on the ground of sovereign immunity. Gulf Res. Am., Inc. v. Republic of the Congo, 370 F.3d 65, 70 (D.C. Cir. 2004). FSIA is "the sole basis for obtaining jurisdiction over a foreign state in our courts." Peterson v. Royal Kin......
  • Strategic Technologies Pte, Ltd. v. Republic of China (Taiwan), 051007 DCDC, 05-2311 (RMC)
    • United States
    • Federal Cases United States District Courts District of Columbia
    • 10 Mayo 2007
    ...Strategic Tech's allegations do not bring this case within an exception to immunity. See Gulf Res. of Am., Inc. v. Republic of the Congo, 370 F.3d 65, 70 (D.C. Cir. 2004) (burden of proof rests upon sovereign state claiming A. Implied-Waiver Exception Under FSIA, a foreign state is not immu......
1 books & journal articles
  • The Waiver Exception
    • United States
    • The Foreign Sovereign Immunities Act Deskbook The Fsia and subject matter jurisdiction
    • 23 Mayo 2013
    ...or otherwise) from jurisdiction of any court” constituted explicit contractual waiver); Gulf Resources America, Inc. v. Republic of Congo, 370 F.3d 65, 72-74 (D.C. Cir. 2004) (agreement waived “beneits and protections of any nature). 8. Cf. Argentine Republic v. Amerada Hess Shipping Corp.,......