First Kuwaiti General Trading & Contracting in the US courts — the Baghdad embassy False Claims Act suit (4th Cir. 2010) and the KBR arbitration (4th Cir. 2025)

COURT. Gregory, Thacker and Berner JJ.; opinion by Judge Berner; argued 1 November 2024. Appeal from the Eastern District of Virginia (Trenga J.). Affirmed.

FACTS. Under KBR's US Army logistics contract, First Kuwaiti's Subcontract 11 was to supply thousands of trailers (nearly $81 million) as housing for troops in Iraq. The Army did not provide convoy escorts, the trailers backed up at the Kuwait–Iraq border and some were damaged or destroyed. First Kuwaiti claimed $70 million; KBR agreed to pay $48.75 million and sought reimbursement from the government, which first allowed $35 million. The opinion records that "a former KBR contract administrator pled guilty to participating in an illegal kickback scheme relating to a government contract. The scheme also implicated a First Kuwaiti principal." The audit was reopened, First Kuwaiti's claim documentation was found "not credible", and the reimbursement was rescinded — upheld by the Armed Services Board of Contract Appeals and the Federal Circuit (973 F.3d 1366, 2020). The parties had agreed on 19 January 2009 to arbitrate before the International Centre for Dispute Resolution, whose final award of 26 July 2022 followed the Federal Circuit on the excess costs and did not award interest on two stipulated settlements (2009 and 2014).

HOLDING. (1) First Kuwaiti's motion to vacate, filed 5 January 2023, was outside the three months allowed by 9 U.S.C. § 12: the award of 26 July 2022 was final, and the panel's decision of October 2022 on requests under ICDR Article 30 (which permits only interpretation and correction, not reconsideration) did not restart time. (2) Because First Kuwaiti is a foreign party, Chapter Two of the Federal Arbitration Act (the New York Convention) applied, and it does not require consent to judicial confirmation. (3) The district court did not abuse its discretion in refusing pre-judgment interest that "could have exceeded $28 million".

USE IN A REPORT: two appellate opinions on a Kuwait-based contractor's US government work. Cite them for what the courts held; the 2025 opinion's reference to a kickback scheme is background, stated without naming the principal or making a finding against the company.

The 2025 opinion's sentence on the kickback scheme should be quoted exactly and not paraphrased as a finding against First Kuwaiti: it names neither the principal nor any conviction of the company, and the rescission of reimbursement rested on the documentation being found "not credible". The 2010 opinion, for its part, records an independent inspection that found the embassy work comparable to US standards. For due diligence on the company, the two opinions together show a long record of US government contracting, one fraud suit that failed, and one commercial dispute lost on time limits.

COURT. Traxler C.J., Wilkinson J. and Wilson D.J. (sitting by designation); opinion by Judge Wilkinson. Affirmed.

FACTS. In 2005 the State Department selected First Kuwaiti to build the new US Embassy on a 65-acre site in Baghdad: more than twenty buildings and major infrastructure, contracts "close to $600 million", billed from late 2005 to September 2008. John Owens, hired as a general construction foreman in November 2005 and resigning in June 2006, brought a qui tam suit alleging billing for defective work and retaliation. The government commissioned an independent inspection (the "Collins Report", December 2007), which found workmanship "comparable to that found in the United States" and defects "minor and not unexpected" and repaired. The State Department issued certificates of final acceptance in April 2008 and declined to intervene.

HOLDING. The False Claims Act addresses fraud, "not ordinary contractual disputes". Owens produced no evidence of knowing misrepresentation or of retaliation for protected activity. The court warned that allowing the Act to be used for "run-of-the-mill contract disagreements and employee grievances" would raise costs for the government.