Originally Published in Law360, July 30, 2021

By Morgan Conley
Law360 (July 30, 2021, 1:15 PM EDT) — A Jordanian company’s efforts to enforce a $53 million foreign judgment against the Iraqi government over a mineral contract should proceed, a D.C. federal magistrate judge said Thursday, finding the country hasn’t disproved claims it waived its sovereign immunity.

U.S. Magistrate Judge G. Michael Harvey said that Mohammad Hilmi Nassif & Partners has sufficiently alleged multiple statements made by senior government officials for Iraq and its Ministry of Industry and Minerals assuring the company it could sue to enforce a contract “anywhere in the world” is sufficient to support claims the country waived sovereign immunity. The judge disagreed that both Iraqi law and the Foreign Sovereign Immunities Act require immunity waivers to be made in writing to be binding and recommended the country’s motion to dismiss be denied.

“Taking the repeated statements of senior Iraqi officials at face value, while they do not use the words ‘waiver’ or ‘sovereign immunity,’ they quite clearly permit plaintiff to sue defendants in the United States to enforce the parties’ contract,” Judge Harvey said.

The dispute is rooted in Nassif’s claims Iraq owed it money for goods bought before 1995. To satisfy that debt, the Iraqi government agreed in 1995 to provide 450,000 tons of sulfur and 100,000 tons of urea to Nassif, which it then intended to on-sell to a buyer in New York. But, when Iraq failed to honor its commitment, Nassif’s deal with the U.S. buyer fell through, according to the magistrate’s report.

The company sued in Jordanian court for breach of contract, winning a $53 million judgment in 2015, but a Jordanian appeals court in 2016 found the ruling unenforceable based on immunity. The company took the dispute to the U.S. in 2017.

In addition to finding Iraq hasn’t proved it is immune from the suit, Judge Harvey recommended the court reject other efforts to dismiss the suit based on arguments that the U.S. sanctions regime on Iraq in place at the time of the deal would have made the arrangement unlawful and prevented Nassif’s deal to sell the materials to the New York buyer anyway.

The judge agreed with Nassif that the contract between the company and Iraq wouldn’t have been considered a violation of the sanctions and it was possible to obtain a license through the U.S. Treasury Department’s Office of Foreign Assets Control to permit the sale. Nassif said it kept the U.S. Embassy in the loop about its agreement with Iraq and it was the embassy that referred it to the New York buyer.

The magistrate did note that if the court disagrees with him on the sovereign immunity front, he would then recommend the action be dismissed. Iraq’s immunity question is key to the success of the suit’s claims. If the country is not immune and its commercial conduct is also being litigated, the commercial activities exception applies since Iraq’s alleged failure to ship the product “had a legally cognizable direct effect” in the U.S. due to the New York buyer.

Representatives for the parties didn’t immediately respond to requests for comment.

Mohammad Hilmi Nassif & Partners is represented by Karnig S. Kerkonian, Elizabeth M. Al- Dajani and Gayane Khechoomian of Kerkonian Dajani LLC.
Iraq is represented by Creighton R. Magid and Juan C. Basombrio of Dorsey & Whitney LLP.

The case is Mohammad Hilmi Nassif & Partners v. Republic of Iraq et al., case number 1:17- cv-02193, in the U.S. District Court for the District of Columbia.

–Additional reporting by Daniel Wilson. Editing by Alex Hubbard.