Tag Archives: Qatar

TBS Middle East Carriers v. United Quarries

The case of the day is TBS Middle East Carriers v. United Quarries (S.D.N.Y. 2014). United Quarries charted vessels owned by TBS to carry crushed gabbro aggregate from Fujairah, in the UAE, to Mesaieed, Qatar. Under their contract, 134 shipments were completed. TBS charged United Quarries approximately $30.2 million for freight and $18.2 million for demurrage. There was no dispute about those charges. There was, however, a dispute about much smaller costs: $122,753 for “account reconciliation,” $25,696.78 for “reimbursement of shifting expenses,” $138,162.15 for additional war risk premiums, and $1.36 million for bunker escalations. United Quarries counterclaimed for $605,835.57, or 1.25% on the gross freight and demurrage earned by TBS.
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Case of the Day: Manco Contracting Co. v. Bezdikian

The case of the day is Manco Contracting Co. v. Bezdikian (Cal. Ct. App. 2013). Manco Contracting Co. was a construction and engineering company operating in Qatar. Krikor Bezdikian owned 40% of the company, and Omar Al-Mana, a Qatari national, owned the remaining 60%. In 1988, Bezdikian and Al-Mana had a dispute that led to Bezdikian’s departure from Qatar for Los Angeles, “never to return.” In 1991, Manco sued Bezdikian in Qatar, alleging that Bezdikian had stolen money from the company. Bezdikian counterclaimed for an accounting and Manco’s disolution. In 1997, the Qatari court entered judgment in favor of Manco. Bezdikian appealed, but in 2000 the appellate court entered a final judgment for Manco in the amount of nearly 13.7 million riyals (or about $3.76 million in 2000 dollars).

In 2004, Manco sought recognition and enforcement of the judgment in the Los Angeles Superior Court. The judge, after a trial on the merits, entered a judgment for Manco in the full amount of the judgment, excluding post-judgment interest—the judge found that Manco had failed to prove that Qatari law provides for post-judgment interest. Both parties appealed. 1

On appeal, the court affirmed. Bezdikian’s main argument was that the Qatari judgment was not conclusive under § 4(a) of the UFMJRA because Qatar’s judiciary “does not provide impartial tribunals or procedures compatible with the requirements of due process of law.” The court found that Bezdikian had failed to make his case: his expert, Joseph Kechichian, had opined that “Qatar’s judiciary favored Muslim citizens such as … Al-Mana, over non-Muslim foreigners such as Bezdikian,” but his opinion rested on application of his common sense “to his knowledge of Qatar drawn from his study of the country and personal observations during visits there.” The trial judge rejected the opinion as unsubstantiated, and the Court of Appeals agreed, pointing to the “substantial evidence” that supported the trial judge’s findings that Qatar’s courts were impartial, including the provisions of Qatar’s constitution, protections for judicial independence under Qatari law. While there was evidence of bias against non-Muslim foreigners, the evidence on this question was mixed, and the court held that the trial judge had permissibly decided the question in favor of Manco.

Perhaps the most interesting point in the case was Bezdikian’s argument that the trial judge had erred by excluding from evidence the State Department’s Human Rights Report on Qatar. 2 The question was whether the contents of the report were hearsay. For you civilians out there who fail to appreciate the baroque splendor of our law of evidence, hearsay is a statement that a declarant does not make while testifying at the current trial, and that a party offers in evidence to prove the truth of the matter asserted in the statement. Hearsay is not admissible in evidence, but there is an exception for certain public records. In federal law, the exception extends in civil cases to a record or statement of a public office if it sets out factual findings from a legally authorized investigation, and neither the source of the information nor other circumstances indicate a lack of trustworthiness. (FRE 803(8)). Bezdikian pointed to this rule, somewhat oddly, and the court rightly rejected his argument on the grounds that it was California law, not federal law, that governed. Under California law, one of the conditions for the application of the hearsay exception is that the writing must be “made by and within the scope of duty of a public employee.” The evidence was that non-public employees, including Bezdikian’s expert witness himself, contributed to the report. The testimony was that the State Department relies not just on US embassies, but on “think tank reports from Rand Corporation, from the Brookings Corporation (sic), a variety of sources.” Therefore, the report was inadmissible under California law, even though it would likely have been admissible in federal court. In any case, the court found that no prejudice resulted from the exclusion of the report, because Bezdikian’s expert was permitted to quote from the report during his testimony and in any case the report focused on shortcomings in Qatar’s Shari’a courts, not in the civil courts that heard Manco’s lawsuit.

Last, Bezdikian argued extrinsic fraud, which under § 4 of the UFMJRA is grounds for refusing recognition. He argued that Al-Mana had filed a criminal complaint against him in Qatar for embezzlement, and that in 1992 he had been tried in absentia and sentenced to seven years in prison. Bezdikian had the right to return to Qatar, request a vacation of his conviction, and request a trial, but he believed—perhaps wrongly—that under Qatari law he would be imprisoned without bail pending his trial. But because under Qatar’s legal system Bezdikian’s personal presence was not necessary to presentation of his case (the civil courts in Qatar rarely take viva voce testimony), the court held there had been no complete denial of Bezdikian’s right to present his case and thus no basis for refusing recognition.

Notes:

  1. I don’t deal further about the cross-appeal relating to post-judgment interest.
  2. The link is to the current report, not to the older reports at issue in the case.

Case of the Day: International Trading & Industrial Investment Co. v. Dyncorp Aerospace Technology

The case of the day, International Trading & Indus. Inv. Co. v. DynCorp Aerospace Tech., No. 09-791 (D.D.C. Jan. 21, 2011), is Judge Walton’s second opinion on confirmation of an international arbitral award in a week.  Way to go, Judge Walton!

DynCorp was a logistics and security contractor for the U.S. military in Qatar. International Trading was its “service agent” and was responsible for helping DynCorp obtain contracts in Qatar. The dispute between the parties was whether DynCorp had the power to terminate the contract when it did, or whether its termination was premature. The parties had agreed to submit disputes under the contract to arbitration before the ICC (the English version of the contract said that the ICC would “finally settle” disputes; the Arabic version said that the ICC would “settle” disputes. More on that point in a moment).

The ICC, pursuant to its own rules, selected Paris as the seat of the arbitration. The parties had chosen Qatari law to govern the substance of the dispute. The tribunal found that DynCorp had breached the contract and awarded more than a million dollars in damages.

DynCorp sought to stay the award in the Qatari courts—not the French courts—and the Qatar Court of Cassation found that the tribunal had misconstrued the contract and thereby failed to follow Qatari law. International Trading participated in the Qatari proceedings.

International Trading then sought recognition and enforcement of the award in the United States.  DynCorp argued that the Qatari courts had already set the award aside and that the court should deny confirmation in any case. But perhaps concerned that it should have sought to vacate the award in France, the seat of the arbitration, DynCorp simultaneously began proceedings in France to set aside the award. The parties stipulated that the U.S. proceedings should be held in abeyance pending the outcome of the French proceedings. Ultimately, the Paris Court of Appeal rejected DynCorp’s position.

DynCorp’s argument about the effect of the Qatari proceedings relied on two points: first, the parties had not intended the arbitration to be binding, and Qatari law gave its courts the power to review non-binding arbitral awards; and second, because it participated in the Qatari proceedings, International Trading should be estopped to contest their outcome. On the first point, the court found the ICC award was indeed binding. Even if one of the versions of the agreement lacked the word “finally”, the ICC Rules, which the agreement invoked, make all ICC awards binding on the parties. On the second point, the court noted–and the parties agreed–that in general, the courts at the seat of the arbitration are the competent authorities under Article V(1)(e) of the New York Convention to set aside an award. The court construed this as a grant of exclusive subject-matter jurisdiction, and it held that the parties could not confer such jurisdiction on another court by consent. I question whether it makes sense to invoke boundary-policing jurisdictional notions from the law of federal courts in this context. Arbitration, unlike the jurisdiction of the federal courts, is a creature of contract, and if there was no objection under Qatari law to the exercise of jurisdiction, why should the parties not be able to agree that they will regard the award as binding if the Qatari courts uphold it, and not otherwise? That being said, it is somewhat mysterious why International Trading would not have preserved the argument that only the French courts could set aside the award when litigating in the Qatar courts.

The court then turned to DynCorp’s argument that the Qatari courts had found, in effect, that the tribunal had acted in manifest disregard for Qatari law, though the Qatari court did not put it in those precise terms. While in Argentina v. BG Group Judge Walton pulled his punches, here he squarely held that the New York Convention did not permit a court, faced with a motion to confirm, to deny the motion on grounds of manifest disregard of the law. He focused on the distinction  between a court’s power, under § 10 of the FAA, to vacate an award where the tribunal has exceeded its authority and the much more limited power of the court under Article V of the Convention to refuse confirmation where the award “deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.” The matter before him related to recognition and enforcement of the award, not setting the award aside; under Article V, the latter issue was for the French courts to decide.