National Iranian Oil Company Legal Status Case

CourtCourt of Appeal of Frankfurt (Germany)
Federal Republic of Germany, Superior Provincial Court (Oberlandesgericht) of Frankfurt
National Iranian Oil Company Legal Status Case1

Sovereign immunity Foreign States and State-owned corporations National Iranian Oil Company Legal status Whether entitled to jurisdictional immunity Whether immunity available to commercial undertakings owned by foreign State and endowed with independent legal personality Whether foreign judgment violating jurisdictional rules under international law qualifies for domestic recognition The law of the Federal Republic of Germany

Summary: The facts:The plaintiff2 obtained an attachment order against the defendant on the basis of a claim against it. The defendant, the National Iranian Oil Company, was a State-owned company with worldwide interests in oil, natural gas and petrochemicals. The plaintiff also obtained an attachment order against the defendant in respect of the same claim from a United States court.3 The defendant applied for a time-limit to be imposed for the commencement of the main action by the plaintiff, pursuant to Article 926 (1) of the Federal Code of Civil Procedure (ZPO).

The Registrar of the Provincial Court (Landgericht) of Frankfurt rejected the application on the grounds that an action on the merits was already pending before a United States court so that the initiation of proceedings on the merits in the FRG could not be ordered. An objection was lodged against the decision of the Registrar and the case was submitted on appeal to the Superior Provincial Court (Oberlandesgericht) of Frankfurt.

Held:The appeal was dismissed. The application for the fixing of a time-limit for commencement of the main action had been rightly rejected on the grounds of the pending foreign action.

(1) A foreign judgment which infringed the norms of international law concerning the exemption of specific persons from the jurisdiction of the foreign State in which that judgment had been pronounced was contrary to international law. The recognition of such a judgment was prohibited under a general rule of international law transformed into German law by Article 25 (1) of the Basic Law (GG)4 of the Federal Republic.

(2) According to Article 20 of the Law on the Constitution of the Courts (GVG) taken in conjunction with the general rules of international law, commercial undertakings of a foreign State which had been endowed with their own independent legal personality did not enjoy any immunity, even if, from the commercial point of view, they were closely interlocked with the government of the State concerned.

The following is a statement of the relevant facts as reported in RIW/AWD 1980, p. 874:[5]

The plaintiff obtained attachment and enforcement orders against the defendant from the Provincial Court (Landgericht) of Frankfurt am Main on 24 March 1980. The total amount claimed by the plaintiff was US$6,759,755.69. The plaintiff had previously brought art action against the defendant before the United States District Court for the Southern District of New York and obtained an attachment in the amount of US$12,255,366. Furthermore other creditors applied to the United States District Court for attachment orders against the defendant on its assets in the United States for a total amount of US$596 million. The defendant is an Iranian commercial undertaking constituted in the form of a joint-stock company according to Iranian law...

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