D.C. Circuit Affirms That Foreign State-Owned Corporations Are Entitled to Due Process Protections in United States Courts

On May 25, 2012, the United States Court of Appeals for the D.C. Circuit, ruling in GSS Group Ltd. v. National Port Authority, re-confirmed that foreign corporations owned by a foreign sovereign are entitled to the Fifth Amendment’s jurisdictional due process protections. The Court’s decision rested heavily on its own precedent, TMR Energy Ltd. v. State Prop. Fund of Ukraine, which held that a foreign state-owned corporation is entitled to constitutional due process protections under the Fifth Amendment unless it can be shown that the foreign corporation has a principal-agent relationship with the state within the meaning of the Supreme Court’s holding in First National City Bank v. Banco Para El Comercio Exterior de Cuba (“Bancec”). The concurrence, however, seriously questioned the logical soundness of the Court’s analysis in TMR Energy, suggesting that “in a suitable case it may be valuable for courts to reconsider” the assumptions made in TMR Energy, and to reconcile the evident inconsistencies among earlier Supreme Court and D.C. Circuit precedents dealing with the application of due process in suits against individual foreign defendants and private foreign corporations. While the Court of Appeals’ majority decision holds fast to precedent and breaks very little new ground, statements by the district court and the Court of Appeals’ concurring opinion highlight some logical inconsistencies that have been repeatedly noted by courts and litigants in prior cases dealing with the constitutional rights of foreign state-owned corporations. Such inconsistencies continue to spark debate, and reflect a persisting view that existing precedents may not provide the most logical solutions to jurisdictional issues arising in cases involving foreign corporations entitled to sovereign immunity.