Menashi, Circuit Judge:
This suit involves a longstanding dispute over Moldovan gas debts. In 2000, the U.S. District Court for the Southern District of New York (Preska, J.) entered a default judgment against Respondents-Appellants —the Republic of Moldova ("Republic") and the Moldovan corporation AO Moldovagaz ("Moldovagaz")—in favor of Lloyd's Underwriters ("Lloyd's"), a British underwriters association. The default judgment confirmed a Russian arbitration award granted to Lloyd's after Moldovagaz's predecessor-in-interest, AO Gazsnabtranzit, defaulted on debt it owed to a Russian gas supply company named Gazprom. Lloyd's had reinsured the debt. In 2012, Lloyd's assigned its right to collect on the default judgment to Petitioner-Appellee Gater Assets Limited ("Gater"), a British Virgin Islands company. With the limitations period for enforcing the default judgment nearing its end, Gater brought a renewal action in the same district court pursuant to New York Civil Practice Law and Rules § 5014, which allows for the renewal of a judgment and the restarting of its limitations period. On November 1, 2019, the district court entered a renewal judgment in Gater's favor against both Moldovagaz and the Republic. The district court explained its underlying reasoning in opinions filed on September 30, 2018,
Because of the particular respondents, however, jurisdiction may exist pursuant to the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1330, 1391(f), 1441(d), 1602-11. The FSIA provides federal district courts with "original jurisdiction" over "any nonjury civil action against a foreign state as defined in [the FSIA]... with respect to which the foreign state is not entitled to immunity either under [the FSIA] or under any applicable international agreement." Id. § 1330(a). In Verlinden B.V. v. Cent. Bank of Nigeria, the Supreme Court held that this jurisdictional grant, when viewed in light of the FSIA as a whole, suffices to provide federal courts with arising-under jurisdiction. 461 U.S. 480, 496-97, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983). Therefore, if the respondents are foreign states for the purposes of the FSIA, then the district court had subject-matter jurisdiction over Gater's renewal action so long as an exception to the general rule of foreign sovereign immunity applies.
Yet subject-matter jurisdiction is not enough by itself. A court must also have personal jurisdiction over a party in order to enter a binding judgment against it. The FSIA provides that a court with subject-matter jurisdiction pursuant to the FSIA also has "[p]ersonal jurisdiction over a foreign state" so long as "service [was] made" in accordance with the FSIA's service rules. 28 U.S.C. § 1330(b). Neither Moldovagaz nor the Republic argues that it did not receive proper service. Still, the Due Process Clause of the Fifth Amendment independently prohibits federal courts from exercising personal jurisdiction over parties that lack "minimum contacts" with the court's forum. See Waldman v. Palestine Liberation Org., 835 F.3d 317, 330-31 (2d Cir. 2016).
That rule, too, has an exception. We have held that foreign states do not enjoy due process protections from the exercise of the judicial power because foreign states, like U.S. states, are not "persons" for the purposes of the Due Process Clause. See Frontera Res. Azerbaijan Corp. v. State Oil Co. of Azerbaijan Republic, 582 F.3d 393, 399 (2d Cir. 2009); see also U.S. Const. amend. V ("[N]or shall any person ... be deprived of life, liberty, or property, without due process of law."). When applying the Fifth Amendment, moreover, we do not define a foreign state in the same way the FSIA does. The FSIA's definition of a foreign state includes both the sovereign itself and its agencies and instrumentalities, which are separate legal persons from the sovereign. See 28 U.S.C. § 1603(a)-(b). Yet when it comes to the Fifth Amendment, we have indicated—and today hold directly—that only the sovereign itself and its "alter egos" are not "persons." Agencies and instrumentalities of foreign sovereigns retain their status as "separate legal person[s]," id. § 1603(b)(1), and receive protection from the exercise of personal jurisdiction under the Due Process Clause.
All told, the requirements for exercising jurisdiction over the claims against each
As we explain below, the record here fails to establish that Gater's renewal action meets the jurisdictional requirements for its claims against each Respondent-Appellant. With respect to Moldovagaz, Gater concedes that Moldovagaz has no contacts with the United States. And, contrary to the district court's conclusion, Moldovagaz is not an alter ego of the Republic. The Republic neither exercises "extensive control" over Moldovagaz nor abused the corporate form such that respecting Moldovagaz's separate juridical personhood "would work fraud or injustice." First Nat'l City Bank v. Banco Para El Comercio Exterior de Cuba (Bancec), 462 U.S. 611, 629, 103 S.Ct. 2591, 77 L.Ed.2d 46 (1983). Therefore, the district court lacked personal jurisdiction over Moldovagaz.
With respect to the Republic, Gater's claim against it does not fit within an FSIA immunity exception. The district court invoked the exception for actions to confirm arbitration awards issued pursuant to a qualifying agreement "made by the foreign state." 28 U.S.C. § 1605(a)(6). But the Republic was not a party to the underlying arbitration agreement. Recognizing this fact, the district court relied on direct benefits estoppel to hold that the immunity exception nevertheless applied. It is not clear to us, however, that a theory of direct benefits estoppel can establish that a foreign state "made" an agreement to which it was not a party. But even assuming that it can, the direct benefits theory cannot support subject-matter jurisdiction here because Gater fails to demonstrate either that the agreement "expressly provide[d] [the Republic] with a benefit" or that the Republic "actually invoke[d] the contract to obtain its benefit." Trina Solar US, Inc. v. Jasmin Solar Pty Ltd, 954 F.3d 567, 572 (2d Cir. 2020). The district court, therefore, lacked subject-matter jurisdiction over Gater's renewal claim against the Republic.
Accordingly, we vacate the district court's judgment in Gater's renewal action and remand with instructions to dismiss the renewal action for lack of jurisdiction. We nevertheless affirm the district court's refusal to vacate its original default judgment because the appellants have failed to demonstrate that the district court had no arguable basis to exercise jurisdiction to enter that judgment.
Moldovans rely on natural gas supplied by Gazprom, a gas supply company that is majority-owned by the Russian government. Many Moldovan customers—especially those in the autonomous region of Transnistria—use the gas without providing full payment. See J. App'x 1181-82. As a result of this and other factors, the Republic and some Moldovan gas entities accumulated large debts to Gazprom in the early 1990s. To help address the mounting
When that effort did not succeed, the Republic, Transnistria, and Gazprom incorporated Moldovagaz in 1998. To form Moldovagaz, each of the parties contributed its stake in Gazsnabtranzit. Combined, those stakes were valued at $170.5 million. Additionally, the Republic and Transnistria contributed other gas holdings and property worth $120 million, bringing Moldovagaz's total capitalization to $290.5 million. In return, Gazprom reduced the outstanding debt owed to it by $60 million.
The Republic owns 35.3 percent of Moldovagaz, Gazprom owns 50 percent, and Transnistria owns 13.4 percent. In 2005, Transnistria granted Gazprom the right to administer its stake in Moldovagaz. As a result, Gazprom controls 63.4 percent of Moldovagaz's shares, and its representatives hold a majority of the seats on Moldovagaz's governing bodies. The Republic has remained involved in Moldovagaz's affairs from its inception.
In 1996, Gazsnabtranzit entered into an agreement with Gazprom that set the price and quantity terms for the Gazprom gas that Gazsnabtranzit would deliver to Moldovans in 1997. The agreement specified that the parties would arbitrate any disputes arising thereunder before the International Commercial Arbitration Court of the Chamber of Commerce of the Russian Federation in Moscow ("ICAC"). The next year, a dispute developed between Gazprom and Gazsnabtranzit regarding money Gazprom claimed it was owed under the agreement. Lloyd's Underwriters, Gazprom's ultimate reinsurers, covered the allegedly unpaid debt. Lloyd's, which became subrogated to Gazprom's rights under the agreement, then brought an arbitration action against Gazsnabtranzit in the ICAC pursuant to the arbitration clause. On November 12, 1998, the ICAC awarded Lloyd's $8.5 million plus costs against Gazsnabtranzit.
In December 1999, Lloyd's filed a petition in the U.S. District Court for the Southern District of New York to confirm the award against Gazsnabtranzit, Moldovagaz (which by that time had succeeded Gazsnabtranzit), and the Republic. Lloyd's brought suit pursuant to legislation implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention"). See 9 U.S.C. §§ 201-08. After the defendants failed to appear, the district court entered a default judgment for Lloyd's in July 2000. In 2012, Lloyd's assigned that judgment to Gater. As the twenty-year statute of limitations to collect the judgment approached, Gater filed an action under New York's "renewal" statute, N.Y. C.P.L.R. § 5014, which permits a plaintiff to obtain a renewed judgment with its own limitations period by bringing a new action on an existing judgment. This time, Moldovagaz and the Republic appeared and sought dismissal of Gater's renewal action pursuant to Federal Rule of Civil Procedure 12(b)(1) (lack of subject-matter jurisdiction) and 12(b)(2) (lack of personal jurisdiction). Moldovagaz and the Republic also moved pursuant to Rule 60(b)(4) to vacate the district court's original 2000 default judgment as void due to a lack of jurisdiction.
The district court denied the motions and granted judgment in favor of Gater in its renewal action. The district court concluded that Moldovagaz was an "organ" of the Republic and therefore qualified as a foreign state under the FSIA. Gater I, 2018 U.S. Dist. LEXIS 171350, at *22-43.
In addition, the district court held that neither the Republic nor Moldovagaz was entitled to immunity under the FSIA because Gater's action for a renewal judgment fit into the FSIA's immunity exception for actions brought "to confirm an award made pursuant" to an arbitration "agreement made by the foreign state" that is governed by "a treaty or other international agreement in force for the United States." Gater II, 413 F. Supp. 3d at 325-28 (quoting 28 U.S.C. § 1605(a)(6)); Gater I, at *53-56 (same). Finally, the district court ruled that the Southern District of New York was a proper venue for the renewal action because "a substantial part of the events or omissions giving rise to the claim," namely the original 2000 suit that resulted in the default judgment Gater sought to renew, occurred in the Southern District of New York. Gater II, 413 F. Supp. 3d at 328 (quoting 28 U.S.C. § 1391(f)(1)). Moldovagaz and the Republic timely appealed.
STANDARD OF REVIEW
We review a district court's factual determinations in making jurisdictional rulings under the FSIA for clear error. See Frontera, 582 F.3d at 395 (personal jurisdiction); Filler v. Hanvit Bank, 378 F.3d 213, 216 (2d Cir. 2004) (subject-matter jurisdiction). Under this standard, we will disturb the district court's findings only if we have a "definite and firm conviction" that the district court made a mistake. Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985). At the same time, we review the district court's legal conclusions on these issues de novo. EM Ltd. v. Banco Central de la República Argentina, 800 F.3d 78, 89 (2d Cir. 2015) (personal jurisdiction); Filler, 378 F.3d at 216 (subject-matter jurisdiction). Here, because we identify certain clear errors of fact, we will discount those factual findings and determine de novo if the district court had jurisdiction over Gater's renewal action with respect to Moldovagaz and the Republic.
Regarding the Rule 12(b)(1) motions to dismiss Gater's renewal claims for lack of subject-matter jurisdiction, once a movant such as the Republic "present[s] a prima facie case that it is a foreign sovereign," the non-movant then "has the burden of going forward with evidence showing that, under exceptions to the FSIA, immunity should not be granted." Virtual Countries, Inc. v. Republic of South Africa, 300 F.3d 230, 241 (2d Cir. 2002) (internal quotation marks and emphasis omitted). If the non-movant can satisfy that burden of production, the foreign state bears the "ultimate burden of persuasion by a preponderance of the evidence." Id. at 242.
The district court lacked jurisdiction over Gater's renewal action. Moldovagaz has no contacts with the United States and, contrary to the district court's conclusion, it is not an alter ego of the Republic. Due process protects a party from being subject to personal jurisdiction in a forum with which it has no connection. See, e.g., Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Although we have denied this protection to foreign sovereigns and their alter egos, see Frontera, 582 F.3d at 399, that exception does not extend to all agencies or instrumentalities of foreign states as defined by the FSIA. Therefore, the district court lacked personal jurisdiction over Moldovagaz even if it is an agency or instrumentality of the Republic.
The Republic, meanwhile, was not a party to the arbitration agreement that the district court held triggered the FSIA's immunity exception for arbitral awards. The district court nevertheless bound the Republic to this arbitration agreement and abrogated its immunity under a theory of direct benefits estoppel. For the FSIA arbitration
Because we conclude that the district court was powerless to entertain Gater's renewal action against either Moldovagaz or the Republic, we do not address the other issues raised here—namely, whether Moldovagaz is an agency or instrumentality of the Republic as defined by the FSIA, whether a renewal action under N.Y. C.P.L.R. § 5014 qualifies as an action to "confirm" an arbitration award under the FSIA's arbitration immunity exception, and whether venue for the renewal action was proper in the district court.
The Due Process Clause of the Fourteenth Amendment protects a party from being subject to personal jurisdiction in a state court if it does not have "minimum contacts" with the forum state. Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154. This protection applies to domestic and foreign parties alike. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 918-20, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011); Daimler AG v. Bauman, 571 U.S. 117, 120-22, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). Although the Fourteenth Amendment does not limit the district court's power in this case,
Here, all parties agree that Moldovagaz "has no contacts with the United
Moldovagaz is a gas company rather than a sovereign. Still, we have held that entities that are alter egos of foreign sovereigns also cannot claim the protection of the Fifth Amendment's Due Process Clause. Id. at 400. To determine whether an entity is an alter ego of a foreign sovereign, we use the framework set out in the Supreme Court's decision in Bancec, 462 U.S. 611, 103 S.Ct. 2591. See Frontera, 582 F.3d at 400. Although Bancec addressed whether a court could pierce the corporate veil between a corporation and a sovereign for the purpose of imposing liability, the standards set out in that case allow us to assess when a corporate entity may share an identity with the sovereign and therefore lack personhood for the purposes of the Fifth Amendment. See id. at 400-01; see also GSS Grp. Ltd v. Nat'l Port Auth., 680 F.3d 805, 815, 817 (D.C. Cir. 2012) ("[When] a foreign sovereign controls an instrumentality to such a degree that a principal-agent relationship arises between them, the instrumentality receives the same due process protection as the sovereign: none.").
An alter ego relationship is not easily established. In Bancec, the Supreme Court explained that basic legal principles, the FSIA's legislative history, and considerations of comity and respect for foreign sovereigns all dictate that "duly created instrumentalities of a foreign state are to be accorded a presumption of independent status." 462 U.S. at 625-28, 103 S.Ct. 2591. This "presumption of separateness is a strong one." Zappia Middle E. Const. Co. v. Emirate of Abu Dhabi, 215 F.3d 247, 252 (2d Cir. 2000). Nonetheless, it "may be overcome" in two circumstances: "where a corporate entity is so extensively controlled by its owner that a relationship of principal and agent is created" or where recognizing the instrumentality's separate juridical status "would work fraud or injustice." Bancec, 462 U.S. at 628-29, 103 S.Ct. 2591.
In applying Bancec's "extensive control" prong, "the touchstone inquiry" is "whether the sovereign state exercises significant and repeated control over the instrumentality's day-to-day operations." EM Ltd., 800 F.3d at 91.
We also deem an entity to be the sovereign's alter ego when failing to do so "would work fraud or injustice." Bancec, 462 U.S. at 629, 103 S.Ct. 2591. This occurs when a sovereign has "abused the corporate form" vis-à-vis the entity. EM Ltd., 800 F.3d at 95; see also De Letelier v. Republic of Chile, 748 F.2d 790, 794 (2d Cir. 1984) (remarking that Bancec's veil-piercing criteria relate to "classic abuse of corporate form"); First Inv. Corp. of Marsh. Is. v. Fujian Mawei Shipbuilding, Ltd., 703 F.3d 742, 755 (5th Cir. 2012) ("[T]o meet [the fraud or injustice] prong it is not sufficient ... merely to point out an injustice that would result from an adverse decision. Rather, [the plaintiff] must show how the [sovereign] manipulated [the instrumentality's] corporate form to perpetuate a fraud or injustice.").
Applying Bancec's standards to this appeal, we conclude that Moldovagaz is not an alter ego of the Republic.
To establish that Moldovagaz is the Republic's alter ego under Bancec's "extensive control" prong, Gater must show that the Republic "exercises significant and repeated control over [Moldovagaz's] day-to-day operations." EM Ltd., 800 F.3d at 91. Although the district court determined that the Republic "extensively controlled" Moldovagaz, most of the facts on which it relied are incidents of the Republic's due exercise of its ownership interest in or regulatory power over Moldovagaz. While some aspects of the Republic's relationship with Moldovagaz appear somewhat irregular, those aspects do not sufficiently demonstrate that the Republic "exercise[d] significant and repeated control over [Moldovagaz's] day-to-day operations." EM Ltd., 800 F.3d at 91. These facts, therefore, are insufficient to rebut the strong "presumption" in favor of recognizing Moldovagaz's "independent status." Bancec, 462 U.S. at 627, 103 S.Ct. 2591.
1. The Republic's Regulation of Moldovagaz
As the district court emphasized, the Republic sets the rates that Moldovagaz may charge customers for gas. Gater II, 413 F. Supp. 3d at 315, 317, 319, 325. The Republic does so through its ratemaking agency, the National Energy Regulatory Agency ("ANRE"). But governments routinely engage in ratemaking for companies in important sectors of their national economies, especially public utilities. See generally Charles F. Phillips Jr., The Regulation of Public Utilities (1988). That does not make those companies their alter egos.
Gater also observes that the Republic mandates that Moldovagaz service and maintain the country's gas pipelines and regulates how Moldovagaz must carry out that obligation. But governments routinely enact maintenance requirements and safety regulations without rendering companies subject to that oversight the government's alter ego. Compare J. App'x 631-35 (Moldovan pipeline maintenance law), with 49 U.S.C. §§ 60101-41 (U.S. pipeline safety regulations).
Finally, Gater notes that the Moldovan Parliament has conducted two investigations into Moldovagaz in the past twenty years. A government's investigation of a business, however, is not remarkable. And these investigations in particular do not establish extensive control. The first investigation lasted one month and occurred as part of the Parliament's investigation of the entire Moldovan electricity and natural gas industry. The second investigation was focused on Moldovagaz, but it lasted only
2. The Republic's Exercise of Its Minority Interest in Moldovagaz
The Republic also exercises some authority over Moldovagaz via its ownership interest, but that authority is not enough to render Moldovagaz the Republic's alter ego. Moldovagaz's governance structure works as follows: Certain fundamental decisions, such as amending the corporate charter, are reserved for shareholder meetings. Aside from those decisions, Moldovagaz is governed by a Supervisory Council (akin to a board of directors) and managed by a Board (the duties and powers of which resemble those of officers). The Republic appoints some directors to the Supervisory Council, and many of its appointees have been civil servants. But these directors constitute only a minority of the Council; Gazprom appoints the majority of the Council's members. Gazprom's representatives also hold a majority of the positions on the Board.
Gater notes that Gazprom's representatives at shareholder and Council meetings do not vote on any transactions between Moldovagaz and Gazprom. According to Gater, these are the "most critical votes, which ultimately determine the day-to-day affairs" of Moldovagaz. Brief for Petitioner-Appellee-Cross-Appellant Gater Assets Limited 26. Moldovagaz's shareholders and Council, however, make important decisions that do not involve transactions with Gazprom. For example, the Council votes to approve nominees to Moldovagaz's Board. Moreover, the fact that Gazprom and its appointees are conflicted out of votes regarding possible self-dealing transactions is an unremarkable result of ordinary corporate law, which hardly establishes Moldovagaz as the alter ego of the Republic. See, e.g., 3 William M. Fletcher et al., Fletcher Cyclopedia of the Law of Corporations § 913 (2020); N.Y. Bus. Corp. Law § 713; 8 Del. Code § 144.
Even if the inability of Gazprom's representatives to vote on transactions with Gazprom meant that the Republic effectively wields the power of a majority shareholder over Moldovagaz—a conclusion that the record does not support —such authority does not in itself establish extensive control. Black letter corporate law provides that a corporation and its controlling shareholder are distinct entities. See United States v. Bestfoods, 524 U.S. 51, 61, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998); see also Transamerica Leasing, Inc. v. La Republica de Venezuela, 200 F.3d 843, 849 (D.C. Cir. 2000) ("If majority stock ownership and appointment of the directors were sufficient, then the presumption of separateness announced in Bancec would be an illusion.").
The fact that the Republic appoints civil servants to exercise its ownership interest on Moldovagaz's Council similarly does not establish extensive control. Appointing loyal board members is a due "exercise of power incidental to ownership." EM Ltd., 800 F.3d at 92-93. Indeed, "courts have consistently rejected the argument
The Republic also nominates Moldovagaz's chief officer, the Board chairman. The Republic's nominee, however, must be approved by the Council, of which Gazprom's representatives constitute the majority. Undisputed evidence shows that the Council has blocked the Republic's nominee on at least two occasions in the past five years. Thus, even if direct appointment of corporate officers could establish that a shareholder controls a corporation's day-to-day operations, the record will not admit a finding that the Republic wielded such power over Moldovagaz. Moreover, as previously noted, at least one former Moldovagaz chairman repeatedly clashed with the Republic, further indicating that the Republic's ability to nominate the chairman does not mean that it controls Moldovagaz's day-to-day operations.
3. Apparent Irregularities in the Republic-Moldovagaz Relationship
Gater identifies some instances in which the Republic arguably intruded into Moldovagaz's affairs to a degree atypical of a shareholder or government regulator. Yet this evidence still falls short of establishing that the Republic "exercise[d] significant and repeated control over the instrumentality's day-to-day operations," EM Ltd., 800 F.3d at 91, such that Gater can "overcome" the strong "presumption" in favor of Moldovagaz's "independent status," Bancec, 462 U.S. at 627-29, 103 S.Ct. 2591.
First, Gater identifies an agreement the Republic signed with the Russian government in 2001 that dictated many aspects of Moldovagaz's business relationship with Gazprom. The agreement bound Moldovagaz to terms regarding the price it would pay Gazprom for gas, how Moldovagaz would make those payments to Gazprom, and the interest rate on Moldovagaz's debt to Gazprom. Moldovagaz responds that the agreement cannot evidence extensive control because it expressly provided that Gazprom and Moldovagaz would determine "amounts and conditions for the sale" of gas. J. App'x 948. Moldovagaz also posits that the agreement resembles trade agreements into which foreign states routinely enter with one another. For purposes of the personal jurisdiction inquiry in this case, we need not decide whether this kind of an agreement can establish extensive control.
Second, Gater relies on a 2014 Moldovan law that purportedly directed Moldovagaz to invest in a specific compressor station and pipeline. That decree, however, directed the Republic's Ministry of Economy— which administers the Republic's stake in Moldovagaz—to "facilitate the insertion" of these capital improvements into Moldovagaz's investment program. J. App'x 998. The district court called this a "striking example" of "active control over the day-to-day activities of Moldovagaz" and relied on it to conclude that the Republic "sets specific priorities for Moldovagaz." Gater II, 413 F. Supp. 3d at 315-16. But while the decree may have set priorities for the Ministry of Economy, the law did not direct Moldovagaz to take any action. The mere fact that the Republic, which maintains a 35.3 percent ownership interest in Moldovagaz, sought to advance certain investment goals does not show that the Republic exercised any outsized authority over Moldovagaz. Neither the district court nor Gater identifies evidence indicating that the Ministry of Economy forced Moldovagaz to invest in these improvements or even that it could have done so, given that Gazprom controls Moldovagaz's governing bodies. Regardless, Gater does not produce any other examples of such control, and one instance of an alleged directed investment over the course of twenty years is insufficient as a matter of law to demonstrate "significant and repeated control over ... day-to-day operations." EM Ltd., 800 F.3d at 91.
Third, Gater notes that the Republic has negotiated with Gazprom and the Russian government regarding important issues relating to Moldovagaz, including its debts to and contracts with Gazprom. High ranking Moldovan officials, including the president and prime minister, have met with Gazprom and Russian officials on several occasions to discuss these issues, often alongside members of Moldovagaz's Board. In light of Bancec's admonition that "government instrumentalities established as juridical entities distinct and independent from their sovereign should normally be treated as such," 462 U.S. at 626-27, 103 S.Ct. 2591, we cannot conclude that a government's intercession on behalf of an important domestic utility company renders that company its alter ego—especially where the government's efforts are related to promoting the company's interests vis-à-vis other entities rather than directing the company's day-to-day operations. Additionally,
Finally, Gater points out that, during one negotiation, the Moldovan president stated that Moldovagaz's debt to Gazprom "is the total debt of Moldova." J. App'x 1185. (After this statement caused a small uproar, the president clarified that "this is not a debt of Moldova, of the country's Government, but the debt of `Moldovagaz.'" J. App'x 1560.) Similarly, a June 2018 press release from the Republic reported that "officials" at another meeting "noted that Moldova ... performs on time and in full the gas payments ... [and] has managed to pay some of the historical debts." J. App'x 1207. These statements reflect the Republic's special interest in Moldovagaz's affairs and might even serve as evidence that the Republic does not always recognize Moldovagaz's separate status—a factor we have recognized as relevant to the "extensive control" inquiry. See EM Ltd., 800 F.3d at 91. But two isolated statements—one of which was retracted —do not suffice to establish extensive control by the sovereign over a corporation. See Bancec, 462 U.S. at 625, 103 S.Ct. 2591 (noting that courts should generally honor the separate legal status of "utilities and industries which are given priority in the national development plan" in "countries which have insufficient private venture capital to develop").
4. The Failure to Show Extensive Control
In sum, Gater has failed to show that the Republic "exercises significant and repeated control over [Moldovagaz's] day-to-day operations." EM Ltd., 800 F.3d at 91. Therefore, the district court erred in concluding that Moldovagaz is the Republic's alter ego under Bancec's extensive control prong.
Gater insists that the facts here resemble those in a recent Third Circuit case in which the court concluded that Venezuela extensively controlled the oil company Petróleos de Venezuela ("PDVSA"). See Crystallex Int'l Corp. v. Bolivarian Republic of Venezuela, 932 F.3d 126, 146-49 (3d Cir. 2019). In that case, the evidence showed that Venezuela actively interfered in the operations of PDVSA in a way that rendered PDVSA little more than Venezuela's political tool. The Venezuelan government forced PDVSA to sell oil "for no, or de minimis, consideration" and ordered sales to political allies at a "steep discount." Id. at 146-47. It also ordered the company to spend more than $4 billion on "social programs and projects" that had "nothing to do with its business." Id. Additionally, Venezuela wholly owned PDVSA. Id. at 148. Here, by contrast, the Republic owns a minority stake in Moldovagaz and has not exercised the level of control that Venezuela did in Crystallex.
Turning to Bancec's second prong, Gater has failed to show that recognizing Moldovagaz's separate juridical status "would work fraud or injustice." Bancec, 462 U.S. at 629, 103 S.Ct. 2591. It may be true, as the district court observed, that "[a]s a practical matter ... whatever corporate arrangements the Republic has with Moldovagaz, they have thus far worked to prevent Plaintiff from collecting its judgment." Gater II, 413 F. Supp. 3d at 322. However, to meet Bancec's fraud or injustice prong, Gater must do more than "merely to point out an injustice that would result from an adverse decision." First Inv., 703 F.3d at 755. Rather, it must demonstrate that the Republic or Moldovagaz has "abused the corporate form" to "avoid their obligations." EM Ltd., 800 F.3d at 95.
The facts on which the district court relied to pierce the veil between the Republic and Moldovagaz do not indicate an abuse of the corporate form. The district court emphasized that the Republic has at times provided funds to pay some of Moldovagaz's debts to Gazprom but not to other creditors. See Gater II, 413 F. Supp. 3d at 322-23. Yet Gater does not cite any authority establishing that preferring certain creditors qualifies as an abuse of the corporate from. In EM Ltd., we held that there was "nothing irregular or fraudulent" about Argentina preferring the International Monetary Fund over other creditors because such a policy was necessary "to protect the funds of [the IMF's] member states." 800 F.3d at 93 n.70, 96. Here too there is nothing "irregular or fraudulent" about the Republic and Moldovagaz preferring Gazprom, which supplies Moldovans with an essential commodity, over other creditors.
The district court also pointed to Moldovagaz's "chronic undercapitalization" and to Moldovagaz's efforts to evade the ICAC's arbitral award judgment when it was originally issued. Gater II, 413 F. Supp. 3d at 322. But the record does not suggest that those circumstances involved a manipulation of Moldovagaz's corporate form. The district court cited no evidence that the Republic undercapitalized Moldovagaz for the purpose of evading its creditors.
In a separate part of its opinion, the district court found that the Republic failed to adequately capitalize Moldovagaz at the time of its incorporation. Gater II, 413 F. Supp. 3d at 324. The record does not support that conclusion. Moldovagaz's constitutive contract indicates an initial capitalization of $290.5 million. The district court apparently disregarded the contract in part because it believed there was no "independent valuation" of those capital contributions. Gater II, 413 F. Supp. 3d at 324. But Moldovan law and Moldovagaz's charter both required an independent valuation. Moreover, Moldova's Commission on Financial Markets may not register a corporation's securities until it receives an independent report on the market value of the capital contributions, and the Commission did register Moldovagaz's shares. The district court therefore clearly erred in concluding that no independent valuation was completed simply because Moldovagaz could not produce a copy of a document— more than twenty years after Moldovagaz was created—that contained the initial valuation. See Gater II, 413 F. Supp. 3d at 324.
The district court also thought that a July 2000 decree from the Republic's Parliament showed that "the capital contributions had not been made in full" by that date. Id. But that decree does not indicate that there was a delay in contributing capital to Moldovagaz; it refers to a delay in Russia's recognition of Gazprom's new ownership stake and the debt reduction that should have resulted.
This case does not resemble those circumstances that we have said justify piercing the veil between a sovereign and a related entity to avoid a fraud or injustice:
EM Ltd., 800 F.3d at 95 (footnotes omitted). And in Corporacion Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploracion Y Produccion, we disregarded an entity's separate status when it tried to argue that it simultaneously was an independent corporation "for personal jurisdiction purposes" and should be "treated ... as [a] foreign sovereign" for "other issues in th[e] litigation." 832 F.3d 92, 103 (2d Cir. 2016). Unlike those cases, the evidence and litigation history here do not suggest that the Republic or Moldovagaz has been inconsistent or abusive with respect to Moldovagaz's corporate form.
In the end, the district court's conclusion that Moldovagaz is the Republic's alter ego seems to have been influenced by the fact that "Moldovagaz was created to pay down part of the Republic's debt to Gazprom and to provide for Moldova's citizens' energy needs." Gater II, 413 F. Supp. 3d at 325; see also id. at 317, 320. But a sovereign may form a separate entity to help it address problems such as these, and that entity retains its separate juridical status even if it "assist[s]" the sovereign in achieving the sovereign's "policies and goals." EM Ltd., 800 F.3d at 94; see also Seijas v. Republic of Argentina, 502 F. App'x 19, 22 (2d Cir. 2012) (noting that an instrumentality's conduct taken "in accordance with [the sovereign's] policy preferences" and "as a vehicle for the government to obtain ... financial resources... does not demonstrate that [the instrumentality] was an alter ego of [the sovereign]") (internal quotation marks and citation omitted). Such an entity loses its "presumption of independent status" only if the sovereign "so extensively control[s]" it "that a relationship of principal and agent is created" or if recognizing that separate status "would work fraud or injustice." Bancec, 462 U.S. at 627-29, 103 S.Ct. 2591. Here, neither the Republic nor Moldovagaz has acted in a way that justifies denying Moldovagaz its status as a corporation juridically separate from the Republic.
Our recognition of Moldovagaz's status as a corporate juridical entity separate from the Republic should dispose of the personal jurisdiction question in this case. Because we do not equate Moldovagaz with a foreign sovereign, due process requires that it have minimum contacts with the United States before an American court may exercise jurisdiction over it. Gater does not suggest that Moldovagaz has such contacts. Instead, Gater asks us to expand the exception we announced in Frontera and rule that agencies and instrumentalities of foreign sovereigns, as defined in the FSIA, are also not "persons"
We decline to do so. Foreign corporations are plainly persons entitled to the personal jurisdiction protections that litigants receive as a matter of due process. See Pemex, 832 F.3d at 103 ("The jurisdictional protections of the Due Process Clause ... apply to ... foreign corporations.... [D]ue process rights can only be exercised by persons, including corporations, which are persons at law.") (internal citations omitted); see also Goodyear Dunlop Tires, 564 U.S. at 918-20, 131 S.Ct. 2846; Daimler, 571 U.S. at 120-22, 134 S.Ct. 746. This remains true regardless of which Due Process Clause applies. See Waldman, 835 F.3d at 330 ("This Court's precedents clearly establish the congruence of due process analysis under both the Fourteenth and Fifth Amendments."). Our conclusion that Moldovagaz is not an alter ego of the Republic necessarily implies that we recognize its status as a foreign corporation. It may be a foreign corporation that serves as an agency or instrumentality of a foreign sovereign—as the FSIA defines that term—but Gater offers no compelling reason to conclude that while the Fifth Amendment's use of the word "person" generally includes corporations, it excludes those corporations that have a close relationship with a foreign sovereign.
We therefore join two of our sister circuits in holding that foreign corporations that do not meet Bancec's veil-piercing standards "enjoy all the due process protections" regularly afforded to litigants challenging personal jurisdiction. GSS Grp., 680 F.3d at 815; see also First Inv., 703 F.3d at 752-55. This remains true
Having concluded that the district court lacked personal jurisdiction over Moldovagaz, we turn to Gater's renewal claim against the Republic. As a foreign sovereign, the Republic may not protest that allowing this suit to proceed against it would violate due process limits on personal jurisdiction. See Frontera, 582 F.3d at 399.
"The FSIA provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country." Barnet v. Ministry of Culture & Sports of the Hellenic Republic, 961 F.3d 193, 199 (2d Cir. 2020). Because the FSIA directs that a "foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607," sovereign immunity from suit "is the default rule, subject only to specific exceptions." Id.
The district court held that Gater's claim against the Republic fits into section 1605's exception for actions "to confirm an award made pursuant" to a qualifying "agreement to arbitrate" that was "made by the foreign state." 28 U.S.C. § 1605(a)(6); see Gater II, 413 F. Supp. 3d at 325-28. For that immunity exception to apply here, the relevant arbitration agreement must have been "made by" the Republic. 28 U.S.C. § 1605(a)(6). All parties agree that the
It is undisputed that the Republic never signed that contract, and nowhere does the contract indicate that the Republic was a party to it.
We have suggested in dicta that direct benefits estoppel can apply not only to bind a private party to an arbitration agreement but also to abrogate a state's immunity under the FSIA's arbitration immunity exception.
To be bound under a theory of direct benefits estoppel, "[t]he nonsignatory beneficiary must actually invoke the contract to obtain its benefit, or the contract must expressly provide the beneficiary with a benefit." Trina Solar, 954 F.3d at 572; see also MAG Portfolio Consult, GMBH v. Merlin Biomed Grp. LLC, 268 F.3d 58, 62 (2d Cir. 2001) (holding this theory applies only when a nonsignatory "knowingly exploited [a] purchase contract and thereby received a direct benefit from the contract") (alterations and internal quotation marks omitted). As district courts in this circuit have recognized, "the mere fact of a nonsignatory's affiliation with a signatory will not suffice to estop the nonsignatory from avoiding arbitration, no matter how close the affiliation is."
As the district court acknowledged, the Gazsnabtranzit-Gazprom agreement gave the Republic no rights to purchase or receive gas. Rather, Gater argued—and the district court found—that the Republic derived direct and substantial benefits from the Gazsnabtranzit-Gazprom agreement by "discharging [the Republic's] obligations" under an earlier 1996-97 Moldova-Russia trade agreement. Gater II, 413 F. Supp. 3d at 326.
The record does not support the conclusion that this alleged benefit binds the Republic to arbitration under a direct benefits estoppel theory. The Gazsnabtranzit-Gazprom agreement did not "expressly provide the [Republic] with a benefit" with respect to the trade agreement. Trina Solar, 954 F.3d at 572. Moreover, the trade agreement required only that the Republic "instruct" the relevant state bodies "to prepare proposals" for the inter-country shipment of specified quantities of over fifty products, including natural gas. J. App'x 1104, 1107-10. The specific purchase terms and even the consummation of the Gazsnabtranzit-Gazprom agreement were not necessary for the Republic to discharge its obligations under the trade agreement. By contrast, our cases have estopped nonsignatories only when the agreement itself confers a "tangible and definite" benefit. Specht v. Netscape Commc'ns Corp., 306 F.3d 17, 39-40 (2d Cir. 2002) (discussing Deloitte, 9 F.3d 1060, and Tencara Shipyard, 170 F.3d 349).
Additionally, the record here does not indicate that the Republic "actually invoke[d]" the Gazsnabtranzit-Gazprom agreement to obtain any benefit the agreement might have provided with respect to the discharge of the Republic's obligations to Russia under the trade agreement. Trina Solar, 954 F.3d at 572-73 (rejecting direct benefits estoppel because, although a nonsignatory "surely benefited" from the contract by receiving solar panels, "no record evidence" indicated that the nonsignatory "invoked the Contract to demand delivery of the solar panels" or "invoke[d]" a signatory's "duties" in order to "seek or obtain" any benefits at all). Absent evidence of a direct and definite benefit, Gazsnabtranzit's and Gazprom's agreement to arbitrate disputes over gas supplied to the Republic in 1997 does not estop the Republic from claiming immunity here.
In sum, the Republic was not a party to the Gazsnabtranzit-Gazprom agreement, and that agreement does not bind the Republic to arbitration or abrogate its immunity
While we have concluded that the district court lacked jurisdiction over both parties for the renewal action, we must now consider whether the district court erred by denying the motions to vacate the original default judgment under Rule 60(b)(4).
To determine whether the district court had jurisdiction to issue the default judgment, we would need to analyze the relationship between Moldovagaz and the Republic when Lloyd's filed the original action to confirm its arbitral award in December 1999. But the arguments in this appeal focus on the Moldovagaz-Republic relationship at the time of Gater's renewal action and rely heavily on facts that postdate the default judgment. We therefore conclude that neither the Republic nor Moldovagaz has satisfied its burden to show that vacatur is warranted.
For the foregoing reasons, the district court lacked jurisdiction over Gater's renewal action. Accordingly, we