GSS Group LTD v. National Port Authority, 680 F.3d 805 (D.C. Cir. 2012)

Appellee National Port Authority of Liberia (“Port Authority”)–a state-owned corporation organized under the laws of Liberia–executed a long-term agreement with Appellant GSS Group (“GSS”), a construction company incorporated in the British Virgin Islands and headquartered in Israel.  The agreement called for GSS to build and operate a container park at the port of Liberia’s capital city of Monrovia.  The agreement collapsed, however, after only a few months.  The newly-elected government of Liberia, which succeeded the transitional Liberian government that was installed during the country’s four-year civil war, declared the agreement “null and void” on the basis that the agreement violated Liberia’s competitive bidding requirements.

The agreement called for GSS to build and operate a container park at the port of Liberia’s capital city of Monrovia.  The agreement collapsed, however, after only a few months.  The newly-elected government of Liberia, which succeeded the transitional Liberian government that was installed during the country’s four-year civil war, declared the agreement “null and void” on the basis that the agreement violated Liberia’s competitive bidding requirements.

After failing to resolve the dispute informally, GSS Group invoked the agreement’s arbitration provision, which designated London, England as the arbitral situs.  Over Port Authority’s resistance to arbitration in London, and despite Port Authority’s pursuit of parallel proceedings in the Liberian court system, the arbitrator held that Port Authority breached the agreement and was liable in excess of $44 million.  GSS filed a petition in the U.S. District Court for the District of Columbia to confirm the award.  Port Authority objected on personal jurisdiction grounds, claiming that it was entitled to U.S. constitutional due process protections by virtue of being “legally separate from the Liberian government” such that the bar on personal jurisdiction defenses to foreign sovereigns did not apply.  GSS did not contest Port Authority’s claim of juridical separateness or assert that Port Authority had minimum contacts with the U.S.; instead, GSS claimed that the jurisdictional prerequisites of the Foreign Sovereign Immunities Act (“FSIA”) trumped the “minimum contacts” standard for personal jurisdiction and, moreover, that Port Authority had satisfied those prerequisites.  The district court rejected GSS’s claim and granted Port Authority’s motion to dismiss.  The district court ruled that Port Authority was akin to a “person” who is entitled to due process protections, including the right to contest personal jurisdiction, under the Fifth Amendment.

On appeal, GSS argued that foreign, state-owned corporations have no due process rights and should be treated no differently than their sovereign shareholders.  Under this rule, GSS argued, the Port Authority would be unable to oppose enforcement of the arbitration award on jurisdictional grounds, because it would not have a constitutional status different from the Liberian Government.  The D.C. Circuit disagreed, holding that foreign state-owned corporations may invoke due process protections to challenge the exercise of personal jurisdiction over them.  The court held that the extent of a state-owned corporation's juridical independence plays a dispositive role in the constitutional analysis.  Specifically, the court held that, if the state-owned corporation does not act as an agent of the state, and separate treatment would not result in manifest injustice, the entity will enjoy all the due process protections available to private corporations. 

In this case, the Port Authority claimed to be an independent juridical entity in its motion to dismiss, and GSS failed to contest that characterization.  Therefore, the court held that the Port Authority was entitled to treatment as a separate "person" entitled to due process protection, including the right to assert a minimum contacts defense.  The court found that GSS had not identified any connection between the Port Authority and the U.S. and, in fact, GSS conceded that none exists.  The court affirmed the district court’s dismissal of GSS’s petition for lack of personal jurisdiction.