Case of the Day: DeJoria v. Maghreb Petroleum Exploration

John Paul DeJoria
John Paul DeJoria. Credit: Hys69s
The case of the day is DeJoria v. Maghreb Petroleum Exploration S.A. (W.D. Tex. 2014). John Paul DeJoria and Maghreb Petroleum Exploration were partners in a Moroccan oil venture. In 2002, MPE sued DeJoria in Morocco, alleging that DeJoria had fraudulently misrepresented the value of his business in order to induce MPE to invest in it. The facts were complicated, but suffice it to say that the Moroccan royal family had reason to want DeJoria to lose. In 2009, the Moroccan court entered a judgment for more than $120 million against DeJoria. DeJoria then sued in Texas for a declaration that the Moroccan judgment was not entitled to recognition in Texas.

As an initial matter, you might ask whether it was proper to sue for declaratory relief, in light of Chevron Corp. v. Naranjo, which held that a judgment debtor can’t seek declaratory relief but must wait for the judgment creditor to seek recognition. I didn’t see the force of the argument the court made in Naranjo, but here the point was moot since MPE counterclaimed for recognition. Under Texas’s version of the UFCMJRA, “A party against whom recognition of a foreign country judgment is sought” can make a motion for nonrecognition.

The issue in the case was whether the Moroccan judgment “was rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law.” In the world of recognition of foreign judgments, winning this argument is like shooting the moon. The judgment debtor doesn’t just claim that this judgment was obtained by fraud, or whatever; it claims that every judgment rendered by the courts of the country in question is unenforceable. This is powerful medicine, and therefore the burden on the judgment debtor is high: the judgment creditor prevails unless the foreign state’s procedures are not “fundamentally fair.”

I have no real knowledge of the Moroccan judicial system, and a look at the US State Department’s Human Rights Report on Morocco suggests that the judiciary there is troubled; corruption and political influence in judgment in particular seems to be real problems. So I am not out to argue that the Texas court’s decision was wrong. Still, I was struck by some of the things the judge found objectionable about the structure of the Moroccan system.

Criticism of Morocco What Other Countries Do
“While the 1996 Constitution guarantees judicial independence, the judiciary remains under the administrative control of the Ministry of Justice, which of course answers directly to the King. Moreover, the Constitution does not establish the judiciary as an autonomous entity.” “That the judiciary is not structurally insulated from the other political branches of government is unremarkable, at least in the context of other international judicial systems. In fact, the Moroccan Constitution’s language relating to the judiciary is modeled on France’s Constitution.”
“[A]ll judgments rendered by Moroccan courts issued in the name of the King.” Check out a modern writ of control (akin to a writ of execution or an old fi. fa.) in England and Wales. It begins “ELIZABETH THE SECOND, by the Grace of God,” etc., and it continues: “YOU ARE NOW COMMANDED to take control of the goods of the defendant …”
“[T]he King also presides over the Conseil Supérieur de la Magistrature (High Judicial Council), which is the body that appoints, disciplines, and promotes judges.” U.S. Constitution, art. II, § 2: “[The President] shall nominate, and by and with the advice and consent of the Senate, shall appoint … judges of the Supreme Court, and all other officers of the United States …”
U.S. Constitution, art. I, § 2: “The House of Representatives … shall have the sole power of impeachment.”
U.S. Constitution, art. I, § 3: “The Senate shall have the sole power to try all impeachments.”

Again, I don’t mean to defend the Moroccan judiciary—the Texas judge even found that a majority of the Moroccan judges believe they lack judicial independence. But we should be careful in our judgments. Suppose a friend of President Obama who was in business sought and obtained a judgment in a US court against a Moroccan and sought to obtain recognition in Morocco. It would be silly to argue that the judgment was not entitled to recognition on the grounds that the plaintiff’s friend had appointed the judge, right?

King Mohammed VI
King Mohammed VI. Credit: US State Department
In a move that would bring a smile to Randy Mastro’s face, DeJoria argued that the king of Morocco, Mohammed VI, had shut down and threatened criminal prosecution of a newspaper that had supported DeJoria’s side of the story, though the Texas judge’s decision doesn’t do more than suggest motive the king’s involvement:

Given the narrative power that the verdict would undoubtedly have, MPE/MFM’s suggestion that a man who cared enough about maintaining his image to intimidate and prosecute a whole paper into submission had no interest in the outcome of a case which could either reenforce his favored image or, alternatively, make him appear foolish if not downright dishonest for having promised so much oil during his now infamous speech simply does not add up.

But despite the lack of direct evidence of executive interference in the case, the judge found that the Moroccan system was not up to snuff, and he held that the judgment was therefore not entitled to recognition. The judge compared the case to Bank Melli Iran v. Pahlavi, 58 F.3d 1406 (9th Cir. 1995), a case on non-recognition of an Iranian judgment against the Shah’s sister after the Iranian revolution. I would like to compare the case to the Lago Agrio case. There are some similarities—a developing country with a judiciary subject to some criticism; a foreign executive that is not a champion of the free press. But there are differences too. It doesn’t seem that DeJoria volunteered to have the dispute heard in the courts of Morocco, as Texaco did. Still, DeJoria was not a stranger to Morocco. He did business there.

I suspect there will be an appeal, and it will be interesting to see whether there is any diplomatic fallout from this decision.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

Leave a Reply

Your email address will not be published. Required fields are marked *