Gulf Petro Trading Co. v. Nigerian National Petroleum Corp.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

January 7, 2008

No. 06-40713 Charles R. Fulbruge III

Clerk

GULF PETRO TRADING COMPANY INC;

PETREC INTERNATIONAL INC;

JAMES S FAULK; JAMES W FAULK

Plaintiffs - Appellants

v.

NIGERIAN NATIONAL PETROLEUM CORPORATION;

BOLA AJIBOLA; JACKSON GAIUS-OBASEKI, Individually;

SENA ANTHONY, Individually; ANDREW

W A BERKELEY; IAN MEAKIN; HANS VAN HOUTTE;

ROBERT CLARKE

Defendants - Appellees

Appeal from the United States District Court

for the Eastern District of Texas

Before KING, GARZA, and BENAVIDES, Circuit Judges.

KING, Circuit Judge:

This appeal is the latest round in a long-running dispute, previously

submitted to arbitration in Switzerland, arising out of a contract to salvage “slop

oil” generated by the operations of Nigeria’s state-owned oil company.

Plaintiffs–appellants—a Texas oil company, its subsidiary, and its

principals—appeal the district court’s dismissal of their complaint against the

Nigerian company and various associated individuals. The district court

No. 06-40713

concluded that it lacked subject matter jurisdiction over the lawsuit, which it

determined to be a collateral attack on a foreign arbitral award. It alternately

concluded that suit against certain of the parties was barred on foreign sovereign

immunity and personal jurisdiction grounds. For the reasons set out below, we

conclude that this lawsuit was properly dismissed for lack of subject matter

jurisdiction, as we agree that it represents a collateral attack on a foreign

arbitral award. We therefore do not consider the district court’s alternate

holdings. AFFIRMED.

I. BACKGROUND

The origins of this dispute lie in a 1993 joint venture agreement between

Petrec International, Inc. (“Petrec”), and Nigerian National Petroleum

Corporation (“NNPC”), whereby Petrec was to undertake reclamation and

salvaging of slop oil discarded by NNPC in the course of its daily operations in

Nigeria. Petrec is a wholly owned subsidiary of Gulf Petro Trading Company,

Inc. (“GPTC”), a Texas oil field services company. NNPC is owned by the

government of Nigeria. The agreement called for the creation of a Nigerian

company, Petrec (Nigeria) Limited (“PNL”), which was to be jointly capitalized

and owned by Petrec and NNPC. Petrec and NNPC agreed to submit any

disputes arising out of the agreement to arbitration.

After NNPC allegedly failed to contribute its share of capital to PNL and

refused to provide access to the areas needed to conduct the salvaging

operations, Petrec initiated arbitration proceedings with the Chamber of

Commerce and Industry of Geneva in 1998. The arbitration proceedings were

phased, such that the panel would first consider issues of jurisdiction and

liability before, if necessary, determining damages. After some delay and two

evidentiary hearings, the panel issued a “Partial Award” on July 5, 2000, finding

that Petrec had standing to pursue its claims and that NNPC had failed to

contribute its share of capital to PNL. However, the panel further found that the

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joint venture agreement did not confer exclusive rights to all of NNPC’s slop oil

on PNL, as Petrec had argued. Rather, NNPC’s obligation was only to make

available enough slop oil to keep PNL’s operations viable and profitable.

In January 2001, the panel held a hearing for the purpose of determining

the quantum of Petrec’s damages. At this hearing, NNPC challenged the panel’s

jurisdiction and Petrec’s standing by producing a copy of a Texas certificate of

incorporation showing that an entity identified as “Petrec International Inc.” had

been incorporated in Texas on February 28, 2000, well after execution of the

joint venture agreement and the demand for arbitration. On October 9, 2001,

the panel issued a “Final Award,” holding that Petrec lacked capacity to

maintain its claims against NNPC. Additionally, the panel stated in dictum that

had Petrec been able to sustain its claims, its damages would have been much

lower than demanded in light of a variety of factors, including the panel’s earlier

determination in the Partial Award that the joint venture agreement did not

confer exclusive rights to all of NNPC’s slop oil on PNL.

Petrec challenged the Final Award in the federal court of Switzerland on

grounds that it violated Swiss arbitration law and public policy, but the Swiss

court upheld the panel’s decision in April 2002. Petrec next filed a lawsuit in the

Northern District of Texas, seeking, inter alia, confirmation of the Partial

Award, in which the panel had found in Petrec’s favor on some aspects of the

question of NNPC’s liability, and a determination of damages. The district court

dismissed the action for lack of subject matter jurisdiction. See Gulf Petro

Trading Co. v. Nigerian Nat’l Petrol. Corp., 288 F. Supp. 2d 783 (N.D. Tex.

2003). The court reasoned that in seeking confirmation of the Partial Award,

Petrec was effectively requesting that the Final Award be set aside or modified,

actions that the court was precluded from taking by the Convention on the

Recognition and Enforcement of Foreign Arbitral Awards (the “New York

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Convention,” or “Convention”).1 Id. at 792–93. The court also determined that

doctrines of res judicata and international comity precluded it from revisiting

the Swiss court’s decision not to vacate the Final Award. Id. at 794–95. This

court affirmed the decision of the district court in an unpublished opinion.

In September 2005, GPTC, Petrec, and principals James S. Faulk and

James W. Faulk (collectively, “Gulf Petro”) brought this action in the Eastern

District of Texas, alleging that the Final Award was procured by fraud, bribery,

and corruption. Gulf Petro has what is purportedly a March 18, 2002, letter

from Chief Sena Anthony, NNPC’s general counsel, to Andrew Berkeley, one of

the arbitrators, detailing the payment of a $25 million bribe. According to the

letter, this payment was authorized by various individuals within NNPC and

was to be shared by the three arbitrators in return for delivery of a favorable

award to NNPC in the slop oil arbitration. Gulf Petro also alleges that Berkeley

and Ian Meakin, another arbitrator, engaged in a variety of undisclosed dealings

and ex parte communications with NNPC that cast doubt on their impartiality

as arbitrators in the matter.

Gulf Petro named as defendants NNPC, Anthony, Prince Bola Ajibola,

formerly Nigeria’s High Commissioner to the United Kingdom, Jackson Gaius-

Obaseki, formerly NNPC’s Group Managing Director, Robert Clarke, outside

counsel to NNPC, and the three arbitrators, Berkeley, Meakin, and Hans van

Houtte. In six separate counts, Gulf Petro sought relief under: (1) the Racketeer

Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq.

(three counts); (2) the Texas Deceptive Trade Practices Act (“DTPA”), TEX. BUS.

& COMM. CODE § 17.46 et seq.; (3) Texas common law fraud; and (4) the Texas

common law tort of civil conspiracy. In a seventh count, Gulf Petro sought to

1

See 21 U.S.T. 2517 (entered into force with respect to the United States, December 29,

1970), implemented at 9 U.S.C. § 201 et seq.

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No. 06-40713

nullify (i.e., vacate) the Final Award under the Federal Arbitration Act (“FAA”),

9 U.S.C. § 1 et seq.

NNPC, Anthony, Ajibola, Obaseki, and Clarke filed a motion to dismiss,

asserting lack of subject matter jurisdiction on account of the New York

Convention and foreign sovereign immunity, as well as lack of personal

jurisdiction.2 The district court granted the motion in a March 15, 2006, order.

The court first concluded that under the Convention it lacked subject matter

jurisdiction to modify or vacate the Final Award. It then reasoned that although

only one of Gulf Petro’s claims explicitly sought to vacate the award, its

remaining claims were based on the theory that bribery of the arbitrators

rendered the Final Award invalid, and sought damages that Gulf Petro would

only be entitled to if the Final Award were vacated. Therefore, the court

concluded that Gulf Petro’s entire complaint constituted a collateral attack on

the Final Award that it lacked subject matter jurisdiction to entertain.

Additionally, the court determined that NNPC, Anthony, and Obaseki were

entitled to foreign sovereign immunity, and that it lacked personal jurisdiction

over Ajibola and Clarke. Gulf Petro now appeals.

II. STANDARD OF REVIEW

We review a dismissal for lack of subject matter jurisdiction de novo, using

the same standard as the district court. Robinson v. TCI/US W. Commc’ns. Inc.,

117 F.3d 900, 904 (5th Cir. 1997).

III. DISCUSSION

Gulf Petro concedes on appeal that its claim seeking vacatur of the Final

Award was properly dismissed for lack of subject matter jurisdiction, and we

agree that the New York Convention requires this result. Gulf Petro first

contests the district court’s determination that the Convention requires

2

The arbitrators did not join in the motion to dismiss and apparently never appeared

in the lawsuit.

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No. 06-40713

dismissal of the remaining claims in its complaint for lack of subject matter

jurisdiction. For the reasons that follow, we conclude that those claims were

properly dismissed as well.

As an initial matter, some discussion of the rules and framework

established by the New York Convention is necessary to understand its

application in this case. The Convention provides that it “shall apply to the

recognition and enforcement of arbitral awards made in the territory of a

[country] other than the [country] where the recognition and enforcement of such

awards are sought.” Convention, art. I(1). The award at issue in this case,

which was made in Switzerland under arbitral proceedings governed by Swiss

law, is clearly a foreign award within the scope of the Convention.

Though its “essential purpose” relates to the recognition and enforcement

of foreign arbitral awards, “the underlying theme of the New York Convention

as a whole is clearly the autonomy of international arbitration.” FOUCHARD,

GAILLARD, GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION § 250

(Emmanuel Gaillard & John Savage, eds., 1999) [hereinafter FOUCHARD]. To

this end, the Convention “mandates very different regimes for the review of

arbitral awards (1) in the countries in which, or under the law of which, the

award was made, and (2) in other countries where recognition and enforcement

are sought.” Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas

Bumi Negara, 335 F.3d 357, 364 (5th Cir. 2003) (quoting Yusuf Ahmed Alghanim

& Sons v. Toys “R” Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997)) (internal quotation

marks and brackets omitted). We have characterized the country “in which, or

under the [arbitration] law of which,” an award was made as having primary

jurisdiction over the award. Id. All other signatory countries are then said to

be secondary jurisdictions. Id. It is undisputed that Switzerland is the country

of primary jurisdiction with respect to the Final Award.

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“[T]he Convention does not restrict the grounds on which primary-

jurisdiction courts may annul an award, thereby leaving to a primary

jurisdiction’s local law the decision whether to set aside an award.” Id. at 368.

Such courts are “free to set aside or modify an award in accordance with [the

country’s] domestic arbitral law and its full panoply of express and implied

grounds for relief.” Alghanim, 126 F.3d at 23.

In contrast, the Convention significantly limits the review of arbitral

awards in courts of a secondary jurisdiction; essentially, “parties can only contest

whether that [country] should enforce the arbitral award.” Karaha Bodas, 335

F.3d at 364. “Articles IV and V of the Convention specify the procedures for

courts of secondary jurisdictions to follow when deciding whether to enforce a

foreign arbitral award.” Id. at 368. “Article IV provides that a party can obtain

enforcement of its award by furnishing to the putative enforcement court the

authenticated award and the original arbitration agreement (or a certified copy

of both).” Id. In turn, Article V enumerates the exclusive grounds on which a

court of secondary jurisdiction may refuse recognition and enforcement of an

award. See id.; M & C Corp. v. Erwin Behr GmbH & Co., 87 F.3d 844, 848–49

(6th Cir. 1996). Finally, Article VI allows a court of secondary jurisdiction to

stay enforcement proceedings if an application to set aside the award is pending

in the primary jurisdiction.

In sum, although the Convention permits a primary jurisdiction court to

apply its full range of domestic law to set aside or modify an arbitral award,

secondary jurisdiction courts may only refuse or stay enforcement of an award

on the limited grounds specified in Articles V and VI. See Karaha Bodas, 335

F.3d at 368. As one commentator has explained, Articles V and VI of the

Convention “unequivocally lay down the principle that the court in the country

in which, or under the law of which, the award was made has the exclusive

competence to decide on the action for setting aside the award.” ALBERT JAN VAN

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DEN BERG, THE NEW YORK ARBITRATION CONVENTION OF 1958: TOWARDS A

UNIFORM JUDICIAL INTERPRETATION 350 (1981) (emphasis removed).

Accordingly, a United States court sitting in secondary jurisdiction lacks subject

matter jurisdiction over claims seeking to vacate, set aside, or modify a foreign

arbitral award. See M & C, 87 F.3d at 849; Gulf Petro, 288 F. Supp. 2d at

792–93; Int’l Standard Elec. Corp. v. Bridas Sociedad Anonima Petrolera,

Industrial y Comercial, 745 F. Supp. 172, 177, 182 (S.D.N.Y. 1990).

As noted above, though, Gulf Petro does not take issue with the district

court’s determination that it lacked subject matter jurisdiction over the claim

seeking vacatur of the Final Award. Rather, Gulf Petro argues that the court

erred in “extending” that holding to its remaining RICO, DTPA, and common

law fraud and civil conspiracy claims. Gulf Petro challenges the dismissal of

these claims on two fronts. First, it argues that the claims are not a collateral

attack on the Final Award. Second, it contends that there is no basis for

imposing a subject matter jurisdictional bar. We consider each argument in

turn.

A. Collateral Attack on the Final Award

Gulf Petro argues that a fair reading of its complaint shows that the RICO

and state law claims are not disguised attempts to vacate or attack the Final

Award. Rather, it contends that it has alleged a pattern of racketeering and

conspiratorial conduct that, while arising in the context of arbitration

proceedings, constitutes an independent violation of federal and state law and

compels relief analytically distinct from vacatur. We disagree. Like the district

court, we conclude that the claims asserted by Gulf Petro are no more, in

substance, than a collateral attack on the Final Award itself.

The district court relied on Corey v. New York Stock Exchange, 691 F.2d

1205 (6th Cir. 1982), in determining that Gulf Petro’s claims were an

impermissible attack on the Final Award. In Corey, the plaintiff had initiated

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arbitration proceedings against Merrill Lynch after his investment portfolio

suffered significant losses. Id. at 1207. The rules of the New York Stock

Exchange (“NYSE”) governed the selection of the arbitration panel as well as the

procedural rules to be followed, and an NYSE official was responsible for the

preliminary arrangements of the arbitration and appointment of the panel. Id.

at 1208. The arbitration panel ultimately dismissed the plaintiff’s claim. Id.

The arbitration at issue in Corey fell under Chapter One of the FAA, which

provides for limited judicial review of an arbitral award in the federal district

court of the district in which the award was made. See id. at 1212 (discussing

the FAA). However, instead of seeking relief under the FAA, the plaintiff

brought suit against the NYSE, alleging that he was deprived of a fair hearing

because the NYSE official had selected the panel in violation of NYSE rules and

had adjourned and rescheduled hearings over the plaintiff’s objection. Id. at

1207. These allegations of wrongdoing fell squarely within the scope of § 10 of

the FAA, which provides for vacatur of an award in cases of evident partiality

of the arbitrators or adjournments resulting in prejudice. See id. at 1212. After

concluding that “the [FAA] provides the exclusive remedy for challenging acts

that taint an arbitration award,” the Sixth Circuit determined that the plaintiff’s

“attempt to sue the NYSE . . . [was] no more, in substance, than an

impermissible collateral attack on the award itself.” Id. at 1211–12. The court

explained its reasoning as follows:

[The plaintiff’s] claims constitute a collateral attack against the

award even though [the plaintiff] is . . . requesting damages for the

acts of wrongdoing rather than the vacation, modification or

correction of the arbitration award. [The plaintiff] was not harmed

by the selection of the arbitrators and the adjournments of the

hearings in and of themselves . . . . Rather, he was harmed by the

impact these acts had on the award. [The plaintiff’s] complaint has

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no purpose other than to challenge the very wrongs affecting the

award for which review is provided under section 10 of the [FAA].

Id. at 1213.

NNPC also directs our attention to a similar case, Decker v. Merrill Lynch,

Pierce, Fenner & Smith, Inc., 205 F.3d 906 (6th Cir. 2000), in which the Sixth

Circuit affirmed the dismissal of several contract and tort claims alleging

wrongdoing in the course of an arbitration proceeding. The plaintiff in Decker

was engaged in arbitration with Merrill Lynch when the chairperson of the

arbitration panel revealed that his law firm had been hired by a Merrill Lynch

subsidiary in connection with several real estate transactions. Id. at 908. The

panel denied the plaintiff’s motion to recuse the chairperson, proceeded with the

arbitration, and issued an award. Id. Instead of seeking to vacate the award

under the FAA, the plaintiff brought various claims against Merrill Lynch based

on its hiring of the chairperson’s law firm. Id.

As in Corey, the court looked to the alleged harm suffered by the plaintiff,

which “did not result when the Merrill Lynch subsidiary hired the chairperson

. . . , but instead resulted from the impact of this action on the arbitration

award.” Id. at 910. The “ultimate objective in this damages suit,” the court

continued, was “to rectify the alleged harm [the plaintiff] suffered by receiving

a smaller arbitration award than she would have received in the absence of the

chairperson’s relationship with Merrill Lynch.” Id. Because this objective

should have been pursued by filing a motion to vacate under the FAA, the court

concluded that the plaintiff’s suit was a collateral attack requiring dismissal. Id.

at 910–11.

Although Corey and Decker involved allegations of wrongdoing in the

context of domestic arbitrations, rather than international arbitrations, we find

the reasoning employed in both cases on the question of when a claim constitutes

a collateral attack on an arbitral award to be persuasive. In both cases,

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plaintiffs alleged wrongdoing in the course of an arbitration but did not explicitly

seek to overturn or modify the award. In response, the Sixth Circuit examined

the relationship between the alleged wrongdoing, purported harm, and

arbitration award, and concluded that because the harm was not caused by the

wrongdoing in and of itself, but rather by the impact of the acts complained of

on the award, the claims were no more than collateral attacks on the award.

With this methodology in mind, we turn to Gulf Petro’s complaint.3

Gulf Petro alleges two broad categories of wrongdoing on the part of

NNPC, its officials and attorneys, and the arbitrators. First, it alleges that

NNPC paid a $25 million bribe to the arbitrators in order to procure a favorable

outcome in the slop oil arbitration. Second, it alleges that two of the arbitrators

had a variety of business dealings and ex parte communications with NNPC and

its attorneys that they failed to disclose prior to or during the arbitration.

According to Gulf Petro, arbitrator Berkeley failed to disclose that he traveled

to Nigeria shortly before the arbitration to discuss the matter with NNPC, had

previously served on an arbitration panel with members of the Nigerian

government, engaged in internet and phone communications with NNPC

3

We decline Gulf Petro’s invitation to apply the reasoning found in Mian v. Donaldson,

Lufkin & Jenrette Securities Corp., 7 F.3d 1085 (2d Cir. 1993) (per curiam), which Gulf Petro

contends limits the holding of Corey. In Mian, the plaintiff brought a pro se action under 42

U.S.C. §§ 1981, 1985, and 1986, alleging that the "defendants impermissibly discriminated

against him because of his race during the course of an arbitration." Id. at 1086. Although

the court acknowledged that the issue was not “free of all doubt,” it concluded that the

plaintiff’s failure to seek vacatur of the award under the FAA did “not prevent him from

seeking to recover damages for alleged civil rights violations that occurred during the

arbitration proceeding itself,” even if “a major component of the damages sought would consist

of the amount of the arbitration award.” Id. at 1086–87. In so holding, the Mian court was

apparently influenced by language in a then-recent Supreme Court opinion stating that § 1981

“‘covers wholly private efforts to . . . obstruct nonjudicial methods of adjudicating disputes.’”

Id. at 1087 (quoting Patterson v. McLean Credit Union, 491 U.S. 164, 177 (1989)) (emphasis

in original). As we discern no similar considerations in the instant case, we believe that Corey

and Decker supply the proper analytical framework for determining if Gulf Petro’s claims

constitute a collateral attack on the Final Award. See also Foster v. Turley, 808 F.2d 38, 41–42

(10th Cir. 1986).

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officials and attorneys, accepted appointments from NNPC to serve on other

arbitration panels, and had ongoing relationships with law firms that

represented NNPC. Arbitrator Meakin allegedly failed to disclose that he had

been associated with a Swiss law firm that represented NNPC.

Based on these allegations, Gulf Petro asserts violations of RICO, the

Texas DTPA, and Texas common law fraud and civil conspiracy. For each

claim, Gulf Petro seeks the following damages: (1) costs and expenses of the

arbitration and subsequent legal challenges; (2) lost expenses and profits that

would have been awarded had the panel rendered a fair award; (3) reputational

injury suffered as a consequence of not prevailing in the arbitration; and (4) lost

business opportunities suffered as a consequence of not prevailing in the

arbitration.

Gulf Petro briefly contends that its claims cannot be construed as a

collateral attack on the Final Award because they do not attempt to relitigate

the facts and defenses that were raised in the prior arbitration. In one sense,

however, they do seek to relitigate certain issues, since Gulf Petro asks for as

damages the award it believes it should have received in the arbitration, which

would require an inquiry into questions of liability that were already presented

to the arbitration panel. We do recognize that the specific allegations of bribery

and corruption are separate from the contract dispute over slop oil that was the

subject of the arbitration. However, it does not follow that these claims cannot

be construed as a collateral attack. Limiting the concept of a collateral attack

as Gulf Petro suggests would be squarely at odds with Corey and Decker, where

the plaintiffs were found to be engaged in collateral attacks even though they did

not attempt to relitigate the facts and defenses of the underlying disputes that

had prompted arbitration, but instead were alleging that wrongdoing had

tainted the arbitration proceedings and caused unfair awards.

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More broadly, Gulf Petro argues that the claims it advances and relief it

seeks are analytically distinct from vacatur. However, this argument is belied

by a close examination of the allegations and damages actually found in Gulf

Petro’s complaint. Gulf Petro contends that it has pled independent violations

of federal and state law, but the ultimate significance of the conduct it complains

of can only be found in the effect that it had on the Final Award. Like the

plaintiffs in Corey and Decker, Gulf Petro’s harm was not caused by the alleged

acts of wrongdoing in and of themselves. The harm in this case did not result

when the arbitrators failed to disclose business dealings, engaged in ex parte

communications with NNPC, or were bribed. Rather, it resulted from the impact

that these acts had on the Final Award. The relief Gulf Petro seeks—the award

it believes it should have received, as well as costs, expenses, and consequential

damages stemming from the unfavorable award it did receive—shows that its

true objective in this suit is to rectify the harm it suffered in receiving the

unfavorable Final Award. Under the framework of the New York Convention,

the proper method of obtaining this relief is by moving to set aside or modify the

award in a court of primary jurisdiction. Though cloaked in a variety of federal

and state law claims, Gulf Petro’s complaint amounts to no more than a

collateral attack on the Final Award itself.

B. Dismissal for Lack of Subject Matter Jurisdiction

Gulf Petro also argues that its federal and state law claims cannot

properly be the subject of a Rule 12(b)(1) dismissal for lack of subject matter

jurisdiction. See FED. R. CIV. P. 12(b)(1). We disagree. Because the Convention

bars the litigation of claims of the type asserted by Gulf Petro in all but the

courts of the primary jurisdiction, dismissal for lack of subject matter

jurisdiction was appropriate in this case.

Gulf Petro first argues that there is no basis for the notion that a

complaint can be dismissed on subject matter jurisdictional grounds as a

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collateral attack on an arbitral award. It points out that in Corey and Decker,

the complaints that were held to be collateral attacks were dismissed for failure

to state a claim upon which relief can be granted or on summary judgment, and

not for lack of subject matter jurisdiction. This argument misapprehends the

significance of Corey and Decker to the instant case, which lies in the reasoning

employed by the Sixth Circuit in concluding that the claims asserted were

collateral attacks on arbitration awards, and not in the final dispositions of the

cases themselves. Corey and Decker were litigated in the shadow of the

framework for judicial review of domestic arbitrations established by Chapter

One of the FAA, while the instant case is being litigated in the shadow of the

framework for international arbitrations established by the New York

Convention, which is implemented by Chapter Two of the FAA. Once it has been

established that Gulf Petro’s claims constitute a collateral attack on a foreign

arbitral award, it is the Convention, and not Corey or Decker, that dictates the

appropriate disposition.4

Gulf Petro also characterizes the dismissal in this case as creating an

“arbitration exception” to federal subject matter jurisdiction, and warns of

ominous consequences that it expects will follow if the district court’s decision

is upheld. For example, Gulf Petro states that this so-called exception will

render unenforceable statutes that make it a crime to obstruct justice or suborn

the corruption of an arbitration panel, preclude application of RICO’s civil

provisions to “irregularities arising from conduct relating to arbitration,” and,

more generally, bar lawsuits that touch even tangentially upon arbitration. We

4

On a related note, Gulf Petro asserts that no provision of the FAA can be construed

to bar federal subject matter jurisdiction over its claims. Further, Gulf Petro argues that since

Chapter One of the FAA does not even grant an independent ground for federal subject matter

jurisdiction, it cannot strip jurisdiction over otherwise cognizable claims. But the absence of

a jurisdiction-granting provision in Chapter One of the FAA is of no import here, as Chapter

Two provides that the Convention “shall be enforced” in United States courts, and it is the

Convention, not Chapter One, that controls in this case. See 9 U.S.C. § 201.

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believe these fears of a wide-ranging “arbitration exception” to be unfounded, as

our holding in this case is actually quite narrow, and only bars jurisdiction over

claims that, when evaluated under the analytical framework of Corey and

Decker, are determined to be a collateral attack on a foreign arbitral award. For

one, we fail to see how this methodology could be employed to preclude statutes

criminalizing activities that might occur in an arbitration. Nothing in Corey and

Decker can be taken as affecting the availability of criminal prosecutions under

such statutes, as those cases simply stand for the proposition that “where a

party files a complaint . . . seeking damages for an alleged wrongdoing that

compromised an arbitration award and caused the party injury, it ‘is no more,

in substance, than an impermissible collateral attack on the award itself.’”

Decker, 205 F.3d at 910 (quoting Corey, 691 F.2d at 1211–12). Nor do we believe

that the result here will preclude lawsuits that touch only tangentially on an

arbitration, since a plaintiff need only be able to allege wrongdoing that has

caused harm independent of its effect on the arbitration award to avoid the

collateral attack label.5

We also have considered the possibility that the Final Award’s effect on

Gulf Petro’s claims should have been evaluated under the doctrine of res

judicata, rather than as a jurisdictional inquiry. Under this line of thinking,

Gulf Petro’s RICO and state law claims would have survived NNPC’s 12(b)(1)

motion, but individual elements of those claims could later have been challenged

on res judicata grounds through an affirmative defense. In fact, the Convention

acknowledges that foreign awards can serve as res judicata in secondary

5

To take Gulf Petro’s example of a hypothetical RICO lawsuit relating to “irregularities

arising from conduct relating to arbitration,” it seems likely that if the link between the

conduct complained of and the arbitration was indeed so attenuated that the wrongdoing could

truly be characterized as only “arising from conduct relating to arbitration,” then at least some

of the resulting claims would be based on harm independent of the arbitration award and

therefore could not be construed as a collateral attack. Such a suit, however, is not before this

court.

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jurisdictions, and accordingly provides for the “recognition” of an award, in

addition to the more commonly invoked enforcement.6 See Convention, arts.

III–V. Recognition typically occurs “in a court action between the same parties

on the same subject matter as decided in the foreign award.” VAN DEN BERG,

supra, at 244. In such a case, “the defendant requests the recognition of the

award by invoking its effect of res judicata . . . .” Id. It might therefore be

suggested that instead of granting NNPC’s 12(b)(1) motion and dismissing Gulf

Petro’s claims for lack of subject matter jurisdiction, the district court should

have entertained a motion to recognize the Final Award, in which case Gulf

Petro could have asserted the specific defenses to recognition found in Article V.7

However, the nature of Gulf Petro’s claims, which relate first and foremost to the

alleged tainting of the arbitration proceedings rather than the underlying

contract dispute itself, counsels against such a course of action. There is simply

more at work here than res judicata, as Gulf Petro’s claim that NNPC suborned

the corruption of the panel, though certainly arising out of the arbitration

proceedings, is not a matter that was decided in those proceedings.

Finally, Gulf Petro argues that any limitations imposed on courts of

secondary jurisdiction by the Convention should be overlooked in this case

because relief is not available in the primary jurisdiction of Switzerland. We

note that Gulf Petro already has sought to have the Final Award set aside in

Switzerland, although on different grounds than it advances here. According to

Gulf Petro, though, it has no means of vindicating its new claims of bribery and

6

Most cases under the Convention involve requests for enforcement: typically, a party

who has prevailed in a foreign arbitration seeks to collect on the award by confirming it in a

country where the losing party has assets. See VAN DEN BERG, supra, at 243–44. Recognition,

on the other hand, “may be requested where the party relying on an award merely wishes it

to have a negative effect.” FOUCHARD, supra, § 1667.

7

The same conditions as for an enforcement of an award found in Articles IV–VI are

applicable to a recognition. See VAN DEN BERG, supra, at 244.

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No. 06-40713

corruption in Switzerland because it has been unable to initiate a criminal

proceeding against the arbitrators in that country, such an action apparently

being a prerequisite to obtaining reconsideration of the Swiss court’s earlier

decision. Some commentators suggest that the absence of any possibility of

setting aside an award in the primary jurisdiction justifies removing the

protection of the Convention from an award. See FOUCHARD, supra, § 1688

(discussing views on this issue). But this view is almost unanimously rejected.

Id. § 1689. In any event, Gulf Petro has already had one opportunity to set aside

the award in Switzerland, and now seeks a second opportunity. Needless to say,

we have come across no suggestion that the absence of multiple opportunities to

set aside an award in the primary jurisdiction should render the protections of

the Convention inapplicable. In the interest of finality, every primary

jurisdiction undoubtedly will foreclose review of an award at some point. It

would seriously undermine the functioning of the Convention if the fact that the

opportunity for judicial review of an award in the primary jurisdiction has

passed could open the door to otherwise impermissible review in a secondary

jurisdiction. Moreover, “it is not the district court’s burden or ours to protect [a

party] from all the . . . hardships it might undergo . . . as a result of this foreign

arbitration or the international commercial dispute that spawned it.” Karaha

Bodas, 335 F.3d at 369. There is no basis for an exception here.

We have seen that the Convention operates by “assigning . . . different

roles to national courts to carry out the aims of the treaty.” Id. at 368. As

discussed above, the role assigned to courts of secondary jurisdiction is a limited

one. It is undisputed that the Convention precludes a court of secondary

jurisdiction from vacating, setting aside, or modifying a foreign arbitral award.

See M & C, 87 F.3d at 849. And given the particular interests at stake in

arbitration, it is not surprising that this limitation has been implemented in the

form of a jurisdictional bar, which provides an extremely effective method for

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No. 06-40713

choking off post-arbitration litigation at the earliest possible moment, thereby

encouraging finality and limiting costs.

At the outset of this appeal, all parties stood in agreement that Gulf

Petro’s claim seeking vacatur constituted a direct attack on the Final Award,

and was therefore properly dismissed by the district court for lack of subject

matter jurisdiction. We have since concluded that Gulf Petro’s remaining

claims, though ostensibly sounding in independent sources of law, are no more

than an indirect attack on that same award. Having come this far, it would be

perverse to say that the disposition that Gulf Petro itself concedes to be

appropriate for the former claim—dismissal for lack of subject matter

jurisdiction—is somehow inappropriate for the latter ones. Put simply, Gulf

Petro’s entire complaint is an attempt to set aside the Final Award and replace

it with a modified award. The Convention dictates that a United States court,

sitting in secondary jurisdiction, lacks jurisdiction to consider such an action.

We do not see what result, other than dismissal for lack of subject matter

jurisdiction, should follow.

IV. CONCLUSION

Having concluded that Gulf Petro’s claims were properly dismissed for lack

of subject matter jurisdiction, we see no need to consider Gulf Petro’s challenges

to the district court’s alternate rulings on the issues of foreign sovereign

immunity and personal jurisdiction. The judgment of the district court is

AFFIRMED.

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