Iraq Middle Market Development Foundation v. Harmoosh, 175 F. Supp. 3d 567

Background

In 2006 IMMDF loaned $2,000,000 to AGTTT under a Loan Agreement that included a broad arbitration clause; Harmoosh signed a personal guaranty (promissory note).
AGTTT defaulted and ceased operations in 2008; IMMDF sued in D. Md. in 2010 to enforce the note; the court dismissed for lack of jurisdiction in 2011 because the dispute was covered by the arbitration clause (769 F. Supp. 2d 838).
IMMDF then sued in Iraqi court in 2014; after full appeals in Iraq, IMMDF obtained a judgment against Harmoosh for $2,000,000 plus fees.
In 2015 IMMDF filed in Maryland to record the Iraqi judgment and alleged fraudulent conveyance of Harmoosh’s assets; defendants moved to compel arbitration and to dismiss or stay, arguing the Iraqi judgment should not be recognized and the remaining claims are arbitrable.
The district court treated the motion as one for summary judgment, held the Iraqi judgment was not entitled to recognition (discretionary ground because it contravened the parties’ arbitration agreement), compelled arbitration of the fraudulent-conveyance claim, and dismissed the case.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Iraqi judgment should be recognized under Maryland’s Recognition Act	Iraqi judgment is final and enforceable; meets §10-702 requirements	Iraqi proceedings violated arbitration agreement and thus judgment should be nonrecognized	Court declined recognition on discretionary ground that Iraqi proceedings were contrary to arbitration agreement (Count I denied)
Whether Iraqi courts provide impartial tribunals and due process (mandatory nonrecognition)	Iraqi system under post‑2003 constitution affords due process; plaintiff had notice and counsel	Iraqi courts are corrupt and subject to bribery; not fundamentally fair	Court found no systemic evidence of lack of impartial tribunals or due process; mandatory ground not met
Whether Iraqi court had personal and subject‑matter jurisdiction	Iraq has jurisdiction over Iraqi nationals and courts; plaintiff relied on Iraqi code and process	Harmoosh is U.S. citizen with limited Iraqi contacts; arbitration clause deprived Iraqi court of subject‑matter jurisdiction	Court held personal‑jurisdiction challenge failed; subject‑matter jurisdiction unresolved on record (no Iraqi ruling proving waiver), so mandatory ground not met
Whether fraud by IMMDF in Iraqi proceedings bars recognition	IMMDF’s failure to cite prior U.S. decision or arbitration clause and alleged over‑recovery amount show fraud	Defendants allege IMMDF committed fraud on the Iraqi court	Court treated alleged misconduct as intrinsic fraud (not extrinsic) and found no extrinsic fraud preventing adversarial trial; mandatory fraud ground not met
Whether remaining fraudulent‑conveyance claim is arbitrable	IMMDF: claim is a domestic enforcement/fraudulent‑transfer claim distinct from arbitration	Defendants: claim arises from the Loan Agreement/debt and falls within broad arbitration clause	Court held fraudulent‑conveyance claim arises out of the Loan Agreement and is subject to arbitration; compelled arbitration and dismissed action

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (standards for pleading plausibility)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard)
Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (federal policy favoring arbitration)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standards)
Choice Hotels Int'l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707 (dismissal appropriate when all issues are arbitrable)
Guinness PLC v. Ward, 955 F.2d 875 (applying recognition act/due process inquiry)
DeJoria v. Maghreb Petrol. Expl., S.A., 804 F.3d 373 (foreign‑system fundamental fairness standard)