Contract Dispute With United Nations Could Lead to End of Diplomatic Immunity

Kahraman Sadikoglu

Kahraman Sadikoglu

A federal judge in New York has issued an order that could lift the U.N.’s long-recognized diplomatic immunity in the United States involving contract disputes, opening the doors for claims of “hundreds of millions of dollars” against the world body, according to lawyers involved in the case.

Following a ruling by Judge P. Kevin Castel, both the Wall Street Journal and the New York Times on Wednesday published legal notices on behalf of Kahraman Sadikoglu, a Turkish billionaire businessman who is suing the U.N. Development Program (UNDP) for $150 million.

Click here to read the notices: 1 and 2.

The notices are a legal substitute for the process of officially serving the lawsuit to U.N. officials, who have refused to accept the authority of U.S. courts in this and other legal matters.

Sadikoglu was hired by the UNDP to clear the Iraqi harbor of Um Qasr, Iraq’s largest port in 2003, so that supplies could be delivered to the war-shattered nation. He has fought since that time to be paid for the work, and according to his lawyers is suing now because the U.N. failed to honor the terms of a 2008 agreement that would have settled the matter.

“But when they learned that money would come from their own funds,” according to George G. Irving, Sadikoglu’s attorney at the time, “they just ignored him.” Most of the reconstruction funds had either come from American or Iraqi coffers.

According to Irving, who once worked in the Legal Affairs Office of the U.N. Secretary General, it could open up the floodgates for hundreds of similar lawsuits.

“It is not unusual for the U.N. to play these kinds of games with contractors. They try to frustrate them at every turn so they give up and go away,” he said. But because those contractors would now have access to the courts, the amounts the U.N. could be forced to pay could “amount to hundreds of millions of dollars in claims.”

One officer at an international aid organization said the problem of non-payment is so bad that organizations now mockingly say the UNDP acronym really stands for “U.N. Don’t Pay.”
UNDP has since rebuffed efforts to reach a settlement, rejected the idea of arbitration, and has even refused to accept notice a lawsuit had been filed.

It was that defiance of legal procedure, and the failure of the organization to follow its own procedures, that prompted Castel to allow Sadikoglu’s lawyers to circumvent the normal requirements of serving notice of the suit. If Castel goes on to hear the case, it would set a precedent by erasing the U.N.’s diplomatic immunity, at least on contract disputes.

Asked about the new development, Stanislav Saling, a public affairs officer with the U.N., emailed this response: “We are aware of the case regarding Mr. Sadikoglu and have been in discussions with him for a number of years in an effort to come to some common understanding. However, since this matter is now under consideration in court, I cannot comment further.”

Sadikoglu’s story was one of the rare cases of early reconstruction in Iraq actually working. Originally hired by Saddam Hussein to clear Um Qasr of wreckage from the 1980-1988 Iran-Iraq War, Sadikoglu’s work was suspended because of U.N. sanctions against Saddam and other problems. But he was asked to continue with the project by UNDP after the U.S.-led invasion of Iraq forced Saddam from power.

The project was massive. Nineteen sunken ships had to be cleared from the harbor, cut up and sold for salvage. Sadikoglu brought in nine of his own ships to house the recovery crews and perform the work. Despite the chaos and terror of the early years of the invasion, Sadikoglu was able to raise the ships and open the harbor.

Officials from the Coalition Provisional Authority, who had oversight of the port at the time, said Sadikoglu not only completed the work on time, but managed to meet the changing demands of the UNDP as the work progressed. They, too, said they cannot understand why he was never paid.