National Oil Corp. v. Libyan Sun Oil Company

733 F. Supp. 800 (1990)

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National Oil Corp. v. Libyan Sun Oil Company

United States District Court for the District of Delaware
733 F. Supp. 800 (1990)

Facts

National Oil Corporation (NOC) (plaintiff), a Libyan corporation, entered into an exploration-and-production-sharing agreement with Libyan Sun Oil Company (Sun Oil) (defendant), a Delaware corporation, whereby Sun Oil was to fund and engage in an oil-exploration program in Libya, beginning in the first half of 1981. However, in December 1981, Sun Oil invoked the agreement’s force majeure clause based on the U.S. State Department’s order prohibiting the use of United States passports for travel to Libya. Sun Oil claimed that its employees could not go to Libya and carry out exploration under the contract. NOC disputed the claim and demanded performance. Sun Oil also notified NOC that additional export regulations were a further event of force majeure. In July 1982, NOC sought arbitration in the Court of Arbitration of the International Chamber of Commerce (ICC) in Paris, France. Arbitration proceedings were held in 1984. The panel concluded there was no force majeure, and an initial award was issued. A second and final award in NOC’s favor was issued in 1987, amounting to $27,000,000, which NOC was not able to collect from Sun Oil. NOC sought confirmation of the arbitration award pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the convention), a treaty ratified by the United States and implemented under 9 U.S.C. §§ 201–208. Sun Oil moved to dismiss the petition, citing three of the seven defenses to enforcement of the award contained in Article V of the convention, including the public-policy exception. Sun Oil maintained that confirming the award (1) would penalize it for obeying U.S. government directives and sanctions programs, (2) would be inconsistent with American antiterrorism policy, and (3) would send a message that the United States was not committed to its policy and would allow U.S. funds to be transferred and possibly used to finance terrorist activities in Libya.

Rule of Law

Issue

Holding and Reasoning (Latchum, J.)

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