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National Petrochemical Co. of Iran v. the M/T Stolt Sheaf

Published online by Cambridge University Press:  27 February 2017

Jerome M. Marcus*
Affiliation:
Of the Pennsylvania Bar

Extract

In an action brought in the U.S. District Court for the Southern District of New York, plaintiff, the National Petrochemical Co. of Iran (NPC), sought damages against Monnris Enterprises of Dubai, the United Arab Emirates, Rotexchemie Brunst & Co. of Hamburg (Rotex), and Rotex’s Geneva affiliate, Formula S.A., for breach of an agreement to sell chemicals to NPC. Asserting that NPC is a subsidiary of the National Iranian Oil Co., which is in turn owned wholly by the Government of Iran, defendants moved to dismiss on the ground that the United States does not recognize the Khomeini Government of Iran and, hence, that neither Iran nor its instrumentality NPC has standing to sue in U.S. courts. The district court granted the motion, NPC appealed and the U.S. Court of Appeals for the Second Circuit held: (1) that a foreign state may have standing to sue in U.S. courts even if the United States does not recognize its government or have diplomatic relations with it; (2) that an unrecognized government will have standing to sue if the U.S. executive branch has evinced a willingness to permit the plaintiff to litigate its claims in U.S. courts; and (3) that the level of intercourse between the United States and Iran, and a Statement of Interest filed in this case by the United States as amicuš curiae, show that the executive branch is willing to permit NPC to litigate its claims in U.S. courts.

Type
International Decisions
Copyright
Copyright © American Society of International Law 1989

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References

1 671 F.Supp. 1009 (S.D.N.Y. 1987).

2 Article HI extends the federal judicial power to “all Cases … between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.” U.S. Const. Art. II, §2, cl. 1. This authorization is implemented by the judicial code, which provides for the exercise of diversity jurisdiction over civil actions between “a foreign state … as plaintiff and citizens of a State or of different States.” 28 U.S.C. §1332(a)(4) (1982).

3 Restatement (Third) of Foreign Relations Law of the United States §201 (1987).

4 860 F.2d 551, 554.

5 Id.

6 Id. (quoting Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 410 (1964)).

7 Letter from the Assistant Legal Adviser for Management, U.S. Department of State, in Iran Handicraft & Carpet Export Center v. Marjan Int'l Corp., 655 F.Supp. 1275, 1280 n.4 (S.D.N.Y. 1987) (stating that the United States has not “recognized the Khomeini Government of the Islamic Republic of Iran”), quoted in 860 F.2d at 554.

8 376 U.S. 398, 410(1964).

9 Brief for Amicus Curiae the United States of America, at 4 (on file with the author).

10 860 F.2d at 554.

11 Id. (quoting 77 Dep't St. Bull. 462–63 (1977)).

12 Id.

13 Id. at 555 (citing Sabbatino, 376 U.S. at 411 n.12).

14 Id.

15 Id. See Organization for Investment, Economic and Technical Assistance of Iran v. Shack & Kimball, No. 85-0437 (D.D.C. Dec. 28, 1988), reprinted in Mealey's Litigation Rep., January 1989, at A–1 (following the reasoning in National Petrochemical in holding that a different Iranian agency had standing to sue in the U.S. courts).

16 Brief for Amicus Curiae, supra note 9, at 6.

17 860 F.2d at 556 (emphasizing that the executive branch was not in this instance “arbitrarily allowing some suits” by Iran “while disallowing others”).