397 F.Supp.3d 323
S.D.N.Y.2019Background
- Esso (two Exxon affiliates) and NNPC contracted in 1993 for development of the Erha offshore oil field; contract gave Esso exclusive rights to calculate and allocate produced oil and to prepare related tax returns; arbitration in Nigeria under Nigerian law was the agreed dispute mechanism.
- In 2007–08 a Nigerian Presidential Committee recommended NNPC lift (take) more oil; NNPC increased lifts ("overlifting") and submitted its own tax returns to FIRS, prompting Esso to commence arbitration in 2009.
- A Nigerian arbitral tribunal awarded Esso $1.799 billion; Nigerian Federal High Court later enjoined aspects of arbitration and set aside the Award on the ground the dispute was primarily a non‑arbitrable tax matter; the Nigerian Court of Appeal reinstated some non‑monetary findings but left the monetary Award vacated.
- Esso petitioned in the SDNY to confirm the Award; NNPC moved to dismiss for lack of personal jurisdiction, forum non conveniens, and because the Award was set aside at its seat; Esso sought adverse‑inference sanctions for discovery failures.
- The district court found (1) NNPC is an alter ego of Nigeria and had sufficient minimum contacts with the U.S., so personal jurisdiction lies; (2) forum non conveniens dismissal was unwarranted at this late, summary stage; but (3) the court declined to confirm the Award because Nigerian courts had set it aside and Pemex factors favored giving deference to the Nigerian rulings; Esso’s adverse‑inference motion was denied.
Issues
| Issue | Plaintiff's Argument (Esso) | Defendant's Argument (NNPC) | Held |
|---|---|---|---|
| Personal jurisdiction | FSIA confers jurisdiction; NNPC is alter ego of Nigeria; minimum contacts with U.S. via solicitation, negotiations in Houston, U.S. dollar transactions and New York bank accounts | FSIA status as instrumentality doesn’t eliminate due process; insufficient U.S. contacts; accounts belong to CBN not NNPC | Court found NNPC an alter ego of Nigeria and, alternatively, sufficient minimum contacts; personal jurisdiction exists |
| FSIA / alter ego | FSIA + service = jurisdiction; instrumentality treated as foreign state | FSIA designation doesn’t answer constitutional due process; must show alter ego under Bancec factors | Applying Bancec/EM Ltd. factors court found extensive Nigerian control (appointments, directives, shared assets/accounts) and thus alter ego |
| Forum non conveniens | Esso chose U.S. forum under FSIA and confirmation is a summary proceeding; foreign plaintiff’s choice merits deference | Nigeria is proper, local interest favors Nigeria | Court denied FNC dismissal: private and public factors (and advanced procedural posture) weighed against dismissal |
| Confirmation of arbitral award (set aside at seat) | Court should confirm Award notwithstanding Nigerian vacatur (Pemex and public‑policy arguments; partial reinstatement of liability) | Award was set aside by competent Nigerian courts at the seat; New York Convention permits refusal when set aside | Court declined to confirm: Article V(1)(e) permits refusal; Pemex factors analyzed and district court gave deference to Nigerian courts; confirmation denied |
| Adverse‑inference sanctions | NNPC withheld Committee and bank docs; seek 12 established facts/adverse inferences | Discovery failures, but many requested facts irrelevant or moot to disposition | Motion denied: most requested inferences were moot to jurisdictional ruling or irrelevant to key issues; court criticized NNPC’s discovery conduct but declined sanctions |
Key Cases Cited
- Eades v. Kennedy PC Law Offices, 799 F.3d 161 (2d Cir.) (prima facie burden to establish personal jurisdiction)
- Frontera Res. Azer. Corp. v. State Oil Co. of Azer. Republic, 582 F.3d 393 (2d Cir.) (FSIA vs. due process and alter‑ego discussion)
- First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (U.S.) (Bancec alter‑ego and presumption of separate juridical status)
- EM Ltd. v. Banco Central De La Republica Argentina, 800 F.3d 78 (2d Cir.) (alter‑ego factors and extensive control analysis)
- Daimler AG v. Bauman, 571 U.S. 117 (U.S.) (forum contacts and affiliation central to jurisdiction)
- Walden v. Fiore, 571 U.S. 277 (U.S.) (contacts must be the defendant’s own affiliation with the forum)
- Licci ex rel. Licci v. Lebanese Canadian Bank, 732 F.3d 161 (2d Cir.) (Fifth Amendment / nationwide contacts test under federal‑question jurisdiction)
- Republic of Argentina v. Weltover, 504 U.S. 607 (U.S.) (use of U.S. dollars and New York payment mechanisms support jurisdiction)
- Corporacion Mexicana de Mantenimiento Integral v. Pemex‑Exploracion y Produccion, 832 F.3d 92 (2d Cir.) (when foreign annulment may still permit U.S. confirmation; Pemex factors)
- Yusuf Ahmed Alghanim & Sons v. Toys "R" Us, Inc., 126 F.3d 15 (2d Cir.) (New York Convention Article V grounds for refusal to confirm)
- Baker Marine (Nigeria) Ltd. v. Chevron (Nigeria) Ltd., 191 F.3d 194 (2d Cir.) (confirmation standard under New York Convention)
- Ackermann v. Levine, 788 F.2d 830 (2d Cir.) (foreign judgments generally conclusive; comity concerns)
- Zurich Am. Ins. Co. v. Team Tankers A.S., 811 F.3d 584 (2d Cir.) (limitations on district court’s remedial authority in arbitration confirmation context)