GSS Group Ltd. v. National Port Authority of Liberia , 822 F.3d 598 ( 2016 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 9, 2016 Decided May 17, 2016
No. 14–7041
GSS GROUP LTD., ALSO KNOWN AS
GLOBAL SECURITY SEALS GROUP LTD.,
APPELLANT
v.
NATIONAL PORT AUTHORITY OF LIBERIA
AND REPUBLIC OF LIBERIA,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:12–cv–00332)
Stanley McDermott III, pro hac vice, argued the cause for
the appellant. Charles B. Wayne was with him on brief.
Colleen E. Roh Sinzdak argued the cause for the
appellees. Jessica L. Ellsworth was with her on brief.
Before: HENDERSON, ROGERS and KAVANAUGH, Circuit
Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.
2
KAREN LECRAFT HENDERSON, Circuit Judge: GSS
Group, Ltd. (GSS), a construction company incorporated in
the British Virgin Islands and headquartered in Israel, appeals
the district court’s dismissal of its second attempt to confirm a
$44 million arbitral award entered against the National Port
Authority of Liberia (Port Authority) for breach of a
construction contract. When GSS first tried to confirm the
award, the district court found, and we affirmed, that it had no
personal jurisdiction over the Port Authority. When GSS
filed its second petition, it named not only the Port Authority
but also the Republic of Liberia, which owns the Port
Authority, as respondents. The district court again dismissed
GSS’s petition, finding that issue preclusion barred re-
litigating its personal jurisdiction over the Port Authority and
that GSS failed to demonstrate that Liberia was liable for the
Port Authority’s alleged breach. For the reasons stated below,
we affirm.
I. BACKGROUND
Although resolution of this case is ultimately
straightforward, the history leading to our disposition is not.
Three district court orders 1 and one opinion from this Court 2
have set out the relevant background but a refresher is
nonetheless needed for completeness.
1
See GSS Grp. Ltd. v. Nat’l Port Auth. (GSS Grp. I), 774 F. Supp. 2d
134 (D.D.C. 2011) (order dismissing first petition); GSS Grp. Ltd. v. Nat’l
Port Auth. (GSS Grp. II), No. 09-cv-1322 (D.D.C. Aug. 10, 2011) (order
denying GSS’s motion to alter or amend judgment); GSS Grp. Ltd. v.
Republic of Liber. (GSS Grp. IV), 31 F. Supp. 3d 50 (D.D.C. 2014) (order
dismissing second petition).
2
See GSS Grp. Ltd v. Nat’l Port Auth. (GSS Grp. III), 680 F.3d 805
(D.C. Cir. 2012).
3
A. FACTUAL BACKGROUND
The contract dispute at issue has its genesis in the turmoil
following Liberia’s Second Civil War. After four years of
conflict, two separate rebel groups besieged Monrovia,
Liberia’s capital, in 2003. Within months, Liberian President
Charles Taylor was exiled and the separate political factions
signed a Comprehensive Peace Agreement. The Peace
Agreement created the National Transitional Government of
Liberia, a power-sharing entity designed to govern the
recovering nation until it could hold democratic elections.
Monitoring and enforcing the Peace Agreement became the
responsibility of the International Contact Group on Liberia
(ICGL), a multi-national advisory board led by the United
States and including members of the United Nations, the
European Union, the Economic Community of West African
States and the World Bank.
The Peace Agreement also created the Liberian Contract
& Monopolies Commission (Commission) to combat the
corruption and mismanagement that had plagued the nation.
The Peace Agreement authorized the Commission to ensure
that “all public financial and budgetary commitments entered
into by the” National Transitional Government are
“transparent, non-monopolistic and in accordance with the
laws of Liberia and internationally accepted norms of
commercial practice.” Comprehensive Peace Agreement, art.
XVII(2)(a). To accomplish its goal, the Commission
promulgated Liberia’s Interim Public Procurement Policy and
Procedures (Interim Procedures), which set out ground rules
for, inter alia, state procurement of contracts for goods and
services.
During Liberia’s transition period, revitalizing the war-
ravaged Monrovian Port (Port) became a priority. The
4
responsibility of doing so fell to the Port Authority, a wholly
Liberian-owned corporation that manages, operates and
maintains all Liberian ports. Created as “a distinct juridical
entity with the capacity to enter into contracts and to sue and
be sued in its own name,” GSS Grp. IV, 31 F. Supp. 3d at 55,
the Port Authority functions “at some remove from the
government itself,” GSS Grp. III, 680 F.3d at 808. For
instance, it enjoys expansive financial and administrative
authority and has exclusive control over all funds it generates.
Its Board of Directors is primarily comprised of Liberian
government officials and individuals appointed by Liberia’s
president.
On June 9, 2005, the Port Authority awarded GSS a
multi-million-dollar contract to build a container park at the
Port. Although the Interim Procedures mandated that the Port
Authority award such contracts through “open competitive
bidding,” Interim Procedures 3 (Joint App’x (J.A.) 535), the
Port Authority did not do so. As a result, on June 23, 2005,
the Commission informed the Port Authority that the GSS
contract was invalid and reminded it that all contracts must
result from competitive bidding.
Instead of conducting a bid, the Port Authority petitioned
the Commission for a single-source exemption, which allows
a Liberian entity to dispense with competitive bidding if, inter
alia, “there is an urgent need” for the contract and “engaging
in bid proceedings . . . is impractical due to unforeseeable
circumstances.” Id. at 12–13 (J.A. 544–45). The Port
Authority urged the Commission that any further delay in
construction of the container park could result in the Port’s
closure and that the contract would help the Port comply with
the International Ship and Port Facility Security Code. The
Commission granted the exemption on August 12, 2005, and
the parties re-negotiated the contract 10 days later.
5
The GSS contract aroused the international community’s
interest. The ICGL reviewed the contract and came away
with “deep concerns” about its validity and monetary value.
Letter from ICGL to Charles Gyude Bryant, Chairman of
Nat’l Transitional Gov’t of Liber., at 1 (Oct. 19, 2005) (J.A.
220). It notified the National Transitional Government by
letter dated October 19, 2005, stating that, in its view, the
Commission should not have granted the Port Authority the
exemption and that the contract represented poor value for
money. Aware of the scrutiny, GSS and the Port Authority
amended the contract again on October 28, 2005. Their
efforts failed. On December 30, 2005, the National
Transitional Government’s Chairman directed the Port
Authority to cancel the GSS contract. The letter stated:
I have taken off considerable time to carefully
review the analysis of my technical team
regarding equitable benefits to all parties
resulting from the contract entered into
between the [Port Authority] and the GSS.
Our evaluation shows that the contract as
negotiated and concluded places the Port
Authority in a grossly disadvantageous
position for more than a decade. Additionally,
the contract does not contribute in any material
way to compliance with the [International Ship
and Port Facility Security] regulations and as
such Security Qualification of the Free Port of
Monrovia still remains.
I am therefore directing that the GSS contract
be cancelled and the Port Authority work[]
toward a more holistic management contract
that will improve operational, financial and
security efficiency levels. The sourcing of any
6
managing team must be done through a
competitive bidding process after proper terms
of reference are agreed upon and approved by
the . . . Commission and the technical
committee of the [Economic Governance
Steering Committee].[3] The GSS shall be free
to submit an offer at that time.
Letter from Charles Gyude Bryant, Chairman of Nat’l
Transitional Gov’t of Liber., to D. Masuleng Coop, Chairman
of Nat’l Port Auth. (Dec. 30, 2005) (J.A. 977). On January 3,
2006, the Port Authority sought reconsideration from the
National Transitional Government. The record does not
reflect whether the Port Authority’s request prompted a
response. On January 16, 2006, the National Transitional
Government abdicated its power and Liberia’s newly elected
government assumed control.
On January 26, 2006, the Port Authority informed GSS,
via letter, that it was cancelling the contract. A rapid volley
of correspondence between GSS and the Port Authority
ensued, culminating in a February 16, 2006 letter from the
3
The Economic Governance Steering Committee (EGSC) was one
of two organizations created in 2005 as part of an agreement between the
ICGL and the National Transitional Government called the “Governance
and Economic Management Assistance Program” (GEMAP). The
GEMAP’s goal “was to promote accountability and transparency in fiscal
management by setting in place internal governmental controls and
providing for international involvement, all while recognizing and
preserving Liberian sovereignty.” Aff. of O. Natty B. Davis II, Republic
of Liber.’s Minister of State, ¶ 12 (J.A. 244). The EGSC, whose
membership consisted of Liberian government officials as well as
representatives from the United States (including the United States
Ambassador to Liberia), the EU, the World Bank and other international
stakeholders, was the body designed to provide the international
involvement contemplated by the GEMAP.
7
Port Authority explaining that the Interim Procedures demand
complete transparency and adherence to open bidding and
concluding that the GSS contract fell well short of those
standards. It further explained that the Commission only
granted the single-source exemption because it mistakenly
thought the contract was necessary to comply with
international obligations and to avoid the Port’s closure. 4
Because the exemption was mistakenly granted, the Port
Authority considered the contract “null and void ab initio.”
GSS Grp. IV, 31 F. Supp. 3d at 56 (citation omitted).
On March 15, 2006, GSS invoked the contract’s
arbitration clause (which provided that disputes arising under
the agreement were to be arbitrated in London and in
accordance with the laws of England and Wales) against the
Port Authority, but not against Liberia. Meanwhile, a
separate Liberian governmental organization—the Liberian
Public Procurement and Concession Commission5—sought a
Liberian-court declaration that the contract, including the
arbitration provision, was invalid. Because of the Liberian
judicial proceedings, the Port Authority declined to participate
in the London arbitration and GSS appointed the sole
arbitrator. On February 8, 2008, the Liberian court found the
4
According to the Port Authority, the Commission’s mistake was
caused by a $30,000 bribe that GSS paid the Port Authority’s then-
managing director to convince the Commission that an urgent need for the
requested single-source exemption existed.
5
Formed in 2005, the Liberian Public Procurement and Concession
Commission’s mission is “to ensure the economic and efficient use of
public funds in public procurement and to ensure that public procurement
and concession processes are conducted in a fair, transparent and non-
discriminatory manner.” Frequently Asked Questions about PPCC, Public
Procurement & Concessions Commission, Gov. of the Republic of Liber.,
http://www.ppcc.gov.lr/content.php?sub=67&related=1&third=67&pg=sp
(last visited May 9, 2016).
8
relevant portions of the contract unenforceable.
Notwithstanding the Liberian court’s decision, one month
later, the arbitrator determined that he had jurisdiction of the
dispute; in June 2008, he concluded that the Port Authority
was liable for the cancellation and in May 2009, he found that
GSS suffered damages in the amount of $44,347,260.00.
B. GSS’S FIRST PETITION TO CONFIRM
LONDON ARBITRAL AWARD
On June 16, 2009, GSS filed a petition in the United
States District Court for the District of Columbia to confirm
the London arbitral award. 6 The Port Authority moved to
dismiss the petition on the ground that, inter alia, it had no
contact whatsoever with the United States (much less the
District of Columbia) and therefore the district court lacked
personal jurisdiction. GSS responded that the Port Authority,
a wholly state-owned enterprise, was not a “person” within
the meaning of the Due Process Clause and, accordingly, had
no right to assert a personal-jurisdiction defense. GSS Grp. I,
774 F. Supp. 2d at 138.
The district court rejected GSS’s argument, finding that,
although a foreign sovereign is not a person under the Due
Process Clause, the Port Authority “functions more like a
6
Statutory subject matter jurisdiction of GSS’s petition is based on
the Federal Arbitration Act (FAA), 9 U.S.C. §§ 201 et seq, which codifies
the 1958 Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (Convention), June 10, 1958, 21 U.S.T. 2517, 330
U.N.T.S. 3. The Convention, in turn, obligates each contracting nation
(including the United States) to “recognize [foreign] arbitral awards as
binding and enforce them in accordance with” local law. Id. art. III.
Because the United Kingdom is also a party to the Convention, the FAA
provides U.S. courts with authority to enforce the London arbitral award
(notwithstanding neither the arbitral award nor the GSS contract has any
United States connection).
9
private corporation” and, accordingly, has due process rights.
Id. at 141. Because GSS made no attempt to show that the
Port Authority had any United States contacts, the district
court dismissed GSS’s petition for lack of personal
jurisdiction. In so doing, the district court observed that,
“[f]or unknown reasons,” GSS declined to argue that the Port
Authority and Liberia “are legally indistinguishable.” Id. at
138–39.
GSS moved for reconsideration under Rule 59(e). In its
motion, GSS argued for the first time that the Port Authority
was Liberia’s agent and that it was entitled to discovery to
demonstrate the same. The district court found that GSS had
waived the arguments by failing to raise them earlier.
GSS appealed the dismissal and, on May 25, 2012, we
affirmed in toto. As a threshold matter, we agreed that GSS
had waived its agency and jurisdictional-discovery arguments.
We then rejected the only argument GSS had preserved—that
a foreign, state-owned entity has no due process rights—and
affirmed the district court’s dismissal because GSS had failed
to identify “any connection” between the United States and
the Port Authority. GSS Grp. III, 680 F.3d at 817 (emphasis
in original).
C. GSS’S SECOND PETITION TO CONFIRM
LONDON ARBITRAL AWARD
On March 1, 2012 (one day before oral argument here in
GSS’s appeal of the dismissal of its initial petition), GSS filed
in district court a second petition to confirm the award. This
time, however, GSS named Liberia as the sole respondent; 7
7
As noted above, see supra n.6, the FAA provided the subject matter
jurisdiction for GSS’s first position, which named the Port Authority as
the sole respondent. Because GSS named Liberia, a foreign sovereign, as
10
three weeks later, it amended the petition to add the Port
Authority. The thrust of GSS’s second petition was that the
Port Authority was Liberia’s agent and, accordingly, Liberia
was liable for the $44 million London award. Because
Liberia, as a sovereign, may not assert a personal-jurisdiction
defense, GSS believed that its second petition cleared the
hurdle that blocked its first. It also served both the Port
Authority and Liberia with discovery requests to clarify their
inter se connection.
The district court was not persuaded. It began with the
Port Authority’s amenability to suit, concluding that its
dismissal of GSS’s first petition on the “no personal
jurisdiction” ground precluded GSS’s second attempt to sue
the Port Authority in federal court. Despite GSS’s contention
that the district court did not resolve its agency argument
when it dismissed GSS’s first petition, the district court
concluded that collateral estoppel barred issues—not simply
specific arguments—that had been necessarily decided in
earlier proceedings. And because “GSS enjoyed every
the respondent in its second petition, GSS argued that the district court had
subject matter jurisdiction under the Foreign Sovereign Immunities Act
(FSIA), 28 U.S.C. §§ 1330 et seq. Under the FSIA, a foreign state, as well
as its agencies and instrumentalities, is presumed to enjoy sovereign
immunity from suit in U.S. courts unless one of several statutory
exceptions applies. See id. § 1604. One exception—the only one
applicable here—is the “arbitration exception,” which provides that “[a]
foreign state shall not be immune from the jurisdiction of courts of the
United States . . . in any case . . . in which the action is brought [to enforce
an arbitration agreement or award that] is or may be governed by a treaty
or other international agreement in force for the United States calling for
the recognition and enforcement of arbitral awards.” Id. § 1605(a)(6)(B);
see also 28 U.S.C. § 1330(a) (district court has subject matter jurisdiction
of “any nonjury civil action against a foreign state . . . as to any claim for
relief in personam with respect to which the foreign state is not entitled to
immunity”).
11
opportunity to rely on a theory of agency when it earlier
litigated the issue of personal jurisdiction,” GSS Grp. IV, 31
F. Supp. 3d at 61, the district court applied the issue
preclusion bar.
The district court also held that it had no subject matter
jurisdiction of Liberia. It noted that GSS had to overcome the
presumption that “government instrumentalities established as
juridical entities distinct and independent from their
sovereign”—like the Port Authority—“should normally be
treated as such.” Id. at 62 (quoting First Nat’l City Bank v.
Banco Para El Comercio Exterior de Cuba (Bancec), 462
U.S. 611, 626–27 (1983)). To do so, GSS had to demonstrate
either that the Port Authority was Liberia’s agent or that
treating the Port Authority as distinct from Liberia would
perpetuate fraud or injustice. The district court found that
GSS had demonstrated neither.
To support its agency argument, GSS proffered that
Liberia controlled the Port Authority’s board of directors; that
Liberia had assumed a portion of the Port Authority’s
outstanding debt; that, when the Port Authority contracted
with a third party to replace the GSS contract in 2010, several
Liberian government officials, including the Liberian
president, executed the new agreement; and that Liberia
forced the Port Authority to cancel the contract. The district
court found that GSS’s first three arguments were either
foreclosed by Transamerica Leasing, Inc. v. La Republica de
Venezuela, 200 F.3d 843 (D.C. Cir. 2000), or not probative of
Liberia’s control over the Port Authority in 2005–06. It also
rejected the argument that the directive to the Port Authority
to cancel the contract created an agency relationship. In so
doing, it noted that the Port Authority independently
negotiated and executed the contract and that Liberia’s
12
cancellation order was an act of government regulation, not
commandeering.
Having found that the Port Authority was not Liberia’s
agent, the district court made quick work of GSS’s fraud or
injustice argument. It first recognized that the requisite
injustice occurs if, for example, a sovereign uses an
instrumentality to shield itself from costs or risks, to unjustly
enrich itself or to defeat a statutory policy. It then concluded
that the “single sentence” GSS offered in support of its
argument did not suffice to demonstrate injustice. GSS Grp.
IV, 31 F. Supp. 3d at 68.
The district court dismissed GSS’s petition in its entirety
but did not address GSS’s discovery requests before it did so.
GSS timely appealed. 8 Our review of the district court’s issue
preclusion determination, see Hall v. Clinton, 285 F.3d 74, 80
(D.C. Cir. 2002), and its dismissal for lack of subject matter
jurisdiction, see Transamerica Leasing, Inc., 200 F.3d at 847,
is de novo. We review its denial of jurisdictional discovery
for abuse of discretion. See Caribbean Broad. Sys., Ltd. v.
Cable & Wireless P.L.C., 148 F.3d 1080, 1089 (D.C. Cir.
1998).
8
On February 21, 2015, we held this case in abeyance pending the
United States Supreme Court’s disposition of OBB Personenverkehr AG v.
Sachs, 136 S. Ct. 390 (2015). When the Supreme Court granted certiorari
in OBB Personenverkehr AG, a potential issue was “[w]hether, for
purposes of determining when an entity is an ‘agent’ of a ‘foreign state,’ ”
the FSIA’s definition of “agency,” the factors set out in Bancec “or
common law principles of agency” govern. Pet. for Writ of Cert. at i,
OBB Personenverkehr AG v. Sachs (No. 13-1067), 2014 WL 890906 at *i
(Mar. 5, 2014). The Supreme Court ultimately failed to reach the issue.
See OBB Personenverkehr AG, 136 S. Ct. at 395.
13
II. ANALYSIS
On appeal, GSS argues that: (1) the district court had
subject matter jurisdiction of Liberia: the Port Authority was
Liberia’s agent and failure to hold Liberia liable for the Port
Authority’s contract cancellation would permit a miscarriage
of justice; (2) the district court had personal jurisdiction of the
Port Authority by virtue of its jurisdiction of Liberia and the
district court erred by finding that issue preclusion barred the
claim and (3) the district court abused its discretion by
dismissing GSS’s petition before allowing GSS to conduct
jurisdictional discovery. GSS’s appeal turns on whether the
National Transitional Government’s December 30, 2005
cancellation order justifies setting aside our general rule that
“agencies and instrumentalities of a foreign nation are
presumed to be separate from each other and from the foreign
state.” Foremost-McKesson, Inc. v. Islamic Republic of Iran,
905 F.2d 438, 440 (D.C. Cir. 1990).
A. REPUBLIC OF LIBERIA
GSS’s primary argument is that Liberia is liable for the
Port Authority’s cancellation of the contract and, accordingly,
the district court had subject matter jurisdiction of it pursuant
to the FSIA’s arbitration exception. To satisfy its burden,9
GSS must demonstrate either that Liberia controlled the Port
Authority “so extensively” that the Port Authority became
Liberia’s agent or that treating the Port Authority as legally
separate from Liberia would allow fraud or injustice.
Transamerica Leasing, Inc., 200 F.3d at 848. GSS argues
that it satisfies both exceptions, relying almost exclusively on
9
See Foremost-McKesson, Inc., 905 F.2d at 447 (“It is . . . clear that
the plaintiff bears the burden of asserting facts sufficient to withstand a
motion to dismiss regarding the agency relationship.” (emphasis in
original)).
14
the National Transitional Government’s instruction to cancel
the contract.
1. Principal/Agency Relationship
Our resolution of GSS’s agency argument begins and
ends with our Transamerica Leasing, Inc. opinion. In that
case, we explained that a plaintiff may demonstrate that an
agency relationship exists in one of two ways. The first
occurs if a sovereign asserts “complete domination” of a
subsidiary. Id. The second results from “ordinary agency
principles,” which do not require a showing of “complete
dominion.” Id. at 849 (emphasis added). GSS makes no real
attempt to demonstrate that it satisfies the former, instead
focusing its efforts on the latter.
In Transamerica Leasing, Inc., we recognized that
explaining the degree of control necessary to find agency is
challenging. See id. Despite the caselaw’s
“often . . . confusing results,” we discerned four prerequisites.
Id. We held that no agency relationship arises unless (1) the
sovereign makes plain its desire for the instrumentality to act
on the sovereign’s behalf; (2) the instrumentality agrees to so
act; (3) the sovereign has final say over matters delegated to
the instrumentality and (4) the sovereign wields its power
more directly than voting a majority of the instrumentality’s
stock or choosing the instrumentality’s board of directors. 10
Id. at 849–50. Based on these factors, GSS’s argument
reduces to the following: Liberia ordered the Port Authority
to cancel the contract and the Port Authority obliged;
10
See also RESTATEMENT (SECOND) OF AGENCY § 1 (“Agency is the
fiduciary relation which results from the manifestation of consent by one
person to another that the other shall act on his behalf and subject to his
control, and consent by the other so to act.”).
15
therefore, Liberia had the requisite authority over the Port
Authority to make the latter its agent. 11
Superficially, GSS has a point—the National Transitional
Government’s directive left the Port Authority with no
discretion to ignore the cancellation order. But in
Transamerica Leasing, Inc., we recognized that a government
can wield power not only “as shareholder” but also as
“regulator.” 200 F.3d at 851. 12 And read in context, it is
plain that the National Transitional Government was
exercising its regulatory authority when it ordered the Port
Authority to cancel the GSS contract—not commandeering
the Port Authority in a way that erased the separate juridical
boundaries between it and Liberia.
Recall the situation in Liberia during which the contract
emerged. Between 2003 and 2006, Liberia (and, especially,
Monrovia) was struggling to recover not only from a four-
year civil war but also from a history of government
corruption and financial mismanagement. To aid the
recovery, the Commission promulgated Interim Procedures,
which required state-owned corporations to obtain goods and
services through competitive bidding. When the Port
Authority failed to do so, the Commission immediately
advised the Port Authority that the procedural violation
11
See also Appellant’s Br. 9 (“In short, when Liberia directed the
[Port Authority] to cancel the Project Agreement, Liberia acted as
principal, the [Port Authority] was its agent, and that principal-agent
relationship—manifest in the cancellation of the Project Agreement—
satisfies the Bancec standard.”).
12
See also Transamerica Leasing, Inc., 200 F.3d at 851 (“[W]e
cannot say that requiring a shipping company to obtain governmental
approval for the sale of vessels represents the exercise of Venezuela’s
authority as shareholder rather than its exercise of governmental power in
the ordinary course of regulation.”).
16
rendered the contract invalid; in addition, the ICGL undertook
its own review. The Commission’s grant of a single-source
exemption did not erase the ICGL’s “deep concerns” about
the contract’s validity and worth and these concerns prompted
the ICGL to inform the National Transitional Government
that the Commission should not have granted the exemption
and that the contract as a whole disproportionately favored
GSS at the Port Authority’s expense. Letter from ICGL to
Charles Gyude Bryant, Chairman of Nat’l Transitional Gov’t
of Liber., at 1 (Oct. 19, 2005) (J.A. 220). With the ICGL’s
guidance in mind, the National Transitional Government then
instructed the Port Authority to cancel the contract.
The National Transitional Government’s December 30,
2005 letter informed the Port Authority that it had not
complied with a legal obligation, that it had not satisfied the
requirement for an exemption therefrom and that it was to
cancel the contract. This action is the quintessential function
of a government regulator. Granted, one of the criticisms of
the contract was “commercial,” Appellant’s Br. 20, but in our
view, the concern that the contract placed “the Port Authority
in a grossly disadvantageous position” was an outgrowth of
Liberia’s broader regulatory goal of remedying past financial
mismanagement. Letter from Charles Gyude Bryant,
Chairman of Nat’l Transitional Gov’t of Liber., to D.
Masuleng Coop, Chairman of Nat’l Port Auth. (Dec. 30,
2005) (J.A. 977). In any event, the National Transitional
Government also ordered the contract’s cancellation because
it did “not contribute in any material way to compliance with”
the Port’s international responsibilities. Id. Ensuring
compliance with international obligations, and correcting a
17
state-owned instrumentality when it fails to do so, is a
hallmark of a sovereign acting in its regulatory capacity. 13
The National Transitional Government’s directive to the
Port Authority to “work[] toward a more holistic management
contract that will improve operational, financial and security
efficiency levels” emphasized the importance of revitalizing
the Port in a cost-effective manner, id.; moreover, its
instruction that “[t]he sourcing of any managing team must be
done through a competitive bidding process after proper terms
of reference are agreed upon and approved by
the . . . Commission and the technical committee of the
EGSC” reminded the Port Authority of its responsibility to
follow the Interim Procedures, id. Critically, the National
Transitional Government noted that GSS remained free to
submit a bid for the contract so long as it complied with all
applicable procedures. Allowing GSS the opportunity to
secure the contract (through a competitive bid) underscores
that Liberia’s interest was in ensuring that the Port Authority
procured goods and services in accordance with the Interim
13
See, e.g., 46 U.S.C. § 42101 (“[T]he Federal Maritime
Commission shall prescribe regulations affecting shipping in foreign
trade, . . . to adjust or meet general or special conditions unfavorable to
shipping in foreign trade, . . . which arise out of or result from laws or
regulations of a foreign country or competitive methods, pricing practices,
or other practices employed by owners, operators, agents, or masters of
vessels of a foreign country.”); id. § 42106(5) (“If the Federal Maritime
Commission finds that conditions unfavorable to shipping in foreign trade
as described in section 42101 of this title exist, the Commission
may . . . take any [remedial] action the Commission finds necessary and
appropriate to adjust or meet any condition unfavorable to shipping in the
foreign trade of the United States.”).
18
Procedures and not in “wresting control of the . . . contract
from the” Port Authority. Appellant’s Br. 21. 14
GSS discusses (but does not emphasize) other factors
that, in its view, demonstrate Liberia’s control of the Port
Authority. None changes our conclusion. First, GSS argues
that the Port Authority’s board of directors was controlled by
Liberia but we have held that state stock ownership and board
control is an inherent part of state-owned instrumentalities
and, standing alone, does not create an agency relationship.
See Transamerica Leasing, Inc., 200 F.3d at 851. Next, GSS
points out that Liberia absorbed $32.2 million of the Port
Authority’s debt burden but we have held that a sovereign’s
financial aid to an instrumentality is part and parcel of normal
state ownership. Id. at 852. Finally, GSS points to a 2010
agreement that replaced the cancelled GSS contract, which
agreement was executed by several Liberian government
officials, including the Liberian president. But the 2010
agreement sheds no light on the degree to which Liberia
controlled the Port Authority when the Port Authority entered
into and then cancelled the GSS contract in 2005–06.
14
GSS argues that “the principal Liberian regulator,
the . . . Commission . . . had approved the Project Agreement before
Liberia cancelled it, indicating that Liberia was not acting in any
regulatory capacity when it did so.” Appellant’s Br. 10. But the
Commission initially advised the Port Authority that the contract was
invalid because it was not awarded through competitive bidding. The
National Transitional Government also cited the Port Authority’s failure to
comply with the competitive-bidding requirement when it ordered the
contract’s cancellation; the only difference between its position and the
Commission’s earlier position was that the National Transitional
Government also concluded that the contract did not qualify for a single-
source exemption.
19
2. Fraud or Injustice
GSS also argues that respecting the boundaries between
Liberia and the Port Authority would perpetuate fraud or
injustice. It relies on the Fifth Circuit’s opinion in Bridas
S.A.P.I.C. v. Government of Turkmenistan (Bridas I), which
held that a sovereign can be liable for its instrumentality’s
acts if the sovereign completely controlled the instrumentality
“with respect to the transaction at issue” and exercised its
dominion to commit a “fraud or wrong.” 345 F.3d 347, 359
(5th Cir. 2003). In GSS’s view, Liberia dominated the Port
Authority “with respect to” the contract and the Port
Authority’s cancellation was a “remediable wrong.”
Appellant’s Br. 31–32. This argument is without merit. The
Fifth Circuit explained that the requisite “wrong” must
constitute either “fraud” or “misuse of the corporate form to
promote injustice,” Bridas S.A.P.I.C. v. Gov’t of Turkm.
(Bridas II), 447 F.3d 411, 416–17 (5th Cir. 2006), and not
simply a run of the mill alleged contractual breach. This case
is not the “exceptional case[]” to which Bridas I may apply.
Bridas II, 447 F.3d at 416.
For the foregoing reasons, we affirm the district court’s
dismissal of the claims against Liberia for lack of subject
matter jurisdiction under the FSIA.
B. PORT AUTHORITY
GSS also argues that issue preclusion does not bar its
claims against the Port Authority because its claims against
Liberia differ from its claims against the Port Authority and
jurisdiction over Liberia necessarily confers jurisdiction over
the Port Authority. Based on our conclusion that Liberia is
not subject to suit in a United States court, GSS’s argument
regarding the Port Authority fails. We note, however, that the
district court’s issue preclusion analysis is plainly correct.
20
Preclusion applies if a later argument “is related to the
subject-matter and relevant to the issues that were litigated
and adjudicated previously, so that it could have been raised.”
Hall, 285 F.3d at 81 (quoting Yamaha Corp. of Am. v. United
States, 961 F.2d 245, 257–58 (D.C. Cir. 1992) (emphasis
omitted)); see also Yamaha Corp., 961 F.2d at 254 (“[O]nce
an issue is raised and determined, it is the entire issue that is
precluded, not just the particular arguments raised in support
of it in the first case.” (emphases in original)). GSS could
have raised the agency argument in its first petition; it
eventually did raise the argument but too late to avoid waiver.
Accordingly, we again affirm the district court’s dismissal of
GSS’s petition against the Port Authority.
C. JURISDICTIONAL DISCOVERY
Finally, GSS offers two sentences in support of its
argument that the district court erred by dismissing its petition
before allowing jurisdictional discovery. We are
correspondingly brief in concluding that, without more,
GSS’s two-sentence claim does not suffice and, thus, the
district court committed no abuse of its wide discretion.
For the foregoing reasons, we affirm the district court’s
dismissal of GSS’s petition.
So ordered.