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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1997
- **Citation:** 522 U.S. 967

## Text

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]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_1358%3A2. Public record. Not legal advice.
