Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-03-07118/USCOURTS-caDC-03-07118-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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Notice: This opinion is subject to formal revision before publication in the

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before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 13, 2004 Decided June 8, 2004

No. 03-7118

GULF RESOURCES AMERICA, INC. AND

GULF RESOURCES CORPORATION,

APPELLANTS

v.

REPUBLIC OF THE CONGO,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 98cv02978)

Stuart H. Newberger argued the cause for appellants.

With him on the brief were Clifton S. Elgarten, Dana C.

Contratto, and Beth Nolan.

Michael R. Lazerwitz argued the cause and filed the brief

for appellee.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

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Before: EDWARDS, SENTELLE and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge EDWARDS.

EDWARDS, Circuit Judge: The Foreign Sovereign Immunities Act (‘‘FSIA’’), 28 U.S.C. §§ 1602-1611 (2000), includes a

provision pursuant to which foreign states may waive their

sovereign immunity from suit in the courts of the United

States. See id. § 1605(a)(1). This case involves the applicability of that provision to a contract dispute involving plaintiffs-appellants Gulf Resources Corporation (‘‘Gulf’’), a Panamanian corporation with its primary place of business in

Beirut, Lebanon, and Gulf Resources America, Inc. (‘‘Gulf

America’’), a wholly owned subsidiary of Gulf with its principal places of business in Washington, D.C. and Los Angeles,

and defendant-appellee the Republic of the Congo (‘‘Congo’’).

(Throughout this opinion, Gulf and Gulf America are referred

to collectively as ‘‘Gulf’’ or ‘‘appellant.’’)

The dispute here arises out of the sale and resale of in-kind

oil royalties owed to Congo by a subsidiary of an Italian oil

conglomerate extracting oil from Congolese oil fields. At the

heart of the dispute are several written agreements pursuant

to which Congo sold certain of the royalty oil owed to Congo

by the Italian producer to Gulf and Gulf’s U.S. business

partner. Acting through its business partner, Gulf agreed to

sell the Congolese royalty oil back to the Italian producer at

market prices. Gulf paid Congo in advance for the oil that it

purchased. The Italian company was to pay Gulf as the oil

was produced. When it had paid Gulf for just over a quarter

of the oil that Gulf had purchased from Congo, the Italian

producer, allegedly following instructions from Congo, redirected to Congo the payments due to Gulf. Thus, Gulf

complains that Congo received payments owed to Gulf from

the Italian producer. In essence, Gulf alleges that Congo

received double payment for nearly three quarters of the

royalty oil that Congo sold to Gulf: Congo was paid once in

advance by Gulf and then again by the Italian producer.

Gulf filed suit in District Court alleging causes of action in

contract and tort (including conversion and interference with

contract) against Congo. Gulf sought damages and an acUSCA Case #03-7118 Document #826512 Filed: 06/08/2004 Page 2 of 15
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counting. Congo moved to dismiss under Federal Rule of

Civil Procedure 12(b)(1) asserting sovereign immunity. Gulf

argued that the District Court should exercise jurisdiction

under FSIA’s waiver provision, § 1605(a)(1), or under the

second clause of the commercial activity exception,

§ 1605(a)(2). The District Court dismissed the complaint

without prejudice, rejecting Gulf’s several theories in support

of its waiver argument, as well as its argument in support of a

commercial activity exception. Gulf Resources Am. v. Republic of Congo, 276 F. Supp. 2d 20 (D.D.C. 2003).

We reverse the judgment of the District Court and remand

the case for further proceedings. We find that Congo contractually waived sovereign immunity with respect to Gulf’s

claims in this case. Having waived sovereign immunity,

Congo lost its immunity from jurisdiction pursuant to 28

U.S.C. § 1605(a)(1). In light of this finding, we need not

address Gulf’s contention that Congo also lost immunity

under the commercial activity exception in FSIA.

I. BACKGROUND

A. The Original Purchase Agreement

In April 1993, a U.S. corporation, Occidental Congo Inc.

(‘‘Occidental’’), signed a Purchase Agreement with Congo,

pursuant to which Congo was to provide Occidental with 50

million barrels of ‘‘royalty oil’’ in exchange for $150 million

and Occidental’s assistance with an economic ‘‘structural adjustment program.’’ Purchase Agreement (Apr. 28, 1993),

reprinted in Joint Appendix (‘‘J.A.’’) 119-35. Agip Recherches Congo (‘‘Agip’’), a subsidiary of Italian oil conglomerate

ENI SpAaan, and Elf Congo S.A., a subsidiary of French

conglomerate Elf Aquitaine, had previously agreed to pay the

royalty oil to the Congo in exchange for the right to operate

various Congolese oil fields. See id. Arts. 1.1-1.3, at 3-4, J.A.

121.

Several provisions of the Purchase Agreement are of particular relevance here. First, in Article 9, the parties explicitly contemplated Occidental’s assignment of its oil interests.

That provision states:

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Occidental shall have the right to assign TTT its

interest in this Agreement without first obtaining

the approval of the Government provided that any

assignment to a third party other than to an affiliate

of Occidental shall require the prior written consent

of the Government which consent shall not be unreasonably withheld. Any request for such consent shall

state the main terms of such assignment. Any such

assignment TTT shall be promptly notified to the

Government.

Id. Art. 9, at 8, J.A. 128. Second, the agreement contained an

explicit acknowledgment that the transactions contemplated

by it were commercial in nature. Id. Art. 10.1(j), at 10, J.A.

130. And it included an explicit waiver of sovereign immunity. Id. Finally, the agreement provided that all disputes

which could not be resolved amicably would be settled

through arbitration following the rules of the International

Chamber of Commerce in Paris, France. Id. Art. 11.1, at 10,

J.A. 130.

B. Amendment of the Purchase Agreement

In February 1994, Occidental and Congo amended the

Purchase Agreement. Amendment to Purchase Agreement

(Feb. 19, 1994) (‘‘Amendment’’), reprinted in J.A. 154-62. The

Amendment accomplished a number of things. It provided

that the royalty oil that Congo had agreed to provide to

Occidental would come entirely from various Agip operations,

eliminating Elf from the transaction. Id. Art. 2.1, at 1-2, J.A.

154-55. The Amendment referred to this newly designated

oil as ‘‘substitute oil.’’ Id. Arts. 1, 2.1, at 1-2, J.A. 154-55.

More significantly, the Amendment contained a provision in

which Congo ‘‘directed that Occidental assign to Gulf’’ the

right to take a specified percentage of the royalty oil ‘‘under

the Purchase AgreementTTTT’’ Id. Art. 9.2, at 7-8, J.A. 160-

61. The Amendment indicated that this assignment was a

consequence of the fact that Occidental informed Congo that

Gulf, as Occidental’s joint venture partner, was to undertake

the structural adjustment program that Occidental had

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agreed to perform pursuant to the Purchase Agreement. Id.

The Amendment also made clear that the waiver of sovereign

immunity, contained in the Purchase Agreement, together

with other warranty provisions, applied mutatis mutandis to

the substitute oil. Id. Art. 6.2, at 6, J.A. 159.

C. Implementation of the Amended Purchase Agreement

Four days after the Amendment was signed, Congo and

Occidental executed a one-page protocol, which stated: ‘‘Reference is made to the Amendment, dated 19 February 1994

(the ‘Amendment’), to the Purchase Agreement dated April

28, 1993, between the Government and Occidental.’’ Protocol

(Feb. 23, 1994) (February Protocol), reprinted in J.A. 174-75.

The Protocol clarified that, notwithstanding Article 9.2 of the

Amendment (pursuant to which Congo ‘‘directed that Occidental assign to Gulf’’ the right to take a specified percentage

of the royalty oil ‘‘under the Purchase Agreement’’), Congo

and Occidental agreed that the portion of the identified

royalty oil delivered to Gulf would not be counted against the

50 million barrels that Congo had sold to Occidental. See id.,

J.A. 174. In addition to being signed by representatives of

Congo and Occidental, the Chairman of Gulf indicated, by his

signature, that Gulf had ‘‘received and approved’’ the document. Id., J.A. 175.

Several weeks later, on May 2, 1994, Congo and Gulf signed

their own protocol pertaining to the assignment of royalty oil

to Gulf. Protocol (May 5, 1994) (May Protocol), reprinted in

J.A. 176-79. This protocol explicitly referred to the Purchase

Agreement and Amendment signed by Congo and Occidental

and specified that ‘‘[t]he terms used in this Protocol shall

have the same meaning as defined in the Purchase Agreement as amended, modified and supplemented by the Amendment.’’ Id. at 1, J.A. 176. The protocol first expressly

acknowledged Occidental’s assignment of rights to Gulf, as

directed by Congo. Id. ¶ 1, at 1, J.A. 176. It then established that Gulf’s rights under the assignment in the Amendment equaled 10 million barrels of oil for which Gulf was to

pay Congo $30 million. Id. ¶¶ 1-2, at 1-2, J.A. 176-77. (ApUSCA Case #03-7118 Document #826512 Filed: 06/08/2004 Page 5 of 15
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proximately seven months later, Congo and Gulf agreed to

limit the sale to five million barrels for the first $15 million

paid by Gulf. See Complaint ¶ 25, at 9, J.A. 33.)

Also on May 2, 1994, Congo, Occidental, and Gulf signed a

letter agreement stating that Gulf would take over Occidental’s obligations to advise Congo on a structural adjustment

program. Id. ¶ 22, at 8, J.A. 32. In conjunction with the

letter agreement, Congo and Gulf executed a Structural

Adjustment Program Service Agreement stating ‘‘that Gulf

would provide the Congo with some consulting services relating to the financial management and implementation of the

Congo’s structural adjustment program.’’ Id. ‘‘The Congo

directed Occidental to work out with Gulf any compensation

due Gulf for Gulf’s performance of Occidental’s obligations

under the structural adjustment program.’’ Id. ¶ 23, at 9,

J.A. 33.

D. Agips’ Purchase of the Royalty Oil

Gulf’s complaint alleges that Congo directed Agip to begin

delivering royalty oil to Occidental and Gulf in August 1994.

Id. ¶ 38, at 13, J.A. 37. It also alleges that before the first

delivery was made, Occidental entered into an agreement on

behalf of itself and Gulf pursuant to which Agip agreed to buy

all of Occidental’s and Gulf’s shares of the Congo royalty oil

at ‘‘the monthly per barrel official price (‘prix fixe’) for Congo

oilTTTT’’ Id. ¶ 26, at 10, J.A. 34; see also Congo Crude Oil

Sales Agreement ¶ 5 (Aug. 18, 1994) (Agip Purchase Agreement), reprinted in J.A. 180-84. Pursuant to the Agip Purchase Agreement, Agip made payments for the oil to a bank

specified by Occidental. Id. ¶ 6, at 3, J.A. 182. According to

the complaint, Agip was aware of Gulf’s interest in the royalty

oil that Agip was purchasing and purposely paid Occidental

for Gulf’s share of the oil. Complaint ¶¶ 27, 36, J.A. 34, 36;

see also Memo from Pietro Cavanna, Senior Vice Pres., Agip

(Nov. 22, 1994), reprinted in J.A. 185-86. The royalty oil

owed to Occidental and Gulf was never physically separated

from the rest of the oil produced by Agip. See Agip Purchase

Agreement ¶ 1, at 1, J.A. 180. Thus, disposition of this

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royalty oil was accomplished entirely as a bookkeeping matter. See Complaint ¶ 11, at 4-5, J.A. 29-30.

Some 15 months after the Agip Purchase Agreement was

signed, Occidental and Gulf entered into an agreement regarding the disbursement of the proceeds from Agip’s purchase of Gulf’s royalty oil. Agreement and Direction Regarding Sales of Congo Royalty Oil and Disbursement of Proceeds

(Dec. 1, 1995) (Disbursement Agreement), reprinted in J.A.

188-94; see also Complaint ¶ 36, at 12, J.A. 36. The Disbursement Agreement, which formalized the collection and

disbursement arrangement between Occidental and Gulf, was

necessitated by the fact that a Gulf subsidiary was merging

with Clark USA, Inc. (‘‘Clark’’), a U.S. company. See Declaration of William C.F. Arnold, Pres., Gulf Resources Corporation, ¶ 27, at 11-12 (June 2, 1999), reprinted in J.A. 75-99.

Before entering into the merger agreement with Clark, Gulf

transferred to its subsidiary its interest in the outstanding

proceeds from the sale of the royalty oil to Agip. Id. ¶ 23, at

9-10, J.A. 83-84. In exchange, Clark was to give to Gulf

Clark stock. Id. In keeping with these arrangements, Gulf,

through the Disbursement Agreement, directed Occidental to

pay Gulf’s share of the Agip royalty oil proceeds to Clark.

Complaint ¶ 37, at 13, J.A. 37; Disbursement Agreement ¶ 2,

at 2-3, J.A. 189-90. According to the complaint, Gulf representatives discussed the Gulf–Clark merger with the thenPresident of the Congo, who supported the merger. Id. ¶ 33,

at 11, J.A. 35.

E. Congo’s Repurchase of Occidental’s Royalty Oil and

Ensuing Events

In March 1996, Congo and Occidental signed an accord and

satisfaction whereby Congo paid $215 million to buy back

Occidental’s remaining rights to the 50 million barrels that

Occidental purchased from Congo pursuant to the 1994 Purchase Agreement. Complaint ¶ 40, at 13-14, J.A. 37-38; Accord and Satisfaction Agreement (Mar. 1, 1996) (Accord and

Satisfaction), reprinted in J.A. 195-205. In identifying the

royalty oil subject to repurchase by Congo, the Accord and

Satisfaction specifically excluded oil ‘‘assigned by Occidental

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to a third party pursuant to Section 9.2 of Amendment No. 1

dated 19 February 1994, to the Purchase Agreement.’’ Id.

Art. 1.9, at 2, J.A. 196. Moreover, in a separate article titled

‘‘No Effect on Rights or Obligations of Third Parties,’’ the

Accord and Satisfaction referenced Article 9.2’s assignment of

oil to Gulf and stated that the assignment was not affected by

the repurchase of Occidental’s oil by Congo. Accord and

Satisfaction Art. 7, at 6, J.A. 200; see also Complaint ¶ 42, at

14, J.A. 38. In other words, the Accord and Satisfaction did

not alter the arrangement between Congo and Gulf or in any

way diminish Gulf’s interest in the royalty oil purchased from

Congo. See Complaint ¶¶ 12, 43, at 5, 43, J.A. 29, 38.

The complaint alleges that in July 1996, several months

after the execution of the Accord and Satisfaction, ‘‘Congo

stopped delivery of Gulf and Clark’s royalty oil.’’ Complaint

¶ 39, at 13, J.A. 37. It elaborates: ‘‘Upon information and

belief, Agip entered into an agreement with the Congo whereby the Congo directly sold the royalty oil to Agip.’’ Id. ¶ 44,

at 15, J.A. 39.

For purposes of its Rule 12(b)(1) motion, Congo did not

dispute any of the facts alleged by Gulf, but argued only that

the asserted facts were insufficient, as a matter of law, to

abrogate Congo’s sovereign immunity. Congo Br. at 3. The

District Court agreed, finding that Congo retained its sovereign immunity to suit with respect to the claims made by

Gulf. The District Court dismissed the complaint without

prejudice and Gulf appealed.

II. Analysis

FSIA sets forth a comprehensive framework for determining when a federal or state court may exercise jurisdiction

over a foreign state. Republic of Argentina v. Weltover, Inc.,

504 U.S. 607, 610 (1992). It authorizes ‘‘ ‘a foreign plaintiff to

sue a foreign sovereign in the courts of the United States,

provided the substantive requirements of the Act are satisfiedTTTT’ ’’ Id. at 619 (quoting Verlinden B.V. v. Cent. Bank

of Nigeria, 461 U.S. 480, 489 (1983)). And it grants federal

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district courts subject matter jurisdiction over in personam

civil claims with respect to which the defendant foreign state

is not entitled to immunity under 28 U.S.C. §§ 1605-1607. 28

U.S.C. § 1330(a) (2000).

A district court order granting a Rule 12(b)(1) motion to

dismiss on grounds of sovereign immunity is reviewed de

novo. Price v. Socialist People’s Libyan Arab Jamahiriya,

294 F.3d 82, 91 (D.C. Cir. 2002); McKesson HBOC, Inc. v.

Islamic Republic of Iran, 271 F.3d 1101, 1105 (D.C. Cir.

2001). ‘‘ ‘In accordance with the restrictive view of sovereign

immunity reflected in FSIA,’ the defendant bears the burden

of proving that the plaintiff’s allegations do not bring its case

within a statutory exception to immunity.’’ Phoenix Consulting, Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C. Cir.

2000) (quoting Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1002 (D.C. Cir. 1985)). ‘‘If,’’ as

in this case, ‘‘the defendant challenges only the legal sufficiency of the plaintiff’s jurisdictional allegations, then the TTT

court should take the plaintiff’s factual allegations as true and

determine whether they bring the case within any of the

exceptions to immunity invoked by the plaintiff.’’ Phoenix

Consulting, 216 F.3d at 40. Applying these standards, we

hold that Gulf’s allegations are sufficient to bring this case

within the statutory exception to immunity under FSIA

§ 1605(a)(1).

A. Article 10.1(j) of the Purchase Agreement Applies to

Gulf

Section 1605(a)(1) provides that ‘‘[a] foreign state shall not

be immune from the jurisdiction of courts of the United

States TTT in any case TTT in which the foreign state has

waived its immunity either explicitly or by implicationTTTT’’

28 U.S.C. § 1605(a)(1). Congo does not dispute that Article

10.1(j) of the original Purchase Agreement contains an explicit waiver of sovereign immunity. Rather, Congo principally

contends that this waiver does not apply to Gulf, because Gulf

was not a party to the original Purchase Agreement. See

Congo Br. at 28, 29-30. This argument fails.

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It is true that Gulf was not a signatory to the original

Purchase Agreement. However, under the 1994 Amendment,

Gulf reached an explicit agreement with Congo for the purchase of royalty oil, the sale of which was clearly set within

the framework of the original Purchase Agreement. In other

words, pursuant to the 1994 Amendment, Gulf was incorporated into and made a beneficiary of and participant in the

Purchase Agreement. This conclusion is inescapable on the

record before us.

First, Congo and Occidental clearly anticipated the possible

addition of new participants in the sale of the royalty oil and

drafted the Purchase Agreement to allow for such additions.

Indeed, the Purchase Agreement explicitly states that Occidental’s rights are transferrable. Purchase Agreement Art.

9, at 8, J.A. 128. The anticipated addition of participants was

realized in the 1994 Amendment when Congo ‘‘directed that

Occidental assign to Gulf the right (a) to lift twenty five

percent (25%) of the Royalty Oil under the Purchase Agreement TTT and (b) to receive seventy five percent (75%) of the

royalties paid in cash to Occidental during the six months

notice period for the election to take Royalty Oil in kind, as

provided in Article 3.1 of this Amendment.’’ Amendment Art.

9.2, at 8-9, J.A. 160-61. Moreover, the terms of the Amendment make it clear that the understandings reached therein

were to be treated as part of the Purchase Agreement. Thus,

the Amendment is entitled ‘‘Amendment to Purchase Agreement’’ and it plainly states that ‘‘the term ‘Agreement’ when

used in the Purchase Agreement shall mean the Purchase

Agreement as amended, modified and supplemented by this

AmendmentTTTT’’ Id. Art. 1, at 1, J.A. 154. Finally, the

Amendment makes it clear that the waiver of sovereign

immunity contained in Article 10.1(j) of the Purchase Agreement ‘‘shall apply mutatis mutandis to the Substitute Oil, the

fields from which the Substitute Oil is produced, and the

contracts, conventions, and establishment agreements applicable to such fields.’’ Id. Art. 6.2, at 6, J.A. 159 (making all but

two of the warranty provisions of the Purchase Agreement

applicable, mutatis mutandis, to the substitute oil described

in the Amendment).

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The protocols implementing the amended Purchase Agreement contain no limitations suggesting that Gulf is not entitled to the full benefit of the amended Purchase Agreement.

The first protocol, to which Gulf’s Chairman affixed his

signature as proof that Gulf had received and approved it,

simply made clear that the oil Congo assigned to Gulf in the

amended Purchase Agreement (a percentage of the royalty or

substitute oil removed from specified fields) did not count

against the total number of barrels that Occidental was

entitled to collect under the Purchase Agreement. February

Protocol, J.A. 174. The second protocol, signed by Gulf and

Congo, established the total amount of oil, in barrels, to which

Gulf was entitled as a result of its assigned right to collect a

percentage of the royalty or substitute oil produced at the

specified fields. May Protocol, ¶ 1, at 1, J.A. 176. It also set

the total amount that Gulf owed Congo in consideration for

that oil. Id. ¶ 2, at 1-2, J.A. 176-77.

Moreover, the protocols belie any suggestion that they are

self-contained agreements separate from the amended Purchase Agreement. Both protocols introduce the substantive

matters contained therein with an explicit reference the

Amendment and the Purchase Agreement. February Protocol, J.A. 174; May Protocol, at 1, J.A. 176. In addition to

referencing the preceding agreements, the second protocol

states that ‘‘[t]he terms used in this Protocol shall have the

same meaning as defined in the Purchase Agreement as

amended, modified and supplemented by the Amendment.’’

Id. at 1, J.A. 176. Finally, it is clear that the protocols would

be devoid of content if read apart from the amended Purchase

Agreement. This is because they do no more than paraphrase Article 9.2 of the Amendment – i.e., the assignment

article – and then simply clarify certain details regarding that

assignment.

Additional and explicit confirmation of Gulf’s status as a

participant in and beneficiary of the amended Purchase

Agreement is found in the Accord and Satisfaction pursuant

to which Congo bought back the royalty oil purchased by

Occidental. Article 7 of that agreement states:

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No provision of this Agreement shall be deemed or

interpreted to apply to limit or affect the rights or

obligations of any third parties with respect to

agreements between such third parties and the Congo, including, without limitation, the third party

referred to in Article 9.2 of Amendment No. 1 to the

Purchase Agreement.

Accord and Satisfaction Art. 7, at 6, J.A. 200. Congo thus

recognized that Gulf was a party with whom it had an

agreement that was defined and memorialized in the amended

Purchase Agreement.

B. The Nature of the Waiver Provided by Article 10.1(j)

The various agreements at issue here make clear that Gulf

is covered by the amended Purchase Agreement. The only

remaining question is whether Gulf’s claims fit within the

contours of the waiver contained in Article 10.1(j) of the

amended Purchase Agreement. They do.

Article 10.1(j) states:

The transactions contemplated by this Agreement

are commercial transactions, and the Government

shall not, by legislative or executive act or proceeding, or otherwise, (i) take any action which would

alter or impair the rights of Occidental under this

Agreement, (ii) contest or defend or assert defenses

against TTT claims, if any, made by Occidental, based

in whole or in part upon the Government’s status as

a sovereign, or (iii) in any manner avail itself of TTT

any other benefits or protections of any nature

whatsoever which might otherwise be available to

the Government connected with the Government’s

status as a sovereign state in relation to this Agreement.

Purchase Agreement Art. 10.1(j), at 10, J.A. 130. The parties

agree that, under subsection (ii), Congo waived sovereign

immunity with respect to Occidental. The dispute here turns

on the meaning of subsection (iii). Gulf argues that the plain

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terms of subsection (iii) cover Gulf’s claims, because Gulf’s

claims against Congo arise ‘‘in relation to’’ the Purchase

Agreement. Gulf Br. at 57-59; Reply Br. at 17-20. We

agree.

Subsection (iii) contains a waiver of sovereign immunity,

not, as Congo suggests, a waiver of some other, unspecified

and unidentifiable, defense. We cannot imagine a ‘‘benefit[ ]’’

or ‘‘protection[ ]’’ that is ‘‘connected with [Congo’s] status as a

sovereign state’’ that is not an assertion of sovereign immunity. Indeed, that is precisely the meaning that Congo gives

the phrase ‘‘the Government’s status as a sovereign state’’ in

subsection (ii). Congo Br. at 29. More significantly, Congo

suggests no other ‘‘benefit[ ]’’ or ‘‘protection[ ]’’ that is ‘‘connected with the Government’s status as a sovereign state’’ to

which subsection (iii) might refer other than sovereign immunity.

Congo asserts that subsection (ii), which waives sovereign

immunity with respect to Occidental, is superfluous if subsection (iii) waives sovereign immunity more generally. Consequently, Congo argues, subsection (iii) cannot be read as a

waiver of Congo’s sovereign immunity with respect to Gulf’s

claims here. Congo Br. at 34. This argument proves too

much. Congo and Occidental were the original parties to the

Purchase Agreement. Therefore, as Gulf argues, subsection

(ii) logically, and not surprisingly, refers to these two parties

alone. See Reply Br. at 20. However, as the original Purchase Agreement makes clear in explicitly providing for the

assignment of Occidental’s oil interests, Purchase Agreement

Art. 9, at 8, J.A. 128, Congo and Occidental contemplated that

other parties might later be brought into the Agreement.

Subsection (iii) anticipates the addition of other investors,

such as Gulf, to the arrangement and affords these other

investors the same waiver of sovereign immunity given to

Occidental in subsection (ii). As Gulf argues, one can view

subsections (ii) and (iii) as covering, without overlap, two

different groups – Occidental and the rest of the universe,

respectively. Reply Br. at 19-20. In that case, subsection (ii)

is not superfluous.

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Even if subsection (ii) is seen as a subset of subsection (iii),

this is not fatal to the extension of Congo’s waiver to Gulf.

Though the parties need not have written subsection (ii) as a

subset of subsection (iii), a decision to do so in order to give

the benefit of a waiver to contemplated but as yet unidentified participants in the purchase of Congo’s royalty oil is

plausible. Congo explicitly acknowledges that the transactions contemplated by the Purchase Agreement are ‘‘commercial.’’ Purchase Agreement Art. 10.1(j), at 10, J.A. 130. This

being the case, it is hard to imagine any business entity

entering into a commercial agreement with a sovereign state

for millions of dollars if the state is unwilling to make itself

amenable to suit for breach of contract. In any event, the

main point is that Congo’s suggestion that subsection (iii)

refers to defenses other than sovereign immunity is specious.

Congo offers nothing to support this claim, the District Court

found nothing, and we can think of nothing. Subsection (iii)

must have meaning, and the only plausible meaning that has

been offered is the interpretation pressed by Gulf.

Finally, Congo argues that Gulf will gain more than was

given to Occidental under subsection (ii) if subsection (iii) is

read as a waiver of sovereign immunity. In particular, Congo

says that Occidental was required to arbitrate any disputes

under the Purchase Agreement before the International

Chamber of Commerce in France and that Gulf seeks to avoid

this duty. See Congo Br. at 31. It is true that ‘‘most courts

have refused to find an implicit waiver of immunity to suit in

American courts from a contract clause providing for arbitration in a country other than the United States.’’ Frolova v.

Union of Soviet Socialist Republics, 761 F.2d 370, 377 (7th

Cir. 1985), quoted in Creighton, Ltd. v. Gov’t of Qatar, 181

F.3d 118, 122 (D.C. Cir. 1999) (emphasis added). But in those

cases the relevant contract contained only an arbitration

provision. There was not, as there is here, a separate,

explicit waiver provision. Congo’s position seems to be that

the waiver provision should be read, in conjunction with the

arbitration provision, as waiving immunity to suit only in

France, but we reject that view for two reasons. First,

unlike the arbitration provision, the waiver provision makes

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no reference to any country, thus indicating a broader scope.

Second, Congo’s initial contract partner, Occidental, was an

American company. We cannot accept that Congo never

contemplated being sued in an American court even though it

explicitly waived sovereign immunity in a contract that it

signed with an American company. Our rejection of Congo’s

immunity claim does not, of course, address its argument that

Gulf is bound by the Purchase Agreement’s arbitration provision. Whether Gulf is obligated to arbitrate any claims

against Congo under the amended Purchase Agreement is a

matter the District Court can, in the first instance, resolve.

III. Conclusion

For the foregoing reasons, the judgment of the District

Court is reversed and the case remanded for further proceedings.

USCA Case #03-7118 Document #826512 Filed: 06/08/2004 Page 15 of 15