582 F.3d 393 (2nd Cir. 2009), 07-1815-cv, Frontera Resources Azerbaijan Corp. v. State Oil Co. of Azerbaijan Republic

Docket Nº:07-1815-cv.
Citation:582 F.3d 393
Opinion Judge:JOHN M. WALKER, JR., Circuit Judge:
Attorney:James E. Berger, Paul Hastings Janofsky & Walker, LLP, New York, NY, for Petitioner-Appellant. John D. Winter, Patterson Belknap Webb & Tyler LLP, New York, NY, for Respondent-Appellee.
Judge Panel:Before WALKER, PARKER, and RAGGI, Circuit Judges.
Case Date:September 28, 2009
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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582 F.3d 393 (2nd Cir. 2009)




No. 07-1815-cv.

United States Court of Appeals, Second Circuit.

September 28, 2009

Argued: Oct. 27, 2008.

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James E. Berger, Paul Hastings Janofsky & Walker, LLP, New York, NY, for Petitioner-Appellant.

John D. Winter, Patterson Belknap Webb & Tyler LLP, New York, NY, for Respondent-Appellee.

Before WALKER, PARKER, and RAGGI, Circuit Judges.

JOHN M. WALKER, JR., Circuit Judge:

Petitioner-Appellant Frontera Resources Azerbaijan Corporation (" Frontera" ) appeals from the dismissal by the United States District Court for the Southern District of New York (Richard J. Holwell, Judge) of its petition to enforce a Swedish arbitration award against Respondent-Appellee State Oil Corporation of the Azerbaijan Republic (" SOCAR" ). The district court granted SOCAR's motion to dismiss for want of personal jurisdiction. See Frontera Res. Azer. Corp. v. State Oil Co. of Azer. Republic, 479 F.Supp.2d 376, 388 (S.D.N.Y.2007). We conclude that SOCAR is not entitled to the Due Process

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Clause's jurisdictional protections if it is an agent of the Azerbaijani state. Accordingly, we vacate and remand for the district court to reconsider its analysis.


Frontera and SOCAR are two companies in the oil industry. Frontera is based in the Cayman Islands, and SOCAR is based in and owned by the Republic of Azerbaijan (" Azerbaijan" ). In November 1998, the parties entered into a written agreement (the " Agreement" ) under which Frontera developed and managed oil deposits in Azerbaijan and delivered oil to SOCAR. In 2000, a dispute arose over SOCAR's refusal to pay for some of this oil, and in response, Frontera allegedly sought to sell oil that was supposed to be sold to SOCAR to parties outside of Azerbaijan instead. In November 2000, after instructing local customs authorities to block Frontera's oil exports, SOCAR seized the oil.

In March 2002, the bank that had financed Frontera's involvement in Azerbaijan foreclosed on its loan, forcing Frontera to assign its rights in the project to the bank. In July 2002, the bank settled its claims with SOCAR. Frontera, however, continued to seek payment for both previously delivered and seized oil. Based on its settlement with the bank, SOCAR denied liability to Frontera.

After Frontera and SOCAR were unable to settle their dispute amicably, Frontera served SOCAR in July 2003 with a request for arbitration as per the Agreement. In January 2006, after a hearing on the merits with full participation by both parties, a Swedish arbitral tribunal awarded Frontera approximately $1.24 million plus interest.

On February 14, 2006, Frontera filed a petition in the Southern District of New York to confirm the award pursuant to Article II(2) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (" New York Convention" ), opened for signature June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38, implemented at 9 U.S.C. § 207. The district court dismissed the petition for lack of personal jurisdiction, on the basis that SOCAR had insufficient contacts with the United States to meet the Due Process Clause's requirements for the assertion of personal jurisdiction. The district court questioned the soundness of according due process protections to SOCAR, a company owned by Azerbaijan, but nonetheless applied the traditional due process test based on our precedent in Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300 (2d Cir.1981). The district court also declined to find quasi in rem jurisdiction over SOCAR, because Frontera had not identified specific SOCAR assets within the court's jurisdiction. The district court denied jurisdictional discovery and dismissed Frontera's petition. This appeal followed.


Frontera contends (1) that a court does not need personal jurisdiction over a party in order to confirm a foreign arbitral award against that party, and (2) that Texas Trading should be overruled, because the Due Process Clause's protections should not apply to foreign states or their instrumentalities. Frontera also challenges the district court's denial of jurisdictional discovery.

I. Personal Jurisdiction over SOCAR

When considering a district court's dismissal for lack of personal jurisdiction, we review its factual findings for clear error and its legal conclusions de novo. See Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22 (2d Cir.2004).

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Generally, personal jurisdiction has both statutory and constitutional components. A court must have a statutory basis for asserting jurisdiction over a defendant, see Grand River Enters. Six Nations, Ltd. v. Jash International, Inc., 425 F.3d 158, 165 (2d Cir.2005), and the Due Process Clause typically also demands that the defendant, if " not present within the territory of the forum, ... have certain minimum contacts with it such that the maintenance of the suit does not offend ‘ traditional notions of fair play and substantial justice.’ " Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). The parties do not challenge the district court's reliance on the Foreign Sovereign Immunities Act (" FSIA" ), 28 U.S.C. § 1608(a), as the statutory basis for jurisdiction over SOCAR. See Frontera, 479 F.Supp.2d at 379-80; see also Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989) (stating that the FSIA " provides the sole basis for obtaining jurisdiction over a foreign state in federal court" ). This appeal instead is focused on the Due Process Clause's place in the district court's analysis.

The district court dismissed Frontera's petition because it concluded that SOCAR's contacts with the United States were insufficient to meet the Due Process Clause's demands for personal jurisdiction. Frontera contends that this was in error both because personal jurisdiction is not necessary for the requested relief, and because SOCAR is not entitled to the Due Process Clause's protections. We address each argument in turn.

A. The Need for Jurisdiction

Frontera argues that a district court does not need personal jurisdiction over a respondent to confirm a foreign arbitral award against that party. Yet, Frontera contends, the district court's dismissal of its petition " necessarily rest[ed] upon an assumption" that personal jurisdiction over SOCAR was indispensable. (Appellant's Br. at 38.)

We read the district court's decision differently. Although the district court considered whether it could assert personal jurisdiction over SOCAR, it did not make that question dispositive. Instead, after finding SOCAR's contacts with the United States insufficient to establish personal jurisdiction, the district court examined whether it had jurisdiction over any of SOCAR's assets, because " in the absence of minimum contacts, quasi in rem jurisdiction may be exercised to attach property to collect a debt." Frontera, 479 F.Supp.2d at 387. Thus, by suggesting that the district court required personal jurisdiction, Frontera misunderstands the framework of the court's analysis. And to the extent that Frontera's challenge is to the district court's requirement of either personal or quasi in rem jurisdiction, it is without merit.

We have previously avoided deciding whether personal or quasi in rem jurisdiction is required to confirm foreign arbitral awards pursuant to the New York Convention. See Dardana Ltd. v. A.O. Yuganskneftegaz, 317 F.3d 202, 207 (2d Cir.2003). However, the numerous other courts to have addressed the issue have each required personal or quasi in rem jurisdiction. See, e.g., Telcordia Tech Inc. v. Telkom SA Ltd., 458 F.3d 172, 178-79 (3d Cir.2006); Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1120-22 (9th Cir.2002); Base Metal Trading, Ltd. v. OJSC " Novokuznetsky Aluminum Factory" , 283 F.3d 208, 212-13 (4th Cir.2002); see also Transatl. Bulk Shipping Ltd. v. Saudi Chartering S.A., 622 F.Supp. 25, 27 (S.D.N.Y.1985).

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Frontera contends that none of these courts addressed the precise argument it advances here: that there is no " positive statutory or treaty basis" for such a jurisdictional requirement.1 (Appellant's Reply Br. at 11.) The federal statute that implements the New York Convention requires a court to confirm an award " unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention." 9 U.S.C. § 207. Article V of the New York Convention " provides the exclusive grounds for refusing confirmation," Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys " R" Us, Inc., 126 F.3d 15, 20 (2d Cir.1997), and specifies seven grounds for refusing to enforce an arbitral award, none of which include a lack of jurisdiction over the respondent or the respondent's property, see New York Convention at art. 5, 21 U.S.T. at 2517. Frontera accordingly argues that we cannot impose a jurisdictional requirement if the Convention does not already have one. We disagree.

Unlike " state courts[,] [which] are courts of general jurisdiction[,] ... federal courts are courts of limited jurisdiction which thus require a specific grant of jurisdiction." Foxhall Realty Law Offices, Inc. v. Telecomm. Premium Servs., Ltd., 156 F.3d 432, 435 (2d Cir.1998) (citing Sheldon v. Sill, 49 U.S. (8 How.) 441, 449, 12 L.Ed. 1147 (1850)). " The validity of an order of a federal court depends upon that court's having jurisdiction over both the subject matter and the parties." Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). While the requirement of...

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