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OPEC and the U.N.: How To Tell Them ApartThe distinction's lost on the oil cartel.

By Timothy Noah
Posted Thursday, Feb. 7, 2002, at 1:06 PM ET

On Jan. 28 the dean of America's antitrust bar argued in a federal courtroom in Birmingham, Ala., that the Organization of Petroleum Exporting Countries should be prosecutable under U.S. antitrust law—which OPEC, as a cartel, almost certainly violates. That strikes Chatterbox as at least as big a story as last month's news that said dean, David Boies, was being sued by two female former employees for failing to promote them to partner. The sex-discrimination story received wide and gleeful play, but the only coverage of the OPEC arguments that Chatterbox can find is a Jan. 29 article by Val Walton in the Birmingham News. Possibly the story was ignored because the lawsuit, Prewitt Enterprises v. OPEC, is widely considered to be quixotic. As Chatterbox noted previously (see "Suing OPEC," Aug. 9, 2001), in 1981 a federal court of appeals threw out a similar lawsuit brought by the Association of Machinists and Aerospace Workers. In that instance, though, the machinists were suing the OPEC member countries, which was obviously problematic. This time, Birmingham gas-station owners Carl and Debbie Prewitt are suing OPEC itself. Which is why OPEC's lawyers found themselves likening OPEC to the United Nations and the Organization of American States.

At issue in the Jan. 28 hearing was whether the attorneys in the case had followed proper legal procedure when they served OPEC with papers in Vienna, where OPEC is based. OPEC said not, because that was prohibited by Austrian law. (The Austrians actually have an OPEC-specific statute on the books that says OPEC can't be served with court papers without OPEC's consent.) Boies said it didn't matter what Austrian law said, because this wasn't an Austrian court, and that U.S. law said the papers could be served overseas. Indeed, Boies pointed out, that's exactly what happened a few years ago when the United States busted the vitamin cartel:

This was a case in which vitamin manufacturers got together and fixed prices. Now, they did it in Germany and Japan, not the United States. They met in Germany and Japan and once in Mexico to fix prices. They never met in the United States. And most of them were foreign companies. And those that were foreign companies and that weren't themselves directly doing business in the United States said you can't serve us. And, of course, the courts held, no, that's not right, because when you take action outside the United States that is designed to have an effect in the United States, then you are subject to jurisdiction in the United States.

Chatterbox isn't sufficiently expert about international law to pass judgment on this argument. But he enjoyed immensely what it provoked from OPEC attorney J. Mark White:

Mr. Boies says if this were Austria, Austria could serve somebody by registered mail in the United States. But they certainly couldn't serve the United Nations. And they couldn't serve the Organization of American States. And allowing service on OPEC would set a terribly dangerous precedent under international law, allowing those organizations which are afforded our protection under exactly the same type of headquarters agreement from being served.

This is entirely in keeping with OPEC's claim that it is not a "simple commercial entity" (i.e., cartel) at all, but rather an international organization dedicated to maintaining oil price stability as "an essential ingredient for sound economic growth." Why, you might even call it philanthropic!

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Timothy Noah is a senior writer at Slate.
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Notes From The Fray Editor:

Loran has nothing to worry about. His is the quintessential good Chatterbox post: interesting, funny, discursive. We look forward to more.

Reader Comments From The Fray:


I'm going to cringe a little as I post this, for two reasons -

1) The Chatterbox Fray scares the hell out of me.

2) I'll try to remember I said this the next time I'm filling up at the gas station, but:

There's probably something to be said for OPEC's charter staying in power. You do have to have some kind of plan to stabilize supply and demand. Otherwise, one biggie takes over and you eventually end up paying an extorted price anyway.

Still, it's fun to think that some good 'ol boy and girl from Birmingham could get it over on OPEC. That David Boies is throwing in with them can only be considered a positive.

By the way, there's a statue of Vulcan in Birmingham that's like the second largest in the country or something. It used to be you climbed some stairs to an open veranda at the base. The view of the city was outstanding. Now, they've got the base enclosed, outfitted with elevators and so forth. Doesn't have the same feel, but the view is still nice

--Loran

(To find or answer this post, click here.)


OPEC has been so unbelievably ineffective since 1979 that its patently ridiculous that any American consumer try to pursue a legal claim against it. In fact, if there is an economic case against OPEC, it's for not being enough of a cartel: oil prices have been so low (and supply so high) in the past two decades that the rate of global depletion has accelerated while R&D of non-fossil fuel alternatives has languished, at least relative to where it would be. Perhaps cheap oil fuelled the 90s economic boom, but at an economic cost over the longer run.

--Fletch

(To find or answer this post, click here.)

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