## Facts

- Petrec International, Inc., a subsidiary of Gulf Petro Trading Co., Inc., entered a 1993 joint-venture agreement with Nigerian National Petroleum Corporation (NNPC) to reclaim “slop oil” in Nigeria through a jointly owned Nigerian entity.
- The agreement required arbitration in Geneva under Chamber of Commerce and Industry of Geneva rules, with Nigerian law governing the contract.
- Petrec commenced arbitration in 1998, alleging NNPC failed to fund and support the venture.
- The tribunal issued a partial award favorable to Petrec on some matters, but later issued a final award dismissing claims on the ground Petrec lacked capacity.
- Swiss courts upheld the final award, making Switzerland the primary jurisdiction for purposes of judicial control of the award under the New York Convention.
- Plaintiffs later sued in the Eastern District of Texas against NNPC and individuals connected to the arbitration (NNPC officials, arbitrators, and counsel), alleging the award was procured through fraud, bribery, and corruption.
- Plaintiffs sought vacatur/nullification of the award and damages under federal and state theories including fraud, conspiracy, unfair trade practices, and RICO.

## Issues

1. Whether a U.S. court, as a secondary jurisdiction under the New York Convention, has subject-matter jurisdiction over claims styled as tort and RICO actions when the claims depend on proving a foreign arbitral award was fraudulently procured and would effectively negate that award.
2. Whether the complaint’s non-vacatur counts were truly independent causes of action or an impermissible collateral attack on the foreign award already sustained in the primary jurisdiction.

## Decision

- The Fifth Circuit affirmed dismissal for lack of subject-matter jurisdiction.
- The court held the suit, including the purportedly “independent” tort and RICO claims, was a collateral attack on a foreign arbitral award.
- Because jurisdiction was lacking, the court did not reach alternative grounds addressed by the district court (including foreign sovereign immunity and personal jurisdiction).

## Legal Principles

- Under the New York Convention, courts in the primary jurisdiction (typically the arbitral seat) have authority to annul or set aside an award; courts in secondary jurisdictions are generally limited to recognition and enforcement and to Convention defenses.
- A court determines Convention limits by examining the substance of the requested relief, not the labels attached to claims.
- Claims are jurisdictionally barred in a secondary jurisdiction when they are inextricably tied to alleged defects in the arbitral process and success would require treating the foreign award as invalid or without legal effect.
- Serious allegations (e.g., bribery or corruption) do not expand a secondary jurisdiction court’s authority to grant relief that functionally nullifies a foreign award already reviewed by the primary jurisdiction.

## Conclusion

The Fifth Circuit held that the plaintiffs’ tort and RICO theories were not meaningfully separable from their challenge to the Swiss arbitral award; because the United States was only a secondary jurisdiction under the New York Convention, the federal court lacked subject-matter jurisdiction to hear a suit that would effectively undermine or negate the foreign award.


Gulf Petro Trading Co. v. Nigerian Nat'l Petroleum Corp., 512 F.3d 742 (5th Cir. 2008)