## Facts

- National Oil Corporation (NOC) was a Libyan government–owned corporation; Libyan Sun Oil Company (Sun Oil) was a Delaware corporation and subsidiary of a U.S. parent.
- In 1980, the parties executed an Exploration and Production Sharing Agreement (EPSA) for oil exploration in Libya to be funded and performed by Sun Oil.
- In December 1981, Sun Oil suspended performance, invoking the EPSA’s force majeure clause based on U.S. State Department restrictions on U.S. passports for travel to Libya.
- NOC disputed the force majeure claim and commenced ICC arbitration in Paris pursuant to the EPSA.
- The arbitral tribunal rejected Sun Oil’s force majeure defense under the EPSA and applicable Libyan law and awarded NOC roughly $20 million in damages.
- Sun Oil did not pay the award; in 1989 NOC petitioned in federal court to confirm the award under the New York Convention as implemented in 9 U.S.C. §§ 201–208.
- Sun Oil moved to dismiss or to deny recognition and enforcement, asserting foreign policy objections and Convention defenses (including public policy, fraud, and excess of arbitral authority).

## Issues

1. Whether strained U.S.–Libya relations and sanctions barred a Libyan state-owned entity from access to U.S. courts or rendered the dispute non-justiciable.
2. Whether the foreign ICC award should be recognized and enforced under the New York Convention.
3. Whether enforcement should be refused under Convention defenses, including (a) the public policy exception, (b) alleged fraud or false testimony in the arbitration, or (c) an asserted excess of the tribunal’s jurisdiction or scope of submission.

## Decision

- The court denied Sun Oil’s motion to dismiss and held the dispute justiciable; NOC was not barred from U.S. courts.
- The court granted NOC’s petition and confirmed the foreign arbitral award.
- The court held that France was a Convention signatory, satisfying reciprocity for Convention enforcement.
- The court rejected Sun Oil’s public policy defense, finding that enforcement did not violate fundamental U.S. public policy and was not defeated by generalized foreign policy objections toward Libya.
- The court rejected Sun Oil’s fraud allegations for failure of proof and declined to revisit credibility or evidentiary determinations made in arbitration.
- The court rejected the claim that the tribunal exceeded its authority, concluding the award was derived from the EPSA and within the tribunal’s contractual mandate.
- The court declined to deny enforcement based on NOC’s delay in seeking confirmation, finding no Convention defense and concluding equities favored enforcement.

## Legal Principles

- A recognized foreign sovereign or its instrumentality is not denied access to U.S. courts solely because diplomatic relations are strained or sanctions exist; categorical denial generally requires derecognition or a state of war.
- Under the New York Convention, recognition and enforcement are the rule; refusal is limited to the Convention’s enumerated defenses, which are construed narrowly.
- The Convention’s public policy exception applies only when enforcement would violate the forum’s most basic notions of morality and justice; political hostility or foreign policy objections are insufficient.
- Courts enforcing foreign arbitral awards do not conduct merits review and will not reconsider contractual interpretation or factfinding where the tribunal acted within its authority.
- A party opposing enforcement bears the burden to prove a Convention defense such as fraud or excess of jurisdiction.

## Conclusion

The court held that NOC could sue in U.S. federal court despite adverse U.S.–Libya relations and confirmed the ICC award under the New York Convention, rejecting Sun Oil’s public policy, fraud, and jurisdictional defenses and entering judgment consistent with the arbitral award.


Nat'l Oil Corp. v. Libyan Sun Oil Co., 733 F. Supp. 800 (D. Del. 1990)