Kurds Fight Iraq’s Second Bid to Seize Tanker Off Texas

By Laurel Brubaker Calkins

Sept. 16 (Bloomberg) –- The Kurdistan Regional Government asked a U.S. judge to reject the Iraqi Oil Ministry’s bid to use new legal theories to seek a second seizure order for $100 million of Kurdish crude waiting in a tanker off the Texas coast.

U.S. District Judge Gray Miller ruled last month he had no authority to decide which government rightfully owns the cargo, which was pumped from wells in the autonomous Kurdistan region of northern Iraq and exported through a Turkish pipeline. He threw out a U.S. magistrate’s arrest warrant that would have allowed federal agents to seize the crude and store it ashore at the Iraqi government’s expense, if the ship enters U.S. territorial waters, until the ownership dispute can be resolved.

The judge gave the Iraqis a chance to revise their suit, and the central government asked to add new legal theories to try for a second order seizing the cargo.

“The Ministry of Oil has repackaged old facts into new legal claims” that don’t change the judge’s determination he lacked authority to decide the matter under U.S. laws governing property stolen on the high seas, Harold Watson, a lawyer for the Kurds, said in a filing in Houston federal court. If the oil was improperly exported, which the Kurds deny, any misappropriation occurred on land in Kurdistan, not onboard the tanker, Watson said.

“This is a dispute firmly rooted in Iraq, and it will not and cannot be resolved by application of maritime law,” Watson said. The Kurds also contend U.S. state doctrines prohibit federal agents from seizing the property of sovereign foreign governments before a judge can fully decide the matter.

Kurdish Crude

Both sides previously said the Iraq Supreme Court should determine who has the right to export Kurdish crude.

Watson also urged Miller to reject Iraq’s attempt to add a “John Doe” theft claim against the cargo’s unidentified buyer to try to seize the crude under Texas stolen-property laws. There’s no evidence proving the cargo wasn’t sold while the oil was still in Kurdistan, Watson said, which means Iraqi courts should still decide the matter.

Phillip Dye, one of the U.S. lawyers for Iraq’s Oil Ministry, told Miller in August that Iraq hoped to seize the cargo in Texas as leverage to force the KRG to appear before the Iraq Supreme Court. The two sides are locked in a protracted battle there over billions of dollars in unpaid oil royalties and overdue war-damage reparations the central government owes Kurdistan.

Jim Loftis, another of Iraq’s Houston attorneys, didn’t immediately respond after regular business hours yesterday to a request for comment on the KRG filing.

The case is Ministry of Oil of the Republic of Iraq vs. 1,032,212 Barrels of Crude Oil, 3:14-249, U.S. District Court, Southern District of Texas (Galveston).

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