German Economist Sues OPEC, Wants $50 In Compensation

Authored by Charles Kennedy via OilPrice.com,

• A German economist has filed a lawsuit against OPEC with a Berlin court.

• Despite the paltry sum, the suit could end up costing OPEC more than it can afford.

• The judge in a regional court in Berlin allowed the case to proceed and has ordered OPEC and several state-controlled oil firms to file a document naming their lawyers for the case.

A German economist has filed a lawsuit against OPEC with a Berlin court, accusing the cartel of pushing up the prices of the gasoline and heating oil he is buying, Bloomberg Opinion columnist Javier Blas reports—and despite the paltry sum, the suit could end up costing OPEC more than it can afford.

Armin Steinbach, Professor of law and economics, is suing OPEC for damages for $50 (50 euros), plus interest, alleging that OPEC is an illegal cartel operating to drive up oil prices. The court has allowed the case, which is a rare legal challenge against OPEC, despite decades of one-and-off debates in the United States about a bill that would allow lawsuits against OPEC producers.   

The judge in a regional court in Berlin allowed the case to proceed and has ordered OPEC and several state-controlled oil firms to file a document naming their lawyers for the case.

“I hope OPEC reacts soon to the court order. Ignoring court orders is not smart strategy in dealing with German courts,” the German plaintiff, Steinbach, tweeted on Monday.

In his claim, Steinbach had written that he was seeking damages “due to violation of antitrust law.”

“If my lawsuit is successful, it would be recognized for the first time in court that OPEC is a cartel,” Steinbach told German business daily Handelsblatt last week.

“Then every German could sue OPEC for damages,” he added.

Such a precedent could have legal consequences, although countries, including the U.S., have been wary of removing the sovereign immunity for countries to be sued, for fear of retaliatory lawsuits.  

In the United States, the Senate Judiciary Committee moved last month the bill that would allow the U.S. to sue OPEC for antitrust behavior and market manipulation to the Senate. The so-called No Oil Producing and Exporting Cartels (NOPEC) Act proposes to amend the Sherman Act to make oil-producing and exporting cartels illegal. NOPEC has been an on-and-off topic for U.S. lawmakers and Administrations for over two decades but has never moved past discussions at committees in Congress. Forms of antitrust legislation aimed at OPEC were discussed at various times under Presidents George W. Bush and Barack Obama, but they both threatened to veto such legislation.

While the NOPEC bill may be dead in the water again, a private citizen’s lawsuit against OPEC could set precedents for more court actions against the organization.