Al-Qarqani v. Chevron Corp.

• Decision Date: 12 August 2021
• Docket Number: No. 19-17074,19-17074
• Citation: 8 F.4th 1018
• Parties: Waleed Khalid Abu Al-Waleed Al Hood AL-QARQANI; Ahmed Khalid Abu Al-Waleed Al Hood Al-Qarqani; Shaha Khalid Abu Al-Waleed Al Hood Al-Qarqani; Naoum Al-Doha Khalid Abu Al-Waleed Al Hood Al-Qarqani; Nisreen Mustafa Jawad Zikri, Petitioners-Appellants, v. CHEVRON CORPORATION; Chevron USA Inc., Respondents-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

8 F.4th 1018

Waleed Khalid Abu Al-Waleed Al Hood AL-QARQANI; Ahmed Khalid Abu Al-Waleed Al Hood Al-Qarqani; Shaha Khalid Abu Al-Waleed Al Hood Al-Qarqani; Naoum Al-Doha Khalid Abu Al-Waleed Al Hood Al-Qarqani; Nisreen Mustafa Jawad Zikri, Petitioners-Appellants,

v.CHEVRON CORPORATION; Chevron USA Inc., Respondents-Appellees.

No. 19-17074

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 19, 2020 San Francisco, California

Filed August 12, 2021

Edward C. Chung (argued), Chung Malhas & Mantel PLLC, Seattle, Washington, for Petitioners-Appellants.

Thomas G. Hungar (argued), Gibson Dunn & Crutcher LLP, Washington, D.C.; Charles J. Stevens and Stephen Henrick, Gibson Dunn & Crutcher LLP, San Francisco, California; Randy M. Mastro, Anne Champion, and Akiva Shapiro, Gibson Dunn & Crutcher LLP, New York, New York; Christian Leathley and Scott Balber, Herbert Smith Freehills New York LLP, New York, New York; for Respondents-Appellees.

Before: Sidney R. Thomas, Chief Judge, and Paul J. Kelly, Jr.^* and Eric D. Miller, Circuit Judges.

MILLER, Circuit Judge:

In 1949, the government of Saudi Arabia transferred certain land in that country to an official named Khalid Abu Al-Waleed Al-Hood Al-Qarqani, who leased it to an affiliate of what later became Chevron Corporation. Five of Al-Qarqani's heirs now claim that Chevron owes them billions of dollars in rent. The heirs contend that an arbitration clause contained in a separate 1933 agreement between Saudi Arabia and Chevron's predecessor, Standard Oil Company of California (SOCAL), applies to their dispute. An Egyptian arbitral panel agreed and awarded them $18 billion. The heirs petitioned for enforcement of that award, but the district court found that the parties had never agreed to arbitrate and therefore held that it lacked jurisdiction over the petition. We agree with the district court that the parties did not enter into a binding agreement to arbitrate. Although the absence of an agreement is a reason to deny enforcement on the merits rather than to dismiss the petition for lack of subject-matter jurisdiction, the practical effect in this case is the same. We therefore affirm.

In 1933, SOCAL and the government of Saudi Arabia entered a land concession agreement for oil exploration and extraction. Article 25 of the agreement authorized SOCAL "to obtain from the owner of the land the surface rights of the lands which the Company deems necessary for use in its works." In return, SOCAL would pay Saudi Arabia an annual rent and a portion of its proceeds and "pay to the occupant of the lands an allowance."

The 1933 concession agreement contained an arbitration clause. Specifically, article 31 required Saudi Arabia and SOCAL to arbitrate "any doubt, difficulty or difference ... in interpreting th[e] Agreement, the execution thereof or the interpretation or execution of any of it or with regard to any matter that is related to it or the rights of either of the two parties or the consequences thereof." The clause provided that any arbitration would take place in the Hague, unless the parties agreed on a different location, and it prescribed certain procedures for the appointment of arbitrators.

Later that year, SOCAL assigned its rights under the concession agreement to a wholly owned subsidiary, California Arabian Standard Oil Company, which later became Arabian American Oil Company (Aramco). A few years later, SOCAL surrendered its majority ownership interest in that subsidiary; by 1948, SOCAL was a minority shareholder owning only 30 percent of Aramco.

The next year, Saudi Arabia transferred the ownership of certain plots of land to Al-Qarqani and others. The 1949 deed transferring the land also contained a lease agreement between Al-Qarqani, the other land recipients, and Aramco that "transfer[red] ... to [Aramco]," for "good and valuable consideration," "the right to use and occupy" the land "for the purposes of the Saudi Arabian Concession." It further provided "that the rights of [Aramco], as to using and occupying the said Plots of Land, are based on the requirements of Article (25) of the said Concession." The 1949 deed did not mention the arbitration clause of the 1933 concession agreement.

In the 1970s and 1980s, Saudi Arabia nationalized Aramco, and in 1990, Aramco was dissolved. In the meantime, SOCAL changed its name to Chevron Corporation.

In 2014, several of Al-Qarqani's heirs initiated arbitration proceedings against Chevron before the International Arbitration Center (IAC) in Cairo, claiming rents due under the 1949 deed. Chevron objected that it was not a party to the relevant contracts, that there was no valid agreement to arbitrate, and that the 1933 concession agreement upon which the heirs relied did not authorize IAC arbitration in Cairo. Despite those objections, the arbitration proceeded. Soon thereafter, Chevron stopped participating in the arbitration, citing a series of irregularities in the composition of the arbitral panel. The proceedings continued in Chevron's absence, but the irregularities persisted. For example, the IAC cycled through five arbitrators and two umpires over the course of one year. And after the initial arbitral panel dismissed the dispute, the panel was reformulated and the dismissal withdrawn. A new arbitral panel then issued an award ordering Chevron to pay the heirs $18 billion.

The heirs petitioned to enforce the award in the Northern District of California, naming as respondents both Chevron Corporation and Chevron U.S.A. Inc. They invoked the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, commonly known as the New York Convention. The Convention aims "to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries." Scherk v. Alberto-Culver Co. , 417 U.S. 506, 520 n.15, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974). Soon after the United States joined the Convention, Congress provided that the Convention "shall be enforced in United States courts." 9 U.S.C. § 201. When an arbitrator enters an award that is subject to the Convention, any party may apply to a federal district court "for an order confirming the award as against any other party to the arbitration." Id. § 207.

The district court dismissed the petition for lack of subject-matter jurisdiction. The court reasoned that one of "the Convention's jurisdictional requirements" is that "there is an ‘arbitration agreement under the terms of the Convention.’ " (quoting Bothell v. Hitachi Zosen Corp. , 97 F. Supp. 2d 1048, 1053 (W.D. Wash. 2000) ). Emphasizing that "[t]he original agreement to arbitrate occurred between third parties, not the current parties before this Court," the court stated that "[p]etitioners make no persuasive or legally coherent argument that the parties ... are legally obligated by the third party signatories to the original agreement." In addition, the court dismissed the petition as to Chevron U.S.A. because that entity "was not a named ... party in the arbitration proceedings."

The district court went on to explain "that numerous procedural infirmities would independently preclude confirmation of the arbitral award." For example, the court noted that the heirs had "failed to produce a duly certified copy of the arbitration award." The court further determined that the arbitral proceedings did not comply with article 31 of the 1933 agreement because, among other things, the heirs "unilaterally brought their arbitration before the IAC and seated the tribunal in Cairo instead of Holland," in violation of "the explicit contractual terms of the arbitration provision." And the court found that "the constitution of the arbitral panel was highly irregular and appears to have been engineered to produce a result" in the heirs’ favor.

The heirs now appeal. Or do they? The petition to enforce the arbitral award listed several dozen individuals as petitioners, but the notice of appeal names only five of them, along with the "Heirs of Khalid Abu al-Waleed al-Hood al-Qarqani," a group whose members the notice of appeal does not identify. Federal Rule of Appellate Procedure 3(c)(1)(A) requires that a notice of appeal "specify the party or parties taking the appeal." The omission of a party from the notice of appeal "constitutes a failure of that party to appeal" and means that the court of appeals lacks jurisdiction over that party. Torres v. Oakland Scavenger Co. , 487 U.S. 312, 314, 108 S.Ct. 2405, 101 L.Ed.2d 285 (1988) ; see Gonzalez v. Thaler , 565 U.S. 134, 147–48, 132 S.Ct. 641, 181 L.Ed.2d 619 (2012). To be sure, Rule 3 "does not require that the individual names of the appealing parties be listed in instances in which a generic term, such as plaintiffs or defendants, adequately identifies them." National Ctr. for Immigrants’ Rts., Inc. v. INS , 892 F.2d 814, 816 (9th Cir. 1989) (per curiam). But the term "heirs" is not sufficiently definite to "give[ ] fair notice of the specific individual or entity seeking to appeal." Torres , 487 U.S. at 318, 108 S.Ct. 2405. We conclude that only the five named individuals have appealed the district court's order. (For simplicity, we will continue to refer to them as "the heirs."). Those individuals are identified in the caption of this opinion, and the clerk is directed to revise the docket to reflect that they are the only appellants.

For those appellants who are properly before us, we begin by considering the district court's conclusion that it lacked subject-matter jurisdiction. The district court was correct that the existence of a binding agreement to arbitrate is a prerequisite to enforcing an arbitration award under the New York Convention. The Convention's implementing legislation provides that a court presented with a petition to confirm an arbitral...