Ministry of Oil of Republic of Iraq v. Kurdistan Region of Iraq

Case: 15-40062 Document: 00513201789 Page: 1 Date Filed: 09/21/2015

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

United States Court of Appeals

Fifth Circuit

No. 15-40062 FILED

September 21, 2015

Lyle W. Cayce

MINISTRY OF OIL OF THE REPUBLIC OF IRAQ, Clerk

Plaintiff - Appellee

v.

KURDISTAN REGION OF IRAQ,

Defendant - Appellant

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 3:14-CV-249

Before HIGGINBOTHAM, DENNIS, and HAYNES, Circuit Judges.

PER CURIAM:*

The Ministry of Oil of the Republic of Iraq (the “Ministry”) filed a

complaint alleging that the Kurdistan Regional Government (the “KRG”),

which administers a subsidiary region and political subdivision of the Republic

of Iraq, unlawfully exported a particular cargo of oil from the country. The

district court denied the KRG’s motion to dismiss and the KRG now appeals

that decision. While this appeal was pending, the Ministry moved to dismiss

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH

CIR. R. 47.5.4.

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the appeal as moot, submitting uncontested evidence that the KRG had sold

the subject oil in a foreign jurisdiction. We agree that the KRG’s sale of the oil

moots the case and therefore dismiss this appeal.

BACKGROUND 1

The Ministry exercises the Republic of Iraq’s powers in the oil and gas

sector and represents the Republic of Iraq in suits related to oil. The KRG

administers the Kurdistan Region of Iraq, a northern region of the Republic of

Iraq. Sometime between late-2013 and mid-2014, the KRG caused the

equivalent of 1,032,212 barrels of crude oil (the “Cargo”), which had been

extracted from oil wells in the Kurdistan Region of Iraq, to be pumped through

an oil pipeline to Ceyhan, Turkey. There, the Cargo was loaded aboard the

UNITED KALAVRYTA (the “Vessel”), an oceangoing oil tanker. On June 23,

2014, a bill of lading issued, stating that the Cargo would be delivered “unto

order” of the KRG, and the Vessel left the port of Ceyhan. The Vessel was

originally headed for the Port of Augusta, Italy, but its destination changed

repeatedly and it eventually dropped anchor in the Gulf of Mexico, just over 60

miles off the coast of Galveston, Texas. While the Vessel was in navigable

waters, the KRG attempted to transfer title of the Cargo to a buyer in the

United States.

On July 28, 2014, the Ministry initiated the instant suit in the Southern

District of Texas. 2 On September 19, 2014, the Ministry filed its Second

1 Because this appeal comes before us at the motion-to-dismiss stage, we accept the

facts as alleged in the Ministry’s Second Amended Complaint, as well as the undisputed facts

that have subsequently come to light. See Saudi Arabia v. Nelson, 507 U.S. 349, 351 (1993).

2The Ministry tells us a related suit is currently pending in Iraqi court. According to

the Ministry, it filed suit on July 31, 2012, against the KRG in the Federal Supreme Court of

Iraq to resolve issues regarding the KRG’s exportation of oil generally, not limited to the oil

at issue in this appeal. The KRG, however, has failed to accept service of process or respond

to summonses in that case. Because the Iraqi judicial system does not allow for default

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Amended Complaint—the operative complaint in this appeal—making claims

against the KRG pursuant to the Foreign Sovereign Immunities Act of 1976,

28 U.S.C. §§ 1330, 1391(f), 1602-1611 (the “FSIA”), and claims against the KRG

and an unknown “John Doe Buyer” pursuant to federal maritime law and

Texas state law. The complaint asserted that the KRG had engaged in tortious

activity by exporting the Cargo and noted that any further sale of the Cargo

would prevent the Ministry from exercising any meaningful ownership rights.

As relevant here, the complaint requested that the district court (1) declare the

Ministry the owner of the Cargo and award the Ministry title; (2) award the

Ministry permanent possession of the Cargo; (3) “order adjudge and decree that

[the Ministry] have a decree against [the KRG] and John Doe Buyer” for its

claims, along with interest and costs; and (4) award any other relief that the

court deems proper.

The KRG moved to dismiss the Ministry’s complaint, arguing that the

Ministry’s claims presented a nonjusticiable political question; were barred by

sovereign immunity under the FSIA; failed to establish admiralty jurisdiction;

were barred by the act of state doctrine; and lacked merit under Iraqi law. On

January 7, 2015, the district court granted in part and denied in part the KRG’s

motion to dismiss, leaving an in personam claim against the KRG for violation

of Iraqi law and a state-law conversion claim against John Doe Buyer. 3 See

Ministry of Oil of the Republic of Iraq v. 1,032,212 Barrels of Crude Oil Aboard

the United Kalavrvta, No. 3:14-CV-249, 2015 WL 93900, at *14 (S.D. Tex. Jan.

7, 2015).

judgments before the Federal Supreme Court, the KRG’s refusal to participate in that suit

has prevented the case from proceeding.

3 The hypothetical John Doe Buyer has never been identified and is not a party to this

appeal.

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On January 20, 2015, the KRG informed the district court that it would

move the Vessel “to another destination in order to pass special surveys

designed to maintain its class certification” but that it would also send

additional oil shipments to the United States soon. The KRG did not state that

it intended to remove the Cargo permanently or sell the Cargo in a foreign

jurisdiction. On January 23, the KRG appealed as of right the district court’s

denial of the KRG’s claim of sovereign immunity. The district court granted a

stay pending appeal. Ministry of Oil of the Republic of Iraq v. 1,032,212 Barrels

of Crude Oil Aboard the United Kalavrvta, No. 3:14-CV-249, 2015 WL 851920,

at *5 (S.D. Tex. Feb. 26, 2015). As a condition of the stay, the district court

ordered the KRG to give the Ministry ten days’ notice of “any further attempted

sales or deliveries of oil in the Southern District of Texas.” Id.

On April 7, 2015, we granted the KRG’s motion to expedite this appeal.

On the same day, the Ministry filed a motion to dismiss the appeal as moot, on

the grounds that the KRG had discharged the Cargo in Israel shortly after the

district court had held that the KRG was not immune from this suit. The

Ministry submitted evidence that the Vessel had weighed anchor on or around

January 25, 2015, and had sailed to Ashkelon, Israel, where the Cargo had

been discharged sometime between February 23, 2015, and March 3, 2015. We

carried the Ministry’s motion to dismiss the appeal as moot with the case.

DISCUSSION

The Ministry asks us to dismiss the appeal as moot or, in the alternative,

to affirm the district court’s denial of the KRG’s motion to dismiss. The KRG

seeks to have the district court’s decision reversed and the case dismissed on

the basis of the political question doctrine, sovereign immunity under the

FSIA, or the act of state doctrine. The KRG contends that we should consider

the political question doctrine first, as it concerns subject matter jurisdiction,

whereas mootness is merely prudential. Of course, both the political question

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and mootness doctrines are justiciability doctrines. Choice Inc. of Tex. v.

Greenstein, 691 F.3d 710, 715 (5th Cir. 2012). Similarly, they both touch on a

federal court’s jurisdiction to hear a claim. See Lane v. Halliburton, 529 F.3d

548, 565 (5th Cir. 2008) (“Invocation of the political question doctrine

implicates the district court’s jurisdiction.”); United States v. Lares-Meraz, 452

F.3d 352, 355 (5th Cir. 2006) (per curiam) (“Whether an appeal is moot is a

jurisdictional issue because it implicates Article III’s requirement of a live case

or controversy.”). Naturally, where a dispute is nonjusticiable under one

doctrine, we need not consider whether it is also nonjusticiable under another.

See Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 431

(2007) (“[A] federal court has leeway to choose among threshold grounds for

denying audience to a case on the merits.” (quotation marks omitted)); Gilligan

v. Morgan, 413 U.S. 1, 5 (1973) (resolving case on political question grounds

without reaching mootness). Because this appeal is most readily resolved on

mootness grounds, we consider that doctrine alone.

I. Live Case or Controversy

The Ministry contends that this appeal is moot because the Cargo has

been discharged in Israel, making possession of the oil impossible. “[A] federal

court has no authority ‘to give opinions upon moot questions or abstract

propositions, or to declare principles or rules of law which cannot affect the

matter in issue in the case before it.’” Church of Scientology of Cal. v. United

States, 506 U.S. 9, 12 (1992) (quoting Mills v. Green, 159 U.S. 651, 653 (1895)).

“[A]n appeal must be dismissed when an event occurs while a case is pending

on appeal that makes it impossible for the court to grant any effectual relief

whatever to a prevailing party.” Motient Corp. v. Dondero, 529 F.3d 532, 537

(5th Cir. 2008) (quotation marks omitted). “A claim becomes moot when the

issues presented are no longer live or the parties lack a legally cognizable

interest in the outcome.” Id. (quotation marks omitted). Neither we nor the

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district court has the power to grant the Ministry’s requested relief, possession

of the Cargo. Accordingly, this appeal is now moot. See In re Nat’l Mass Media

Telecomm. Sys., Inc., 152 F.3d 1178 (9th Cir. 1998) (affirming dismissal of

appeal as moot where property at issue was sold to a nonparty and only relief

plaintiff had demanded was return of the property).

The KRG argues that the appeal is not moot because the Ministry’s

complaint seeks relief beyond mere possession of the Cargo and those other

requests present an ongoing case or controversy. “Where several forms of relief

are requested and one of these requests subsequently becomes moot, the Court

has still considered the remaining requests.” Powell v. McCormack, 395 U.S.

486, 496 n.8 (1969).

First, the KRG contends that the Ministry requested a declaratory

judgment when it asked the court to (1) “declare[] [the Ministry] the owner of

the Cargo and that title be awarded” to it and (2) “order, adjudge and decree

that [the Ministry has] a decree against [the KRG] and John Doe Buyer” for its

claims. The KRG suggests that these requests preserve a “definite and

concrete” controversy that we could resolve. See MedImmune, Inc. v.

Genentech, Inc., 549 U.S. 118, 127 (2007) (applying the Article III standing

analysis to the “actual controversy” requirement found in the Declaratory

Judgment Act); Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 98 (1993)

(holding appeal was not moot where sole issue remaining was request for

declaratory relief). The Ministry responds that it did not request a declaratory

judgment, but instead requested to be declared the owner of the Cargo because

that is a predicate to obtaining permanent possession of the Cargo pursuant to

maritime law. See Gulf Coast Shell & Aggregate LP v. Newlin, 623 F.3d 235,

239 (5th Cir. 2010) (“[A] party seeking possession of a vessel under [Admiralty]

Rule D must have legal title or a legal claim to possession.” (internal quotation

marks omitted)); Goodpasture, Inc. v. M/V Pollux, 602 F.2d 84, 87 (5th Cir.

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1979) (ruling that maritime suit for conversion of cargo turns on establishing

ownership of the subject cargo).

The Ministry’s operative complaint makes clear that this is

fundamentally a suit for possession of the Cargo. Nowhere in the complaint

did the Ministry explicitly seek a declaratory judgment. Instead, the

Ministry’s request to be “declared” owner of the Cargo is best understood as an

attempt to satisfy the requirements for obtaining full possession of the Cargo

under admiralty law. See Gulf Coast Shell, 623 F.3d at 239; cf. Conn. Bank of

Commerce v. Republic of Congo, 309 F.3d 240, 250 (5th Cir. 2002) (refusing to

treat earlier court decision as a declaratory judgment where plaintiff had not

“filed what was clearly a declaratory judgment action”). We will not ascribe to

the Ministry a request for relief that does not appear in its complaint and

which the Ministry explicitly disclaims. We thus conclude that the Ministry

did not seek a declaratory judgment. 4

Second, the KRG argues that because the Ministry requested “interest

and costs” against the KRG and John Doe Buyer, a live controversy remains.

As a general matter, an outstanding request for interest may prevent a dispute

from becoming moot. See Templin v. Independence Blue Cross, 487 F. App’x 6,

11 (3d Cir. 2012) (unpublished) (“Dismissal of the claims as moot without

considering the plaintiffs’ entitlement to interest was error.”); Tucson Med. Ctr.

v. Sullivan, 947 F.2d 971, 978 (D.C. Cir. 1991) (ruling that appellants’ interest

claims were moot only if the underlying reimbursement claims were moot at

the time they were filed); 13C CHARLES ALAN WRIGHT, ARTHUR R. MILLER &

EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE: JURISDICTION AND

RELATED MATTERS § 3533.3 (3d ed. 2008) (“[M]ootness is avoided by demands

4 The Ministry’s redundant request that the court “order, adjudge and decree” that

the Ministry has a “decree” against the KRG relates to the Ministry’s requests for possession

of the Cargo, which is no longer available.

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for . . . interest.”). But this appeal does not present an ordinary request for

prejudgment interest. “[T]he purpose of prejudgment interest is to put a

plaintiff in the position he would have been in had he had his trial and

recovered his judgment immediately after his injury.” Carlton v. H. C. Price

Co., 640 F.2d 573, 576 (5th Cir. 1981); see also Monessen Sw. Ry. Co. v. Morgan,

486 U.S. 330, 335 (1988) (“Prejudgment interest is normally designed to make

the plaintiff whole and is part of the actual damages sought to be recovered.”).

Here, the Ministry does not seek money damages and cannot obtain

possession of the Cargo, so prejudgment interest is not available. The KRG

cites no case, and we have uncovered none ourselves, wherein prejudgment

interest has been awarded where a plaintiff did not seek monetary damages.

Cf. 28 U.S.C. § 1605(c) (in a suit to enforce a maritime lien against a foreign

state, a decree “may include costs of the suit and, if the decree is for a money

judgment, interest as ordered by the court.” (emphasis added)); 28 U.S.C.

§ 1961 (“Interest shall be allowed on any money judgment in a civil case

recovered in a district court.” (emphasis added)); West Virginia v. United

States, 479 U.S. 305, 311 n.2 (1987) (“Prejudgment interest serves to

compensate for the loss of use of money due as damages . . . .” (emphasis

added)). Since the Ministry does not seek money damages, the district court

likely could not award interest. Even if we assume, arguendo, that interest is

theoretically available in a suit for possession of tangible goods, an award of

interest would be inappropriate here, since the Ministry never obtained

possession of the subject goods. Given that “[t]he essential rationale for

awarding prejudgment interest is to ensure that an injured party is fully

compensated for its loss,” City of Milwaukee v. Cement Division, National

Gypsum Co., 515 U.S. 189, 195 (1995), an award of interest cannot serve its

purpose standing alone. It would thus be inappropriate to award interest in a

suit for possession of tangible goods where such possession has become

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impossible. See id. Because the Ministry has not requested money damages

and cannot obtain possession of the Cargo, the Ministry’s demand for interest

does not rescue this appeal from mootness.

Additionally, neither the Ministry’s request for court costs nor the court’s

continuing power to award costs averts mootness as to the merits of the case.

See U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18, 20-22 (1994)

(concluding that no statute could authorize federal court to decide legal

question posed in absence of Article III case or controversy . . . “[b]ut reason

and authority refute the quite different notion that a federal appellate court

may not take any action with regard to a piece of litigation once it has been

determined that the requirements of Article III no longer are (or indeed never

were) met”; noting that, in cases that have become moot, courts nonetheless

have power to award costs and enter dismissal, and holding that they have

power to vacate judgments entered by lower courts); see also, Heitmuller v.

Stokes, 256 U.S. 359, 362-363 (1921) (“Where no controversy remains, except

as to costs, this court will not pass upon the merits.” (citing In re Paper-Bag

Cases, 105 U.S. 766, 772 (1881)).

Third, the KRG asserts that the Ministry did, in fact, request money

damages for the allegedly converted oil, because the operative complaint asked

for “such other and further relief that [the] Court deems just and proper.”

However, the Ministry did not explicitly request damages in its complaint, the

district court did not suggest that the Ministry sought damages, and the

Supreme Court has cautioned courts to approach with skepticism claims for

damages “extracted late in the day from [a] general prayer for relief and

asserted solely to avoid otherwise certain mootness.” Arizonans for Official

English v. Arizona, 520 U.S. 43, 71 (1997) (discussing eleventh-hour allegation

that nominal damages were requested); see also Fox v. Bd. of Trustees of the

State Univ. of N.Y., 42 F.3d 135, 142 (2d Cir. 1994) (“[W]e perceive no basis to

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allow a belated claim for damages to breathe life into a moribund dispute.”

(internal quotation marks omitted)). Moreover, undesired damages should not

be “foisted upon the parties by the court.” Sapp v. Renfroe, 511 F.2d 172, 176

n.3 (5th Cir. 1975). Since the Ministry never explicitly requested damages and

now disavows any such request, we will not foist it upon the Ministry.

Last, the KRG makes a number of still less persuasive arguments

against mootness. The KRG suggests the appeal is not moot because the

district court ordered the KRG to provide ten days’ notice of any additional oil

sales in the Southern District of Texas, but that was merely a condition of the

court’s stay pending appeal, not a remedy for the alleged harm. The KRG

further contends that this appeal is not moot because it has stated an intention

to ship more oil for sale in the United States, but hypothetical future shipments

do not prevent the dispute regarding the Cargo at issue here from being moot.

See Staley v. Harris Cnty., 485 F.3d 305, 307-09 (5th Cir. 2007) (en banc)

(holding that suit over display of monument featuring the Bible at a county

courthouse was mooted by removal of the monument during renovations, and

that any dispute over a probable redisplay was not ripe for review because the

precise manner in which the monument would be redisplayed was unknown).

We conclude that because the KRG has made possession of the Cargo

impossible, and because the Ministry requested no other available relief, we

must dismiss this appeal as moot. See Thibaut v. Ourso, 705 F.2d 118, 121

(5th Cir. 1983) (“[I]f, pending an appeal an event occurs which renders it

impossible for [an] appellate court to grant any relief or renders the decision

unnecessary, the appeal will be dismissed as moot.” (quoting NLRB v. O.E.

Szekely & Assocs., Inc., 259 F.2d 652, 654 (5th Cir. 1958), which referred to and

approved the Seventh Circuit’s holding in Fink v. Cont’l Foundry & Mach. Co.,

240 F.2d 369 (7th Cir. 1957))).

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II. Vacatur

Having decided that this appeal is moot, we now consider whether to

vacate the district court’s order. Although federal appellate courts historically

vacated a lower court’s decision whenever a case became moot on appeal, see

United States v. Munsingwear, Inc., 340 U.S. 36, 39 (1950), the Supreme Court

has since moved away from that default practice, see U.S. Bancorp, 513 U.S.

at 23-24. Vacatur is an “equitable” and “extraordinary” remedy. Id. at 26.

“[V]acatur is to be determined on a case-by-case basis, governed by facts and

not inflexible rules.” Staley, 485 F.3d at 310. “The principal condition to which

[the Supreme Court has] looked is whether the party seeking relief from the

judgment below caused the mootness by voluntary action.” U.S. Bancorp, 513

U.S. at 24. “[W]here mootness results from the voluntary actions of the losing

party, such party has ‘forfeited his legal remedy by the ordinary processes of

appeal or certiorari, thereby surrendering his claim to the equitable remedy of

vacatur.’” Sierra Club v. Glickman, 156 F.3d 606, 620 (5th Cir. 1998) (quoting

U.S. Bancorp, 513 U.S. at 24).

Our en banc decision in Staley is particularly instructive. Staley sought

to enjoin Harris County, Texas, from the continued display of a Bible in a

monument located on the grounds of the county courthouse. Staley, 485 F.3d

at 307. The district court ordered Harris County to remove the Bible, holding

that its presence violated the Establishment Clause. Id. A panel of this court

affirmed, and the county sought rehearing en banc. Id. Some two months

before en banc oral argument was to be heard, we learned that the county

courthouse had been closed and requested supplemental briefing on the

question of mootness. Id. Harris County then informed us that the monument,

including the Bible, would be removed and placed in storage for at least two

years, while the courthouse underwent renovations, but asserted that the

monument would be redisplayed once the courthouse reopened. Id. at 307-08.

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We held that the county’s removal of the Bible mooted the case and we refused

to vacate the district court’s judgment. Id. at 314. We stressed that the county

had mooted the suit through its voluntary actions, although it did not do so for

the purpose of mooting the case. Id. at 312. We also determined that the

county’s promise to redisplay the monument and its failure to inform the court

of the possible mootness counseled against vacatur. Id. at 313. Accordingly,

we held that the county had failed to show that the balance of the equities

favored vacating the district court’s judgment. Id. at 314.

Here, the KRG mooted this appeal through its voluntary decision to

discharge the Cargo in Israel. In so doing, the KRG severely weakened its

argument for equitable relief. See U.S. Bancorp, 513 U.S. at 24. Like the

county in Staley, the KRG contends that it did not moot the case for the purpose

of depriving us of jurisdiction, but the Staley court determined that that does

not suffice to establish entitlement to the extraordinary remedy of vacatur. See

Staley, 485 F.3d at 312. Also like the county in Staley, the KRG has said that

it plans to send additional shipments of oil in the future, which further

undermines its argument for vacatur. Id. at 313. Additionally, “[w]here, as

here, the complexion of the case has entirely changed while appeal is pending,

counsel for both parties have an obligation to so inform the court. That is so

even if a party believes it has a basis for arguing that the issue should still be

decided.” Mansourian v. Regents of the Univ. of Cal., 602 F.3d 957, 963 n.5

(9th Cir. 2010). The KRG failed to inform the court that it had discharged the

Cargo in a foreign port, thus making vacatur still less appropriate. See id.; see

also Staley, 485 F.3d at 313. Having considered the facts of this particular

case, we hold that the KRG has not carried its burden “to demonstrate

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‘equitable entitlement to the extraordinary remedy of vacatur.’” See Staley, 485

F.3d at 310 (quoting U.S. Bancorp, 513 U.S. at 26). 5

CONCLUSION

For the foregoing reasons, we GRANT the Ministry’s motion to dismiss

this appeal as moot.

5Since we dismiss this appeal as moot and do not reach the KRG’s other jurisdictional

or merits arguments, we express no opinion as to the correctness of the district court’s

decisions below. See Sierra Club v. Glickman, 156 F.3d 606, 620 n.8 (5th Cir. 1998).

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