United States District Court, D. Maryland
L. Russell, III United States District Judge
MATTER is before the Court on Defendants Mohammad Ali
Mohammad Harmoosh and Jawad Alharmoosh's Motion for
Summary Judgment and to Compel Arbitration (ECF No. 49). The
Motion is ripe for disposition, and no hearing is necessary.
See Local Rule 105.6 (D.Md. 2016). For the reasons
outlined below, the Court will grant the Motion.
Iraq Middle Market Development Foundation
(“IMMDF”), a non-profit corporation, makes and
services loans to local businesses in Iraq. Iraq Middle
Mkt. Dev. Found. v. Harmoosh, 848 F.3d 235, 237 (4th
Cir. 2017). On November 10, 2006, IMMDF agreed to lend $2
million to an entity Harmoosh controlled. Id.;
(Compl. ¶ 8, ECF. No. 1). The loan agreement includes an
arbitration clause specifying that “[a]ll disputes,
controversies and claims between the parties which may arise
out of or in connection with the Agreement . . . shall be
finally and exclusively settled by arbitration.”
Harmoosh, 848 F.3d at 237. The clause identifies
Amman, Jordan as the venue for arbitration. Id. As
part of the loan agreement, Harmoosh executed a promissory
note guaranteeing repayment of the loan. Id.
2010, after Harmoosh had refused to repay the loan, IMMDF
tried to collect by suing him for breach of contract in this
Court. Id. Harmoosh moved to dismiss, arguing that
his alleged breach was an arbitrable dispute “aris[ing]
out of or in connection with” the loan agreement.
Id. The Court agreed and dismissed IMMDF's
complaint. Id. (citing Iraq Middle Mkt. Dev.
Found. v. Al Harmoosh, 769 F.Supp.2d 838, 842 (D.Md.
2011)). Harmoosh, however, did not move to compel
arbitration, as he was entitled to do under the Federal
Arbitration Act (“FAA”). Harmoosh, 848
F.3d at 237 (citing 9 U.S.C. § 3 (2012)).
February 2014, IMMDF filed another civil action against
Harmoosh to collect on the promissory note, this time in the
Court of First Instance for Commercial Suites
(“CFICS”) in Baghdad, Iraq. Id.; (Compl.
¶ 13). Harmoosh appeared in that court through counsel
and asserted at least two affirmative defenses.
Harmoosh, 848 F.3d at 237. First, he contended that
the court lacked personal jurisdiction. Id. Second,
Harmoosh argued that he was not personally liable because he
guaranteed the loan only in his capacity as a shareholder.
Id. The parties disagree as to whether Harmoosh
raised the arbitration clause as a third defense.
Id. It is undisputed that, under Iraqi law, although
a valid arbitration clause deprives a court of jurisdiction
over arbitrable disputes, a party waives his right to
arbitrate if he fails to assert it before the trial court.
Id. (citing Art. 253, Amended Civ. Proc. Code No. 83
of 1969 (Iraq)).
event, IMMDF and Harmoosh litigated their dispute to final
judgment in Iraq. Id. In April 2014, the CFICS found
in favor of IMMDF and awarded it $2 million in damages and
$424.91 in costs and legal fees (the “Iraqi
Judgment”). Id. Harmoosh appealed the Iraqi
Judgment to the Baghdad/Al-Rasafa Federal Court of Appeals
(the “Intermediate Appellate Court”), which
affirmed. Id. Harmoosh then appealed to the Federal
Court of Cassation of Iraq, the court of last resort for
commercial disputes, which also affirmed. Id.
April 20, 2015, IMMDF returned to this Court and filed a
two-count Complaint against both Harmoosh and Alharmoosh.
(ECF. No. 1). Count I seeks recognition of the Iraqi Judgment
under the Maryland Uniform Foreign Money-Judgments
Recognition Act (the “Maryland Recognition Act”),
Md. Code Ann., Cts. & Jud. Proc. [“CJP”]
§§ 10-701 et seq. (West 2016). (Compl.
¶¶ 20-22). Count II alleges that Harmoosh
fraudulently conveyed some of his assets both before and
after the CFICS rendered the Iraqi Judgment. (Id.
following month, Defendants filed a Motion to Compel
Arbitration and Dismiss or Stay Action (ECF No. 10),
contending that the Iraqi Judgment was not entitled to
recognition because the parties agreed to arbitrate their
disputes. Harmoosh, 848 F.3d at 238. The Court
concluded that “IMMDF's Iraqi judgment on the
promissory note is contrary to the parties' agreement to
arbitrate” under section 10-704(b)(4) of the Maryland
Recognition Act. (Mar. 30, 2016 Mem. Op., at 22, ECF No. 20).
The Court also concluded that IMMDF's fraudulent
conveyance claim is related to Harmoosh's debt under the
loan agreement and promissory note and is therefore subject
to arbitration. (Id. at 26). Accordingly, the Court
granted Defendants' motion as to both Counts of the
Complaint, directed that Count II between submitted to
arbitration, and dismissed the matter. (Id. at
appealed to the United States Court of Appeals for the Fourth
Circuit. (Notice Appeal, ECF No. 23). The Fourth Circuit held
that the “arbitration clause exception” set forth
in section 10-704(b)(4) of the Maryland Recognition Act is
inapplicable where parties choose to forego their rights to
arbitrate by participating in foreign judicial proceedings.
Harmoosh, 848 F.3d at 240. The Fourth Circuit also
determined that “genuine issues of material fact remain
as to whether Harmoosh defaulted his right to arbitrate,
” citing the FAA as governing law. Id. at
241-42. The Fourth Circuit acknowledged that the parties had
not conducted discovery, thus adding that “it is too
soon to say whether Harmoosh defaulted his arbitration
rights.” Id. at 238, 242 n.2. Consequently,
the Fourth Circuit remanded the matter to this Court.
Id. at 242.
February 5, 2018, Defendants filed their Motion for Summary
Judgment and to Compel Arbitration. (ECF No. 49). IMMDF filed
an Opposition on February 27, 2018. (ECF No. 52). On March
13, 2018, Defendants filed a Reply. (ECF No. 53).