MESOP : Iraq refiles case in U.S. court over disputed Kurdistan oil

September 6, 2014 – REUTERS – HOUSTON,— Iraq has refiled in U.S. court to gain control of $100 million of Kurdistan crude oil on a tanker near Texas, days after the court ruled it lacked jurisdiction to seize the cargo but said it could hear arguments over who is the oil’s rightful owner.Iraq, in court documents seen on Friday, widened its case to include potential buyers of the cargo and said the Kurdistan Regional Government KRG has not stated if it currently owns it.Baghdad urged the court to intervene by taking temporary control of the cargo until the dispute is resolved, and said the U.S. court in fact has jurisdiction because the case involves business done in the United States.

The dispute over the United Kalavrvta tanker, carrying some 1 million barrels of crude, is also being litigated in Baghdad, but Iraq said the Kurds have yet to respond to at least one of their lawsuits there. The tanker has been stationed about 60 miles off Texas since late July, as the central government of Iraq wages a legal battle against Iraqi Kurdistan over who has the sole right to export crude. “This Court has subject matter jurisdiction over the claims against John Doe Buyer,” Iraq said in its motion. U.S. District Court Judge Gray Miller had invited Iraq to replead the case. Stymied by the judge’s ruling last month that he didn’t have jurisdiction under admiralty law, the nation has come back with claims under maritime and Texas statutes. U.S. District Judge Gray Miller in Houston threw out an arrest warrant that gave federal agents authority to take the 1 million-barrel cargo and store it, at Iraq’s expense, if the tanker entered U.S. waters. Miller said he had no authority to intervene in a foreign ownership dispute under U.S. laws governing property stolen on the high seas. Iraq cited those laws as the basis for to recover crude exported from wells in the northern Iraqi region of Kurdistan without permission.

Iraq’s Oil Ministry has now revised its complaint, citing different statutes to obtain a new arrest warrant aimed at preventing the Kurdistan Regional Government, or KRG, from selling the cargo in the U.S. Iraq now cites the Foreign Sovereign Immunities Act and state law governing stolen property.

No Rehash

“Such request is not made to re-hash previously pleaded arguments or factual allegations but for the purpose of addressing newly discovered information revealed since the” initial filing of the complaint, Iraq’s lawyers said in papers filed yesterday in Houston federal court. Harold Watson, the KRG’s lawyer in Houston, declined to comment on the filing.

The proposed amended complaint names Kurdistan, which the U.S. doesn’t recognize as a sovereign nation, and the unknown “John Doe Buyer” believed to have purchased the cargo after it left Turkey in June. At a court hearing last month, both the Iraqis and Kurds told the judge they’d prefer to have ownership of the crude determined by Iraq’s Supreme Court. The sides are locked in a protracted legal battle there over billions of dollars in overdue oil royalties and unpaid war-damages reparations the central government owes Kurdistan, which the U.S. considers part of Iraq. Iraq’s lawyers said the KRG has refused to appear in its courts to address a 2012 government lawsuit seeking to block the region from exporting oil for its own benefit. They said seizing the Kurdish cargo in Texas was their only leverage to get the KRG to show up before the Iraqi high court.

Moving

The United Kalavryta had been circling within a 350-yard radius of a spot 60 miles southeast of Galveston from July 26 through Sept. 1, when a vessel tracking service lost its signal.

The signal picked up again last night, and the ship has moved about 20 miles south from that spot, according to vessel tracking data compiled by Bloomberg.

Four firms that handle lightering services for vessels entering the ports of Houston, Corpus Christi, Galveston and Port Arthur said today they haven’t been hired to offload oil from the stranded ship onto smaller ships and bring it to shore. One of the firms, SPT Inc., wouldn’t take the job if it was offered, spokesman Simon Duncan said in a telephone interview. “I would honestly think no one would touch this ship,” Duncan said. “You’re inviting the potential for arrest of your own ship. It doesn’t make sense.” A fifth firm, AET Inc., had originally been hired to lighter the oil and later dropped the job after the dispute over the cargo arose. Two officials at vessel operator Marine Management Services M.C. of Piraeus, Greece, didn’t immediately respond to e-mails today seeking comment on the status of the vessel and its cargo. They also didn’t address the question in several e-mail exchanges yesterday.

The case is Ministry of Oil of The Republic of Iraq v. 1,032,212 Barrels of Crude Oil, 3:14-249, U.S. District Court, Southern District of Texas (Galveston).