UAB Skyroad Leasing v. Ojsc Tajik Air

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 21-7015 September Term, 2021

FILED ON: JUNE 17, 2022

UAB SKYROAD LEASING,

APPELLANT

v.

OJSC TAJIK AIR, THE REPUBLIC OF TAJIKISTAN,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:20-cv-00763)

Before: ROGERS and RAO, Circuit Judges, and GINSBURG, Senior Circuit Judge.

JUDGMENT

This appeal was considered on the record from the United States District Court for the

District of Columbia and on the briefs and oral arguments of the parties. The court has afforded

the issues full consideration and has determined that they do not warrant a published opinion. See

D.C. Cir. R. 36(d). For the following reasons, it is

ORDERED AND ADJUDGED that the judgment of the district court be AFFIRMED.

UAB Skyroad Leasing (“Skyroad”), a Lithuanian company, seeks to enforce an arbitral

award against OJSC Tajik Air (“Tajik Air”), an airline wholly owned by the Republic of Tajikistan.

The Vilnius Court of Commercial Arbitration issued a final award in Skyroad’s favor, which was

affirmed by the Court of Appeal of Lithuania. Tajik Air has not yet paid the arbitral award, and

Skyroad filed a petition to enforce the award in the district court pursuant to the Federal Arbitration

Act, 9 U.S.C. § 207. Tajik Air moved to dismiss for improper service of process and lack of

personal jurisdiction. The district court granted the motion, ruling that it lacked personal

jurisdiction over Tajik Air under the Fifth Amendment’s Due Process Clause. UAB Skyroad

Leasing v. OJSC Tajik Air (“Skyroad”), No. 20-cv-763, 2021 WL 254106, at *1, *12 (D.D.C. Jan.

26, 2021). We affirm.

2

I.

The Foreign Sovereign Immunities Act allows U.S. courts to exercise personal jurisdiction

over a “foreign state,” including “an agency or instrumentality of a foreign state,” 28 U.S.C.

§ 1603(a), in any case where subject-matter jurisdiction is present and proper service has been

made, id. § 1330(b). These requirements establish personal jurisdiction over “actual foreign

government[s],” which “are not ‘persons’ protected by the Fifth Amendment.” Price v. Socialist

People’s Libyan Arab Jamahiriya, 294 F.3d 82, 96, 99 (D.C. Cir. 2002). Instrumentalities,

however, enjoy a “presumption of separateness” from the affiliated foreign state. GSS Grp. Ltd.

v. Nat’l Port Auth., 680 F.3d 805, 814 (D.C. Cir. 2012); see also First Nat’l City Bank v. Banco

Para El Comercio Exterior de Cuba (“Bancec”), 462 U.S. 611, 626–27 (1983), abrogated on other

grounds by 28 U.S.C. § 1610. Unless this presumption is rebutted by showing that either a

principal-agent relationship exists between the foreign state and the instrumentality or equitable

principles favor the exercise of jurisdiction, see Bancec, 462 U.S. at 629–32, an instrumentality is

protected by the Due Process Clause of the Fifth Amendment, TMR Energy Ltd. v. State Prop.

Fund of Ukraine, 411 F.3d 296, 301 (D.C. Cir. 2005). The district court has personal jurisdiction

only if, in addition to 28 U.S.C. § 1330(b)’s requirements, the instrumentality has sufficient

minimum contacts with the United States. GSS Grp., 680 F.3d at 810 & n.3. The parties agree

that Tajik Air is an instrumentality of the Republic of Tajikistan and has no contacts with the

United States. Therefore, whether Skyroad can rebut the presumption of separateness is

dispositive. On de novo review, Shatsky v. Palestinian Liberation Org., 955 F.3d 1016, 1036 (D.C.

Cir. 2020), the court has determined the district court correctly concluded that neither the agency

nor the equity exception overcomes the presumption in this case, see Crane v. N.Y. Zoological

Soc’y, 894 F.2d 454, 455–56 (D.C. Cir. 1990).

II.

Skyroad’s allegations, taken as true, and the record evidence do not show that Tajik Air is

an agent of the Republic of Tajikistan or that Tajikistan’s control over the airline “significantly

exceeds the normal supervisory control exercised by any corporate parent . . . and . . . amounts to

complete domination.” Transam. Leasing, Inc. v. La Republica de Venezuela, 200 F.3d 843, 848

(D.C. Cir. 2000); see Bancec, 462 U.S. at 629. As the district court correctly concluded, this case

is similar to Transamerica Leasing, Inc. v. La Republica de Venezuela, 200 F.3d 843 (D.C. Cir.

2000). There, the foreign state was the instrumentality’s sole shareholder, appointed its Board and

executives, oversaw a major restructuring in response to financial distress, and provided indirect

financial aid. 200 F.3d at 850–51. The court regarded the government’s involvement in the

restructuring process as “nothing more than the sole shareholder exercising its influence” to

remedy “severe operational problems” and noted that “a massive restructuring hardly qualifies as

[involvement in] ‘day-to-day’ business” indicative of excessive control or a principal-agent

relationship. Id. at 851. As to financial assistance, the court “noted that a ‘typical government

instrumentality’ has primary responsibility for its own finances ‘[e]xcept for appropriations to

provide capital or to cover losses.’” Id. at 852 (alteration in original) (quoting Bancec, 462 U.S.

at 624). “Taken together,” these facts, along with the state’s sole-owner status and control over

the Board, “reflect[ed] only a normal relationship between a sovereign and an instrumentality of

the state” and did not overcome the presumption of separateness. Id.

3

So too, here: Tajikistan’s sole ownership of Tajik Air and appointment of Supervisory Board

members “as a matter of law do not by themselves establish the required control,” id. at 851,

because they show only that Tajikistan carries out the functions of any majority shareholder or

corporate parent, see id. at 848–49; Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d

438, 448 (D.C. Cir. 1990). The district court determined that “the Supervisory Board appears not

to be responsible for [Tajik Air’s] day-to-day operations,” which “are performed by its Director

General,” an employee of the airline rather than the government. Skyroad, 2021 WL 254106, at

*9. The record shows that the Tajik government adopted resolutions extending state support to

Tajik Air in response to ongoing financial difficulties, see Resolution (Sept. 25, 2018) [Joint Appx.

159–70]; Resolution (June 1, 2020) [Joint Appx. 428–30], but, as the district court found, these

resolutions requiring Tajik Air’s creditors to accept tax credits in lieu of cash payments from the

airline demonstrate only that “Tajikistan has provided indirect financial assistance to Tajik Air” to

alleviate the airline’s financial problems, Skyroad, 2021 WL 254106, at *8; see Transam. Leasing,

200 F.3d at 852.

Skyroad contends that the district court misconstrued the record evidence and did not

consider the totality of the circumstances. The district court rejected Skyroad’s arguments, see

Skyroad, 2021 WL 254106, at *6–11, and Skyroad offers no convincing indication of clear error

in the district court’s factual findings, see M.M.V. v. Garland, 1 F.4th 1100, 1108 (D.C. Cir. 2021),

which are supported by substantial record evidence. Further, the district court’s reasoning reflects

its evaluation of the totality of the circumstances, expressly finding that “the facts offered by

Skyroad to show Tajikistan’s control over Tajik Air, when viewed as a whole, are insufficient to

satisfy the principal-agent exception to Bancec’s presumption of separateness.” Skyroad, 2021

WL 254106, at *11. This conclusion accords with precedent.

Skyroad’s contention that the district court’s refusal to exercise personal jurisdiction works

fraud or injustice lacks merit. Tajik Air has not availed itself of a U.S. forum or sought the

protection of U.S. law beyond defending this lawsuit. See Bancec, 462 U.S. at 632. Nor is Tajik

Air’s assertion of separateness inconsistent with its arguments in the underlying arbitration. There,

Tajik Air argued that Tajikistan was its sole owner, while here it contends that Tajikistan does not

control its day-to-day operations.

Accordingly, given that Skyroad concedes Tajik Air lacks minimum contacts with the United

States, the district court did not err in finding that it could not exercise personal jurisdiction over

Tajik Air consistent with the Due Process Clause.

Pursuant to D.C. Circuit Rule 36, this disposition will not be published. The Clerk is directed

to withhold issuance of the mandate herein until seven days after resolution of any timely petition

for rehearing or petition for rehearing en banc. See Fed. R. App. P. 41(b); D.C. Cir. R. 41.

Per Curiam

4

FOR THE COURT:

Mark J. Langer, Clerk

BY: /s/

Daniel J. Reidy

Deputy Clerk