Shafaq News/ Iraq's Supreme Federal Court on Thursday said that it relied on Articles 110, 111, 115, 121, 103 of the Iraqi constitution and a legal precedent when it declared Kurdistan Regional Government's (KRG) Oil and Gas law unconstitutional.
Iraq's highest court recalled in a statement that a U.S. court ruled in favor of the plaintiff Iraqi Ministry of Oil in the lawsuit it filed against KRG's Ministry of Natural Resources.
On December 21, 2015, the U.S. Court of Appeal, according to the statement, revoked an appeal filed by the KRG ministry to annul the precedent ruling for the appellant admitted to willing unloaded a shipment in Israel.
"The utmost interest of Iraq and its people requires settling the lawsuit 59/federal/2012 and its annex 110/federal/2019 and issuing this ruling," the Court said.
On Tuesday, Iraq's Federal Supreme Court issued a sweeping ruling against the legal foundations of Iraqi Kurdistan's independent oil sector.
The landmark ruling states that the Kurdistan Regional Government has no legal right to manage the oil resources within the territory it administers.
According to a 15-page court document published by the oil ministry and dated Feb. 15, Iraq's highest court ruled that the KRG's oil and gas law was unconstitutional and should be annulled.
The law was passed in 2007 and gave the KRG's Ministry of Natural Resources full authority over the development of oil resources in the region.
The ruling also obliges Erbil "to hand over all the oil production from the oil fields in the Kurdistan Region, and other regions which the KRG's Ministry of Natural Resources produces oil from, to the federal government."
The Supreme Court did not explicitly invalidate the production sharing contracts that the KRG has signed with IOCs, but it makes them vulnerable to legal action by the federal government in Baghdad.
Specifically, it allows the federal government "to seek to invalidate contracts between the regional government and other countries or companies for the exploration, production and sale of oil."
It remains to be seen how Baghdad might try to implement the court's ruling, which comes ten years after it first filed a case challenging the legality of the KRG's oil exports.
The court's decision could force a seismic shift in the balance of oil powers between the federal government and the semi-autonomous Kurdistan Regional Government, potentially upending a 450,000 barrel per day (bpd) market and altering the dynamics of a government-formation process that has seen multiple blocs court Kurdish MPs.