New twist in legal tussle over oil between Kurds and Iraq

KRG lawyers look to reject Iraq attempt to have oil classed as 'stolen property'.

The international legal tussle between the Iraqi central government and the Kurdistan Regional Government (KRG) over ownership of oil produced in the Kurdish north has taken a new twist, even as the new central government regime is also looking to negotiate a compromise back home.

In the latest move in a case that has played out in Texas since late July, the KRG’s lawyers sought to reject a new legal tactic by the Iraq government’s representatives to have the oil seized as “stolen property”. Last month, Judge Gray Miller in the US district court in Texas ruled that the court did not have jurisdiction under maritime law as it involved a dispute over sovereignty which could only be decided by Iraq and the Kurdish people.

Now the Iraq government is essentially trying to claim that the oil was stolen by disputing at which point ownership changed hands. The owner of the oil has been identified in court documents only as “John Doe”, although the KRG claims it sold the oil while it was still in Kurdish Iraq, thus making it a domestic contract dispute.

“The judge ruled that there was no admiralty jurisdiction. However there is jurisdiction to determine title to the oil because it is within US territorial waters. Normally, this would be decided applying local law on ownership: Lex Situs,” Steven Gee, a maritime law expert and barrister at Stone Chambers in London, explained.

“There has not yet been a trial on title to the oil. Normally issues on title include issues on transmission of property rights under a commercial relationship which often is governed by a contract.” The constitutional dispute in this case, however, clouds the issue further.

A decision will have broad significance for Iraq and the Kurdish governments over future jurisdiction of Kurdish oil.

Iraq also is pursuing Marine Management Services in the Greek courts, claiming “damages of at least US$318 million” for what it claims was the company’s role in facilitating the “KRG’s illegal crude oil export scheme”. Iraq claims MMS owns and operates five tankers that have loaded KRG oil for export since last spring, including the United Kalavrvta, the vessel holding the dispute cargo off the coast of Texas. Each cargo has a value of about $100m.

The dispute comes even as a new regime under the prime minister Haider Al Abadi seeks to negotiate a compromise with the KRG over future oil production and revenues. The already fraught situation has been made worse by the advance of the Islamic State in Iraq and Levantine militants, which changed the political balance and gave the Kurds more leverage in their push for full sovereignty.

Follow The National’s Business section on Twitter

Published: September 16, 2014 04:00 AM


Editor's Picks
Sign up to:

* Please select one

Most Read