Nissho-Iwai Co. v. Occidental Crude Sales

729 F.2d 1530 (5th Cir. 1984)


Occidental (D) was under contract to supply Nissho (P) with oil from wells in Libya and particularly from Concession 102. Moammar Khadafy nationalized 51% of that concession in 1973. Despite these problems with Libya, D, in October 4, 1973 renegotiated its contract with P and D agreed to supply 750,000 barrels of oil per month through December 31, 1978. The contract had a force majeure clause and was to be governed by the laws of California. Problems with the new contract developed in that P failed to take the shipments on its required oil allotment. Further problems developed when Libya started to change production quotas almost on a weekly basis. Eventually D refused to pay monies owed to Libya and Libya placed an embargo on exports. D was unable to perform its contract that month. The embargo order was lifted in December of 1975 and production was restored to 300,000 barrels per day. Pipeline breakdowns interfered with the ability of D to deliver and the net result was that P got no oil during the last four months of 1975 and the first four months of 1976. The first trial resulted in a mistrial and a second trial was held. D appealed a verdict in favor of P.