April 04, 2011
Greg Hargreaves / Photodisc Green
A Washington, D.C., federal judge ruled Wednesday (pdf) that state-owned foreign corporations that can prove they operate independently of the government are entitled to certain due process protections afforded to private foreign corporations.
The case stemmed from a breach-of-contract dispute between GSS Group, a company in the British Virgin Islands, and the National Port Authority, a company in Liberia. A London arbitrator had found that NPA violated its contract with GSS Group and that GSS Group was entitled to $44 million in damages. GSS Group filed a petition asking the U.S. District Court for the District of Columbia to confirm the arbitration award.
NPA, represented by Robert Wolinsky of Washington's Hogan Lovells, had argued that the court lacked personal jurisdiction over the matter because NPA was protected as a foreign corporation by the due process clause under the Fifth Amendment. GSS Group, represented by Charles Wayne of Washington's DLA Piper, disagreed, saying that because NPA is owned by the Liberian government, it is not entitled to due process protection.
The court agreed with the distinction in due process protection between foreign states and private foreign companies, and noted that NPA is in a no-man's land as a state-owned corporation that claims to operate separately from the Liberian government. Still, U.S. District Judge Paul Friedman wrote that NPA proved it is closer to a private company.
Once NPA is entitled to due process protection, GSS Group would need to prove NPA had a connection to the United States in order bring its petition here; since they did not, Friedman wrote, the petition must be dismissed.
Attorneys on both sides could not immediately be reached for comment Thursday afternoon.