Gatoil International, Inc. v. National Iranian Oil Co.

Gatoil International, Inc. (Gatoil) (plaintiff) and National Iranian Oil Co. (NIOC) (defendant) contracted for Gatoil to purchase oil from NIOC in 1982. The contract included arbitration provisions stating that each party would appoint an arbitrator, and if a party failed to do so, the president of the Tehran Appeal Court would make the appointment; that Tehran was to be the seat of arbitration; and that the arbitrators should be broadly experienced with the petroleum industry and reasonably fluent in English. A dispute arose between Gatoil and NIOC, and in 1987 Gatoil filed an action in the England and Wales High Court of Justice against NIOC. Gatoil notified NIOC of the court case and stated that it did not wish to arbitrate the dispute in Tehran. NIOC objected to litigating the dispute in court and insisted on arbitrating in Tehran. NIOC sought a mandatory stay pursuant to the Arbitration Act 1975 (the act), an act that incorporated the New York Convention into English law. Gatoil opposed the stay and argued that the arbitration clause was incapable of performance. Gatoil first argued that the selected arbitration appointer, the president of the Tehran Appeal Court, had not existed since before the Iranian Revolution and that the Tehran Appeal Court’s appointment duties were now carried out by the Tehran Municipal Court. Gatoil also argued that it was impossible to find a qualified and willing arbitrator to appear for arbitration in Tehran.