National Iranian Oil Co. v. Ashland Oil

National Iranian Oil Co. v. Ashland Oil

Opinion

 [*327]  GOLDBERG, Circuit Judge:

There was an oil company from Iran whose lawyers devised a neat plan:

To arbitrate a dispute

that Ashland's contract might refute,

the Iranians to the land of cotton ran.

But their clever arbitration plan was

spoiled;

 [*328]  by an Act of Congress, the district court said, it was foiled.

So they take this appeal

to rewrite their first deal.

But their theories are only half-boiled.

To arbitrate in Ole Miss is their prayer.

Inconvenience or waiver makes it fair.

But the contract is clear;

we can't order arbitration here.

Unless agreed, it's Iran or nowhere.

According to the allegations contained in the pleadings and accompanying memoranda, two Ashland Oil Company (Ashland) subsidiaries, Ashland Overseas Trading Limited (AOTL) and Ashland Bermuda Limited began to use the National Iranian Oil Company (NIOC), an instrumentality  [**2]  of the Islamic Republic of Iran, as their primary supplier of Middle Eastern crude oil in 1973. The parties entered into long term contracts. Amid the maelstrom of chaos and confusion engendered during the Islamic Revolution in Iran, NIOC allegedly repudiated then renegotiated its contracts with Ashland's two subsidiaries on several occasions in 1978 and 1979. On March 11, 1979, the parties allegedly entered into a two-year, nine-month contract, providing that NIOC was to supply AOTL with 150,000 barrels of crude oil per day. NIOC allegedly repudiated this March contract on April 10, 1979. On April 11, the parties allegedly executed a new contract, providing that NIOC was to supply AOTL with 115,000 barrels of crude per day until December 31, 1979.

On November 12, 1979, following the takeover of the American Embassy in Tehran and the seizure of American hostages on November 4, President Carter banned the importation of all oil from Iran not already in transit. Exec. Order No. 4702, 44 Fed.Reg. 65581 (November 16, 1979). Several cargoes of crude, however, were then en route to AOTL. AOTL received and refined the oil, worth nearly $283,000,000. Despite NIOC's demand, neither Ashland  [**3]  nor its subsidiaries have rendered payment. Ashland, in essence, contends that it is not responsible for the alleged breaches of its subsidiaries and that NIOC itself breached the March and April agreements.

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