Bethesda, Maryland, USA, 10/08/2015 /SubmitPressRelease123/
The U.S. Court of Appeals for the Fifth Circuit on September 30, 2015, reversed a Texas justice refusal to enforce a judgment rendered in Morocco on December 31, 2009, condemning the famous American businessman John Paul DeJoria to pay $ 123 million to the joint venture MPE / MFM (Maghreb Petroleum Exploration (MPE) and the Mideast Fund Investment Funds Limited for Morocco).
For the record, John Paul DeJoria (“DeJoria”) was a major investor in an American company called Skidmore Energy, Inc. (“Skidmore”), which was engaged in oil exploration and technology projects in Morocco. In pursuit of its goals, Skidmore formed and capitalized a Moroccan corporation, Lone Star Energy Corporation (“Lone Star”) (now Maghreb Petroleum Exploration, S.A., or “MPE”). Corporations established under Moroccan law are required to have a “local” shareholder.
In March 2000, Lone Star entered into an “Investment Agreement” obligating it to invest in hydrocarbon exploration in Morocco. The King of Morocco assured DeJoria that he would line up additional investors for the project to ensure adequate funding. Armadillo Holdings (“Armadillo”) (now Mideast Fund for Morocco, or “MFM”), a Liechtenstein-based company, agreed to make significant investments in Lone Star. In the negotiations leading up to this agreement, Skidmore represented to Armadillo that Skidmore previously invested $27.5 million in Lone Star and that Lone Star’s market value was roughly $175.75 million.
There was one major problem: the oil reserves were not as plentiful as announced. As a result, the business relationship between MFM and Skidmore/DeJoria suffered.
After nearly seven years of considering MPE and MFM’s suit, the Moroccan court ruled against DeJoria and Gustin but absolved five of their codefendants—including Skidmore—of liability. The court entered judgment in favor of MPE and MFM for approximately $122.9 million.
DeJoria sued MPE and MFM in Texas state court, challenging domestic recognition of the Moroccan judgment DeJoria asserts, as mandatory grounds for non-recognition of the Moroccan judgment, that the Moroccan judicial system does not provide due process and that the Moroccan court lacked personal jurisdiction. DeJoria also asserts, as a discretionary ground for non recognition, that the Moroccan judgment should not be recognized because Moroccan courts do not recognize Texas judgments.
However, the case did not stop at the Texas court and went to the U.S. Court of Appeals for the fifth circuit which finally stated that the Moroccan judgment is “conclusive” and “enforceable in the same manner as a judgment of a sister state that is entitled to full faith and credit.”
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