Appeal from the United States District Court for the Central District of California. D.C. No. CV-87-3673-RG. D.C. No. CV-87-3673-RG. Richard A. Gadbois, Jr., District Judge, Presiding.
Before: Melvin Brunetti, Diarmuid F. O'Scannlain, and Thomas G. Nelson, Circuit Judges. Opinion by Judge O'Scannlain.
O'SCANNLAIN, Circuit Judge:
Iran seeks to enforce a foreign arbitral award against U.S. nationals in federal court. The district court dismissed one defendant, Gould, Inc., because it was not the alter ego of any party to the arbitration, and we affirm. The district court confirmed the award against the remaining defendants, but modified the specific performance part of the award. We affirm in part and vacate in part such confirmation and modification of the award and remand for further proceedings.
In 1975, the government of Iran entered into an agreement with Hoffman Export Corporation ("Hoffman") for the sale of military communications equipment and related services to Iran. In January 1978, all shares of Hoffman stock were acquired by Gould, Inc. Later that year, in April 1978, Hoffman, now a wholly-owned subsidiary of Gould, Inc., entered into a second agreement with the government of Iran to provide more military communications equipment and services.
The United States embassy in Teheran, Iran, was seized and diplomatic personnel taken hostage on November 4, 1979. See Ministry of Defense of the Islamic Republic of Iran v. Gould Inc. (Gould III), 887 F.2d 1357, 1358 (9th Cir. 1989) (prior proceeding in this case), cert. denied, 494 U.S. 1016, 108 L. Ed. 2d 494 , 110 S. Ct. 1319 (1990). Performance of the 1975 and 1978 agreements was disrupted. Id. at 1360.
Early in 1980, Hoffman filed suit against the Ministry of Defense of the Islamic Republic of Iran ("Iran") in federal district court, alleging breach of contract. Id. Meanwhile, the governments of the United States and Iran reached an agreement to end the hostage crisis. The countries agreed, inter alia, to establish the Iran-United States Claims Tribunal ("Claims Tribunal" or "Tribunal"), a forum in "which nationals of either country could present their claims against the government of the other." Id. at 1359. The Claims Tribunal would also have jurisdiction over "any counterclaims arising out of the same transaction." Id. On January 19, 1981, President Carter issued Executive Orders implementing the agreement with Iran, and President Reagan, who was inaugurated the following day, "issued an Executive Order ratifying the implementing Orders President Carter had issued." Id. at 1360.
President Reagan "suspended" all claims in United States courts that fell within the jurisdiction of the Claims Tribunal. Id. at 1360. The Supreme Court upheld the President's authority to order such suspension of claims. Dames & Moore v. Regan, 453 U.S. 654, 686, 69 L. Ed. 2d 918 , 101 S. Ct. 2972 (1981). Accordingly, the district court dismissed without prejudice Hoffman's breach of contract action against Iran. See Security Pacific Nat'l Bank v. Government & State of Iran, 513 F. Supp. 864, 884 (C.D. Cal. 1981).
Hoffman then brought claims against Iran before the Claims Tribunal, alleging breach of the 1975 and 1978 contracts. Gould III, 887 F.2d at 1360. Iran in turn filed counterclaims against Hoffman also alleging breach of contract. Id. During the pendency of the arbitral proceedings, Hoffman was merged into Gould Marketing, Inc. ("GMI"). During this time, all shares in GMI were owned by Gould International, Inc. ("GII"), and all shares in GII were in turn owned by Gould, Inc. Thus GMI was Hoffman's successor in interest, and, as was Hoffman, a wholly-owned subsidiary of Gould, Inc. GMI was substituted for Hoffman as the claimant in the pending arbitration before the Claims Tribunal.
On July 27, 1983, the Claims Tribunal issued an interlocutory award. Gould Marketing, Inc. v. Ministry of Nat'l Defense of Iran (Gould I), 3 Iran-U.S. Cl. Trib. Rep. 147 (1983). The Tribunal rejected both parties' breach of contract claims, concluding instead that "performance had become essentially impossible." Id. at 154. "By December 1978, strikes, riots and other civil strife in the course of the Islamic Revolution had created classic force majeure*fn1 conditions at least in Iran's major cities." Id. at 152-53. The nonperformance of both parties was not a breach because "the continued existence of force majeure conditions had by mid-1979 ripened into a termination of the Hoffman-Ministry contract." Id. at 154. The Tribunal ordered "further briefing and oral argument on the general question of what consequences should result from the discharge of the contract through frustration or impossibility." Id.
On October 27, 1983, following both parties' submission of briefs, a hearing was held. Gould Marketing, Inc. v. Ministry of Defence of the Islamic Republic of Iran (Gould II), 6 Iran-U.S. Cl. Trib. Rep. 272, 273 (1984). "Neither Party believed that it should be left in the position in which it was found following the frustration of the contract." Id. Instead, both parties urged compensation for goods and services provided without payment and reimbursement of payments where goods and services were never received. Id. at 274. Iran also persisted in its claim for damages under a breach of contract theory. Id.
The Claims Tribunal entered a final award on June 29, 1984. The Tribunal's inquiry was straightforward: for both the 1975 and 1978 contracts, it sought to "ascertain the extent to which Hoffman performed its contractual obligations until such performance was made impossible, and whether, based on such performance, it is entitled to receive further payments or, on the contrary, must return to the Ministry part of the payments it received." Id. at 275. After proceeding item by item through both the 1975 and 1978 contracts, and determining what GMI's predecessor Hoffman had performed, and what Iran had paid, the Tribunal concluded that GMI owed Iran $3,640,247.13. Id. at 288. In addition, the Tribunal stated that GMI was "obligated to make available" to Iran certain communications equipment in the possession of GMI. Id.
Iran sought confirmation and enforcement of the Claims Tribunal award by filing suit in district court. Although only GMI was named in the Claims Tribunal award, see id., Iran also sought enforcement against Gould, Inc., Hoffman, and GII. GMI, Gould, Inc., Hoffman, and GII (collectively "respondents") filed a motion to dismiss for lack of subject-matter jurisdiction. Gould III, 887 F.2d at 1361. The district court held that it had jurisdiction to hear Iran's enforcement action under 9 U.S.C. § 203, which grants jurisdiction to federal courts over claims arising from certain foreign arbitral awards. Id. at 1362. The district court certified the question of jurisdiction for interlocutory appeal, and we agreed to hear such appeal pursuant to 28 U.S.C. § 1292(b). Id.
This court affirmed, holding that the Claims Tribunal award fell under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention" or "Convention") because the award "(1) . . . arose out of a legal relationship (2) which [was] commercial in nature and (3) which [was] not entirely domestic in scope." Id. The court rejected respondents' argument that the award did not "derive from an arbitral agreement in writing to which the parties voluntarily submitted," as required under the New York Convention, construing the agreement between Iran and the United States establishing the Claims Tribunal "as representing the written agreement so required." Id. at 1363. The court was also unable to find in the Convention a requirement, urged by respondents, that awards must be based on the national arbitration law of a state that is a party to the Convention in order to be enforceable. Id. at 1365. Because the award here fell under the Convention, and "Congress vested federal district courts with original jurisdiction over any action or proceeding 'falling under the Convention,' " id. at 1362 (quoting 9 U.S.C. § 203), the court concluded that the district court had jurisdiction to hear Iran's enforcement suit. Id. at 1366.
The case returned to the district court for cross motions for summary judgment. The district court held "as a matter of law that the plaintiffs have failed to show that Gould, Inc. was the alter ego of Hoffman Export Corporation, Gould Marketing, Inc., or Gould International, Inc." and dismissed Gould, Inc. with prejudice from the case. The district court confirmed the $3.6 million award against the remaining respondents, but modified the award in one respect. Respondents were relieved of the obligation to make available to Iran the communications equipment because the district court determined that "doing so would violate United States export restrictions." The court added, however, that "if these restrictions are lifted within a reasonable time after this Order is entered, then the defendants must return or make available the equipment as directed by the Award."
Iran appeals the dismissal of Gould, Inc. as a party. Respondents appeal the confirmation of the monetary portion of the award. Both parties appeal the district court's modification of the specific performance portion of the award. We have jurisdiction over this timely appeal ...