Al-Qarqani v. Chevron Corp., No. 19-17074 (9th Cir. 2021)
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In 1949, the government of Saudi Arabia transferred certain land in that country to an official named Khalid Abu Al-Waleed Al-Hood Al-Qarqani, who leased it to an affiliate of what later became Chevron. Five of Al-Qarqani's heirs now claim that Chevron owes them billions of dollars in rent. Plaintiffs contend that an arbitration clause contained in a separate 1933 agreement between Saudi Arabia and Chevron's predecessor, SOCAL, applies to their dispute. An Egyptian arbitral panel agreed and awarded plaintiffs $18 billion. Plaintiffs then petitioned for enforcement of the arbitral award, but the district court found that the parties had never agreed to arbitrate and therefore held that it lacked jurisdiction over the petition.
The Ninth Circuit agreed with the Second Circuit, disagreeing with the Eleventh Circuit, that the absence of an agreement to arbitrate was a reason to deny enforcement on the merits, rather than to dismiss for lack of subject-matter jurisdiction. The panel held that so long as a party makes a non-frivolous claim that an arbitral award is covered by the New York Convention, the district court must assume subject-matter jurisdiction. In this case, the panel affirmed the district court's dismissal for lack of subject-matter jurisdiction as to Chevron USA because it was not named in the arbitral award and plaintiffs advanced no non-frivolous theory of enforcement. The court affirmed the district court's denial of the enforcement petition on the merits as to Chevron Corporation where there was no binding agreement to arbitrate between the parties.
Court Description: Arbitration. Affirming the district court’s judgment on a petition for enforcement of a foreign arbitral award against Chevon Corporation, the panel held that the parties did not enter into a binding agreement to arbitrate, and enforcement under the New York Convention therefore should be denied. In 1949, the government of Saudi Arabia transferred land to an official, who leased it to an affiliate of what later became Chevron. The official’s heirs claimed that Chevron owed them rent. They contended that an arbitration clause contained in a separate 1933 land concession agreement between Saudi Arabia and Chevron’s predecessor, Standard Oil Company of California, applied to their dispute. An Egyptian arbitral panel agreed and awarded them $18 billion. The district court found that the parties had never agreed to arbitrate and therefore held that it lacked jurisdiction over the heirs’ petition for enforcement of the award. * The Honorable Paul J. Kelly, Jr., United States Circuit Judge for the U.S. Court of Appeals for the Tenth Circuit, sitting by designation. AL-QARQUANI V. CHEVRON 3 The panel held that under Fed. R. App. P. 3(c)(1)(A), the five heirs named in the notice of appeal were the only proper appellants. Agreeing with the Second Circuit, and disagreeing with the Eleventh Circuit, the panel held that the absence of an agreement to arbitrate was a reason to deny enforcement on the merits, rather than to dismiss for lack of subject-matter jurisdiction. The panel held that so long as a party makes a non-frivolous claim that an arbitral award is covered by the New York Convention, the district court must assume subject-matter jurisdiction. The panel held that as to respondent Chevron USA, Inc., which was not named in the Egyptian arbitral award, the heirs advanced no non-frivolous theory of enforcement. The panel therefore affirmed the district court’s dismissal for lack of subject-matter jurisdiction as to Chevron USA. The panel held that as to Chevron Corporation, the district court correctly concluded that there was no binding agreement to arbitrate between the parties. First, the heirs could not enforce the 1933 concession agreement against Chevron directly because the agreement was signed by Saudi Arabia, not the heirs, and Chevron’s rights and obligations under the 1933 agreement were extinguished long ago. Second, the 1949 deed did not incorporate by reference the arbitration clause contained in the 1933 agreement. The panel held that the proper disposition was not dismissal but denial of the enforcement petition on the merits. Nonetheless, because there was no reason to remand to the district court simply to direct it to affix a new label to its order, the panel affirmed the district court’s judgment. 4 AL-QARQUANI V. CHEVRON
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