2 F.4th 42
2d Cir.2021Background
- In 2000 the SDNY entered a default judgment confirming a Russian arbitration award (ICAC) against Gazsnabtranzit’s successor AO Moldovagaz and the Republic of Moldova in favor of Lloyd’s Underwriters; Lloyd’s assigned the judgment to Gater Assets Limited in 2012.
- With the enforcement limitations period nearing expiration, Gater sued in SDNY in 2016 under New York CPLR §5014 to renew the 2000 judgment; Moldovagaz and the Republic appeared and challenged jurisdiction and sought vacatur of the original default judgment.
- The district court (Preska, J.) denied Rule 12(b)(1)/(2) and Rule 60(b)(4) relief, found Moldovagaz was an alter ego/FSIA organ of the Republic, and held the FSIA §1605(a)(6) arbitration exception (via direct-benefits estoppel) applied; it entered a renewal judgment in 2019.
- On appeal the Second Circuit held the district court lacked personal jurisdiction over Moldovagaz (no minimum contacts and not an alter ego under Bancec) and lacked subject-matter jurisdiction over the Republic (the Republic was not a party to the arbitration and direct-benefits estoppel failed to show the Republic “made” the arbitration agreement).
- The Second Circuit VACATED the renewal judgment and REMANDED with instructions to dismiss for lack of jurisdiction, but AFFIRMED the denial of Rule 60(b)(4) vacatur of the original 2000 default judgment because appellants failed to show no arguable basis for the original court’s jurisdiction.
Issues
| Issue | Gater's Argument | Moldovagaz/Republic's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over Moldovagaz | Moldovagaz is an alter ego/organ of the Republic so FSIA service and sovereign exception defeat Due Process concerns | Moldovagaz has no U.S. contacts and is a separate corporate person entitled to minimum‑contacts protection | No personal jurisdiction: Moldovagaz is not the Republic’s alter ego under Bancec; it has no U.S. contacts |
| Alter‑ego / veil piercing (Bancec test) | Republic exerts extensive control and has abused the corporate form; public‑interest actions tie Moldovagaz to the state | Republic’s minority ownership, regulatory acts, board appointments, and negotiations do not show day‑to‑day control or abuse | Not an alter ego: evidence shows ordinary shareholder/regulatory involvement, not significant repeated control or fraud/injustice to justify piercing |
| FSIA §1605(a)(6) arbitration exception for the Republic | The arbitration agreement (Gazsnabtranzit–Gazprom) should bind the Republic via direct‑benefits estoppel so immunity is abrogated | Republic never signed the arbitration agreement; estoppel does not apply because Republic did not expressly receive or actually invoke contract benefits | No subject‑matter jurisdiction over the Republic: it was not a party; direct‑benefits estoppel fails (no express benefit and no evidence Republic invoked the contract) |
| Rule 60(b)(4) challenge to original 2000 default judgment | Original judgment was void for lack of jurisdiction so it should be vacated | Original court had at least an arguable basis for jurisdiction in 2000; appellants had notice and must meet heavy burden | Denial of vacatur affirmed: appellants did not meet the high Herbert/Nemaizer standard to show a total want of jurisdiction |
Key Cases Cited
- Bancec v. United States, 462 U.S. 611 (1983) (establishes veil‑piercing standards for sovereigns: extensive control or fraud/injustice overcome presumption of separateness)
- Frontera Res. Azerbaijan Corp. v. State Oil Co. of Azerbaijan Republic, 582 F.3d 393 (2d Cir. 2009) (foreign sovereigns and their alter egos not "persons" for Due Process personal‑jurisdiction protections)
- EM Ltd. v. Banco Central de la República Argentina, 800 F.3d 78 (2d Cir. 2015) (applies Bancec: focus on sovereign control over day‑to‑day operations)
- Trina Solar US, Inc. v. Jasmin Solar Pty Ltd., 954 F.3d 567 (2d Cir. 2020) (direct‑benefits estoppel requires express contractual benefit or that the nonsignatory actually invoked the contract)
- Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480 (1983) (FSIA grants federal courts subject‑matter jurisdiction over suits against foreign states when immunity exceptions apply)
- Thomson‑CSF, S.A. v. American Arbitration Ass'n, 64 F.3d 773 (2d Cir. 1995) (doctrine binding nonsignatories to arbitration agreements in limited equitable circumstances)
- Cent. Vt. Pub. Serv. Corp. v. Herbert, 341 F.3d 186 (2d Cir. 2003) (Rule 60(b)(4) vacatur standard: judgment void only when court plainly usurped jurisdiction)
- Crystallex Int'l Corp. v. Bolivarian Republic of Venezuela, 932 F.3d 126 (3d Cir. 2019) (contrast case finding extensive state control over PDVSA; used for comparison)
- GE Energy Power Conversion France SAS v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637 (2020) (Supreme Court: equitable estoppel doctrines may apply under arbitration law but do not resolve FSIA immunity questions)