Waleed Bin Khalid Abu Al-Waleed Al-Qarqani, et al. v. Arabian American Oil Company and Aramco Services Company

At a glance

Parties

Waleed Bin Khalid Abu Al-Waleed Al-Qarqani and others (petitioners) v. Arabian American Oil Company and Aramco Services Company (respondents)

Case no.

Civil Action H-18-1807 (Case 4:18-cv-01807)

Court

U.S. District Court, Southern District of Texas, Houston Division

Underlying award(s)

Arbitral award of June 2015 against Chevron entities (Chevron Company of USA, Chevron Saudi Arabia and Aramco)

Treaty

New York Convention (through 9 U.S.C. § 203); 1933 Concession Agreement arbitration clause

Court

Gray H. Miller, Senior United States District Judge

Sector

Oil and gas; land rights

Outcome

ASC's motion to dismiss was granted for lack of subject matter jurisdiction and, in the alternative, for failure to state a claim; ASC's motion for sanctions was denied.

The dispute

In 1933 Saudi Arabia and Standard Oil Company of California (SoCal), now Chevron, signed a Concession Agreement that gave SoCal surface rights to search for oil in Saudi Arabia. The petitioners are the heirs, beneficiaries and titleholders of the land covered by the concession. In June 2015 they obtained an arbitral award against Chevron entities for failing to pay them for the use of the land. The award also purported to bind Arabian American Oil Company (Aramco), which had dissolved in 1990. The petitioners asked the court to confirm the award against Aramco Services Company (ASC), alleging that it was Aramco's subsidiary. ASC moved to dismiss under FRCP 12(b)(1) and 12(b)(6) because it was not a party to the arbitration agreement.

Key holdings

1. Federal jurisdiction under the Convention (9 U.S.C. § 203) requires an arbitration agreement or award that falls under the Convention and a dispute related to it. ASC is not named in the award, which lists only Chevron Company of USA, Chevron Saudi Arabia and Aramco. Nor is it named in the arbitration clause of the Concession Agreement. p. 4
2. None of the six theories for binding a non-signatory applies. ASC was established only in 1950, after the Concession Agreement. It is now a wholly owned subsidiary of Saudi Aramco and is no longer affiliated with Aramco, which dissolved in 1990. Having once been a subsidiary of Aramco does not bind ASC. p. 5
3. The parts of the award on successor and affiliate liability do not bind ASC. The successor section only explains why Chevron was subject to arbitration. The affiliate section is a statement of law, and ASC is not affiliated with the bound parties and did not share in performing the contract. The court therefore lacks subject matter jurisdiction. pp. 5–6
4. Sarhank Group v. Oracle Corp. is distinguished. ASC's jurisdictional objection does not depend on the merits, and there is no arbitral finding that ASC is liable. The court therefore will not assume jurisdiction. p. 6
5. In the alternative, the claim fails under Rule 12(b)(6) because ASC is not bound by the arbitration agreement. The motion in limine was denied as moot, and ASC's motion for sanctions was denied. p. 7

Procedural history

1. 1933Saudi Arabia and SoCal sign the Concession Agreement, which contains an arbitration clause.
2. 1990Aramco dissolves, two years after Saudi Arabia bought all of its assets and established Saudi Aramco (1988).
3. June 2015Arbitral award against Chevron entities, which also purports to bind Aramco.
4. 2 August 2019The District Court grants ASC's motion to dismiss and denies its motion for sanctions.

Tribunal, counsel and experts

Decided by

• Gray H. Miller Judge, U.S. District Court, Southern District of Texas

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Keywords

• New York Convention
• confirmation of award
• non-signatory
• subject matter jurisdiction
• 9 U.S.C. § 203
• Saudi Aramco
• Chevron
• concession agreement
• Saudi Arabia
• alter ego
• affiliate liability
• successor liability
• Sarhank Group v. Oracle
• Rule 12(b)(1)
• oil and gas
• land rights

Summary generated with AI from the published documents — refer to the award for the authoritative text.