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Gulf Resources America, Inc. v. Republic of the Congo

June 08, 2004

GULF RESOURCES AMERICA, INC. AND GULF RESOURCES CORPORATION, APPELLANTS
v.
REPUBLIC OF THE CONGO, APPELLEE



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

Before: Edwards, Sentelle and Tatel, Circuit Judges.

The opinion of the court was delivered by: Edwards, Circuit Judge

Argued April 13, 2004

Bills of costs must be filed within 14 days after entry of judgment. The court looks with disfavor upon motions to file bills of costs out of time.

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 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 ac-counting. 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 TTT 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 TTT 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 arbitration following ...


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