State of Kuwait v. American Independent Oil Co.

The Government of the State of Kuwait (the Government) (plaintiff) and the American Independent Oil Company (Aminoil) (defendant) entered a contract for the production of oil in certain regions of Kuwait. In 1977, the Government nationalized the assets owned by Aminoil, and the parties agreed to arbitrate disputes arising from the nationalization. In the arbitration agreement, Article IV.1 provided the arbitration would occur in Paris and the proceedings were subject to “any mandatory provisions of the procedural law of the place where the arbitration is held.” Article V of the agreement also provided that the parties waived recourse in court except “such rights as cannot be waived by the law of the place of arbitration.” The agreement also provided that the arbitral tribunal possessed the power to prescribe appropriate procedures on “the basis of natural justice and of such principles of transnational arbitration procedure.” Article III.2 of the agreement also provided “the law governing the substantive issues . . . shall be determined by the Tribunal . . . [considering] the Parties, the transnational character of their relations, and the principles of law and practice prevailing in the modern world.” The parties specifically disputed which law was applicable to the procedural issues and the substantive issues in the contract. The Government argued the law of Kuwait governed the contract because of the subject matter of the contract and because the law of Kuwait included established public international law.