Iraq Wants Another Crack at Oil-for-Food Suit

     MANHATTAN (CN) - Saddam Hussein's actions in the oil-for-food scandal should not absolve the 90-plus corporations with which he co-conspired, Iraq's lawyer told the 2nd Circuit on Tuesday.
     The U.N. Security Council set up the oil-for-food program by resolution on April 14, 1995, to alleviate civilian suffering caused by international economic sanctions against Iraq. The program permitted the sale of Iraqi oil to raise money to buy humanitarian goods for the Iraqi people. But the Saddam Hussein regime, with the participation of thousands of corporations and prominent international politicians, diverted billions of dollars in cash, goods and services from their humanitarian purposes.
     United Nations investigator Paul Volcker outlined the extent of the corruption in multiple reports, leading Iraq to sue the Zurich-based robotics giant ABB AG and dozens of other entities with which it had done business on behalf of its citizens in 2008.
     Several entities of BNP Paribas, the French bank that administered the program, were among the defendants that Iraq accused of breach of contract and violations of U.S. anti-racketeering law and the Foreign Corrupt Practices Act.
     U.S. District Judge Sidney Stein in the Southern District of New York had refused to compel arbitration of those claims, and the 2nd Circuit affirmed that ruling last year.
     Stein closed the case entirely almost exactly one year ago, finding that Iraq had only itself to blame and therefore lacked standing to sue others for the suffering caused by the U.N. Oil for Food Program.
     "The court concludes that the complaint alleges conduct by the Hussein regime that, as a matter of law, is attributable to plaintiff itself, the Republic of Iraq," he wrote.
     Iraq appealed that decision later that month, and the republic's lawyers framed the stakes of the court battle in stark terms in their 61-page brief.
     "This action tests whether private companies and individuals who assist an oppressive dictator in corrupting a United Nations humanitarian program are liable to the victimized nation or whether their clear violations of law are excused by the dictator's complicity in the scheme," the brief states.
     Judge Christopher Droney asked the lion's share of the questions Tuesday as he sat with his fellow appellate judges Amalya Kearse and Ralph Winter, who appeared via closed-circuit TV from another location.
     At one point, Droney asked Iraq's lawyers to respond to Stein's finding that the Hussein's misconduct was "governmental" in nature rather than "personal."
     Mark Maney, an attorney for Iraq with the Texas-based firm Maney & Gonzalez-Felix, said that Hussein's actions were "absolutely for his personal benefit."
     Iraq's brief states that "more than half of the defendants" entered into criminal plea agreements admitting to wrongdoing under U.S. law.
     Maney said these companies flouted U.N. sanctions, the U.S. Treasury and the Patriot Act, passed by Congress after the Sept. 11, 2001, attacks. The brief for Iraq argues that this alleged misconduct also gives U.S. courts jurisdiction over criminal laws violated within the U.N. headquarters district.
     In a reply brief, lawyers for the corporations slammed this reasoning as a "red herring."
     "Pursuant to the Headquarters Agreement, 'the U.N. Headquarters is not really United States territory at all, but is rather neutral ground over which the United States has ceded control,'" the 71-page reply states, citing the 1991 2nd Circuit case of Klinghoffer v. S.N.C. Achille Lauro.
     The lead author of that brief, Washington-based lawyer Brant Bishop, reiterated that argument in court on Tuesday.
     Ultimately, "the republic of Iraq was the actor," Bishop said. "The government of Iraq corrupted the U.N. sanction regime."
     "This actor, this plaintiff, cannot instigate the wrongdoing and then seek relief," Bishop added.
     Federal courts on both courts have recently come to the conclusion that Iraq can neither be sued nor seek relief for the Hussein regime's actions.
     In July 2012, the 9th Circuit threw out a lawsuit by two Cypriot companies suing Iraq for broken oil contracts under the U.N. program. That ruling inspired a fiery dissent that slammed Iraq for seeking damages over the program while denying liability.
     "Iraq may not honestly say there is jurisdiction in New York and deny that there is jurisdiction of similar claims in San Diego," Judge John Noonan wrote at the time.
     After the court later refused to rehear the case en banc, Noonan compared the maneuver to the biblical parable of the two women who fought before King Solomon over a baby.
     "This ancient story comes to mind as the Republic of Iraq seeks to split a whole case in two," Noonan wrote in January. "One doesn't need to be a Solomon to know that a single lawsuit should not be split in half.