Antitrust Law Daily Norwegian oil company excused from oil traders’ price manipulation suit
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Wednesday, March 30, 2016

Norwegian oil company excused from oil traders’ price manipulation suit

By Greg Hammond, J.D.

The federal district court in New York City lacked subject matter jurisdiction over an oil and gas company, which is two-thirds held by the Norwegian government, for purposes of Sherman Act and Commodity Exchange Act claims. In dismissing the oil and gas company, the district court concluded that the plaintiff futures and derivatives traders failed to demonstrate that the commercial activity exception to the Foreign Sovereign Immunities Act applied (In re North Sea Brent Crude Oil Futures Litigation, March 29, 2016, Carter, A.).

The plaintiffs claimed that Statoil ASA and Statoil U.S. Holdings Inc. monopolized the Brent North Sea crude oil market and entered into unlawful agreements and conspiracies to fix and restrain trade and intentionally manipulate Brent crude oil prices and the prices of Brent crude oil futures and derivatives contracts traded on the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE). Statoil ASA is a Norwegian oil and gas company that is primarily owned by the Norwegian government. The Statoil defendants moved to dismiss the Sherman Act, Commodity Exchange Act, and other claims, alleging that the district court lacked subject matter jurisdiction over Statoil ASA under the Foreign Sovereign Immunities Act.

The court agreed that Statoil ASA is immune from jurisdiction under the Foreign Sovereign Immunities Act because the plaintiffs failed to demonstrate that any of the three clauses of the commercial activity exception apply in this case. First, the court noted that the core of this lawsuit was the allegedly manipulative transactions and reporting that allegedly gave rise to manipulation on NYMEX and ICE. Plaintiffs, however, failed to show: (1) any relevant commercial activity carried on by Statoil in the United States, demonstrating that clause one of the commercial activity exception does not apply; (2) any non-commercial acts performed by Statoil ASA in the United States, demonstrating the second prong is inapplicable; and (3) the application of the third clause of the commercial activities exception because they failed to establish any direct effect in the United States, felt by the plaintiffs or by any other entity.

The court consequently dismissed Statoil ASA from the action, but the claims against Statoil U.S. remained.

The case is No. 1:13-md-02475 (ALC).

Attorneys: Candice J. Enders (Berger & Montague PC) for Aaron Schindler. David Sapir Lesser (Wilmer Cutler Pickering Hale and Dorr LLP) for Statoil ASA and Statoil US Holdings Inc. Karl Stern (Quinn Emanuel Urquhart & Sullivan) for Phibro Trading LLC.

Companies: Statoil ASA; Statoil US Holdings Inc.; Phibro Trading LLC

MainStory: TopStory Antitrust NewYorkNews

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