Opposition Brief — Ruhrgas, A. G. v. Marathon Oil Co.

et

No. 97-409 OCT 9

Sipreme Couri.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1997

RUHRGAS, A.G.,

Petitioner,

Vv.

MARATHON OIL COMPANY,

MARATHON INTERNATIONAL OIL COMPANY,

and MARATHON PETROLEUM NorcGE A/S,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF IN OPPOSITION

CLIFTON T. HUTCHINSON *

J. GREGORY TAYLOR

Davip J. SCHENCK

HuGHEs & LUCE, L.L.P.

1717 Main Street, Suite 2800

Dallas, Texas 75201

(214) 939-5500

Attorneys for Respondents

October 9, 1997 * Counsel of Record

WILSON - Eres Printine Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

QUESTIONS PRESENTED

1. Whether, in light of the prohibition against review

“by appeal or otherwise” in 28 U.S.C. § 1447(d), the

Court has jurisdiction over a Petition seeking review of

an order that “remanded the action to the district court

with instructions that the action be remanded” to the state

court from which it was removed.

2. Whether there is any basis for review in the absence

of any conflict among the lower courts or in view of the

Fifth Circuit’s holding in this case that properly refused

to compel arbitration without express or implied consent.

(i)

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED 2.202220... ccceceen i

TABLE OF AUTHORITIES . W000... iv

JURISDICTIONAL STATEMENT 1

STATEMENT OF THE CASE .......0..0 0

A. Background deceinensnstepeseennnsesemsonenenteeestesnareunenauencecsses

B. The Parties and Claims...

SUMMARY OF THE ARGUMENT ._............... 5

REASONS FOR DENYING THE WRIT... 5

I. NO CONFLICT EXISTS AMONG LOWER

a 5

II. RUHRGAS HAS TESTIFIED IT HAS NO

AGREEMENT WITH RESPONDENTS... 6

Ill. NO INTERNATIONAL PRINCIPLE SUP-

PORTS RUHRGAS OR REQUIRES REVIEW...

A. United States Law Determines Arbitrability..

B. The New York Convention Requires a Writ-

EEG a 10

C. International Law Requires Consent _....._.. 11

D. The Fifth Circuit Opinion Does Not Impair

International Commerce ............. ee 13

EE aE NS Ae ae 15

(iii)

iv

TABLE OF AUTHORITIES

CASES Page

Aquafaith Shipping, Ltd. v. Jarillas, 963 F.2d 806.

a ee a 15

AT&T Technologies, Inc. v. Communications Work-

ers of America, 475 U.S. 648 (1986) ~................. 9

Beckham v. William Bayley Co., 655 F. Supp. 288

I is a a seine 8

Briscoe v. Bell, 482 U.S. 404 (1977) ............---.....--- 2

Dow Chem v. Isover Saint Gobain, Cour d‘Appel

Paris 21, October 1983, 110 J. 899 (1983) IX

Yearbook 132 (1984) . ER ree eae 2 12

Gateway Coal Co. v. United Mine Workers, 414

if | RS a are RN rd See aoe 6

Goldberg v. Bear, Stearns & Co., 912 F.2d 1418

Ce I MI Lik os aiiccdhsnsumnslinnicoiapeonindcnndiindinuabeie 8

Gravitt v. Southwestern Bell Tel. Co., 480 U.S. 723

CN sesiatsiledebectnce ceesisaseericssadcebibieadeis Daaelinn taniieaiibine 1

In re Talbott Big Foot, Inc., 887 F.2d 611 (5th Cir.

RSE kg Rr eT RE ORR Oe er, oe 10

International Shipping Co., S.A. v. Hydra Offshore,

Inc., 675 F. Supp. 146 (S.D.N.Y. 1987), aff’d, 875

F.2d 388 (2d Cir.), cert. denied, 493 U.S. 1003

§ AR RRR oe SRR eA NO BE TEE 11

Kaplan v. First Options of Chicago, Inc., 19 F.3d

1503 (3d Cir. 1994), aff’d, 514 U.S. 938 (1995)... 6, 10

Litton Fin. Printing Div. v. NLRB, 501 U.S. 190

g___ SIREPIEES TENE HCP Parsee OUR BAC NR. FR OS 6

Mastrobuono v. Shearson Lehman Hutton, Inc., 514

FF eR aI aaa SPI Lees ieaees 8

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985) ............... 9

Morewitz v. West of England Ship Owners Mutual

Protection & Indem. Ass’n, 62 F.3d 1356 (11th

RG SN ca istic cine adie sadgns pacteaaenpdinlnteebaceammeuneeiionminns 10

Moses H. Cone Mem. Hosp. v. Mercury Constr.

Cg Te Mie I testers thinset icigatieciennes 6

Mowbray v. Moseley, Hallgarten, Estabrook &

Weeden, Inc., 795 F.2d 1111 (1st Cir. 1986) ........ 6,8

National Iranian Oil Co. v..Ashland Oil, Inc., 817

if § ¢: So 3» greieepprecse eee eeaer einen 11

Vv

TABLE OF AUTHORITIES—Continued

Page

Ralph Andrews Prod., Inc. v. Writers Guild of Am.,

West, 938 F.2d 128 (9th Cir. 1991)... 6

Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974).. 9

Severonickel v. Gaston Reymenants, 115 F.3d 265

rN UTE A ILLS SREB Soest Se Ay Meas 3

Societe Generalie de Surveillance, S.A. v. Raytheon

European Mgmt. & Systems Co., 643 F.2d 863

SU WI eer iea ce ee er 10

Swensen’s Ice Cream Co. v. Corsair Corp., 942 F.2d

ee Cs NE occ ee 6

Taylor v. Investors Assocs., Inc., 29 F.2d 211 (5th

oN GREECE MIE eel ACR dtp cm hie RMS OME, 2 ner 8

Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S.

dk BRIE a Ree ERE: AP Sl me

Things Remembered, Inc. v. Petrarca, 116 S. Ct.

EC AI a RS ac St Rae 2

Thomson-C.S.F., S.A. v. American Arbitration

Ass’n, 64 F.3d 773 (2d Cir. 1995) 0. 6, 10

Tropical Cruise Lines, S.A. v. Vesta Ins. Co., 805

F. Supp. 409 (S.D. Miss. 1992) 0.00.00. 10

United States v. Rice, 8327 U.S. 742 (1946) _........... 2 4

Volt Information Sciences, Inc. v. Board of Trustees

of Leland Stanford Junior Univ., 489 U.S. 468

BER heat I AE ML, or Ti CRC ab cae 6

PI sec teticededpdctecesthndhanititnsbeyenlsaclensindgieatioaninndinane, 1

STATUTES AND RULES

th he EEL TERT AR 2

I i 1,2

bi og gS TRL TPA, 3

Sup. Ct. R. 15 (4) 2

TREATIES

TT eR Ree eee eee wee eae ewes ewe seemmeaeeseeeseses

Convention on the Enforcement of Foreign Arbi-

tral Awards, June 12, 1958, art. II, 3 U.S.T.

gee A ERE ALGER I BSE ZH aad NEE SO 4,11

vi

TABLE OF AUTHORITIES—Continued

OTHER AUTHORITIES Page

1 WILLIAM M. FLETCHER, FLETCHER CYCLOPEDIA

OF THE LAW OF PRIVATE CORPORATIONS § 43.85

EE ee S| are 6

14A CHARLES A. WRIGHT, ET AL., FEDERAL PRAC- _

TICE AND PROCEDURE § 3740 (1985) ....................... 2

17A C.J.S. Contracts § 312 (1968) ........................... 8

11 IAN R. MACNEIL, ET AL., FEDERAL ARBITRATION

ee Be I ieccnilceeecscitcrntbierinmctares 6

ADAM SAMUEL, JURISDICTIONAL PROBLEMS IN IN-

TERNATIONAL COMMERCIAL ARBITRATION: A

STUDY OF BELGIAN, DUTCH, ENGLISH, FRENCH,

SWEDISH, U.S. & WEST GERMAN LAW 103 (Swiss

Institute of Comparative Law Zurich (1989) ...... 13

Albert Jon von der Berg, Le droit neélandois de

Varbitrage, in L’ARBITRAGE, TRAVAUX OFFERTS

AU PROFESSEUR ALBERT FETTWEIS 265 (Lambert

Matroy and Georges de Leval, eds. Brussels,

RR NAT SEPT a OTS SEEN MENTE OE LO 12

Giuseppe Tarzia, Le droit italien de l’arbitrage, in

L’ARBITRAGE, TRAVAUX OFFERTS AU PROFESSEUR

ALBERT FETTWEIS 255 (Lambert Matroy and

Georges de Leval, eds. Brussels, 1989) ............... 12

Lambert Matray, Le droit belge de Varbitrage, in

L’ ARBITRAGE, TRAVAUX OFFERTS AU PROFESSEUR

ALBERT FETTWEIS 231 (Lambert Matroy and

Georges de Leval, eds. Brussels, 1989) ................. 12

Ottoarndt Glossner, Le droit allemand de l’arbi-

trage, in L’ARBITRAGE, TRAVAUX OFFERTS AU

PROFESSEUR ALBERT FETTWEIS 199 (Lambert

Matroy and George de Leval, eds. Brussels,

STI cnisodatesDucstilinteninistnihiisionnianeshacbinaubidlaliaddecediidhichesds 11

Peter Schlosser, Schiedsrichterliches Verfahren in

FRIEDRICH STEIN, 7/2 KOMMENTAR ZUR ZPO

BS I ee ee ee 11, 12

Pierre Lalive, Le droit suisse de l’arbitrage, in

L’ARBITRAGE, TRAVAUX OFFERTS AU PROFESSEUR

ALBERT FETTWEIS 279 (Lambert Matroy and

Georges de Leval, eds. Brussels, 1989) ................ 12

vii

TABLE OF AUTHORITIES—Continued

~ Page

Roger Perrot, Le droit francais de lVarbitrage, in

L’ARBITRAGE, TRAVAUX OFFERTS AU PROFESSEUR

ALBERT FETTWEIS 249 (Lambert Matroy and

Georges de Leval, eds. Brussels, 1989) ............... 12

IN THE

Supreme Court of the United States

OCTOBER TERM, 1997

No. 97-409

RUHRGAS, A.G.,

is Petitioner,

MARATHON OIL CoMPANY,

MARATHON INTERNATIONAL O1L CoMPANY,

and MARATHON PETROLEUM NorceE A/S,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF IN OPPOSITION

JURISDICTIONAL STATEMENT

The law governing jurisdiction could not be more clear.

“An order remanding a case to the State Court from

which it was removed is not reviewable on appeal or other-

wise... .” 28 US.C. § 1447(d). Here, the Petitioner un-

abashedly seeks appellate review—by certiorari—of just

such an order." Obviously, such a review is improper in

1 Section 1447(d)’s preclusion of review by appeal or otherwise

encompasses review by extraordinary writs, such as the writ of

certiorari. E.g., Gravitt v. Southwestern Bell Tel. Co., 430 U.S.

723, 723 (1977) (remand order unreviewable “by mandamus or

otherwise”); Volvo of Am. Corp. v. Schwarzer, 429 U.S. 1331

(1976) (Rehnquist, C.J., as Circuit Justice denying stay because

order not reviewable) ; Thermtron Prods., Inc. v. Hermansdorfer,

423 U.S. 336, 351-52 (1976) (appeal or extraordinary writ). As one

-_

2

light of Congress’ unmistakable and unambiguous man-

date.”

The rationale underlying § 1447(d)’s prohibition is the

need to avoid “prolonged litigation of questions of juris-

diction of the district court to which the cause [was]

removed.” United States v. Rice, 327 U.S. 742, 751

(1946); see also 14A CHARLES A. WRIGHT ET AL., FED-

ERAL PRACTICE AND PROCEDURE § 3740 at 594 (1985)

(“purpose of the ban on review is to spare the parties

undue delay and interruption of the litigation solely to

contest a decision regarding removal”). While the order

in this case is properly founded on the absence of federal

jurisdiction, § 1447(d)’s unyielding prohibition on ap-

pellate review still would apply “no matter how plain the

legal error in ordering the remand.” Briscoe v. Bell, 432

U.S. 404, 414 n.13 (1977).

There can be little doubt that the interlocutory order

in this case is a remand order. Even Petitioner concedes

(Pet. 1) that the order leaves no discretion in the district

court. See, e.g., Things Remembered, Inc. v. Petrarca,

116 S. Ct. 494, 496 n.2 (1995) (treating similar order

on appeal from bankruptcy court as an order of remand

and finding review precluded). And, the order specifically

requires remand for one of the bases listed in 28 U.S.C.

§ 1447(c): lack of federal subject matter jurisdiction.

The order, therefore, falls squarely within section

1447(d)’s prohibition. Thermtron Prods., Inc. v. Her-

mansdorfer, 423 U.S. 336, 343 (1976). Petitioner’s

argument regarding international principles cannot lift

this plain statutory bar. Indeed, the Fourth Circuit re-

cently came to this inevitable conclusion notwithstanding

the same argument that international principles supposedly

leading treatise has observed, “[e]ven on review in the Supreme

Court of a state court proceeding following remand, the propriety

of remand . . . cannot be questioned.” 14A CHARLES A. WRIGHT

ET AL., FEDERAL PRACTICE AND PROCEDURE § 3740 at 594 (1985).

2This motion is lodged in conformity with this Court’s Rule

15(4).

3. -

require a corporate defendant to arbitrate based on an

affiliate’s arbitration agreements. Severonickel v. Gaston

Reymenants, 115 F.3d 265, 266-67 (4th Cir. 1997).

Given such unambiguous precedent and such an un-

ambiguous statute, the disposition of this Petition is not

at all problematic. Respondents filed this case in Texas

state court on July 6, 1995. By one procedural roadblock

after another, including this improper Petition, Ruhrgas

has not only delayed and denied Respondents their day in

court, but has kept them from even beginning discovery

on the merits. A clearer example of the evil Congress

intended to avoid—delay in the trial of remanded cases |

by protracted litigation of jurisdictional issues—would be

difficult to imagine. This Court should dismiss the Peti-

tion for want of jurisdiction.

STATEMENT OF THE CASE

A. Background

This case arises from a series of fraudulent misrepre-

sentations, effected in part in Texas and directed specifi-

cally at Respondents, which induced them to advance

hundreds of millions of dollars to develop a North Sea

natural gas field and its supporting infrastructure. The

pleadings allege that this infrastructure was secretly in-

tended to provide Ruhrgas (and those acting in concert

with it)* with complete control over the production and

distribution of Norwegian natural gas.* The pleadings

further allege that Ruhrgas and its co-conspirators exer-

cised their control to the detriment of Respondents, ulti-

mately causing the loss of virtually all of their investment.

Ruhrgas removed this case from state court arguing,

among other things, that the Federal Arbitration Act, 9

8 In the 1970’s Ruhrgas formed a cartel with certain other Euro-

pean gas buyers to control the distribution of gas from the North

Sea fields. The group styled itself the “Consortium” or “Grand

Alliance.”

* Respondents’ Amended Petition is reprinted as Appendix A

(App. A) hereto.

iii iii il

4

U.S.C. §§ 201-08 (1994) (the “FAA”), and its inter-

national counterpart, the Convention on the Enforcement

of Foreign Arbitral Awards, June 12, 1958 art. I, 3

U.S.T. 2517 (implemented at 9 U.S.C. § 201 et seq.) (the

“New York Convention”), created federal subject matter

jurisdiction. In connection with its removal, however,

Ruhrgas filed affidavits admitting that it had “no agree-

ments with any of the plaintiffs’ concerning the matters

stated in the pleadings. (see Appendix B hereto). This

voluntary admission conclusively establishes that there was

no arbitration agreement between the parties. Because

the statute and the New York Convention upon which

Ruhrgas relied specifically require such an agreement,

Ruhrgas’ purported basis for removal evaporated the

moment Ruhrgas filed its removal papers.

In an attempt to surmount this significant obstacle,

Ruhrgas argued that Respondents should be bound by an

arbitration clause in a contract signed by one of their

corporate affiliates °—even though that contract expressly

defined “affiliates” and then excluded them from its arbi-

tration clause. The District Court properly rejected

Ruhrgas’ assertion, but dismissed for lack of personal juris-

diction (without ever reaching Respondents’ challenge to

its subject matter jurisdiction). The Fifth Circuit agreed

that there was no applicable arbitration agreement, re-

versed and remanded in view of the lack of subject matter

jurisdiction, and vacated the personal jurisdiction ruling.

B. The Parties and Claims

Respondents Marathon Oil Company (“MOC”) and

Marathon International Oil Company (“MIOC”) contend

that Ruhrgas fraudulently induced them to loan hundreds

of millions of dollars to develop the Heimdal field; Re-

spondent Marathon Petroleum Norge (“Norge”) contends

that Ruhrgas’ tortious interference diminished the value

5 Marathon Petroleum Company (Norway) (“MPCN’”’), a non-

party, signed a gas sale agreement with Ruhrgas.

5

of its interest as a license-holder in the field.* The facts

surrounding this dispute are long and complex; however,

this Court can dispose of Ruhrgas’ Petition with a single

uncontested fact: MOC, MIOC and Norge are not now,

and have never been, parties to any arbitration agreement

with Ruhrgas.

SUMMARY OF THE ARGUMENT

Even if this Petition were not procedurally deficient, it

still should be denied because none of the criteria for

granting certiorari have been met. First, the lower courts’

rulings are completely consistent with numerous decisions

of this Court and other federal and state courts that uni-

formly have held that a party can be compelled to arbi-

trate its claims only if it previously has agreed to arbitrate

those claims. Thus, this case presents no conflict among

the Circuits. Secondly, the lower courts’ rulings do not

impinge upon any “international principle” so as to re-

quire intervention by this Court. To the extent there is

an international consensus on the issue of arbitrability,

it is in accord with the Fifth Circuit’s ruling.

REASONS FOR DENYING THE WRIT

I. NO CONFLICT EXISTS AMONG LOWER COURTS.

No Circuit conflict exists here. The Fifth Circuit’s deci-

sion is consistent with holdings from each of the Circuits

to address the question of whether arbitration can be com-

pelled on the basis of a corporate affiliation. This Court

and other Circuits have held that arbitration can be com-

pelled only if the party consents to arbitration or if it

can be bound to the contract by accepted principles of

* Ruhrgas’ assertion that this is a simple breach of contract suit

arising from its failure to abide by a gas sales agreement is, thus,

a material misrepresentation of Respondents’ claims.

6

contract, agency or corporate law (i.e., veil piercing).

In the absence of some such indication of consent, arbitra-

tion cannot be compelled without violating the litigant’s

rights, among other things, to select its forum and to a

trial by jury. Petitioner offered neither pleading nor proof

of any such grounds below, as the District Court recog-

nized.®

II. RUHRGAS HAS TESTIFIED IT HAS NO AGREE-

MENT WITH RESPONDENTS.

In an early attempt to distance itself from Respond-

ents’ claims, Ruhrgas unequivocally admitted in sworn

7 See, e.g., Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 200

(1991) (“The law compels a party to submit his grievance to arbi-

tration only if he has contracted to do so.”) (quoting Gateway Coal

Co. v. United Mine Workers, 414 U.S. 368, 374 (1974)); Volt

Information Sciences, Inc. v. Board of Trustees of Leland Stanford

Junior Univ., 489 U.S. 468, 479 (1989) (“Arbitration under the

Act is a matter of consent, not coercion... .”); Moses H. Cone

Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 19-20 (1983)

(requiring parallel claims to remain in litigation despite arbitration

involving other parties on same claims); Mowbray v. Moseley,

Hallgarten, Estabrook & Weeden, Inc., 795 F.2d 1111, 1116-18 (1st

Cir. 1986) (non-signatory not bound absent proof of “meeting of

the minds” on arbitration); Thomson-C.S.F., S.A. v. American

Arbitration Ass’n, 64 F.3d 773, 776 80 (2d Cir. 1995) (limited

theories of contract and ageney law did not apply to bind non-

signatory) ; Kaplan v. First Options of Chicago, Inc., 19 F.3d 1503,

1512 (3d Cir. 1994), aff'd, 514 U.S. 938 (1995) (non-signatory not

bound under alter ego, agency theories) ; Swensen’s Ice Cream Co.

v. Corsair Corp., 942 F.2d 1307, 1310 (8th Cir. 1991) (execution

of guarantee did not bind non-signatory to separate agreement with

arbitration clause) ; Ralph Andrews Prod., Inc. v. Writers Guild of

Am., West, 938 F.2d 128, 130 (9th Cir. 1991) (non-signatory not

bound as alter ego); see also 1 WILLIAM M. FLETCHER, FLETCHER

CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 43.85 (perm.

ed. rev. vol. 1990) ; 11 IAN R. MACNEIL ET AL., FEDERAL ARBITRATION

LAW § 8.4 (1995).

8“The incorporation by reference, assumption, and agency prin-

ciples certainly do not apply in the instant case. Furthermore,

Ruhrgas has not made any allegations that MPCN is the alter ego

of any of the plaintiffs.” Pet. App. D-11.

7

affidavits filed with its removal papers that it had no agree-

ments, arbitrable or otherwise, with Respondents:

Ruhrgas AG has never entered into any agreement

with any of the plaintiffs concerning gas produced

from the Heimdal field or any matters which are the

subject of the First Amended Petition filed by the

Plaintiffs in this action.®

Throughout this case, it has remained undisputed that

MOC, MIOC and Norge never agreed or otherwise con-

sented to arbitrate their claims.

Moreover, the unambiguous terms of Ruhrgas’ con-

tract with Respondents’ affiliate, MPCN, indicate that

neither Ruhrgas nor MPCN even attempted to bind their

corporate parents or other affiliates to the terms of that

contract’s arbitration.’® Tellingly, the contract’s preamble

does not define “MPCN” or “Ruhrgas” to include their

affiliates. It does, however, acknowledge the existence

of such corporations, and even goes so far as to define

the term “Affiliate” to mean any parent corporation of

the parties, and any corporation of which such parent

owns at least 50% of the voting shares. Having acknowl-

edged and defined “Affiliate,” the contract refers to that

term only twice: in § 7.4 to provide that any independent

consultant appointed by the Buyers cannot be an em-

ployee or “Affiliate” of the Buyers; and in 4 14.3.2 to

provide that any appointed expert cannot be an employee

or “Affiliate” of either party to the contract. Most impor-

tantly, Article 15, which contains the contract’s arbitration

provisions, does not apply to any of the contracting par-

ties’ “Affiliates.”

If the parties had intended to bind their affiliates as

Ruhrgas now claims, they certainly could have provided

® Declaration of Lutz K. Eckert 5 (emphasis added) ; reprinted at

Appendix B.

10 Relevant sections of the contract are reprinted at Appendix C.

8

as much in the contract. Instead, being fully aware of the

distinct corporate entities involved, they chose to identify

their affiliates with precision for some limited purpose and

then to exclude any reference to them in any substantive

contractual provision, including the arbitration provision.

By their own terms, these unambiguous provisions exclude

Respondents from any application of MPCN’s arbitration

clause.” Under universally accepted rules of contract

construction, it must be presumed that this exclusion

of affiliates was deliberate.” Even general federal policies

favoring arbitration “cannot serve to stretch a contractual

clause beyond the scope intended by the parties.” Beckham

v. William Bayley Co., 655 F. Supp. 288, 291-92 (N.D.

Tex. 1987).

Ill. NO INTERNATIONAL PRINCIPLE SUPPORTS

RUHRGAS OR REQUIRES REVIEW.

Because it has no arbitration agreement with Respond-

ents, Ruhrgas urges that this Court should nevertheless

compel arbitration based on a vague “international prin-

ciple” that trumps well-settled United States jurisprudence.

According to this argument, all of Ruhrgas’ affiliates *

11 See Mowbray, 795 F.2d at 1116 (finding arbitration provision

inapplicable where parties to contract were aware of third-party

but excluded it from arbitration clause); 17A C.J.S. Contracts § 312

(1963). Even if there were some ambiguity, which there is not,

the contract would have to be strictly construed against Ruhrgas,

the contract’s principal draftsman. See Mastrobuno v. Shearson

Lehman Hutton, Inc., 514 U.S. 52 (1995).

12 See Taylor v. Investors Assocs., Inc., 29 F.3d 211, 215 (5th

Cir. 1994) (adopting opinion of district court) (omission of party

from contractual arbitration clause should be considered purpose-

ful); 17A C.J.S. Contracts § 312 (1963) ; see also Goldberg v. Bear,

Stearns & Co., 912 F.2d 1418, 1419-20 (11th Cir. 1990) (“The

Courts are not to twist the language of the contract to achieve a

result which is favored by federal policy but contrary to the intent

of the parties.”). —

13 This conceivably would include the corporations that are major

shareholders of Ruhrgas, including Esso, Mobil, Shell and British

Petroleum.

9

and all of MPCN’s affiliates would be deemed to have

consented to arbitration and implicitly to have waived

their respective rights to trial by jury. In support of this

alleged rule, Ruhrgas continues to dust off (and misread)

an English translation of a single intermediate French

decision. Of course, as the district court observed, French

law has no conceivable application to this action. More-

over, as explained below, that decision, when carefully

read, would not support Ruhrgas’ argument even as a

matter of French civil law.

Among other serious shortcomings, Ruhrgas’ “inter-

national principle” argument suffers from the following

fatal defects: (1) the initial question of whether there is

an agreement to arbitrate is resolved as a question of

United States contract law separate from the question of

how any such clause should be interpreted; (2) it is con-

trary to actual international law, which requires each

party, corporate or otherwise, to consent to arbitration

before being required to arbitrate; and (3) notwithstand-

ing Ruhrgas’ suggestion that the decision below breaks

new ground that will somehow create an international

commercial crisis, the decision tracks international law

and allows any party seeking arbitration to do so under

ordinary legal principles of contract or agency.

A. United States Law Determines Arbitrability.

Whether a contract’s arbitration clause requires arbi-

tration of a given dispute is a matter of contract inter-

pretation, which is to be performed by the court. AT&T

Technologies, Inc. v. Communications Workers of Amer-

ica, 475 U.S. 643, 649 (1986). “[T]he first task of a

court asked to compel arbitration . . . is to determine

Whether the parties agreed to arbitrate that dispute.”

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,

473 US. 614, 626 (1985). The federal policy favoring

14 Mitsubishi and Scherk v. Alberto-Culver Co., 417 U.S. 506

(1974) offer no support to Ruhrgas’ arguments because in each

case the parties had agreed to arbitrate.

10

arbitration pertains only to the scope of any arbitration

agreement, not to the preliminary question of whether

such an agreement exists. E.g., First Options of Chicago

v. Kaplan, 115 S. Ct. 1920, 1924 (1995); Morewitz v.

West of England Ship Owners Mutual Protection & In-

dem. Ass’n, 62 F.3d 1356, 1365 (11th Cir. 1995) (“[w]e

are unaware of any federal policy that favors arbitration

for parties who have not contractually bound themselves” )

(quoting In re Talbott Big Foot, Inc., 887 F.2d 611, 614

(Sth Cir. 1989) ).”*

This inquiry into whether a contract exists between

the parties is governed by ordinary rules of contract, not

broad policies, international or otherwise, favoring arbi-

tration. First Options of Chicago, Inc. v. Kaplan, 115

S. Ct. 1920, 1924 (1995); Thomson, 64 F.3d at 776;

Morewitz, 62 F.3d at 1364-65; Tropical Cruise Lines,

S.A. v. Vestas Ins. Co., 805 F. Supp. 409, 412-13 (S.D.

Miss. 1992). Of course, Ruhrgas starts with the admis-

sion that it has no agreements with Respondents. And, as

discussed, supra, ordinary rules of contract further estab-

lish that Ruhrgas intended to exclude Respondents from

the application of its gas sales agreement with MPCN.

B. The New York Convention Requires a Written

Agreement.

The New York Convention expressly requires “an agree-

ment in writing under which the parties undertake to sub-

15 Ruhrgas cites Justice Breyer’s decision for the First Circuit

in Societe Generale de Surveillance, S.A. v. Raytheon European

Mgmt. & Systems Co., 643 F.2d 863, 869 (1st Cir. 1985), which

stated that an arbitration clause that arguably governs a dispute

should be sent to arbitration in view of the federal policy favoring

arbitration of disputes. Of course, the parties there had agreed to

arbitration, and the opinion recognized the need for such agree-

ment: “To allow a federal court to enjoin an arbitration proceeding

which is not called for by the contract interferes with neither the

letter nor the spirit of [the FAA].” Jd. at 868 (emphasis in

original).

11

mit to arbitration all or any differences.” New York

Convention, Art. II. 1. (emphasis added). An “agree-

ment in writing” is defined as “an arbitral clause in a con-

tract or an arbitration agreement, signed by the parties or

contained in an exchange of letters or telegrams.” I/d.,

Art. II. 2. Congress, in implementing the New York

Convention and providing the basis for Ruhrgas’ attempted

removal, merely required that arbitration agreements be

enforced in conjunction with the Federal Arbitration Act.

Thus, under the New York Convention, as elsewhere, arbi-

tration is strictly “a creature of contract.” National

Iranian Oil Co. v. Ashland Oil, Inc., 817 F.2d 326, 334

(Sth Cir. 1987) (court cannot rewrite agreement of the

parties); International Shipping Co., S.A. v. Hydra Off-

shore, Inc., 675 F. Supp. 146 (S.D.N.Y. 1987), aff'd,

875 F.2d 388 (2d Cir. 1989), cert. denied, 493 USS.

1003 (1989) (only parties to contract containing arbi-

tration clause can be compelled to arbitrate under the

Convention). Because none of Respondents have con-

tracted for, or consented to, arbitration—in writing or

otherwise—the plain language of the New York Conven-

tion and the statute implementing it cannot compel arbi-

tration here,

C. International Law Requires Consent.

Contrary to Ruhrgas’ assertions, “international” prece-

dent supports this established American rule. Ruhrgas

argued below that Germany would be a convenient forum,

but it has failed to cite here the German rule that non-

executing parties are not bound to an arbitration agree-

ment." The so-called “group of companies doctrine” is

not applicable to arbitration under German law, based on

16 See Peter Schlosser, Schiedsrichterliches Verfahren in FRIED-

RICH STEIN, 7/2 KOMMENTAR ZUR ZPO § 1034 (2ist ed. 1994) ;

Ottoarndt Glossner, Le droit allemand de Varbitrage, in L’ARBITRAGE,

TRAVAUX OFFERTS AU PROFESSEUR ALBERT FETTWEIS 199, 200

(Lambert Matroy and Georges de Leval, eds. Brussels, 1989)

(“‘L’ARBITRAGE” ).

12

the principle that legal entities are separate and individual,

even if economically connected. The leading German au-

thority on arbitration law expressly rejects the notion of

binding an affiliate based on an arbitration agreement

between a related company and a third party." The same

rule applies in other European countries that have con-

sidered the issue.**

The French Dow” case is not to the contrary. The

defendant compelled to arbitrate in Dow had consented

to arbitration in a written contract; the question before

the court was whether the plaintiff parent corporations

could voluntarily participate in an arbitration between the

contract’s signatories.” Thus the case does not endorse,

17 Schlosser, id.

18 F.g., Belgium If one company is bound by an arbitration

clause, other non signatory members of a group

of companies are not bound. Lambert Matray,

Le droit belge de lV’arbitrage, in L’ARBITRAGE

231, 235.

France The general principle is that non signatories

are not bound; exceptions are fact specific and

being part of a “group of companies” is not

enough. Roger Perrot, Le droit francais de

Varbitrage, in L’ARBITRAGE 249, 250.

Italy “Related” parties that are not signatories are

not bound; does not recognize “group of com-

panies” doctrine. Giuseppe Tarzia, Le droit

italien de l’arbitrage, in L’ARBITRAGE 255, 257.

The Netherlands The issue has not been addressed.

Albert Jon von der Berg, Le droit neélandois

de Varbitrage, in L’ ABITRAGE 265, 267.

Switzerland To be bound by an arbitration clause, an

entity must agree to be bound or give a power

of attorney to be bound. Pierre Lalive, Le droit

suisse de l’arbitrage, in L’ARBITRAGE 279, 281.

1° Dow Chem. v. Isover Saint Gobain, Cour d’Appel Paris 21,

October 1983, 110 J. 899 (1983) IX Yearbook 132 (1984).

20The remaining U.S. cases cited by Ruhrgas involve similar

situations in which the nonsignatory is included because it consents

in court.

13

even as a matter of French law, the notion that arbitra-

tion can be imposed without consent.” Instead, the parent

companies in that case, unlike Respondents, voluntarily

sought to bring their claims in arbitration against a de-

fendant who already had consented to arbitrate.

D. The Fifth Circuit Opinion Does Not Impair Inter-

national Commerce.

Ruhrgas argues from a Note Verbale and an amicus

brief of the Federal Republic of Germany that the inter-

national aura of this case somehow demands Supreme

Court review. This argument ignores the analysis required

for arbitrability under the FAA and the Convention.

That Ruhrgas has managed to wield sufficient influence

within the German government to obtain such supple-

mental briefing does not create arbitrability.” Moreover,

the facts adduced below demonstrate that Respondents’

claims have created no commercial crisis in practice or

theory. In terms of the German natural gas market, the

Heimdal production is negligible.”

Nor do Respondents’ claims undermine commercial

negotiations. The reality of international commerce is

that large international corporations such as Ruhrgas

contract with full knowledge of corporate relationships

and wield sufficient economic power to demand express

21 And even that holding has been criticized in Europe. See ADAM

SAMUEL, JURISDICTION PROBLEMS IN INTERNATIONAL COMMERCIAL

ARBITRATION: A STUDY OF BELGIAN, DUTCH, ENGLISH, FRENCH,

SWEDISH, U.S. AND WEST GERMAN LAW 103 (Swiss Institute of

Comparative Law, Zurich 1989).

22 The German supplemental briefs merely attest to Ruhrgas’ sub-

stantial influence within the German government. During discovery,

Ruhrgas admitted that its representatives had met with the German

government to discuss the case.

23 The Ruhrgas manager charged with North Sea gas purchases

testified below that Heimdal gas accounts for only 0.5% of Ruhrgas’

purchases. Ruhrgas admitted that its gas supply from all Heimdal

producers is minimal.

: 14

terms regarding what entities are bound.* It is no threat

to commerce if the terms of such contracts are enforced

and if U.S. courts follow the law of every European

country that has considered the issue. Ruhrgas’ proposed

“principle” is far more ominous, as it would inject un-

certainty as to party identity into virtually every multi-

national agreement.

And it is no threat to international commerce for Ruhr-

gas to appear in a Texas court. While Ruhrgas now

argues that Texas is a “distant” and “unfamiliar forum”

(Pet. at 6), it neglects to mention that it has permanently

stationed employees in Houston, Texas and entered into

an agreement with Tenneco for a substantial interest in a

Texas-based corporation.” Ruhrgas boasted in its own

annual report that this interest (in the Fifth largest gas

marketing company in the United States) would allow

Ruhrgas to “participate in the growth of the gas market-

ing business in the USA” and to “make money in the

[U.S. gas marketing] business.” Moreover, a related non-

competition agreement with Tenneco in which the parties

divide the North American gas distributing market con-

firms that Ruhrgas understands the vagaries of corporate

affiliation and is fully capable of including them in agree-

ments where it so intends.

Ruhrgas clearly contracted to insulate its own sharehold-

ers, including Esso, Mobil and Shell. Now it attempts, but-

tressed by its governmental patron, to avoid the result of

its own draftsmanship and the consequences of its tortious

acts. This invocation of “international principles” cannot

transform a garden variety state court fraud and inter-

24 This is particularly true here, where the Agreement was pro-

vided to MPCN as a virtual fait accompli.

25 In addition to these United States connections, Ruhrgas owns,

directly or indirectly, the American Meter Company, the world’s

largest gas meter manufacturer, based in Pennsylvania, as well as a

number of other American companies, including Kromschoder, Inc.,

LOI, Inc., Hauck Manufacturing, and Centaur Vacuum.

15

ference action into a federal case.** Ruhrgas invites this

Court to create a new rule of law—contrary to all prior

U.S. and European precedent—that would force a U.S.

corporation to arbitrate its claims abroad even though it

never has agreed or otherwise consented to submit to

arbitration. This Court should decline that dubious

invitation.

CONCLUSION

For the reasons stated, the Petition for Certiorari filed

by Ruhrgas, A.G. should be denied. |

Respectfully submitted,

CLIFTON T. HUTCHINSON *

J. GREGORY TAYLOR

DAvip J. SCHENCK

HUGHES & LUCE, L.L.P.

1717 Main Street, Suite 2800

Dallas, Texas 75201

(214) 939-5500

Attorneys for Respondents

October 9, 1997 * Counsel of Record

26 See, e.g., Aquafaith Shipping, Ltd. v. Jarillas, 963 F.2d 806,

809 (5th Cir. 1992) (presence of foreign corporations does not lift

state law claims into “rarefied realm of foreign relations’).

APPENDICES

la

APPENDIX A

[Filed Aug. —, 1995]

IN THE DISTRICT COURT

OF HARRIS COUNTY, TEXAS

152D JUDICIAL DISTRICT

No. 95-32957

MARATHON O1L ComMPANY,

MARATHON INTERNATIONAL O1L CoMPANY,

and MARATHON PETROLEUM NorcE A/S,

; Plaintiffs,

Vv.

RuuHprGas, A.G.,

Defendant.

PLAINTIFFS’ FIRST AMENDED PETITION

Plaintiffs Marathon Oil Company, Marathon Interna-

tional Oil Company, and Marathon Petroleum Norge A/S

(collectively “Plaintiffs” or “Marathon”) assert the follow-

ing claims against Ruhrgas, A.G.

PARTIES

1. Marathon Oil Company is an Ohio corporation that

maintains its principal office at 5555 San Felipe,

Houston, Harris County, Texas 77056.

2. Marathon International Oil Company is a Delaware

corporation that maintains its principal place of busi-

ness at 5555 San Felipe, Houston, Harris County,

Texas 77056.

3. Marathon Petroleum Norge A/S ( “MPN”) is a

Norwegian corporation that maintains its principal

2a

office at 5555 San Felipe, Houston, Harris County,

Texas 77056.

4. Defendant Ruhrgas, A.G. (“Ruhrgas”) is a German

corporation that maintains its principal office at

Huttropstr. 60, 45138 Essen, Germany. Among

other connections to Texas, Ruhrgas owns a 20%

interest in Texas-based Tenneco Oil Compay. This

defendant has done business in the State of Texas

within the meaning of § 17.042 of the Texas Civil

Practice and Remedies Code, out of which a portion

of this suit arises, but has not designated an agent

upon which service of process may be made. Pur-

suant to the Hague Convention, Ruhrgas may be

served by delivering two copies of this petition, trans-

lated into German, to Der Justizminister des Landes

Nordrhein-Westfalen, D 4000 Duesseldorf, Germany.

The Minister of Justice then will forward this peti-

tion to Ruhrgas. Alternatively, Ruhrgas may be

served in accordance with Texas Civil Practice &

Remedies Code § 17.041, et seq., which deems the

Secretary of State to be Ruhrgas’s agent.

VENUE

5. Venue is proper in Harris County pursuant to Tex.

Civ. Prac. & Rem. Code § 15.007 because the de-

fendant is a foreign corporation with no agent or

representative in this state, and certain of the plain-

tiffs reside in Harris County. Furthermore, some of

the causes of action alleged in this petition arose, in

whole or in part, in Houston, Harris County, Texas.

FACTUAL BACKGROUND

6. This case arises out of a conspiracy among Ruhrgas,

Den Norske Stats Oljeselskap A.S. (“Statoil”), and

others to monopolize the Western European market

for natural gas. Pursuant to this conspiracy, Ruhrgas

participated in a series of interconnected wrongful

3a

acts relating to the solicitation for funding, develop-

ment and subsequent operation of gas fields in the

North Sea off the coast of Norway. The wrongful

conduct alleged in this petition has been continuing

for many years, has caused continuing injury to

Plaintiffs, and still is ongoing. Plaintiffs are seeking

to recover the damages they have sustained over the

years as a proximate result of Ruhrgas’ continuing

torts.

History of Gas Developments in the North Sea

. In order to appreciate the nature and extent of

Ruhrgas’ wrongful conduct, one first must understand

the historical factors leading up to the development

of gas in the North Sea. From the mid-1960’s to the

early 1970's, the largest source of natural gas for the

Western European market was the Groningen field

in Holland. Between 1965 and 1974, this field serv-

iced a steadily growing demand for natural gas in

Holland, France, Belgium and West Germany. By

1975, however, Gasunie (the Dutch state-owned gas

company) had determined that the Groningen field

would be insufficient to meet Holland’s future needs

if gas exports continued. As a result, Gasunie began

to phase out its natural gas exports, leaving gas buy-

ers in Western Europe scrambling to find a stable

new source of high-quality gas.

. Although both the Soviet Union and Algeria had gas

in exportable quantities, many Western European

buyers did not consider these sources stable enough

for long-term dependence due to the political cli-

mates in those countries. Instead, the most promising

source for Western Europe’s long term natural gas

needs were gas reserves located beneath the North

Sea. Most of these reserves had not, however, been

commercially developed as of the mid-1970’s, and

were located so far from any coastline that develop-

4a

ment and transportation would be expensive, if not

prohibitive.

9. Ownership of the North Sea gas reserves was divided

between Norway and Great Britain by treaty. By the

early 1970’s, Great Britain already was producing

some North Sea gas for its own domestic consump-

tion, as was Norway to a lesser extent. Norway’s

natural gas operations were conducted by Statoil,

Norway’s state owned oil and gas company.

10. Statoil saw the Western European gas demand as

creating a potential bonanza for itself. If Statoil

could develop the North Sea fields and locate a long-

term, reliable purchaser for large amounts of gas,

Statoil could become Western Europe’s primary gas

supplier and reap tremendous profits for years to

come.

Ruhrgas’ Conspiracy with Statoil

11. Ruhrgas is Germany’s largest gas company, con-

trolling more than 80% of the German market for

natural gas. In the 1970’s, Ruhrgas, along with sev-

eral other gas buyers, formed a cartel known as the

“Consortium” or the “Grand Alliance.” The goal of

this Ruhrgas-led Consortium was to divide up the

European gas market among themselves and control

the distribution of gas throughout the European

continent. Once Gasunie began decreasing its ex-

ports of natural gas, Ruhrgas and its Consortium im-

mediately turned to Statoil as a potential supplier.

12. Following a series of closed door meetings and

negotiations, Statoil agreed to sell the vast majority

of its North Sea gas to Ruhrgas and its Consortium,

and the parties jointly launched a plan to monopolize

the Western European gas market. Pursuant to this

plan, the few Norwegian North Sea gas fields then

in operation were to be linked by a pipeline known

as “Norpipe” to a gas facility owned by Ruhrgas in

13.

14.

5a

Emden, Germany. Thus Ruhrgas would be able to

control the distribution of all gas then being pro-

duced in the southern portion of the North Sea.

Both Ruhrgas and Statoil knew that the few fields

producing North Sea gas in the mid-1970’s never

would provide enough gas to satisfy the Western

European market. In order to monopolize that mar-

ket, Ruhrgas and Statoil would have to ensure a

stable supply of gas for years to come by tapping

into potentially large but still undeveloped gas re-

serves further north. For Ruhrgas’ and Statoil’s plan

to succeed, platforms to exploit such reserves would

have to be funded and developed, and a new pipeline

would have to be constructed to connect the new

fields to the Norpipe system (and thus to Europe

through Ruhrgas’ facility in Emden). Unfortunately,

developing gas fields in the North Sea is an incredibly

expensive proposition. Thus, the conspirators sought

to interest other companies, including Marathon, in

Sharing the costs associated with developing the

northern fields, building platforms, and constructing

a gas pipeline system to transport the gas to Emden.

The Development of Heimdal

One of the undeveloped North Sea fields was the

Heimdal gas field. In 1972, Pan Ocean Oil, Ltd.

had discovered the Heimdal gas field in Norway’s

portion of the North Sea. The Heimdal field was

declared commercial in 1974, roughly the same time

that Gasunie informed its Western European gas

buyers that they would have to look elsewhere for

natural gas. At the time, Pan Ocean planned to

connect the Heimdal field (which had only marginal

gas reserves) to a neighboring field via a short pipe-

line, and then ship the gas to Great Britain through

an existing pipeline. In 1975 Statoil exercised an

option to take a 40% equity interest in Heimdal and

6a

entered into an Operating Agreement with, inter alia,

Pan Ocean Oil Norge A/S, Pan Ocean’s Norwegian

subsidiary, to develop the field.

15. Marathon acquired Pan Ocean in 1976, and with it a

24% interest in the field. Marathon’s acquisition

made it Heimdal’s second-largest equity interest holder

and a joint venture partner with Statoil. Marathon

also acquired Pan Ocean Oil Norge A/S, which held

the license to Heimdal, and subsequently renamed

the company Marathon Petroleum Norge A/S.

16. In the late 1970’s and early 1980’s, Statoil and

Ruhrgas were seeking to obtain control of the sale

and distribution of gas from three North Sea fields:

Heimdal, Gulffaks and Statfjord. Only with all three

fields committed, and with the financial commitment

of the licensees of each (including MPN), could

enough money be raised to build a pipeline to link

these northern regions (and other potential Norwe-

gian reserves even further north) to Ruhrgas’ Emden

facility. Thus Ruhrgas and Statoil plotted to obtain

a commitment from Marathon, and others to commit

the funds necessary to enable them to effect their

monopolistic scheme.

17. Shortly after MPN became a venture partner, Statoil

suggested that Heimdal be connected to the European

continent rather than to Great Britain. Such a con-

nection would require the construction of a new and

longer pipeline (later called “Statpipe”) to connect

Heimdal to the existing Norpipe system, which con-

veniently landed at Ruhrgas’ facility in Emden.

Statoil proposed that the cost of constructing such a

pipeline be recouped from the joint ventures by means

of a high transportation charge or “tariff” on all gas

flowing through the pipeline until the construction

costs were recovered.

18. Naturally, Plaintiffs were concerned about bearing

such a cost (particularly given that a pipeline to

Licicaccenieiaianeiiaiamiamniainaiiaidaiaiiiiiitiaiiaiaanaas

19.

20.

7a

Britain would have been cheaper), but Statoil as-

sured Marathon that the venture partners would be

able to charge a premium price for Heimdal gas

that would be more than sufficient to offset the tariff

costs. Such a premium price was essential—given the

high costs associated with developing the Heimdal

field, and the relatively small amount of gas in the

field, only a premium price would provide an ade-

quate return on investment sufficient to justify the

cost of development.

In order to convince Plaintiffs and the Heimdal joint

venture partners that they would be assured of obtain-

ing the required premium price, Statoil began “nego-

tiating” with potential gas buyers before any sub-

stantial funds were committed to develop the field.

Of course, Statoil’s talks centered primarily, if not

exclusively, on Ruhrgas and the Consortium. Ruhr-

gas and its Consortium agreed to pay the Heimdal

venturers a premium price if the field were developed

and connected to the Norpipe system. Indeed, Ruhr-

gas and the Consortium even signed a “Heads of

Agreement” promising to pay the venturers a formula

then yielding $5.50 per million BTU’s ($6.16/mcf)

for Heimdal gas. Such a price would have provided

the venturers with a sufficient premium to economi-

cally develop the field and pay the Statpipe tariff.

Based on these oral and written assurances, Mara-

thon agreed to provide their subsidiaries and affiliates

with sufficient capital to enable them to fund the

development of the Heimdal field and to support the

proposed Statpipe pipeline.

Ruhrgas’ and Statoil’s Secret Agreements

During the negotiations leading up to Ruhrgas’ repre-

sentations and agreements to purchase gas at a

premium price, Statoil and Ruhrgas representatives

conducted several secret meetings. Upon information

8a

and belief, and Ruhrgas agreed that Statoil would

force the Heimdal venturers to sell the gas to Ruhrgas

and the Consortium through a pipeline to be con-

nected to Ruhrgas’ facility at Emden. The Heimdal

venturers would be “locked” into the Ruhrgas pipe-

line system with no other means of selling their gas.

Marathon, of course, never was told of this secret

agreement.

21. Based on Ruhrgas’ representations and agreements,

Marathon advanced over $300 million to their sub-

sidiaries and affiliates for the development of the

Heimdal field. Statoil and Ruhrgas never disclosed

to Plaintiffs: (a) that they were attempting to mo-

nopolize the Western European gas market and pre-

vent sales to any other gas buyers; (b) that connecting

Heimdal to Europe (instead of Great Britain) through

Ruhrgas’ Emdeen facility was part of their overall

monopolistic plan; or (c) that Ruhrgas never in-

| tended to pay the promised premium price for gas.

| Had Marathon been told of these facts, Marathon

never would have advanced any funds for the de-

velopment of the Heimdal field and the support of

| Statpipe, and MPN could have recovered its capital

investment in the Heimdal license.

22. Also unbeknownst to Plaintiffs was the fact that

Statoil had discovered a huge gas reserve north of

Heimdal that ultimately became known as the Troll

field. The Troll field was forty times larger than

Heimdal, and had the potential of providing Statoil

and Ruhrgas with the gas necessary to permit them

to realize their goal of monopolizing the Western

European gas market.

Ruhrgas Uses Coercion to Lower Gas Prices

23. After discovering the Troll field, Statoil began nego-

tiating a gas sales contract with Ruhrgas and the

Consortium to cover the new gas. Statoil was anxious

24.

ym

9a

to obtain a long-term commitment for the sale of

Troll gas. Ruhrgas, in turn, wished to (1) lower all

North Sea gas prices to boost its monopoly profits,

and (2) obtain the rights to all Norwegian reserves

for the Consortium to assure a stable supply for its

monopoly for many years to come. In secret negoti-

ations these conspirators reached an agreement to

commit Troll gas to Ruhrgas at a much reduced

price (initially around $2.201 per mcf), and Ruhrgas

induced Statoil to commit to lower North Sea gas

prices at all other Norwegian fields, including Heim-

dal. Statoil made its decision to lower all North Sea

gas prices for Ruhrgas’ benefit despite the fact that

Marathon and others had made, and were continuing

to make, enormous investments in developing the

Heimdal field based on the assurance of premium

prices.

Following Statoil’s secret agreement to lower all

North Sea gas prices to the Troll level, Ruhrgas im-

mediately demanded that all Heimdal licensees lower

their gas prices because the Troll price allegedly had

set the market price for North Sea gas. When

Marathon’s ‘affiliate refused to lower the gas price

from the agreed-upon premium amount, Ruhrgas and

the other Consortium members simply continued tak-

ing Heimdal gas from Ruhrgas’ Emden facility but

began paying less for it.

By the time Ruhrgas and the other Consortium mem-

bers began these wrongful acts, Marathon was

trapped. The Heimdal gas reserves (and any hope

of recovering on the loans and the value of the

license) were locked into a single pipeline that

transported its gas to a facility completely controlled

by Ruhrgas. When the possibility of securing non-

Consortium buyers was raised in light of Ruhrgas’

flagrant wrongful conduct, Ruhrgas advised that it

would not allow any such purchasers to access

Heimdal gas. In other words, Marathon’s affiliate

10a

was forced to choose selling its gas to Ruhrgas at a

loss, or not selling its gas at all.

26. In response to the breach of the gas sales agreement

by Ruhrgas and the Consortium, the Marathon af-

filiate that had entered into the contract with the

Consortium initiated arbitration. The arbitration re-

sulted in a finding that Ruhrgas and most Consortium

members were obligated to pay the proper and

agreed-upon contract price for the Heimdal gas.

27. The arbitration was not a total victory, however:

another Consortium member (Distrigaz, the Belgian

state gas company) was excused from performing

under its contracts, leaving Plaintiffs without a buyer

for approximately 15% of the gas. Thus, although

initially victorious over Ruhrgas, the net result from

arbitration still left Marathon’s affiliates operating at

a substantial loss. Furthermore, Ruhrgas expressly

advised that it would not permit the Distrigaz vol-

umes to be sold to any competitor of the Con-

sortium.

28. Ruhrgas appealed the arbitration award and indi-

cated that it would seek relief under a “hardship”

clause of its gas sales contract because the Troll

price allegedly had lowered the market value for

North Sea gas. (In other words, through its con-

spiracy with Statoil, Ruhrgas effectively had lowered

the market price for all North Sea gas. It then

claimed that it suffered a hardship (and would lose

| money) by having to pay more than this new “mar-

ket” price. ).

29. Given Ruhrgas’ threats and its obvious ability to

control the sale of all of the gas from Marathon’s

license, Marathon and its affiliates were left with

no choice but to accede to Ruhrgas’ demands. Faced

with this economic coercion from Ruhrgas acting

from its controlling position in the Western European

30.

31.

32.

lla

gas market, Marathons’ affiliate agreed to an amend-

ment of the gas sales contracts that provided for a

reduction in the sales price over a period of time

beginning in 1992 that ultimately would reach the

Troll price level. The negotiations leading up to this

agreement, along with the economic coercion de-

scribed above, took place in Houston, Harris County,

Texas.

Statoil’s Representations Induced Marathon Into Not

Filing Suit

In the course of the negotiation with Ruhrgas and

the Consortium, Marathon considered further litiga-

tion against Ruhrgas to recover the damages up to

that point. Statoil, however, assured Marathon that

once the Troll field was in production and its gas

was flowing through Statpipe, tariff prices would

decline and thereby assuring Marathon that it invest-

ment would improve. Statoil provided projections

indicating that Troll would be connected to Statpipe,

that gas volumes flowing through Statpipe necessarily

would increase, and that the tariff on all gas flowing

through the pipeline correspondingly would decrease.

These projections were sent to Marathon in Houston,

Texas. Based on Statoil’s assurances, Marathon re-

frained from further litigation with Ruhrgas.

Unfortunately, Statoil only told Marathon half of

the story. Upon information and belief, Statoil and

Ruhrgas had not agreed to ship the Troll volumes

through Statpipe. In fact, Statoil had determined to

ship gas from its newer gas fields through a separate

pipeline system bypassing Statpipe. Thus Statoil

either negligently misrepresented or fraudulently rep-

resented to Marathon that this gas would be avail-

able to lower the Statpipe tariff.

Statoil continued to send projections to Marathon in

Houston, Texas for several years that indicated the

33.

34.

i2a

Troll field would be connected to Statpipe and that

tariffs then would decrease. Earlier this year, how-

ever, Statoil announced for the first time that Troll

would not be connected to Statpipe—instead, its gas

would be transported to Europe through a new pipe-

line. Thus Statoil and Ruhrgas have left Marathon

and its affiliates to continue incurring debilitating

losses without any reduction in expenses as prom-

ised. Had Statoil not made misrepresentations to

Marathon regarding increased shipments of gas

through Statpipe and the related cost reductions,

Plaintiffs would have filed this action years ago.

Plaintiffs’ Damages

As a result of these wrongful activities, Marathon

have suffered, and continue to suffer, tremendous

losses. Furthermore, given that Marathon now will

be unable to repay any of the advances Ruhrgas

induced Marathon to make to develop the Heimdal

field and support Statpipe, Marathon will suffer and

recognize a loss of its capital investment this year.

To add insult to injury, Statoil has attempted to take

advantage of its wrongful acts and conspiratorial

activities by offering to purchase MPN’s license in

Heimdal for a nominal price and thus freeze Plain-

tiffs out of the field they helped develop. The result

of Ruhrgas’ wrongful acts is to render MPN’s license

virtually worthless.

Ruhrgas’ and Statoil’s actions as alleged above were

(and are) part of a single ongoing plan aimed at

controlling the Western European gas market and

duping others into funding the development of North

Sea gas fields and pipeline systems for Statoil’s and

Ruhrgas’ benefit. The wrongful activities of Ruhrgas

and Statoil have been continuing for years, and con-

tinue to effect additional injury to Plaintiffs every

day: in addition to the staggering loss of the initial

35.

36.

37.

38.

13a

investment, Plaintiffs are incurring substantial losses

each month on the Heimdal operations.

Both Statoil and Ruhrgas fraudulently concealed

their secret agreements from Marathon. Had Plain-

tiffs known the truth about Ruhrgas’ and Statoil’s

relationship and plans, they never would have agreed

(1) to commit hundreds of millions of dollars to

develop the Heimdal field, and (2) to support a

pipeline to Europe that landed in a facility controlled

by Ruhrgas.

CAUSES OF ACTION

FRAUD

Plaintiffs reallege the allegations contained in the

preceding paragraphs, and incorporate them by

reference.

As part of its continuing tortious activity, Ruhrgas

made numerous material misrepresentations to Mara-

thon. Among other things, Ruhrgas represented to

Marathon that it would pay a premium price for

Heimdal gas in exchange for (a) Marathon’s agree-

ment to fund the development of the Heimdal gas

reserves; (b) Marathon’s support for connecting

Heimdal to Ruhrgas’ facility in Emden; and (c)

Marathon’s agreement to help underwrite the con-

struction costs for Statpipe.

Ruhrgas never intended to honor its promises to pay

a premium price for Heimdal gas. To the contrary,

Ruhrgas merely promised to pay such prices to induce

Marathon to fund the development of the field and

the construction of a pipeline to Emden. Ruhrgas

always intended to pay a lower price once the pipe-

line was constructed and there was then no other

avenue for selling the gas.

yl

39.

40.

41.

l4a

Ruhrgas intended that Plaintiffs would act upon

these misrepresentations by advancing the funds nec-

essary to develop Heimdal, and Plaintiffs justifiably

relied upon such misrepresentations to their detri-

ment. Had Ruhrgas not made these misrepresenta-

tions, Plaintiffs never would have advanced any funds

for the Heimdal field’s development.

As a proximate result of Ruhrgas’ fraud, Plaintiffs

sustained actual damages in an amount far in excess

of this Court’s jurisdictional limits, for which Plain-

tiffs now sue.

Ruhrgas’ actions as alleged above were willful, know-

ing, intentional, outrageous and malicious. Given the

surrounding circumstances, Ruhrgas either intended,

or should have known, that its conduct created an

extreme degree of risk and peril to Plaintiffs, a high

probability of serious injury to Plaintiffs, and a genu-

ine likelihood of financial catastrophe for Plaintiffs.

Accordingly, Plaintiffs sue for punitive damages in an

amount of at least four times their actual damages.

TORTIOUS INTERFERENCE WITH PROSPECTIVE

42.

43.

44.

BUSINESS RELATIONSHIPS

Plaintiffs reallege the allegations contained in the

preceding paragraphs, and incorporate them by

reference.

From the inception of the Heimdal field’s develop-

ment, and particularly after Ruhrgas demanded a

price renegotiation, Marathon’s affiliate sought to

identify and establish relationships with European

gas buyers other than Ruhrgas and the Ruhrgas-led

Consortium.

In response, Ruhrgas representatives told Marathon

that Ruhrgas would not allow the Heimdal gas to

be transported through its facilities to any competing

gas buyer.

45.

46.

47.

48.

15a

Ruhrgas has made good on its threat. To date, it

has refused to permit non-Consortium buyers to ac-

cess the gas originally allocated to the Consortium

under the gas sales agreements. This interference has

been continuous and still is on-going. For example,

Ruhrgas now is refusing to recognize the termination

of the gas sales contract between the parties, and is

refusing to provide certain necessary gas transporta-

tion cost information to enable a szle to other buyers.

fering with these prospective relationships is to harm

Plaintiffs, and Ruhrgas is not privileged or justified

in such interference.

As a proximate result of Ruhrgas tortious interfer-

ence as alleged above, Plaintiffs hive sustained, and

continue to sustain, actual damage: in an amount far

in excess of this Court’s jurisdictional limits, for

which they now sue.

Ruhrgas’ actions as alleged above vere willful, know-

ing, intentional, outrageous and malicious. Given the

surrounding circumstances, Ruhrgss either intended,

or should have known, that its conduct Created an

extreme degree of risk and peril tc Plaintiffs, a high

probability of serious injury to Plantiffs, and a genu-

ine likelihood of financial Catastrovhe for Plaintiffs.

Accordingly, Plaintiffs also sue for punitive damages

in an amount of at least four tmes their actual

damages.

49.

50.

51.

52.

16a

PARTICIPATION IN BREACH OF

FIDUCIARY DUTY

Plaintiffs reallege the allegations contained in the

preceding paragraphs, and incorporate them by

reference.

As alleged above, Statoil and MPN are joint venture

partners. This relationship gives rise to formal fi-

duciary duties owed by Statoil to MPN.

As a result of its relationship with Statoil, MPN

trusted and relied on Statoil, and was justified in

placing confidence in the belief that Statoil would

act in MPN’s best interest. Accordingly, MPN’s

relationship with Statoil was a confidential and spe-

cial relationship, as well a formal fiduciary relation-

ship.

Among other things, Statoil owed MPN a duty to

fully disclose all material facts, a duty not to seek

an advantage for itself at MPN’s expense, a duty of

loyalty, and a duty of good faith dealing. Statoil’s

breaches of fiduciary duties to MPN have been con-

tinuous, and have caused MPN continuous injury.

Examples of steps taken by Statoil include, among

other things:

a) agreeing to lower all North Sea gas prices to

assist Ruhrgas, contrary to the promises it had

made to Plaintiffs and to Plaintiffs’ detriment;

b) conspiring with Ruhrgas to monopolize the mar-

ket for North Sea gas to Plaintiffs’ detriment;

c) providing projections showing that Troll gas

would flow through Statpipe when Statoil knew,

or should have known, that those projections were

erroneous; and

d) failing to disclose its agreements with Ruhrgas

that necessarily worked to Plaintiffs’ detriment.

53.

54.

55.

56.

57.

58.

17a

Ruhrgas was aware that Statoil and MPN were joint

venturers, and that Statoil owed fiduciary duties to

~ MPN. Nevertheless, Ruhrgas knowingly aided, abet-

ted, induced, and/or participated in the breach of

Statoil’s fiduciary duties as alleged above. Accord-

ingly, Ruhrgas is jointly and severally liable for any

damages Plaintiffs sustained as a result of Statoil’s

breaches of fiduciary duty.

As a proximate result of Statoil’s breaches of its

fiduciary duties, and Ruhrgas’ participation in those

breaches, Plaintiffs sustained actual damages in an

amount far in excess of this Court’s jurisdictional

limits, for which Plaintiffs now sue.

Ruhrgas’ actions as alleged above were willful, know-

ing, intentional, outrageous and malicious. Given the

surrounding circumstances, Ruhrgas either intended,

or should have known, that its conduct created an

extreme degree of risk and peril to Plaintiffs, a high

probability of serious injury to Plaintiffs, and a gen-

uine likelihood of financial catastrophe for Plaintiffs.

Accordingly, Plaintiffs also sue for punitive damages

in an amount of at least four times its actual damages.

CONSTRUCTIVE FRAUD

Plaintiffs reallege the allegations contained in the

preceding paragraphs, and incorporate them by

reference.

Ruhrgas’ participation in Statoil’s breaches of fidu-

ciary duties constitute the breach of both legal and

equitable duties owed to Plaintiffs. Such breaches are

constructively “fraudulent” because of their tendency

to deceive others, violate confidence, and injure pub-

lic interests.

As a proximate result of Ruhrgas’ constructive fraud,

Plaintiffs have sustained actual damages in an amount

—_

18a

far in excess of this Court’s jurisdictional limits, for

which they now sue.

CIVIL CONSPIRACY

59. Plaintiffs reallege the allegations contained in the

preceding paragraphs, and incorporate them by

reference.

60. Ruhrgas and Statoil conspired between themselves

and with others to (i) fraudulently induce Marathon

to fund the development of the Heimdal field, (ii)

lower North Sea gas prices generally, and then (iii)

force Marathon to accede to such prices, by means

of misrepresentations, improper threats, breaches of

fiduciary duty, and fraud. This plan was accom-

plished through the fraud, breaches of fiduciary du-

ties, and other actions alleged above. This conspiracy

was designed to result in:

a) Marathon committing over $300 million to de-

velop the Heimdal gas field and subsidize a Euro-

pean pipeline;

b) Statoil having a guaranteed long-term buyer for

gas produced in its Troll field;

c) Ruhrgas and Statoil controlling the price and dis-

tribution of Heimdal gas;

d) Ruhrgas being able to purchase gas from all

North Sea fields at lower prices than provided in

its contracts;

e) Ruhrgas and Statoil effectively controlling the

flow of gas from major North Sea fields and

monopolizing the sale of North Sea gas in West-

ern Europe;

f) Statoil using Plaintiffs and other gas producers

to fund the construction of an undersea pipeline

y

TT Le

61.

62.

63.

64.

19a

to Europe (for Statoil’s and Ruhrgas’ benefit)

through excessive tariffs;

g) Ruhrgas and Statoil attempting to prevent, re-

strict or distort competition by, among other

things, directly or indirectly fixing prices, and

limiting or controlling markets; and

h) Ruhrgas and Statoil abusing a dominant position

within the market.

Ruhrgas and Statoil conspired among themselves and

others to accomplish both (a) unlawful purposes and

(b) lawful purposes through unlawful means as al-

leged above. Both Ruhrgas and Statoil have com-

mitted, and continue to commit, numerous overt acts

in furtherance of this conspiracy, including the

breaches of fiduciary duties and misrepresentations

previously alleged. Accordingly, Ruhrgas is jointly

anc severally liable for all damages sustained by

Plaintiffs due to this civil conspiracy.

As a proximate result of Ruhrgas’ and Statoil’s

civil conspiracy, Plaintiffs have sustained actual dam-

ages in an amount far in excess of this Court’s juris-

dictional limits, for which they now sue.

Ruhrgas’ actions as alleged above were willful, know-

ing, intentional, outrageous and malicious. Given the

surrounding circumstances, Ruhrgas either intended,

or should have known, that its conduct created an

extreme degree of risk and peril to Plaintiffs, a high

probability of serious injury to Plaintiffs, and a genu-

ine likelihood of financial catastrophe for Plaintiffs.

Accordingly, Plaintiffs also sue for punitive damages

in an amount of at least four times their actual

damages.

JURY DEMAND

Plaintiffs request that this matter be decided by trial

jury, and hereby tender the required jury fee.

20a

WHEREFORE PREMISES CONSIDERED, Plaintiffs

pray that this matter be placed on the Court’s jury docket,

and that after a trial on the merits, the Court enter judg-

ment awarding Plaintiffs:

(1) Actual damages;

(2) Punitive damages of not less than four times actual

damages;

(3) Prejudgment and post-judgment interest allowed by

law;

(4) Costs of Court; and

(5) Such other and further relief as to which Plaintiffs

are entitled.

Respectfully submitted,

/s/ Clifton Hutchinson

CLIFTON T. HUTCHINSON

State Bar No. 10347500

DARRELL E. JORDAN

State Bar No. 00000064

J. GREGORY TAYLOR

State Bar No. 19706100

Davip J. SCHENCK

State Bar No 17736870

of HuGHEsS & Luce, L.L.P.

1717 Main Street

Suite 2800

Dallas, Texas 75201

(214) 939-5500

Telecopy (214) 939-6100

Attorneys for Plaintiffs

Marathon Oil Company,

Marathon International

Oil Company, and

Marathon Petroleum

Norge A/S

ll

2la

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

Civil Action No.

MARATHON OIL ComPany,

MARATHON INTERNATIONAL OIL COMPANY,

and MARATHON PETROLEUM NORGE A/S,

Plaintiffs,

vs.

RuuHRGAS, A.G.,

Defendant.

DECLARATION OF LUTZ K. ECKERT

I, Lutz K. Eckert, declare as follows:

1. I am more than 21 years old; I have never been

convicted of a crime involving moral turpitude; and I am

competent in every respect to give this declaration. The

matters stated herein are based upon my personal

knowledge.

2. Ruhrgas AG is a corporation organized under the

laws of the Federal Republic of Germany with its prin-

cipal place of business in Essen, Germany. I hold the

position of Head of the Legal Division in Ruhrgas AG.

3. Ruhrgas AG is engaged in the purchase and resale

of natural gas in Europe. Ruhrgas AG purchases natural

gas from various producing areas in Western Europe and

Russia and sells it to regional and local distribution com-

panies and industry in the Federal Republic of Germany

as well as to gas companies in neighboring European

countries.

22a

4. One of the sources of supply of gas for Ruhrgas

AG has been the Heimdal Field in the North Sea off the

coast- of Norway. Ruhrgas AG has purchased gas pro-

duced -from the Heimdal Field from various producers,

including Marathon Petroleum Company (Norway)

(“MPCN”). Specifically, Ruhrgas AG, together with

other buyers, has purchased gas produced from the Heim-

dal Field from MPCN under an agreement dated March

2, 1984 and an amendment thereto dated May 11, 1990

(collectively “the Agreement”). Attached hereto as Ex-

hibit “1” is a true and correct copy of the Agreement.

All of the Heimdal Field gas purchased by Ruhrgas AG

from MPCN is covered by the Agreement.

5. Ruhrgas AG has never entered into any agreement

with any of the Plaintiffs concerning gas produced from

the Heimdal Field or any of the matters which are the

subject of the First Amended Petition filed by the Plain-

tiffs in this action.

6. Attached hereto as Exhibit “2” is a true and cor-

rect copy of a letter dated July 21, 1995 from Mara-

thon Oil Company to Ruhrgas AG, which enclosed a copy

of Plaintiffs’ Original Petition. The July 21, 1995 letter

attached hereto as Exhibit “2” was the first notice re-

ceived by Ruh:gas AG of the filing of this action. That

letter was received by Ruhrgas AG on July 24, 1995. :

7. Attachec kereto as Exhibit “3” is a true and correct

copy of a letter dated July 21, 1995, from MPCN to

Ruhrgas AG.

8. Attached hereto as Exhibit “4” is a true and correct

copy of the 1994 Annual Report of Marathon Petroleum

Norge A/S. Attached hereto as Exhibit “5S” is a true and

correct translation of Exhibit “4” into English. The 1994

Annual Repot from Marathon Petroleum Norge A/S

shows that the rights and obligations of Marathon Pe-

troleum Norge A/S under Norwegian Production License

inssoiicescniniaannatineiiidintasieaasaaaiiiiiiiiiatmaile

23a

036 (Block 25/4) “have been exercised and performed by

Marathon Petroleum Company (Norway) under Pass

Through Agreements dated June 25, 1975 and October

23, 1978.”

9. Attached hereto as Exhibit “6” js a true and correct

copy of the Statutory Accounts of Marathon Petroleum

Norge A/S for 1993 and 1994. Attached hereto as Ex-

hibit “7” is a true and correct translation of Exhibit “6”

into English. The Statutory Accounts show that Mara-

thon Petroleum Norge A/S had no operating activities in

1993 or 1994. |

10. Attached hereto as Exhibit “9” is a true and

correct Copy of a telex from Marathon Oil Company to

Ruhrgas dated December 8, 1986, notifying Ruhrgas that

MPCN’s Norway office was closed and that all formal

communications should be directed to MPCN in Houston.

MPCN has not changed these instructions.

11. Den Norske Stats Oljeselkap A.S., which is com-

monly known as “Statoil,” is Norway’s state-owned oil

and gas company. Attached hereto as Exhibit “10” is a

true and correct copy_of an excerpt from a brochure

entitled “Norwegian Petroleum Activity—Fact Sheet 95”

published by Norway’s Ministry of Industry and Energy

which confirms that Statoil is 100% state-owned.

12. Attached hereto as Exhibit “A” is a true and cor-

rect copy of Statoil’s Articles of Association taken from

Statoil’s Annual Report and Account 1994.

I declare under penalty of perjury under the laws of

the United States of America that the foregoing is true

and correct.

Executed on 18 August, 1995, in Essen, Germany.

/s/ Lutz K. Eckert

Lutz K. EcKErT

[Attachments Omitted in Printing]

24a

APPENDIX C

HEIMDAL GAS

SALES AGREEMENT

between

Marathon Petroleum Company (Norway)

Utenlandsk Aksjeselskap

and

Districaz S.A.

Gaz de France

Gelsenberg AG

Gewerkschaft Brigitta

N.V. Nederlandse Gasunie

Ruhrgas AG

Thyssengas GmbH

Date: 2 March 1984

1.1

(3)

7.4

Definitions

Except where the context otherwise indicates the

following terms shall have the meanings ascribed

to them in this Article 1 and include the plural

as well as the singular: -

* * * *

“Affiliate” shall mean any parent company or

corporation of the Seller or any of the Buyers

which owns directly or indirectly fifty (50) per

cent or more of the shares of such Party carry-

ing voting rights, and any company or corporation

other than such Party of which such parent com-

pany or corporation or such Party owns directly

or indirectly fifty (50) percent or more of the

shares carrying voting ights.

* * * *

Buyers’ Consultant

At request from the Buyers in relation with a

determination made according to Article 2.3.4,

the Seller shall provide an independent consult-

ant appointed by the Buyers with all data speci-

fied in Appendix G section 3 necessary to allow

the consultant to make an independent evalua-

tion of a Reference DCQ as contemplated in

Article 2.3.4.

In the event that the Buyers, prior to or subse-

quent to such period when a consultant may be

provided with data according to the preceding

paragraph, reasonably require more information

than presented by the Seller pursuant to Appen-

dix G section 1, they shall have the right, for

their own purposes, to appoint an independent

consultant to whom the Seller shall provide all

necessary data specified in Appendix G section 3

26a

to allow the consultant to make an independent

assessment of the reservoir and its performance.

However, such right shall not be exercised more

than two (2) times.

However, in addition, in the event that the future

availability of gas is significantly affected as con-

templated in Article 2.3.5, fourth paragraph, or

in Article 2.4, third paragraph, the Buyers may

request the Seller to provide the consultant with

information specified in Appendix G section 3.

In order to enable the Buyers to assess whether

or not they should request a determination pur-

suant to Article 2.3.4, the Buyers shall have the

right to request the Seller to provide the consult-

ant with information specified in Appendix G

section 3(b), which right shall not be exercised

more often than seven (7) times. Each time the

consultant has been provided with information

in connection with this Article 7.4, first para-

graph, shall be counted against such seven (7)

times.

The appointment of any independent consultant

is subject to the acceptance of the Seller. Such

acceptance shall not be unreasonably withheld.

No person shall be appointed as a consultant

under this Article 7.4 who at the time of appoint-

ment is an employee of any of the Buyers or any

Affiliate or subsidiary of any of the Buyers or of

any company with which any of the Buyers has

a direct significant financial interest.

The consultant shall treat all the information he

has received from the Seller as confidential and

shall divulge to the Buyers only his conclusions

and the extent to which they show differences, if

any, from the Seller’s presentation.

All expenses and fees of the consultant shall be

borne by the Buyers.

14.3.2

15.

27a

It is recognized by the Buyers that the right

granted by this Article 7.4 is only exercisable

jointly by the Buyers in respect of all sellers tw

them of Processed Gas from the Heimdal Field

Reservoir.

Such assessment by the consultant shall not be

binding upon the parties.

* * * *

Conflicting Interest

Any person appointed as an expert shall before

accepting such appointment fully disclose any

interest or duty he has or may have which con-

flicts or may conflict with his function under

such appointment, and he shall also fully disclose

any such interest or duty incurred at any time

before he gives his determination under such ap-

pointment, provided always that no person shall

be appointed an expert who at the time of ap-

pointment is an employee of either Party or of

any Affiliate or subsidiary of either Party or of

any company with which either Party has a direct

significant financial interest.

* * * *

ARTICLE 15

RESOLUTION OF CLAIMS AND DISPUTES

All claims, disputes: and other matters arising

out of or relating to this Agreement which the

Parties are unable to resolve by mutual agree-

ment within forty-five (45) days of the date the

dispute first arose, except those matters that are

to be referred to an expert in accordance with

the terms and procedures set forth in Article 14

hereof, shall exclusively and finally be settled by

arbitration in Stockholm, Sweden, in accordance

with the Rules of Conciliation and Arbitration

- 28a

of the International Chamber of Commerce in

Paris or, in the absence of any applicable rule,

with the Procedural Laws of Sweden.

Unless otherwise agreed by the Parties such arbi-

tration shall be conducted by three (3) arbitra-

tors, one (1) selected by each Party and the

third arbitrator nominated by the arbitrators so

selected within thirty (30) days after the ap-

pointment of the second arbitrator. The third

arbitrator shall act as the chairman of the board

of arbitration and shall be fully educated and

trained to be a lawyer. The arbitration proceed-

ings shall be conducted in English.

Any arbitral award shall be enforceable in ac-

cordance with the rules of the 1958 Convention

on the Recognition and Enforcement of Foreign

Arbitral Awards. Judgment upon the award

rendered may be entered in any court or other

authority having jurisdiction or application may

be made to said court or other authority for a

judicial acceptance of the award and an order

of enforcement, as the case may be.

* * * *

Marathon Petroleum Company

(Norway)

Utenlandsk Aksjeselskap

/s/ [Illegible] Distrigaz S.A.

/s/ [Illegible]

Gaz de France

/s/ [{Ilegible]

Gelsenberg AG

/s/ [Illegible]

Gewerkschaft Brigitta

/s/ [Illegible]

29a

N.V. Nederlandse Gasunie

/s/ [Illegible]

Ruhrgas AG

/s/ [Illegible]

Thyssengas GmbH

/s/ [Illegible]