Bridas Corp. v Unocal Corp.

• Decision Date: 27 April 2000
• Citation: 16 S.W.3d 893
• Parties: <!--16 S.W.3d 893 (Tex.App.-Houston 2000) BRIDAS CORPORATION, Appellant v. UNOCAL CORPORATION, DELTA OIL CORPORATION LTD., DELTA INTERNATIONAL, and DELTOIL CORPORATION, Appellees NO. 14-99-00196-CV In The Fourteenth Court of Appeals
• Court: Texas Court of Appeals

Page 893

16 S.W.3d 893 (Tex.App.-Houston[14th Dist.] 2000)

BRIDAS CORPORATION, Appellant v UNOCAL CORPORATION, DELTA OIL CORPORATION LTD., DELTA INTERNATIONAL, and DELTOIL CORPORATION, Appellees

NO. 14-99-00196-CV

In The Fourteenth Court of Appeals

April 27, 2000.

On Appeal from the 268th District Court Fort Bend County, Texas Trial Court Cause No. 94,144

Panel consists of Chief Justice Murphy, Justices Hudson, and Wittig.

O P I N I O N

DON WITTIG, Justice.

The principle issue presented is choice of law. The trial court found that Terkmenistan and Afghanistan law applied to the tortious interference claims. Based upon the application of those foreign laws, the trial court also granted summary judgment because no such interference claims exist in situs of the alleged injuries. We affirm.

Bridas Corporation ("Bridas") appeals from a summary judgment granted in favor of Unocal Corporation, Delta Oil Company Ltd., Delta International, and Deltoil Corporation (collectively as "Unocal"). Bridas brought this action against Unocal, alleging civil conspiracy and tortious interference with existing and prospective contractual relationships between Bridas and the governments of Terkmenistan and Afghanistan. Unocal moved for summary judgment on the grounds that (1) the laws of Turkmenistan and Afghanistan applied and that the laws of those nations did not recognize the causes of action alleged by Bridas, and (2) under Texas law, all of the claims alleged by Bridas failed as a matter of law. Judge Brady Elliott conducted an extensive and exhaustive eight-day evidentiary hearing consisting primarily of expert testimony on the choice of law issue. The trial court then granted a summary judgment in favor of Unocal. It found that the laws of Turkmenistan and Afghanistan applied to this matter and could be readily determined. The trial court also found that the laws of those nations did not recognize a cause of action for tortious interference or civil conspiracy. On appeal, Bridas presents three issues for appellate review, oppugning whether (1) the trial court erred in determining that foreign law rather than Texas law applied, (2) the trial court erred in determining that the laws of Turkmenistan and Afghanistan could be determined with certainty and predictability, and (3) the court was legally correct that Turkmen and Afghan law did not recognize the causes of action alleged by Bridas.

BACKGROUND

Turkmenistan became an independent nation upon the collapse of the Soviet Union in late 1991. It is located north of Afghanistan and northeast of Iran; its western border abuts the Caspian Sea. Turkmenistan is a nation that possesses vast hydrocarbon reserves. It began entertaining offers to develop its natural resources in late 1991. Subsequently, Bridas entered into agreements to develop hydrocarbons located in the regions of Turkmenistan known as the Yashlar Field and the Keimir Field. Exploratory drilling by Bridas in the Yashlar Field resulted in the discovery of a natural gas reserve containing an estimated 27 trillion cubic feet of gas, for which Turkmenistan had no domestic need. However, Pakistan did have a domestic need for the gas and executed an agreement with the government of Turkmenistan to purchase gas for a period of thirty years. To deliver the gas, Bridas intended to construct and operate a pipeline from Turkmenistan to Pakistan. To reach Pakistan, it would have been necessary for the proposed pipeline to travel through central Afghanistan.

Bridas contacted Unocal in 1995 to determine whether Unocal would be interested in participating in the development of hydrocarbon projects in Turkmenistan. Indeed, Bridas extended an invitation to Unocal to join its proposed project of constructing and operating the pipeline from Turkmenistan to Pakistan. However, no agreements were made between Bridas and Unocal.

Later in 1995, Turkmen officials traveled to Houston and made a presentation at a meeting hosted by the Greater Houston Partnership. Their presentation concerned petroleum opportunities in Turkmenistan and the need for export pipelines, specifically referencing the development of a gas pipeline from Turkmenistan to Pakistan. Following the meeting, Turkmen officials held private meetings with many companies, including Bridas and Unocal.

During the Summer of 1995, Bridas and Unocal, separately attempted to obtain a contract with the government of Turkmenistan to construct the pipeline. Several proposals offered by Bridas to build the pipeline were rejected by Turkmenistan. However, in the Fall of 1995, Unocal was successful in obtaining an agreement with the Turkmenistan government to construct the gas pipeline. The agreement provided that Unocal would construct the pipeline, that it would purchase gas from Turkmenistan at the Afghan border, and that Turkmenistan would retain the right to select gas reserves to dedicate to the project.

Bridas then attempted to obtain an exclusive agreement with Afghan officials to allow Bridas to construct all pipelines on Afghan territory. Afghanistan's recent political history shows that the country has experienced much instability. After the Soviet Union withdrew its military presence in 1989, a civil war erupted in Afghanistan. The country became divided and controlled by various factions. One faction was controlled by Barhanuddin Rabbani, who controlled less than half the country. In early 1996, Bridas payed Rabbani $1 million in exchange for an agreement which purported to confer upon Bridas all rights to construct pipelines on Afghan territory. Thereafter, another faction forced Rabbani out of the Afghan capital city of Kabul and into the northeastern corner of the country.

Unocal made several attempts with various other Afghan factional leaders to reach an agreement for the construction of a pipeline through Afghanistan. However, Unocal was unable to obtain the right-of-ways it needed. In January 1999, Unocal announced it was withdrawing from the Pakistan pipeline project.

During the respective efforts by Bridas and Unocal to gain the needed right-of-ways in Afghanistan, the government of Turkmenistan unilaterally terminated its agreements with Bridas, which had allowed Bridas to develop and market hydrocarbons in the Yashlar Field and Keimir Field. The government of Turkmenistan sought to renegotiate its agreements with Bridas to gain more favorable terms. Bridas responded by filing an arbitration proceeding in Turkmenistan against the government of Turkmenistan.

Bridas then filed this lawsuit against Unocal, alleging that Unocal tortiously interfered with an existing and prospective contractual relationship between Bridas and the governments of Turkmenistan and Afghanistan; Bridas also alleged civil conspiracy against Unocal. Bridas sought to recover approximately $15 billion from Unocal. The trial court granted Unocal's motion for summary judgment based upon its choice of law findings. Specifically, it found that the laws of Turkmenistan and Afghanistan applied in this case and that the laws of those countries did not recognize the causes of action alleged by Bridas.

STANDARD OF REVIEW

Summary judgment is proper when a movant establishes that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See American Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997); Ahumada v. Dow Chemical Co., 992 S.W.2d 555, 558 (Tex.App.-Houston [14th Dist.] 1999, pet. filed). In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true, resolving all doubts and indulging all reasonable inferences in favor of the non-movant. See id.; Ahumada, 992 S.W.2d at 558.

Further, Rule 203 of the Texas Rules of Evidence provides that "[t]he court, and not a jury, shall determine the laws of foreign countries." TEX. R. EVID. 203. Rule 203 also provides that "the court's ruling shall be subject to review as a ruling on a question of law." Id. Rule 203 is a hybrid rule by which presentation of the law to the court resembles presentment of evidence, but which the court ultimately decides as a matter of law. See Ahumada, 992 S.W.2d at 558; Gardner v. Best Western Int'l, Inc., 929 S.W.2d 474, 483 (Tex.App.-Texarkana 1996, writ denied). The determination of the law of a foreign country may present the court with a mixed question of law and fact. Id. Summary judgment is not precluded when experts disagree on the interpretation of the law if, as in this case, the parties have not disputed that all of the pertinent foreign law was properly submitted in evidence. Id. Where experts disagree on application of the law to the facts, the court is presented with a question of law. Id. at 558-59. On appeal, we must determine whether the trial court reached the proper legal conclusion. Id.; see also Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex. 1984); Salazar v. Coastal Corp., 928 S.W.2d 162, 166 (Tex.App.-Houston [14th Dist.] 1996, no writ).

DISCUSSION

Choice of Law

In its first issue presented for review, Bridas questions whether the trial court erred in determining that the laws of Turkmenistan and Afghanistan applied to its tort claims against Unocal rather than the laws of Texas. The Texas Supreme Court has identified the choice of law principles applicable to tort claims, stating that

[I]t is the holding of this court that in the future all conflicts cases sounding in tort will be governed by the "most significant relationship" test as enunciated in Sections 6¹ and 145² of the RESTATEMENT (SECOND) OF CONFLICT [OF LAWS]. This methodology offers a rational yet flexible approach to conflicts problems. It offers the courts some guidelines without being too vague or too restrictive. It represents a collection of the best thinking on this subject . . . .

Gutierrez v. Collins, 583 S.W.2d 312, 318 (Tex. 1979) (footnotes added); see also CPS Int'l,...