National Iranian Oil Company Pipeline Contracts Case

CourtCourt of Appeal of Frankfurt (Germany)
Federal Republic of Germany, Superior Provincial Court (Oberlandesgericht) of Frankfurt am Main
National Iranian Oil Company Pipeline Contracts Case1

Sovereign immunity Foreign States and State-owned corporations National Iranian Oil Company Contracts for construction of pipelines Whether NIOC entitled to jurisdictional immunity Whether immunity available to undertakings of foreign States endowed with independent legal personality Acts iure imperii and iure gestionis Whether exploitation of oil reserves a sovereign activity Relevance of United Nations Resolutions on OPEC Whether oil pipeline construction a sovereign activity The law of the Federal Republic of Germany

Summary: The facts:In the context of a dispute over the financial performance of contracts to build oil and natural gas pipelines, the plaintiff2 obtained an order from the Provincial Court (Landgericht) of Frankfurt am Main attaching property of the defendant, the National Iranian Oil Company3 in the FRG. The defendant unsuccessfully contended that it formed part of the Iranian State and was therefore entitled to jurisdictional immunity and immunity from attachment. The defendant appealed to the Superior Provincial Court (Oberlandesgericht) of Frankfurt am Main.

Held:The proceedings were stayed to abide the result of a constitutional complaint action brought by the defendant before the Federal Constitutional Court which concerned issues of immunity from attachment which were identical to those raised in the instant case.4

(1) There was no general rule of public international law to the effect that domestic jurisdiction was excluded for actions against a foreign State (or a State enterprise or quasi-State enterprise) in relation to its non-sovereign activity (acta iure gestionis).

(2) Commercial undertakings of a foreign State which had been endowed with their own legal personality did not enjoy immunity. Nevertheless where an undertaking with its own legal personality acted on a sovereign basis for the State concerned, State immunity could, in principle, be claimed.

(3) Even if it were true that the effect of the United Nations Resolutions on the oil-related activities of the OPEC States was to determine that they were sovereign rather than commercial activities, the present case did not involve the actual exploitation of oil resources but rather a dispute over the financial performance of contracts for the building of oil and gas pipelines.

Such contracts were concluded on a purely...

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