Gater Assets Ltd. v. AO Moldovagaz

19-3550(L)

Gater Assets Ltd. v. AO Moldovagaz

In the

United States Court of Appeals

FOR THE SECOND CIRCUIT

AUGUST TERM 2020

Nos. 19-3550, 19-3562,

19-3747, 19-4017,

19-4021, 19-4147

GATER ASSETS LIMITED,

Petitioner-Appellee-Cross-Appellant,

LLOYD’S UNDERWRITERS AT LONDON,

Petitioner,

v.

AO MOLDOVAGAZ, REPUBLIC OF MOLDOVA,

Respondents-Appellants-Cross-Appellees,

AO GAZSNABTRANZIT,

Respondent. *

On Appeal from the United States District Court

for the Southern District of New York

ARGUED: OCTOBER 20, 2020

DECIDED: JUNE 22, 2021

* The Clerk of Court is directed to amend the caption as set forth above.

Before: RAGGI, SULLIVAN, and MENASHI, Circuit Judges.

Appellants AO Moldovagaz and the Republic of Moldova

appeal the judgment of the U.S. District Court for the Southern

District of New York (Preska, J.) entered on November 1, 2019—and

explained in the district court’s opinions of September 30, 2018, and

September 27, 2019—in favor of Appellee Gater Assets Limited. Gater

sought to renew a default judgment, which the district court entered

in 2000, that enforced a Russian arbitration award in favor of Lloyd’s

Underwriters against the appellants. Lloyd’s assigned its default

judgment to Gater in 2012. The district court entered a renewal

judgment in Gater’s favor after concluding that it had personal

jurisdiction over the appellants as well as subject-matter jurisdiction

over the renewal claims. We disagree with those conclusions.

First, the district court lacked personal jurisdiction over

Moldovagaz. The Due Process Clause prohibits federal courts from

exercising personal jurisdiction over Moldovagaz because

Moldovagaz has no contacts with the United States. We have

recognized an exception to this rule when a defendant is a foreign

sovereign or a sovereign’s alter ego. But contrary to the district court’s

conclusion, Moldovagaz is not an alter ego of the Republic of

Moldova.

Second, the district court lacked subject-matter jurisdiction

over Gater’s claim for renewal against the Republic of Moldova. The

Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1330,

1391(f), 1441(d), 1602-11, provides that federal courts lack subject-

matter jurisdiction over claims brought against foreign states unless

one of the FSIA’s immunity exceptions applies. The Republic of

Moldova is a foreign state and no immunity exception applies to

2

Gater’s claim against it. The district court invoked the FSIA’s

exception for confirming awards that are issued pursuant to a

qualifying arbitration agreement “made by the foreign state.” 28

U.S.C. § 1605(a)(6). The Republic of Moldova, however, was not a

party to the underlying arbitration agreement and no equitable

theory, even assuming such theories apply under § 1605(a)(6),

supports abrogating the Republic’s sovereign immunity in this case.

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.

MICHAEL MCGINLEY, Dechert LLP, Philadelphia, PA

(Selby P. Brown, Dechert LLP, Philadelphia, PA; May

Chiang, Dechert LLP, New York, NY; and Dennis H.

Hranitzky, Quinn Emanuel Urquhart & Sullivan, New

York, NY, on the brief), for Petitioner-Appellee-Cross-

Appellant Gater Assets Limited.

ROBERT KRY (Lauren M. Weinstein and Leonid Grinberg,

on the brief), MoloLamken LLP, New York, NY, for

Respondent-Appellant-Cross-Appellee AO Moldovagaz.

EDWARD BALDWIN, Steptoe & Johnson LLP, Washington,

DC, for Respondent-Appellant-Cross-Appellee Republic of

Moldova.

3

19-3550(L)

Gater Assets Ltd. v. AO Moldovagaz

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, 1 and

September 27, 2019. 2

1See Gater Assets Ltd. v. AO Gazsnabtranzit (Gater I), No. 16-CV-4118, 2018

U.S. Dist. LEXIS 171350 (S.D.N.Y. Sept. 30, 2018).

2 See Gater Assets Ltd. v. AO Gazsnabtranzit (Gater II), 413 F. Supp. 3d 304

(S.D.N.Y. 2019).

Moldovagaz and the Republic contest the district court’s

jurisdiction to enter the renewal judgment. Because this case involves

only foreign parties and a cause of action that arises under New York

state law, this suit would seem to fall outside the subject-matter

jurisdiction of the federal courts under Article III of the Constitution.

A lawsuit between foreign parties does not implicate diversity

jurisdiction, see Mossman v. Higginson, 4 U.S. (4 Dall.) 12, 14 (1800), and

a claim under New York state law does not generally “aris[e] under

... the Laws of the United States,” U.S. Const. art. III, § 2; see Wilson v.

Sandford, 51 U.S. (10 How.) 99, 101-02 (1850).

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 (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

5

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 Respondent-Appellant may be simply stated.

First, to pursue its claim for a renewal judgment against Moldovagaz,

6

Gater must establish (1) that Moldovagaz is a foreign state for the

purposes of the FSIA and that an FSIA immunity exception applies

(thus allowing the exercise of subject-matter jurisdiction), and (2) that

Moldovagaz either has minimum contacts with the district court’s

forum or is an alter ego of the Republic (thus allowing the exercise of

personal jurisdiction). Second, because the Republic is

unquestionably a foreign sovereign, Gater’s claim for a renewal

judgment against it must fit within an exception to sovereign

immunity under the FSIA (thereby allowing the exercise of both

subject-matter jurisdiction and personal jurisdiction).

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

(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

7

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.

BACKGROUND

I

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 debt, in 1995 the

Republic formed a corporation called Gazsnabtranzit by privatizing

several Moldovan state-owned gas transmission companies and

giving Gazprom a majority equity stake in the resulting corporation.

8

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.

II

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

9

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. This conclusion meant that the district court would have

subject-matter jurisdiction over the suit against Moldovagaz so long

as an exception to sovereign immunity under the FSIA applied. See

10

28 U.S.C. § 1330(a). The district court also held that Moldovagaz was

an “alter ego” of the Republic and that the court therefore had

personal jurisdiction over Moldovagaz so long as it was properly

served pursuant to the FSIA. See 28 U.S.C. § 1330(b); Gater II, 413

F. Supp. 3d at 313-25.

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 (1985). At the same time, we review

the district court’s legal conclusions on these issues de novo. EM Ltd.

11

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. 3 As for Moldovagaz’s

Rule 12(b)(2) motion to dismiss Gater’s renewal claim for lack of

personal jurisdiction, Gater bears the burden of showing that the

district court had personal jurisdiction over Moldovagaz. In re

Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir. 2003).

3 The parties cite Swarna v. Al-Awadi, which stated that the plaintiff bears

its burden of production “by a preponderance of the evidence.” 622 F.3d

123, 143 (2d Cir. 2010). But our earlier cases indicate that the

preponderance-of-the-evidence standard applies to the foreign sovereign’s

ultimate burden of persuasion, not to the plaintiff’s burden of production.

See Virtual Countries, 300 F.3d at 241-42. To the extent that these articulations

of the standard conflict, we are bound to follow the earlier precedent. See

Tanasi v. New All. Bank, 786 F.3d 195, 200 n.6 (2d Cir. 2015).

12

Moldovagaz and the Republic bear a heavier burden when it

comes to the Rule 60(b)(4) motions to vacate the district court’s

original default judgment. A party moving for relief under Rule 60(b)

generally must “present[] highly convincing ... evidence in support of

vacatur” and “show good cause for the failure to act sooner and that

no undue hardship be imposed on other parties.” Kotlicky v. U.S. Fid.

& Guar. Co., 817 F.2d 6, 9 (2d Cir. 1987) (internal quotation marks and

citation omitted); see also United States v. Int'l Brotherhood of Teamsters,

247 F.3d 370, 391 (2d Cir. 2001). “A motion to vacate a default

judgment as void” under Rule 60(b)(4), however, usually “may be

made at any time.” Grace v. Bank Leumi Tr. Co. of N.Y., 443 F.3d 180,

190 (2d Cir. 2006). Still, “[i]n the context of a Rule 60(b)(4) motion, a

judgment may be declared void for want of jurisdiction only when

the court ‘plainly usurped jurisdiction,’ or, put somewhat differently,

when ‘there is a total want of jurisdiction and no arguable basis on

which it could have rested a finding that it had jurisdiction.’” Cent. Vt.

Pub. Serv. Corp. v. Herbert, 341 F.3d 186, 190 (2d Cir. 2003) (quoting

Nemaizer v. Baker, 793 F.2d 58, 65 (2d Cir. 1986)). Considering the

general rule that a movant bears the burden in Rule 60(b) motions, see

Kotlicky, 817 F.2d at 9, and that neither Moldovagaz nor the Republic

argues on appeal that it lacked actual notice of the original action that

led to the default judgment, we place the burden on Moldovagaz and

the Republic to show that vacatur was warranted under the standard

set out in Herbert. See “R” Best Produce, Inc. v. DiSapio, 540 F.3d 115,

126 (2d Cir. 2008) (“[I]n a collateral challenge to a default judgment

under Rule 60(b)(4), the burden of establishing lack of personal

13

jurisdiction is properly placed on a defendant who had notice of the

original lawsuit.”).4

DISCUSSION

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 (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 immunity exception to apply, however, the relevant

agreement must have been “made by” the Republic, 28 U.S.C.

§ 1605(a)(6), and it is not clear to us that a direct benefits estoppel

4 We express no view regarding whether an exception to the general rule

that the movant bears the burden in a Rule 60(b) motion exists when

circumstances indicate that a movant challenging personal jurisdiction

lacked actual notice of the original lawsuit. Cf. Middleton v. Green Cycle

Hous., LLC, 689 F. App’x 12, 13 (2d Cir. 2017) (“We need not resolve the

issue of whether a defendant who concedes service, but not actual notice,

bears the burden of disproving jurisdiction.”).

14

theory can establish that a foreign state “made” an agreement to

which it was not a party. But even assuming the point arguendo, direct

benefits estoppel cannot support subject-matter jurisdiction here

because Gater failed 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, 954 F.3d at 572. Because no other FSIA exception applies here,

the district court lacked subject-matter jurisdiction over Gater’s claim

against the Republic.

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.

I

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. This protection applies to domestic and foreign parties

alike. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915,

918-20 (2011); Daimler AG v. Bauman, 571 U.S. 117, 120-22 (2014).

Although the Fourteenth Amendment does not limit the district

court’s power in this case, 5 we have held that the Fifth Amendment’s

5Often, federal courts effectively face the same Fourteenth Amendment

personal jurisdiction limitations as state courts. See Fed. R. Civ. P. 4(k)(1)(A)

15

Due Process Clause places similar constitutional constraints on the

exercise of federal judicial power. 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.”). 6

Here, all parties agree that Moldovagaz “has no contacts with

the United States.” Gater I, 2018 U.S. Dist. LEXIS 171350, at *56 n.8

(quoting Gater’s brief before the district court). Ordinarily, then, the

district court would have lacked personal jurisdiction over

Moldovagaz. Yet we have recognized an exception to the minimum

contacts requirement when a sovereign state is the defendant. See

Frontera, 582 F.3d at 399. Sovereign states may not invoke the

protection of the Fifth Amendment’s Due Process Clause because that

(“Serving a summons or filing a waiver of service establishes personal

jurisdiction over a defendant who is subject to the jurisdiction of a court of

general jurisdiction in the state where the district court is located.”). That

rule does not apply, however, when service is independently “authorized

by a federal statute.” Fed. R. Civ. P. 4(k)(1)(C). The FSIA authorizes service

and personal jurisdiction so long as service is made pursuant to the FSIA’s

requirements. See 28 U.S.C. §§ 1330(b), 1608.

6 Recently the Supreme Court has been careful to avoid addressing this

issue. See Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1783-84

(2017). But earlier decisions from the Court indicate that the Fifth

Amendment’s Due Process Clause limits the ability of a federal court to

exercise personal jurisdiction over parties with no connection to the court’s

forum; the open question is whether, for the purposes of the Fifth

Amendment, the court’s forum consists of the entire United States or is

limited to the state in which the court sits. See Omni Capital Int‘l, Ltd. v.

Rudolf Wolff & Co., 484 U.S. 97, 102 n.5 (1987); Asahi Metal Indus. Co. v.

Superior Court, 480 U.S. 102, 113 n.* (1987) (plurality opinion). Our court has

endorsed the former view. See Chew v. Dietrich, 143 F.3d 24, 28 n.4 (2d Cir.

1998). This issue does not affect the outcome of this case because all parties

agree that Moldovagaz has no contacts at all with the United States.

16

clause protects only “person[s],” and our precedent considers foreign

states, like U.S. states, not to be “persons” under the Fifth

Amendment. Id. (citing South Carolina v. Katzenbach, 383 U.S. 301, 323-

24 (1966)). For that reason, a court may exercise personal jurisdiction

over a foreign sovereign without regard to minimum contacts. Id.

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. 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. 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

17

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.

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. 7 An entity does not become a sovereign’s alter

ego merely because it “assist[s]” the sovereign in carrying out the

sovereign’s “policies and goals.” EM Ltd., 800 F.3d at 94. To qualify as

sufficiently extensive under Bancec, the sovereign’s control over an

entity must rise above the level that corporations would normally

tolerate from significant shareholders or expect from government

regulators. See EM Ltd., 800 F.3d at 93 (“[A]n exercise of power

incidental to ownership ... is not synonymous with control over the

instrumentality’s day-to-day operations.”); GSS Grp. Ltd. v. Nat’l Port

Auth. of Liber., 822 F.3d 598, 606 (D.C. Cir. 2016) (“[A] government can

wield power not only as [a] shareholder but also as [a] regulator.”)

(internal quotation marks omitted).

7 Factors relevant to this inquiry include “whether the sovereign nation:

(1) uses the instrumentality’s property as its own; (2) ignores the

instrumentality’s separate status or ordinary corporate formalities;

(3) deprives the instrumentality of the independence from close political

control that is generally enjoyed by government agencies; (4) requires the

instrumentality to obtain approvals for ordinary business decisions from a

political actor; and (5) issues policies or directives that cause the

instrumentality to act directly on behalf of the sovereign state.” EM Ltd., 800

F.3d at 91.

18

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. 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.”).

II

Applying Bancec’s standards to this appeal, we conclude that

Moldovagaz is not an alter ego of the Republic.8

A

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

8 Because neither prong of the Bancec analysis justifies piercing the veil

between Moldovagaz and the Republic, we do not address Moldovagaz’s

argument that Gazprom’s majority stake in Moldovagaz necessarily

forecloses the possibility that Moldovagaz is an alter ego of the Republic.

19

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.

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. 9

9 On one occasion, the ANRE directed Moldovagaz to apply a new,

reduced rate retroactively from the beginning of the calendar year. The

district court thought it significant that the Moldovan prime minister had

earlier voiced an opinion in favor of that reduced rate—as well as its

retroactive application—and demanded that Moldovagaz work out a

system to issue the appropriate refunds if the ANRE adopted his view. See

Gater II, 413 F. Supp. 3d at 315, 319. A politician’s statement in favor of a

position, however, does not indicate alter ego status for an entity that later

acts in accordance with that view. See, e.g., Bernie Woodall & David

Shepardson, Chided by Trump, Ford Scraps Mexico Factory, Adds Michigan

Jobs, Reuters (Jan. 3, 2017).

20

Gater argues that Moldovagaz is a special case because the

ANRE has historically set rates that force Moldovagaz to operate at a

deficit. Yet Moldovagaz generated a profit from 2016 to 2018.

Regardless, setting rates below cost does not necessarily indicate that

a sovereign has crossed the boundary from regulator to alter ego. In

fact, Moldovagaz has challenged the ANRE’s rates in Moldovan

courts over eighty times and complained about those rates to the

International Monetary Fund, the World Bank, the European Energy

Community, and the European Court of Human Rights.10

10 The district court recognized that Moldovagaz has challenged the

ANRE’s rates, but it discounted this evidence because the Moldovagaz

chairman behind these complaints, Alexandru Gusev, was eventually

prosecuted by the Republic and fled the country. See Gater II, 413

F. Supp. 3d at 321. But the news article on which the district court relied to

infer improper influence by the Republic merely reported that the

Moldovan government opened the prosecution after investigations into

“several fraudulent schemes to write off funds due to unaccounted gas

losses and overestimate[s] in purchasing gas metering and other

equipment” as well as “frauds in the purchase of currency.” J. App’x 1805.

Although one unnamed source quoted in the article surmised that the

Republic undertook the prosecution to remove Gusev from his position,

this speculation cannot support a finding that the Republic undertook a

criminal investigation in bad faith. See Chettri v. Nepal Rastra Bank, 834 F.3d

50, 54 (2d Cir. 2016) (“[C]onclusory criticisms of the manner in which [a

sovereign] has conducted [an] investigation are insufficient to prove a

violation of international law.”); Atl. Mut. Ins. Co. v. Balfour Maclaine Int’l

Ltd., 968 F.2d 196, 198 (2d Cir. 1992) (“[A]rgumentative inferences favorable

to the party asserting jurisdiction should not be drawn.”). Even if it could

support such a finding, moreover, the fact that a sovereign would need to

initiate a prosecution to drive a corporate executive out of the country

would suggest that the sovereign did not exercise extensive control over the

corporation’s day-to-day activities in the first place. The record indicates

that the Republic could not simply remove the chairman or direct

Moldovagaz to change its policies. See J. App’x 1806 (reporting a statement

21

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 four

months and apparently ended because the commission conducting

the investigation could not subpoena witnesses or appoint experts.

Thus, it appears that these investigations did not significantly impact

Moldovagaz’s operations.

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

of the head of the Moldovan Parliament’s Commission for Economy,

Budget, and Finance) (“Moldovan authorities ... have been trying to dismiss

[the chairman] for a year already, but Moscow, which has four votes out of

six in the Moldovagaz supervisory board, disagrees.”).

22

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

23

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 (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.”).11

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 that the

appointment or removal of an instrumentality’s officers or directors,

standing alone, overcomes the Bancec presumption because the

exercise of such powers is not synonymous with control over the

instrumentality’s day-to-day operations.” Arch Trading Corp. v.

Republic of Ecuador, 839 F.3d 193, 203 (2d Cir. 2016) (internal quotation

marks and citation omitted). To establish extensive control, Gater

must additionally show that the Republic “use[d] its influence over

these directors in order to interfere with the instrumentality’s

ordinary business affairs.” EM Ltd., 800 F.3d at 93. Gater identifies a

provision of Moldovan law, which applies to all representatives of the

11 Gater also points to Moldovagaz’s 90 percent supermajority requirement

for measures to pass at shareholder meetings as evidence of the Republic’s

extensive control of Moldovagaz. This argument fails for two reasons. First,

whatever veto power this rule effectively gives to the Republic, it also

effectively gives to Gazprom. Second, control over votes at shareholder

meetings does not necessarily render the corporation the alter ego of the

controlling entity. See Transamerica Leasing, 200 F.3d at 849.

24

Republic’s ownership interest on corporate boards, that requires the

Republic’s representative to notify the Republic’s government of any

decision the board makes “that prejudices the interests of the State”

and then submit “a substantiated demand concerning the repeal ... or

the suspension” of that decision. J. App’x 645. But as the district court

noted, there is nothing in this law that provides that the board must

then accede to that demand. Gater I, 2018 U.S. Dist. LEXIS 171350, at

*34-35.

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.12

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

12 See supra note 10 and accompanying text.

25

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.

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. 13 That is because this 2001 agreement expired in

2006. Since then, Moldovagaz itself—not the Republic—has

negotiated these issues with Gazprom. A bilateral agreement that

13While participation in negotiations can sometimes indicate control over

ordinary business decisions, we have held that “nonspecific oversight of

and participation in contractual negotiations, standing alone,” does not

suffice “to permit us to conclude that [instrumentalities] are mere shells for

corporate activity.” Arch Trading, 839 F.3d at 204 (internal quotation marks

omitted). The Republic’s role in the negotiation of this 2001 agreement,

however, appears to exceed mere “nonspecific oversight ... and

participation.” Id.

26

terminated over a decade ago has limited probative value in

determining whether Moldovagaz was the Republic’s alter ego at the

time of Gater’s renewal action.14

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

14 On a few occasions in its opinion, the district court implied that the

Republic still binds Moldovagaz to contracts the Republic signs, dictates the

price that Moldovagaz pays Gazprom for gas, and sets the interest rates on

Moldovagaz’s debts to Gazprom. See Gater II, 413 F. Supp. 3d at 315, 318-19.

Such a finding lacks support in the record. To the extent the district court

relied on Gater’s briefs, see id., the only evidence identified therein are the

2001 agreement that expired in 2006; the subsequent agreement, which was

entered into by Moldovagaz; and the instance discussed above, supra note

9, in which the Republic’s prime minster expressed a view in favor of

retroactive application of a reduced rate.

27

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, 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, the Republic and Gazprom are both

shareholders of Moldovagaz and, as such, would normally negotiate

over their jointly owned corporation’s affairs. These negotiations do

not indicate that the Republic, the minority shareholder, exercised

more authority over Moldovagaz than Gazprom, the majority

shareholder. Therefore, while the Republic may have a special

interest in Moldovagaz’s affairs, the negotiations do not indicate a

principal-agent relationship sufficient to establish alter ego status.

28

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 (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

29

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.15

B

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. 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

15 The district court’s opinion in Crystallex further illustrates how PDSVA

differs from Moldovagaz. The court explained that (1) Venezuela forced

PDVSA to provide oil to China and Russia as repayment for loans those

countries had made to Venezuela; (2) Venezuela used PDVSA’s property,

“including aircraft and tanker trucks, for its own political purposes”;

(3) PDVSA identified Venezuela’s extensive control as a risk factor in its

bond offering documents; and (4) Venezuela appointed PDVSA’s entire

board. Crystallex Int’l Corp. v. Bolivarian Republic of Venezuela, 333

F. Supp. 3d 380, 402 (D. Del. 2018). No comparable facts are present here.

30

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

31

creditors. 16 Rather, the evidence suggests that Moldovagaz’s dire

finances result from other circumstances. Almost 90 percent ($6.04

billion) of Moldovagaz’s $6.76 billion debt stems from losses in the

autonomous region of Transnistria. Customers there take gas from

the supply lines that pass through that region and refuse to pay for it

in full, and the Republic has no practical power to make them pay. 17

By contrast, a 2016 report on which Gater relies attributed under

3 percent ($140.5 million) of Moldovagaz’s debts to the Republic’s

regulatory policies. There is no record basis to conclude, in light of

Gazprom’s majority stake, that the Republic could successfully

undercapitalize Moldovagaz to avoid its creditors—the largest of

which was Gazprom itself.

16 The parties agree that according to relevant American corporate law,

undercapitalization at the time of incorporation can be evidence of an abuse

of the corporate form. See Response and Reply Brief for Respondent-

Appellant-Cross-Appellee Moldovagaz 27-28 (citing 1 Fletcher § 41.33); see

also Brief for Petitioner-Appellee-Cross-Appellant Gater Assets Limited 59

& n.11. If an entity is undercapitalized at that point, it “reveals ... the

corporation was created to avoid liability.” 1 Fletcher § 41.33. “Inadequate

capitalization after incorporation” meanwhile, “is generally relevant if the

capital was removed as part of a fraudulent conveyance scheme. In such a

scheme, the inappropriate transfer of assets and not the level of

capitalization would be the prevailing factor in determining whether to

pierce the corporate veil.” NLRB v. Bolivar-Tees, Inc., 551 F.3d 722, 730 n.7

(8th Cir. 2008). Even assuming that debt accumulated post-incorporation

could show abuse of the corporate form, see 1 Fletcher § 41.55 (noting that

“[i]nsolvency” is a factor that may be “considered ... in deciding whether to

pierce the corporate veil”), the debt in this case does not show such abuse.

17 Some record evidence suggests that Gazprom is complicit in this state of

affairs, providing gas to the separatist region of Transnistria in exchange

for political fealty.

32

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. 18 Gater attempts to

18 See J. App’x 1820. (“[T]he Government shall[] turn to the Government of

the Russian Federation with regard to the question of accelerating the legal

formalization of the transfer to ... Gazprom on the account of repayment of

the indebtedness of the Republic [of] Moldova[,] property in the amount of

93.3 million US dollars as the participatory share of participation in ...

Moldova-Gaz S.A.”) (internal quotation marks omitted) (emphasis added).

33

provide further support for the district court’s conclusion that the

Republic undercapitalized Moldovagaz at its inception, but the only

additional evidence it identifies relates to the Republic’s alleged

undercapitalization of Gazsnabtranzit, not Moldovagaz.

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:

[I]n Bridas S.A.P.I.C. [v. Gov't of Turkmenistan, 447 F.3d

411 (5th Cir. 2006)], the Fifth Circuit found “fraud or

injustice” where Turkmenistan dissolved a state-owned

oil company that was in breach of a joint venture with

plaintiff, and replaced it with an under-capitalized state-

owned oil company endowed with newly-enacted

immunity protection [in order to escape liability]. And in

... Kensington International Ltd. v. Republic of Congo, [No.

03-CV-4578, 2007 WL 1032269 (S.D.N.Y. Mar. 30, 2007),]

the Republic of Congo structured its relationship to its

purportedly independent oil company by, inter alia:

(1) designing the company’s corporate structure to allow

Congo to engage in “unnecessarily complex transactions

and charades for the purpose of confounding its

creditors”; (2) passing all proceeds from oil sales on to

the government, rather than permitting the company to

exercise its right to collect a percentage on transactions;

and (3) commingling state and company assets. ...

In Bancec, Cuba sought relief in a court of the United

States while simultaneously trying to shield itself from

liability by asserting its claim through its dissolved

instrumentality.

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-

34

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. 19 The district court erred in

concluding that Moldovagaz qualified as the Republic’s alter ego

under Bancec’s fraud or injustice prong.

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

19 In contrast to the Pemex case, here Moldovagaz argues that it should not

be treated like a foreign state for any purpose.

35

principal and agent is created” or if recognizing that separate status

“would work fraud or injustice.” Bancec, 462 U.S. at 627-29. 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.

III

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” entitled to due process protections, even if those

agencies and instrumentalities do not qualify as the sovereign’s alter

ego. 20

20 We left this question open in Frontera. See 582 F.3d at 401 (noting that “it

would be premature for us to address” whether “a corporation owned by a

foreign state but not the state’s agent [under Bancec] was entitled to the Due

Process Clause’s protections”). In Pemex, we quoted Frontera in stating that

“[t]he jurisdictional protections of the Due Process Clause do not apply to

‘foreign states and their instrumentalities.’” 832 F.3d at 102 (quoting

Frontera, 582 F.3d at 399). The Pemex court proceeded to state that “[t]he

same conclusion does not follow for foreign corporations ... which are

persons at law.” Id. at 103. It then analyzed the case before it the same way

that the Frontera court did, using the Bancec framework. Id. (“The line

between a foreign sovereign and a foreign corporation ... is informed by

[Bancec].”). The language that Pemex quoted from Frontera regarding

36

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;

Daimler, 571 U.S. at 120-22. 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. 21 Nor does it cite authority to establish that a corporation’s

“foreign states and their instrumentalities,” id. at 102, therefore, is properly

understood as referring to instrumentalities that are alter egos under the

Bancec test, not to all entities that may be considered agencies or

instrumentalities under the FSIA. In quoting and relying on Frontera, the

court in Pemex did not purport to resolve the question that Frontera left

open.

21 Congress, meanwhile, has expressed its view that corporations

qualifying as agencies or instrumentalities under the FSIA are persons. By

definition, an “agency or instrumentality of a foreign state” must be “a

separate legal person, corporate or otherwise.” 28 U.S.C. § 1603(b)(1)

(emphasis added).

37

juridical personhood is dependent on the identities of its

shareholders. 22

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 regardless of whether

the corporation qualifies as an agency or instrumentality of a foreign

state under the FSIA. Because Moldovagaz is not the Republic’s alter

ego under Bancec, “United States courts may not exercise personal

jurisdiction over [Moldovagaz] unless [it] has ‘minimum contacts’

with the relevant forum.” GSS Grp., 680 F.3d at 817. It is undisputed

that Moldovagaz “has no contacts with the United States apart from

this litigation.” Gater I, 2018 U.S. Dist. LEXIS 171350, at *56 n.8

(quoting Gater’s brief before the district court). Therefore, the district

court lacked personal jurisdiction over Moldovagaz for Gater’s

renewal action.23

22 The FSIA’s definition of an “agency or instrumentality of a foreign state”

includes, with narrow exceptions, all corporations “a majority of whose

shares or other ownership interest is owned by a foreign state or political

subdivision thereof,” regardless of the corporation’s activities. 28 U.S.C.

§ 1603(b). We doubt that the reach of the Due Process Clauses depends on

whether only private as opposed to public entities hold ownership interests

in a corporation otherwise entitled to protection. Cf. Lochner v. New York,

198 U.S. 45, 75 (1905) (Holmes, J., dissenting) (“The 14th Amendment does

not enact Mr. Herbert Spencer’s Social Statics.”).

23 Recent scholarship suggests that we err in viewing due process as an

independent constraint on a court’s exercise of personal jurisdiction. See

Stephen E. Sachs, Pennoyer Was Right, 95 Tex. L. Rev. 1249, 1323 (2017)

(“[D]ue process requires jurisdiction, full stop, with the actual jurisdictional

38

IV

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. 24

Instead, the Republic argues that the district court lacked subject-

matter jurisdiction over Gater’s claim against it. We agree.

standards supplied by other sources of law.”). In the United States, a

forum’s legislature always had ultimate authority to determine when its

courts should exercise the judicial power. Id. at 1284-87; see also Picquet v.

Swan, 19 F. Cas. 609, 615 (Story, Circuit Justice, C.C.D. Mass. 1828). Here,

Congress has expressly provided for personal jurisdiction so long as a

foreign state is served pursuant to the FSIA’s requirements. See 28 U.S.C.

§ 1330(b). Moldovagaz does not argue that it was not properly served.

Therefore, under this view, if Moldovagaz is a foreign state under the

FSIA—a category that includes a sovereign’s agencies and

instrumentalities, see 28 U.S.C. § 1603(a))—then the district court would

have had personal jurisdiction regardless of minimum contacts or an alter

ego analysis. See Ingrid Wuerth, The Due Process and Other Constitutional

Rights of Foreign Nations, 88 Fordham L. Rev. 633, 681-86 (2019). However

compelling this view might be, it conflicts with controlling precedent. See

Waldman, 835 F.3d at 329-31.

24 Recent scholarship questions our earlier holding in Frontera that foreign

sovereigns do not qualify as persons under the Due Process Clause. See

Brief of Amicus Curiae Professor Ingrid Brunk Wuerth in Support of

Neither Party 6-13 (detailing evidence that, at the time of the founding,

foreign sovereigns were considered “persons” entitled to “process”). Yet

we remain bound by Frontera here. See In re Sokolowski, 205 F.3d 532, 534-35

(2d Cir. 2000) (“[T]his court is bound by a decision of a prior panel unless

and until its rationale is overruled, implicitly or expressly, by the Supreme

Court or this court en banc.”).

39

“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 qualifying

“agreement to arbitrate” in this case is a 1996 contract entered into by

Gazprom and Moldovagaz’s predecessor, Gazsnabtranzit. The award

Gater seeks to collect resulted from an arbitration that occurred

pursuant to the arbitration clause in that contract.

It is undisputed that the Republic never signed that contract,

and nowhere does the contract indicate that the Republic was a party

to it.25 Nevertheless, the district court concluded that the contract was

“made by” the Republic because the Republic could be bound to the

25 In one clause, the contract stipulates that “Moldova will produce a

timetable for paying off” certain debts. J. App’x 32. But the clause notes that

this obligation “result[s]” from “the inspection of [certain] joint

settlements,” implying that it does not derive from the contract itself.

J. App’x 32. In addition, a section of the contract titled “Responsibilities and

Obligations of the Parties” does not assign any obligations to the Republic.

J. App’x 32-33.

40

contract’s arbitration clause under a “direct benefit[s] estoppel

theory”—a theory under which courts may “bind[] nonsignatories to

arbitration agreements.” Gater II, 413 F. Supp. 3d at 325-27 (citing

Thomson-CSF, S.A. v. Am. Arbitration Ass'n, 64 F.3d 773, 776 (2d Cir.

1995)). 26 The district court found that the Republic directly benefited

from the Gazsnabtranzit-Gazprom agreement because the Republic

discharged a preexisting treaty obligation to Russia by causing

Gazsnabtranzit to enter into the contract. Id. at 326. The district court

concluded that a direct benefits estoppel theory may apply so long as

a party accepts any benefit that flows from a contract’s formation,

even if that benefit does not derive from any terms in the contract

itself. See id. at 327.

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

26 In addition to finding subject-matter jurisdiction on this alternative basis,

the district court concluded that Moldovagaz, as Gazsnabtranzit’s

successor-in-interest, assumed Gazsnabtranzit’s obligations under the

contract. Gater Assets, 2018 U.S. Dist. LEXIS 171350, at *53-56. The district

court then relied on its determination that Moldovagaz is the Republic’s

alter ego to hold that the Republic “made” the contract. Gater II, 413

F. Supp. 3d at 326. Because we conclude that Moldovagaz is not the

Republic’s alter ego, this reasoning can no longer support subject-matter

jurisdiction over Gater’s claim against the Republic. If Gazsnabtranzit itself

were the Republic’s alter ego, that might support the application of the

FSIA’s arbitration exception here. See Thomson-CSF, 64 F.3d at 777. The

district court, however, did not make any conclusions regarding

Gazsnabtranzit’s possible alter ego status and Gater does not pursue this

theory on appeal. Accordingly, we deem this argument waived. See Graves

v. Finch Pruyn & Co., 457 F.3d 181, 184 (2d Cir. 2006).

41

immunity exception.27 Yet the applicability of this equitable doctrine

to the FSIA is far from clear. When Congress codified the arbitration

immunity exception, it specified that the exception applied only in the

presence of an agreement “made by the foreign state.” 28 U.S.C.

§ 1605(a)(6). A contract can be said to be “made by” only the parties

to it.28 While we have said that courts should use their “equitable”

powers to “estop[]” a party “from denying its obligation to arbitrate

when it receives a direct benefit from a contract containing an

arbitration clause,” Am. Bureau of Shipping v. Tencara Shipyard S.P.A.,

170 F.3d 349, 353 (2d Cir. 1999), that does not necessarily mean that

parties in such a position “made” the underlying contract.

Nevertheless, we need not conclusively decide whether direct

27 In Monegasque De Reassurances S.A.M. v. Nak Naftogaz of Ukraine, we

affirmed the district court’s forum non conveniens dismissal of a petition to

enforce an arbitration award against Naftogaz and Ukraine. 311 F.3d 488,

501 (2d Cir. 2002). Because we affirmed on forum non conveniens grounds,

we declined to “address the [petitioner’s] substantive contentions” that an

arbitration agreement that bound Naftogaz could abrogate Ukraine’s

immunity under the FSIA because Naftogaz was either Ukraine’s agent or

alter ago. Id. at 494-95. In bypassing that argument, we included “estoppel”

on a list of “theories under which a non-signatory party may be bound by

an arbitration agreement and thus subject to the jurisdiction of the court in

proceedings to compel arbitration or confirm an arbitration award.” Id. at

495.

28 In fact, Congress added the arbitration exception “to implement the

Inter-American Convention on International Commercial Arbitration.”

Pub. L. No. 100-669, 102 Stat. 3969 (1988). That convention, in turn, speaks

of “parties” who have “undertake[n] to submit to arbitral decision any

differences that may arise or have arisen between them” in an “agreement

... set forth in an instrument signed by the parties, or in the form of an

exchange of letters, telegrams, or telex communications.” Inter-American

Convention on International Commercial Arbitration, art. 1, done Jan. 30,

1975, T.I.A.S. 90-1027, 1438 U.N.T.S. 245.

42

benefits estoppel can abrogate a foreign state’s immunity under the

FSIA. 29 Even assuming that direct benefits estoppel can apply here,

Gater cannot avail itself of such a theory.

To be bound under a theory of direct benefits estoppel, “[t]he

nonsignatory beneficiary must actually invoke the contract to obtain

29 The Supreme Court’s recent decision in GE Energy Power Conversion

France SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637 (2020),

does not compel the conclusion that direct benefits estoppel applies to the

FSIA. In a case involving private parties, the Court reiterated that the

Federal Arbitration Act “permits courts to apply state-law doctrines related

to the enforcement of arbitration agreements,” including “equitable

estoppel.” Id. at 1643-44. The Court then held that the New York

Convention, to which the Federal Arbitration Act’s rules apply absent a

conflict, “does not conflict” with “the equitable estoppel doctrines

permitted under” the Federal Arbitration Act. Id. at 1644-45, 1648. That the

Federal Arbitration Act and the New York Convention permit the

application of estoppel doctrines does not suggest that such doctrines

establish that a foreign state “made” an arbitration agreement and must

answer claims based on that agreement in an American court. 28 U.S.C.

§ 1605(a)(6). Unlike the arbitration context generally, there is no “strong

and ‘liberal federal policy favoring arbitration agreements’” that would

subject foreign states to the jurisdiction of American courts. Thomson-CSF,

64 F.3d at 776 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 625 (1985)). Moreover, the application of the estoppel

doctrine in GE Energy “allow[ed] a nonsignatory to a written agreement

containing an arbitration clause to compel arbitration where a signatory to

the written agreement must rely on the terms of that agreement in asserting

its claims against the nonsignatory.” 140 S. Ct. at 1644 (emphasis added).

Here, by contrast, a signatory’s assignee (Gater) seeks to use the arbitration

agreement against a nonsignatory (the Republic) not only to collect an

arbitral award but also—through an equitable theory—to abrogate its

immunity under the FSIA and to require it to answer in an American court.

GE Energy did not consider, much less compel, the extension of direct

benefits estoppel to confer jurisdiction in a case like the one before us.

43

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.” Life Techs. Corp. v. AB Sciex Pte. Ltd., 803

F. Supp. 2d 270, 274 (S.D.N.Y. 2011). Examples of direct benefits

serving as the basis for estoppel have included, for example, (1) the

right of a foreign affiliate to use the “Deloitte” trade name, arising

from an agreement resolving an intellectual property dispute to

which that particular affiliate was not a signatory but which expressly

conferred the trade name right on the affiliate, Deloitte Noraudit A/S v.

Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1062, 1064 (2d Cir. 1993); and

(2) the right of a vessel owner, which had commissioned a custom

racing sailboat, to take advantage of lower maritime insurance rates

and to register a vessel under a particular flag, Tencara Shipyard, 170

F.3d at 353.

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.

44

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

45

Republic in 1997 does not estop the Republic from claiming immunity

here. 30

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 under 28 U.S.C. § 1605(a)(6). 31

The district court, therefore, lacked subject-matter jurisdiction over

Gater’s renewal claim against the Republic.

V

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). 32 It did not.

A party appealing the denial of a Rule 60(b)(4) motion must carry a

heavy burden to merit vacatur of the original judgment. It must show

30 The district court itself recognized “concern about [its] broader reading

of direct benefit estoppel theory” but considered that concern “mitigate[d]”

by “the unique alter ego relationship between the Republic and

Moldovagaz.” Gater Assets, 413 F. Supp. 3d at 328. As we have held,

however, the record does not support the conclusion that Moldovagaz is an

alter ego of the Republic.

31 If the Republic—rather than Moldovagaz—had assumed

Gazsnabtranzit’s obligations under the contract, that might establish that

the Republic “made” the agreement and must answer to Gater’s claims

premised on it because, as a legal matter, the Republic would have stepped

into Gazsnabtranzit’s shoes. See Thomson-CSF, 64 F.3d at 777. Yet Gater does

not establish that the Republic assumed these obligations.

32 Only the Republic specifically requests that we vacate the original

default judgment, but Moldovagaz adopted the Republic’s arguments

pursuant to Federal Rule of Appellate Procedure 28(i) to the extent that

those arguments are applicable to Moldovagaz.

46

that the district court in that original action “plainly usurped

jurisdiction” such that there was “a total want of jurisdiction and no

arguable basis on which [the district court] could have rested a

finding that it had jurisdiction.” Herbert, 341 F.3d at 190.

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.

CONCLUSION

For the foregoing reasons, the district court lacked jurisdiction

over Gater’s renewal action. Accordingly, we VACATE the district

court’s judgment in the renewal action and REMAND with

instructions to dismiss the renewal action for lack of jurisdiction.

Nevertheless, because Moldovagaz and the Republic failed to

demonstrate that the district court lacked an arguable basis to exercise

jurisdiction over the original action, we AFFIRM the district court’s

denial of the Rule 60(b)(4) motions.

47