The unanimous ruling prompted the KRG to declare victory in its dispute with Baghdad over independent oil sales.Maybe the Supremes have an eye on a safe haven in Kurdistan.
Iraq's Supreme Court has rejected a bid by the oil ministry in Baghdad to outlaw direct oil exports from the Kurdistan region.
In a setback for the central government in its long-running battle with Erbil, the court turned down a request from oil minister Abdul Kareem al-Luaibi to issue a temporary injunction against the Kurdistan Regional Government.
The unanimous ruling prompted the KRG to declare victory in its dispute with Baghdad over independent oil sales.
The judgment, dated June 24, comes as the KRG continues to ship 100,000 to 120,000 barrels of crude daily via its new pipeline to the Turkish port of Ceyhan. Shipments from Ceyhan began late last month, prompting Baghdad to threaten legal action against the KRG, Turkey and potential buyers of the disputed crude.
Welcoming the Supreme Court decision, the KRG noted that the Baghdad oil minister's case was based on his own interpretation of constitutional provisions by which he claimed that the oil and gas affairs fall within the exclusive powers of the federal government.
A statement from the KRG natural resources ministry in Erbil said: "With this Court decision, the Kurdistan Regional Government has another important clarification of its acquired rights as stated in the Constitution. Such a decision by the highest court in the land is binding on the Minister and cannot be challenged in any way."
The injunction was rejected on legal grounds and the court did not rule explicitly on the constitutional issue.
However, the ruling effectively lifts a further barrier to independent Kurdish oil exports, which initially struggled to find international buyers in the face of Baghdad's threats. The KRG argues that it not only has the constitutional right to market its own oil but it has been forced to do so by Baghdad's decision to freeze Erbil's 17 per cent share of the national budget.
A Baghdad-based legal expert who didn't want to be named said that the Iraqi Supreme Court rejected the bid "for how it was drafted only, otherwise the ministry of oil can file a new lawsuit against the same issue."
"It was that the measures taken by the Iraqi Ministry of Oil were not done properly," he said. "The court's rejection doesn't mean consent for KRG's oil exports."
The dispute, which reached a climax with the first shipment of Kurdish oil in May, has since been overshadowed by the sudden collapse of the security situation in Iraq, prompted by the capture of Mosul by the Islamic State of Iraq and Syria (ISIS).
Before the latest crisis, Baghdad took separate legal action against Turkey by filing a complaint with the International Chamber of Commerce in Paris and requesting its arbitration. The Iraqi government claimed that by transporting and storing Kurdish oil without Baghdad's permission, Ankara was in violation of its bilateral obligations.
The statement from the KRG natural resources ministry said that, in the light of the Supreme Court ruling, the federal oil ministry and its oil marketing organization SOMO should abandon their "illegal and unconstitutional interventions" to prevent oil exports from the Kurdistan region.
"They must also cease sending intimidating and threatening letters or making false claims to prospective traders and buyers of oil exported legally by the Kurdistan Regional Government for the benefit of the people of Kurdistan and Iraq," the statement said.
It described the ruling as "a clear victory for justice and for upholding KRG's rights."
Makki al-Rikabi, an Iraqi economist told Rudaw that the court's ruling will enable the KRG to earn much needed money for its Peshmerga forces and civil servants, particularly after the central government cut their budget several months ago.
"The Kurdistan Region needs money, especially now that the threat of the ISIS is there and KRG's own takeover of the new territories," said al-Rikabi.