Civil Procedure - Personal Jurisdiction - D.C. Circuit Dismisses Suit against National Port Authority of Liberia for Lack of Personal Jurisdiction
The rise of the Internet and the rapid pace of globalization have spurred a "proliferation of transnational litigation." (1) Foreign litigants have flocked to the United States, (2) raising questions about the authority of federal courts to assert jurisdiction over foreign defendants. (3) Recently, in GSS Group Ltd. v. National Port Authority, (4) the D.C. Circuit dismissed a suit against the National Port Authority of Liberia (NPA) brought under the Federal Arbitration Act (5) and the Foreign Sovereign Immunities Act of 1976 (6) (FSIA). The court decided that the NPA was entitled to Fifth Amendment due process protections and lacked sufficient contacts with the United States to support the exercise of personal jurisdiction. (7) Commenting on the NPA's entitlement to due process protections, the concurrence suggested that the constitutional right to contest personal jurisdiction should not extend to foreign defendants and Congress should be free to set its own jurisdictional standards. But denying Fifth Amendment protections to foreign defendants is not necessary to afford Congress such flexibility. The Supreme Court has yet to address whether the Fifth Amendment offers foreign defendants the same protections against federal courts sitting in cases arising under federal law that the Fourteenth Amendment does against state courts. Within the existing due process framework, courts could develop a standard for personal jurisdiction under the Fifth Amendment that accounts for the federal government's unique role in international affairs and strengthens Congress's ability to determine whether foreign defendants may be sued in American courts.
The NPA is a public corporation organized under the laws of Liberia and wholly owned by the Liberian government. (8) On June 9, 2005, the NPA entered into a contract with GSS Group, Ltd. (GSS), a construction company headquartered in Israel, for the construction and operation of a container park in Monrovia, Liberia. (9) Several months later, a new Liberian government declared the contract "null and void ab initio" for failing to comply with the country's competitive bidding process. (10) Invoking the contract's binding arbitration clause, GSS submitted the dispute for arbitration in London. (11) The NPA refused to participate, and the arbitrator held it in breach. (12)
Following the decision, GSS filed suit in the United States District Court for the District of Columbia to confirm the arbitral award pursuant to the Federal Arbitration Act and under the FSIA's jurisdictional provisions. (13) The NPA moved to dismiss, arguing among other things that the Due Process Clause of the Fifth Amendment prevented the court from exercising jurisdiction because the NPA lacked sufficient minimum contacts with the United States. (14) GSS offered three responses: (1) "the NPA may not claim any due process protections because it is a foreign instrumentality"; (15) (2) nonresident aliens are not entitled to due process protections; (16) and (3) "foreign state-owned corporations ... should receive no due process protections." (17) GSS did not argue that the NPA had sufficient contacts with the United States to satisfy the Fifth Amendment. (18)
Judge Friedman granted the NPA's motion to dismiss. He noted that while the FSIA provided an adequate statutory basis for establishing personal jurisdiction over the NPA, the "question remains whether the Constitution permits the exercise of personal jurisdiction." (19) Answering in the negative, Judge Friedman rejected each of GSS's arguments against the applicability of Fifth Amendment protections to the NPA. Although "foreign sovereign nations are not among the 'person[s]' afforded rights by the Fifth Amendment," that exclusion only extends to a foreign instrumentality when it is "legally indistinguishable" from the foreign sovereign. (20) GSS failed to allege such a connection between Liberia and the NPA. (21) GSS's argument that nonresident aliens should not receive due process protections fared no better. …