Filed: Aug. 17, 2020
Latest Update: Aug. 17, 2020
Summary: FILED United States Court of Appeals PUBLISH Tenth Circuit UNITED STATES COURT OF APPEALS August 17, 2020 Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _ COMPAÑÍA DE INVERSIONES MERCANTILES, S.A., Plaintiff - Appellee, v. No. 19-1151 GRUPO CEMENTOS DE CHIHUAHUA S.A.B. DE C.V.; GCC LATINOAMÉRICA, S.A. DE C.V., Defendants - Appellants. _ Appeal from the United States District Court for the District of Colorado (D.C. No. 1:15-CV-02120-JLK) _ David M. Cooper, Quinn Emanuel Urquhart & S
Summary: FILED United States Court of Appeals PUBLISH Tenth Circuit UNITED STATES COURT OF APPEALS August 17, 2020 Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _ COMPAÑÍA DE INVERSIONES MERCANTILES, S.A., Plaintiff - Appellee, v. No. 19-1151 GRUPO CEMENTOS DE CHIHUAHUA S.A.B. DE C.V.; GCC LATINOAMÉRICA, S.A. DE C.V., Defendants - Appellants. _ Appeal from the United States District Court for the District of Colorado (D.C. No. 1:15-CV-02120-JLK) _ David M. Cooper, Quinn Emanuel Urquhart & Su..
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FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS August 17, 2020
Christopher M. Wolpert
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
COMPAÑÍA DE INVERSIONES
MERCANTILES, S.A.,
Plaintiff - Appellee,
v. No. 19-1151
GRUPO CEMENTOS DE CHIHUAHUA
S.A.B. DE C.V.; GCC
LATINOAMÉRICA, S.A. DE C.V.,
Defendants - Appellants.
_________________________________
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:15-CV-02120-JLK)
_________________________________
David M. Cooper, Quinn Emanuel Urquhart & Sullivan, LLP, New York, New York
(Juan P. Morillo and Daniel Pulecio-Boek, Quinn Emanuel Urquhart & Sullivan, LLP,
Washington, DC, with him on the briefs), appearing for the Appellants.
Eliot Lauer, Curtis, Mallet-Prevost, Colt & Mosle, LLP, New York, New York (Gabriel
Hertzberg and Sylvi Sareva, Curtis, Mallet-Prevost, Colt & Mosle, LLP, New York, New
York; and Michael A. Rollin, Fox Rothschild LLP, Denver, Colorado, with him on the
brief), appearing for the Appellee.
_________________________________
Before BRISCOE, EBEL, and LUCERO, Circuit Judges.
_________________________________
BRISCOE, Circuit Judge.
_________________________________
This case involves a Bolivian company known as Compañia de Inversiones
Mercantiles S.A. (“CIMSA”) and Mexican companies known as Grupo Cementos de
Chihuahua, S.A.B. de C.V. and GCC Latinoamerica, S.A. de C.V. (collectively
“GCC”). Plaintiff - Appellant CIMSA brought a district court action in 2015
pursuant to the Federal Arbitration Act, 9 U.S.C. § 207, to confirm a foreign arbitral
award issued in Bolivia against Defendant - Appellee GCC. The action has been
prolonged by ongoing litigation abroad and obstacles to effectuating service. The
underlying dispute arises out of an agreement under which CIMSA and GCC
arranged to give each other a right of first refusal if either party decided to sell its
shares in a Bolivian cement company known as Sociedad Boliviana de Cemento, S.A.
(“SOBOCE”). GCC sold its SOBOCE shares to a third party after taking the position
that CIMSA failed to properly exercise its right of first refusal. In 2011, CIMSA
initiated an arbitration proceeding in Bolivia. The arbitration tribunal determined
that GCC violated the contract and the parties’ expectations. The arbitration tribunal
later awarded CIMSA tens of millions of dollars for GCC’s breach.
GCC initiated Bolivian and Mexican court actions challenging the arbitration
tribunal’s decisions. A Bolivian judge, holding a position similar to that of an
American trial judge, rejected GCC’s challenge to the arbitration tribunal’s decision
on the merits. A Bolivian court, acting in a capacity similar to that of an American
intermediate appellate court, reversed and remanded. On remand, the matter was
temporarily assigned to a different trial judge, who granted GCC’s request for relief
before the original trial judge could return from a planned vacation. While these
2
remand proceedings were occurring, however, Bolivia’s highest court reversed the
Bolivian appellate court and affirmed the original trial judge. But as a result of the
simultaneous remand proceedings, Bolivia’s highest court also issued arguably
contradictory orders suggesting the second trial judge’s ruling on the merits remained
in effect. GCC filed a separate Bolivian court action challenging the arbitration
tribunal’s damages award. That case made its way to Bolivia’s highest court as well,
which reversed an intermediate appellate court’s nullification of the award and
remanded for further proceedings. The parties continue to litigate the damages award
in Bolivia.
Invoking the New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (the “New York Convention”), June 10, 1958, 21 U.S.T.
2517, CIMSA filed a confirmation action in the United States District Court for the
District of Colorado. After encountering difficulties with conventional service of
process in Mexico under the Hague Convention on Service Abroad of Judicial and
Extrajudicial Documents (the “Hague Service Convention” or “Convention”), Nov.
15, 1965, 20 U.S.T. 361, CIMSA sought and received permission from the district
court to serve GCC through its American counsel pursuant to Federal Rule of Civil
Procedure (“Rule”) 4(f)(3). The district court then rejected GCC’s challenges to
personal jurisdiction, holding (among other things) that (1) it was appropriate to
aggregate GCC’s contacts with the United States; (2) CIMSA’s injury arose out of
GCC’s contacts; (3) exercising jurisdiction was consistent with fair play and
substantial justice; and (4) alternative service was proper. The district court further
3
rejected GCC’s defenses to CIMSA’s claim under the New York Convention,
concluding that (1) the arbitration tribunal’s ruling on the merits had not been set
aside by a competent Bolivian authority; and (2) the arbitration tribunal’s ruling on
damages was sufficiently “binding” to allow confirmation. These issues are now
before us on appeal.
Although the jurisdictional questions are difficult, we consider this appeal
pursuant to 28 U.S.C. § 1291 and affirm the district court. The district court
appropriately aggregated GCC’s contacts with the United States as a whole under
Rule 4(k)(2). GCC forfeited arguments based on Rule 4(k)(2) and, regardless, we
conclude that those arguments fall short on the merits. The district court properly
determined that CIMSA’s injury arose out of or related to GCC’s nationwide
contacts. Contacts concerning GCC’s underlying breach of contract are pertinent,
and those contacts satisfy the applicable version of the test for “proximate cause.”
The district court correctly decided that exercising personal jurisdiction over GCC
comported with fair play and substantial justice because CIMSA established
minimum contacts and GCC did not make a compelling case to the contrary. Last,
the district court accurately concluded that substitute service on GCC’s United States
counsel did not run afoul of the Hague Service Convention or Rule 4(f)(3).
We also affirm the district court’s confirmation of the arbitration tribunal’s
decisions. We agree with the district court that the best reading of the Bolivian
proceedings is that the arbitration panel’s merits award has not been set aside,
because the Bolivian court orders supporting the second trial judge’s decision
4
favoring GCC lost any legal effect after Bolivia’s highest court affirmed the initial
trial judge’s decision favoring CIMSA. In addition, the arbitration tribunal’s
damages award may be confirmed in the United States under the New York
Convention even if GCC’s Bolivian judicial challenge remains pending. By
necessity, we highlight in today’s opinion some differences between the American
judicial system and the Bolivian judicial system (and, at times, the Mexican judicial
system). We note these differences only to place this case in context, not as a
critique.
I. Background
CIMSA is a Bolivian company. Appellant’s Appendix (“App.”) at 130. GCC
is a set of Mexican companies. Id. The relationship between CIMSA and GCC
began no later than 2005, when the parties met in Miami to discuss a potential joint
venture relating to SOBOCE. Appellee’s Supplemental Appendix (“Supp. App.”) at
6–7. SOBOCE is Bolivia’s largest cement company.
Id. at 6. After the Miami
meeting, GCC made an offer to purchase a substantial interest in SOBOCE for
approximately $59 million.
Id. at 7. That offer was accepted and consummated a
few months later, as GCC and CIMSA simultaneously entered into a shareholder
agreement (the “2005 Shareholder Agreement”).
Id. The 2005 Shareholder
Agreement was governed by Bolivian law. App. at 561. GCC paid for the acquired
SOBOCE shares (and later distributed SOBOCE dividends) through a San Francisco
bank account. Supp. App. at 8. GCC’s General Counsel is located in Colorado.
Id.
at 60.
5
Several years after the execution of the 2005 Shareholder Agreement, a
disagreement arose between CIMSA and GCC involving a right of first refusal. The
2005 Shareholder Agreement enabled each party to transfer its shares in SOBOCE to
a third party after a period of five years, provided that the transferring party gave
notice and afforded the other party an opportunity to purchase the shares on the same
or better terms within 30 days.
Id. at 8. In late 2009, after GCC signaled its
intention to sell its SOBOCE shares at the end of the five-year holding period,
CIMSA and GCC again met in Miami.
Id. at 8–9. In early 2010, the parties met six
more times in Miami, and the discussions included price, sales terms, valuation, and
other features of a possible deal in which CIMSA would purchase GCC’s SOBOCE
shares.
Id. at 9–10. The parties reached agreement on the fundamental terms of the
sale during an April 2010 meeting in Miami, and signed an agreement (the “2010
Shareholder Agreement”) in May 2010 in La Paz, Bolivia.
Id. at 10. The transaction
contemplated by the 2010 Shareholder Agreement did not close, however, because
the Bolivian government expropriated a division of SOBOCE’s business.
Id.
In the wake of the expropriation, CIMSA and GCC began negotiating a new
agreement. In mid-2011, the parties met in Houston, where CIMSA proposed two
alternative payment structures.
Id. at 10–11. In the weeks following the Houston
meeting, the parties continued to discuss CIMSA’s proposals via telephone and
email.
Id. at 11. In July 2011, GCC notified CIMSA that a Peruvian company had
tendered a firm offer to buy GCC’s SOBOCE shares.
Id. CIMSA reiterated its
willingness to purchase the shares, and requested a longer payment schedule than the
6
one proposed by the Peruvian company. Id. GCC indicated that, assuming the
parties could reach an agreement on all relevant terms, GCC would accept one of the
payment terms proposed by CIMSA at the Houston meeting.
Id.
By early August 2011, CIMSA and GCC had nearly finalized the terms of the
new SOBOCE transaction.
Id. GCC instructed CIMSA to hire New York counsel to
draft a final agreement.
Id. CIMSA did so, and GCC hired its own New York
counsel.
Id. GCC sent CIMSA a draft purchase agreement (the “2011 Agreement”)
that was governed by New York law.
Id. Right before the transaction was set to
close, GCC demanded an increase in the number of SOBOCE shares CIMSA would
place in trust, from 4% to 27%, allegedly to ensure CIMSA’s compliance with a
longer payment schedule.
Id. at 11–12. In the months that followed, CIMSA
attempted to exercise its right of first refusal under the terms proposed in Houston
that had been negotiated by the parties.
Id. at 12. GCC took the position that
CIMSA’s attempt was invalid, and during the second week of August 2011, sold its
SOBOCE shares to the Peruvian company.
Id.
The 2005 Shareholder Agreement contained an arbitration clause. The parties
agreed that any “dispute, litigation, discrepancy, issue, or claim” that may arise
“regarding the existence, application, validity, interpretation, compliance or breach,
and termination” of the 2005 Shareholder Agreement “shall be submitted to
mediation and then to international arbitration for a final resolution, pursuant to the
rules and regulations of the Inter-American Commercial Arbitration Commission”
(the “IACAC”).
Id. at 2. The parties further agreed that the arbitration “shall be
7
administered by the national chapter of the [IACAC] in Bolivia[.]” Id. (brackets
added). CIMSA invoked this clause and submitted a notice of arbitration in
November 2011. App. at 169. The arbitration was conducted by a three-person
tribunal in La Paz and subject to Bolivian law.
Id. at 169–70. The parties agreed to
bifurcate the arbitration proceedings into a merits phase and a damages phase.
Id. at
170.
In September 2013, the arbitration tribunal issued a ruling on the merits,
holding that GCC breached the right of first refusal in the 2005 Shareholder
Agreement and acted inappropriately. Id. at 170–71, 352–53. Among other things,
the arbitration tribunal found that GCC in 2011 created a legitimate expectation
CIMSA’s proposed payment schedule would be accepted, yet GCC later turned down
the proposal without extending CIMSA an opportunity to submit a new offer.
Id. at
171, 353–54.
In November 2013, GCC sought leave from a Bolivian court to file a request to
annul the arbitration tribunal’s ruling on the merits. Id. at 180, 675. Once leave was
granted and GCC made the filing, the annulment request was assigned to the Eighth
Judge for the Civil and Commercial Court of the Judicial District of La Paz (the
“Eighth Judge”).
Id. at 181, 675. In August 2015, the Eighth Judge denied GCC’s
annulment request (the “Eighth Judge Decision”).
Id. at 181–82. Unable to directly
appeal the Eighth Judge Decision, GCC initiated an amparo.
Id. at 182–83, 383,
675–76. An amparo is an extraordinary remedy that must be based on an alleged
violation of rights protected by the Bolivian Constitution.
Id. at 182–83, 676.
8
GCC’s amparo was assigned to what is known as a “Guarantee Court,” which in
October 2015 granted GCC’s requested relief, annulled the Eighth Judge Decision,
and remanded the matter to the Eighth Judge for a new decision.
Id. at 183–84, 384,
676–77.
The remand of GCC’s amparo did not immediately end up in front of the
Eighth Judge. Because the Guarantee Court sent the case back during a period when
the Eighth Judge was known to be on vacation, GCC’s amparo was assigned to a
substitute jurist, the Ninth Judge of the Civil and Commercial Court of the Judicial
District of La Paz (the “Ninth Judge”). Id. at 185, 390. Given these unusual
circumstances surrounding the remand—and the fact that the existing case record was
30,000 pages—CIMSA moved to disqualify the Ninth Judge.
Id. at 185–86. Within
seven days of receiving the voluminous case file, the Ninth Judge denied CIMSA’s
disqualification motion and granted a request by GCC to annul and vacate the Eighth
Judge Decision (the “Ninth Judge Decision”).
Id. at 186, 679. CIMSA then filed its
own amparo against the Ninth Judge Decision, which a Guarantee Court granted in
February 2016.
Id. at 189–90, 681–82.
By law, each Guarantee Court decision in an amparo is sent for review to the
highest court in Bolivia, the Plurinational Constitutional Tribunal (the “PCT”). Id. at
184–85, 676. Remand proceedings in the lower court continue while the PCT
conducts its review.
Id. at 676. In March 2016, the PCT rejected GCC’s amparo
against the Eighth Judge Decision, concluding that the Eighth Judge had not violated
GCC’s constitutional rights.
Id. at 191, 387–88. Without providing notice to
9
CIMSA, GCC in July 2016 filed a request for clarification of the March 2016 PCT
order reinstating the Eighth Judge Decision. Id. at 193–94. After that request was
denied, GCC filed a memorandum asking the President of the PCT to address the
issue.
Id. at 194–95. The President obliged, stating in a decree dated November
2016 (but unknown to CIMSA until January 2018) that:
[I]t is appropriate to reconsider the effects of [the Eighth Judge
Decision], in such a way that the acts following the issuance of [the
Guarantee Court resolution granting GCC’s amparo against the Eighth
Judge], subsist; that is, the continued adjudication of the request for
annulment of the award by the judicial authorities, without retroactively
invalidating procedural or adjudicative acts[.]
Id. at 195 (brackets added); see also
id. at 790 (setting forth GCC’s translation of this
portion of the decree).
Armed with the PCT’s March 2016 order, CIMSA withdrew its amparo
against the Ninth Judge Decision in September 2016. Id. at 192. Despite the
withdrawal, the PCT notified the parties in November 2016 of an order that had been
backdated to May 2016.
Id. at 192–93. Among other things, the May 2016 PCT
order stated that CIMSA had not identified a constitutional right which had been
violated by the Ninth Judge.
Id. The May 2016 PCT order indicated that it did not
constitute a ruling on the merits of CIMSA’s amparo against the Ninth Judge
Decision, and added that CIMSA was entitled to file another such amparo.
Id.
Again without providing notice to CIMSA, GCC in November 2016 filed a
request for clarification of the PCT’s backdated May 2016 order.
Id. at 196. The
PCT then issued an order dated January 2017 (again unknown to CIMSA until
10
January 2018) stating that the Ninth Judge Decision annulling the Eighth Judge
Decision “subsists according to the terms established in [herein].” Id. (brackets in
original); see also
id. at 795 (setting forth GCC’s translation of this portion of the
order). The PCT President served as one of the two signatories on the January 2017
order after another PCT judge recused himself.
Id. at 197. The January 2017 order
went into the public record on the same day as the November 2016 decree, which was
also the PCT President’s last day in office.
Id. at 197, 407–08.
All told, the Bolivian proceedings concerning the merits award may be
summarized as follows:
9/13 Arbitration Merits Award
GCC files annulment motion
8/15 Eighth Judge Order Denying Annulment
GCC files amparo
10/15 Guarantee Court Order Reversing Eighth Judge Case is simultaneously remanded
CIMSA appeals to PCT 1/16 Ninth Judge Order Granting Annulment
3/16 PCT Order Reversing Guarantee Court CIMSA files amparo
GCC files memo with President 2/16 Guarantee Court Order Reversing Ninth Judge
11/16 PCT Presidential Decree On Ninth Judge Order CIMSA withdraws amparo
11/16 PCT Order On Alleged Constitutional Violation
GCC files clarification motion with PCT
1/17 PCT Order On Ninth Judge Order
Meanwhile, proceedings relating to the damages phase of the arbitration were
taking place as well. In April 2015, the arbitration tribunal held that CIMSA was
entitled to more than $34 million in damages and more than $2 million in fees and
costs, resulting in an overall award in excess of $36 million. Id. at 174–75. GCC
11
filed a request to annul the damages award in July 2015. Id. at 200. The matter was
assigned to the Twelfth Civil and Commercial Court of the Judicial District of La Paz
(the “Twelfth Judge”), who granted GCC’s request and annulled the damages award
in October 2015.
Id. at 201–02, 689.
In April 2016, CIMSA filed an amparo against the Twelfth Judge’s damages
decision. Id. at 202, 689–90. A Guarantee Court denied CIMSA’s amparo, but the
PCT revoked the denial, found that the Twelfth Judge had violated CIMSA’s
constitutional rights, and remanded for further proceedings.
Id. at 202–03, 690–91.
According to the parties, the Twelfth Judge has not yet issued a new damages
decision on remand. Cf.
id. at 651 (stating that annulment proceedings on the
damages award are “still in process”). Nor has the Twelfth Judge ruled on a motion
submitted by GCC prior to October 2015 asserting, based on the purported
invalidation of the arbitration tribunal’s ruling on the merits, that the Twelfth Judge
lacks jurisdiction over the damages annulment request.
Id. at 1178–79, 1181. Under
Bolivian law, an arbitration award is not enforceable while an action to annul the
award is pending.
Id. at 691.
CIMSA initiated this case in September 2015 by filing a petition in federal
district court to confirm the arbitration award under the New York Convention. App.
at 129–44. Pursuant to the Hague Service Convention, CIMSA delivered a summons
and other materials to the Mexican central authority to serve on GCC. Supp. App. at
55–56. In June 2017, the Mexican central authority notified CIMSA that service had
not been effected because GCC’s offices supposedly could not be located at the
12
headquarters address shown on GCC’s website. Id. at 56–57. In May 2018, CIMSA
sought permission from the district court to serve GCC through GCC’s counsel in the
United States. App. at 145–61. Citing Rule 4(f)(3), the district court authorized this
alternative form of service.
Id. at 1124–26.
Around the time it filed the alternative service motion, CIMSA also filed a
motion to confirm the arbitration award. Id. at 420–69. GCC responded to the
confirmation motion and filed a “cross-motion” to dismiss the petition.
Id. at 481–
552. In that combined pleading, GCC contended it was not subject to personal
jurisdiction because (1) GCC had not purposefully directed activities at American
residents; (2) CIMSA had not adequately alleged the lawsuit arose out of GCC’s
asserted contacts; and (3) the exercise of personal jurisdiction would not be
reasonable.
Id. at 510–20. GCC further contended that the award could not be
confirmed because, inter alia, (1) Bolivian courts had nullified or set aside the
arbitration tribunal’s decision on the merits; and (2) the arbitration tribunal’s decision
on damages was in the process of judicial review and unenforceable under Bolivian
law.
Id. at 527–50. The district court “considered the jurisdictional challenges” and
concluded it could “properly exercise personal jurisdiction over Respondents in this
case.”
Id. at 1127, 1132–44. In a separate order, the district court determined that
the arbitration tribunal’s award was binding for purposes of the New York
Convention, and granted CIMSA’s petition and confirmation motion.
Id. at 1237–70.
13
II. The district court did not err in exercising personal jurisdiction over GCC
It is generally acknowledged that there are “two types of personal jurisdiction:
‘general’ (sometimes called ‘all-purpose’) jurisdiction and ‘specific’ (sometimes
called ‘case-linked’) jurisdiction.” Bristol-Myers Squibb Co. v. Superior Ct. of Cal.,
San Francisco Cty., 137 S. Ct. 1773, 1779–80 (2017) (citation omitted). General
jurisdiction involves “continuous and systematic general business contacts” between
a party and the forum, empowering the forum “to resolve any dispute involving that
party, not just the dispute at issue.” Newsome v. Gallacher,
722 F.3d 1257, 1264
(10th Cir. 2013) (citations and internal quotation marks omitted). No theory of
general jurisdiction has been advanced here.
We thus limit our attention to specific jurisdiction, and we consider the issue
solely as the parties have framed it. The parties agree that due process requires
constitutionally sufficient “minimum contacts” between the defendant and the forum.
Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008)
(quoting Int’l Shoe Co. v. Washington,
326 U.S. 310, 316 (1945)). Using this
framework, we generally ask “(1) whether the defendant purposefully directed its
activities at residents of the forum state; (2) whether the plaintiff’s injury arose from
those purposefully directed activities; and (3) whether exercising jurisdiction would
offend traditional notions of fair play and substantial justice.”
Newsome, 722 F.3d at
1264; see also Monge v. RG Petro-Mach. (Grp.) Co.,
701 F.3d 598, 614 (10th Cir.
2012) (“Whether a defendant has the requisite minimum contacts with the forum state
14
must be decided on the particular facts of each case.”) (citation and internal quotation
marks omitted).1
We review a district court’s ruling on personal jurisdiction de novo. Melea,
Ltd. v. Jawer SA, 511 F.3d 1060, 1065 (10th Cir. 2007). “The plaintiff has the
burden of proving that the court has jurisdiction.”
Id. When personal jurisdiction is
decided on the basis of a complaint and affidavits, both this court and the district
court take as true “all well-pled (that is, plausible, non-conclusory, and non-
speculative) facts alleged in plaintiffs’ complaint.”
Dudnikov, 514 F.3d at 1070
(citations omitted). Any factual disputes in the parties’ affidavits are also resolved
“in plaintiffs’ favor.”
Id.
1
For a claim arising under federal law, we have previously held that “[w]here
Congress has statutorily authorized nationwide service of process, such service
establishes personal jurisdiction, provided that the federal court’s exercise of
jurisdiction comports with Fifth Amendment due process.” Cory v. Aztec Steel Bldg.,
Inc.,
468 F.3d 1226, 1229 (10th Cir. 2006); see also GCIU-Emp’r Ret. Fund v.
Coleridge Fine Arts, 700 F. App’x 865, 867–68 (10th Cir. 2017) (unpublished)
(indicating for a federal claim that if the defendant is not subject to the authority of
any state court of general jurisdiction, then jurisdiction may be exercised if it
comports with Fifth Amendment due process). Because no party in the case at bar
asserts that there is a meaningful distinction between the Fifth and Fourteenth
Amendments, we have no occasion to consider that argument, or the potential application
of cases like Peay v. BellSouth Med. Assistance Plan,
205 F.3d 1206 (10th Cir. 2000). In
any event, Peay teaches that personal jurisdiction should be refused under the Fifth
Amendment in a nationwide-service-of-process case where (1) litigation in the forum is
“so gravely difficult and inconvenient” that the defendant “unfairly is at a severe
disadvantage in comparison to his opponent;” and (2) this burden on the defendant is not
outweighed by “the federal interest in litigating the dispute in the chosen forum[.]”
Id. at
1212–13 (citations omitted). For the reasons discussed below, GCC has not satisfied
these criteria.
15
A. GCC’s objection to the use of nationwide contacts fails
In limited circumstances, Rule 4(k)(2) allows courts to examine a defendant’s
contacts with the United States as a whole, as opposed to contacts with a particular
state. The Rule provides that for “a claim that arises under federal law,” serving a
summons establishes personal jurisdiction if “the defendant is not subject to
jurisdiction in any state’s courts of general jurisdiction,” and “exercising jurisdiction
is consistent with the United States Constitution and laws.” Fed. R. Civ. P.
4(k)(2)(A)–(B). GCC argues that CIMSA cannot invoke Rule 4(k)(2) because the
plaintiff has the burden to establish personal jurisdiction and there is no evidence
(from CIMSA or otherwise) that GCC is not subject to the jurisdiction of any of the
50 states.
GCC forfeited these Rule 4(k)(2) arguments by failing to raise them in district
court. CIMSA alleged in its petition that GCC’s “activities at several jurisdictions
within the United States” were sufficient “for specific personal jurisdiction pursuant
to Fed. R. Civ. P. 4(k)(2), the federal long arm statute, where, as here, Respondents
are not subject to general jurisdiction in any state of the United States.” App. at 133.
GCC responded to CIMSA’s motion to confirm the arbitration award and
simultaneously filed a “cross-motion” to dismiss CIMSA’s petition. See supra § I.
GCC argued that CIMSA had not shouldered its burden to show “purposeful
availment,” an injury “arising out of” relevant contacts, and reasonableness for
purposes of personal jurisdiction. Id. GCC did not assert, however, that its
nationwide contacts could not or should not be aggregated.
16
Nor did GCC oppose aggregating nationwide contacts in subsequent district
court briefs. CIMSA pointed this out in its reply brief in support of the motion to
confirm the award:
Rule 4(k)(2) permits federal courts to aggregate a foreign defendant’s
nationwide contacts in order to exercise jurisdiction where the
defendant’s contacts with any individual state are insufficient. In order
to establish jurisdiction under Rule 4(k)(2), a plaintiff must show that
(1) the claim arises under federal law; (2) the defendant is not subject to
the jurisdiction of the courts of general jurisdiction of any state; and
(3) the court’s exercise of jurisdiction would be consistent with the
Constitution and laws of the United States. Respondents do not dispute
the first two requirements for jurisdiction under Rule 4(k)(2). Rather,
Respondents argue that, under the third element, the Court’s exercise of
jurisdiction would not comport with due process.
App. at 926–27 (citations, internal quotation marks, and indentation omitted). And
CIMSA’s reply brief was not the last word. GCC filed what it styled as a reply in
support of its cross-motion to dismiss. Id. at 1046–1123. Once more, GCC said its
contacts did not satisfy the requirements of purposeful availment, relatedness, and
reasonableness.
Id. at 1074–93. But GCC never argued before the district court that
those contacts could not, or should not, be aggregated under Rule 4(k)(2).
GCC’s arguments on appeal challenging the application of Rule 4(k)(2) thus
come too late. GCC’s decision not to raise those arguments in the district court
constitutes a forfeiture, rather than a waiver, and thus is reviewable for plain error.
See Platt v. Winnebago Indus., Inc., 960 F.3d 1264, 1273 (10th Cir. 2020)
(explaining that a waiver requires intentional relinquishment or abandonment,
whereas a forfeiture arises through mere neglect). Nevertheless, “[i]n order to avoid
a waiver on appeal, a party is required to identify plain error as the standard of
17
review in their opening brief and to provide a defense of that standard’s application.”
Id.; see also McKissick v. Yuen, 618 F.3d 1177, 1189 (10th Cir. 2010) (“A party
cannot count on us to pick out, argue for, and apply a standard of review for it on our
own initiative, without the benefit of the adversarial process, and without any
opportunity for the adversely affected party to be heard on the question.”). This
principle applies here, as GCC did not discuss the plain error factors in its opening
appellate brief. See, e.g., Benham v. Ozark Materials River Rock, LLC,
885 F.3d
1267, 1276–77 (10th Cir. 2018) (converting a forfeiture to a waiver in the absence of
an argument for plain error).
It is true that “[t]his forfeiture rule does not apply when the district court
explicitly considers and resolves an issue of law on the merits. In that circumstance,
the appellant may challenge that ruling on appeal on the ground addressed by the
district court even if he failed to raise the issue in the district court.” Tesone v.
Empire Mkt’g Strategies, 942 F.3d 979, 991–92 (10th Cir. 2019) (citation and
internal quotation marks omitted). In a footnote, the district court in this case cited
authority for the proposition that GCC did not shoulder its burden to “name some
other state in which the suit could proceed” under Rule 4(k)(2). App. at 1133 n.4.
But the district court made that observation only after confirming that GCC “d[id]
not dispute” CIMSA’s contention that GCC was not subject to jurisdiction in any
state.
Id. The district court therefore focused on the arguments GCC did make, i.e.,
“whether the Court’s exercise of personal jurisdiction would comport with due
process.”
Id. GCC does not assert on appeal that the forfeiture rule is inapplicable
18
because the district court ruled on Rule 4(k)(2)’s “no state” requirement. Even if
GCC had made such an argument, the facts in this case are unique—the district court
addressed the “no state” issue only in passing and in dicta. Cf. Tesone, 942 F.3d at
992 (stating that a district court “passes upon” an issue “when it applies the relevant
law to the relevant facts”) (citation and internal quotation marks omitted).
Even assuming arguendo that the issue was properly preserved, we find GCC’s
Rule 4(k)(2) arguments unpersuasive. The First Circuit was the first circuit court to
address how burdens of proof should be allocated under Rule 4(k)(2). That court
held a plaintiff seeking to invoke 4(k)(2) must “make a prima facie case for the
applicability of the rule,” including a certification “based on the information that is
readily available to the plaintiff and his counsel” that “the defendant is not subject to
suit in the courts of general jurisdiction of any state.” United States v. Swiss Am.
Bank, Ltd., 191 F.3d 30, 41 (1st Cir. 1999). The Fourth Circuit has cited Swiss Am.
Bank with approval, albeit without extensive analysis. E.g., Base Metal Trading, Ltd.
v. OJSC “Novokuznetsky Aluminum Factory”,
283 F.3d 208, 215 (4th Cir. 2002).
Every other circuit court to consider the issue has placed the initial burden on the
defendant to identify a state in which the lawsuit could proceed. E.g., Touchcom,
Inc. v. Bereskin & Parr,
574 F.3d 1403, 1413–15 (Fed. Cir. 2009); Oldfield v. Pueblo
De Bahia Lora, S.A.,
558 F.3d 1210, 1218 n.22 (11th Cir. 2009); Holland Am. Line
Inc. v. Wartsila N. Am., Inc.,
485 F.3d 450, 461–62 (9th Cir. 2007); Mwani v. Bin
Laden,
417 F.3d 1, 11 (D.C. Cir. 2005); Adams v. Unione Mediterranea Di Sicurta,
19
364 F.3d 646, 650–51 (5th Cir. 2004); ISI Int’l, Inc. v. Borden Ladner Gervais LLP,
256 F.3d 548, 551–52 (7th Cir. 2001).
The rationale for the majority rule was articulated by the Seventh Circuit in
ISI. That court explained:
Now one might read Rule 4(k)(2) to make matters worse by requiring 51
constitutional decisions: The court must first determine that the United
States has power and then ensure that none of the 50 states does so. . . .
Constitutional analysis for each of the 50 states is eminently avoidable
by allocating burdens sensibly. A defendant who wants to preclude use
of Rule 4(k)(2) has only to name some other state in which the suit
could proceed. Naming a more appropriate state would amount to a
consent to personal jurisdiction there (personal jurisdiction, unlike
federal subject-matter jurisdiction, is waivable). If, however, the
defendant contends that he cannot be sued in the forum state and refuses
to identify any other where suit is possible, then the federal court is
entitled to use Rule 4(k)(2).
256 F.3d at 552. Other appellate courts have agreed with this reasoning, often
expressly choosing the Seventh Circuit’s approach over the First Circuit’s approach.
See, e.g.,
Touchcom, 574 F.3d at 1414–15 (noting the First Circuit’s decision in Swiss
Am. Bank but concluding “the approach articulated by the Seventh Circuit is more in
tune with the purposes behind the enactment of Rule 4(k)(2)”);
Holland, 485 F.3d at
461–62 (acknowledging Swiss Am. Bank but deciding to “join the Fifth, Seventh, and
D.C. Circuits”).
Based on the arguments presented by the parties in this case, we join the
majority. Following the prevailing rule on aggregating contacts under Rule 4(k)(2) is
consistent with this court’s unpublished decision in GCIU. There, we applied the
Rule after observing the defendants had conceded the plaintiff’s claims arose under
20
federal law and “no state court has jurisdiction over them.” 700 F. App’x at 867–68.
We cited Holland for the proposition that “a defendant who wants to preclude the use
of Rule 4(k)(2) has only to name some other state in which the suit could proceed.”
Id. at 868; see also GCIU-Emp’r Ret. Fund v. Coleridge Fine Arts, 808 F. App’x 655,
661–66 (10th Cir. 2020) (unpublished) (holding, after remanding the case for
additional discovery, that personal jurisdiction was lacking). Continuing in GCIU’s
footsteps, we adopt the approach endorsed by the Fifth, Seventh, Ninth, Eleventh,
District of Columbia, and Federal Circuits.
B. GCC’s contacts were sufficient to confer jurisdiction
Aside from resisting the application of Rule 4(k)(2), GCC challenges personal
jurisdiction on other grounds. First, GCC asserts that neither CIMSA’s claim to
enforce the arbitration award nor CIMSA’s underlying claim arises from GCC’s
alleged contacts with the United States. Second, GCC argues that the exercise of
personal jurisdiction would be inconsistent with traditional notions of fair play and
substantial justice. We address each argument in turn.
1. CIMSA’s injury was “proximately caused” by, and thus arose
out of, GCC’s contacts
A plaintiff’s injury must “arise out of or relate to” the defendant’s forum
contacts. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472–73 (1985) (citation
omitted). “The import of the ‘arising out of’ analysis is whether the plaintiff can
establish that the claimed injury resulted from the defendant’s forum-related
activities.”
Newsome, 722 F.3d at 1271. This requirement has been subject to
21
different interpretations. “Some courts have interpreted the phrase ‘arise out of’ as
endorsing a theory of ‘but-for’ causation, while other courts have required proximate
cause to support the exercise of personal jurisdiction.” Dudnikov, 514 F.3d at 1078
(citations omitted). But-for causation means “any event in the causal chain leading to
the plaintiff’s injury is sufficiently related to the claim to support the exercise of
specific jurisdiction.”
Id. “[C]onsiderably more restrictive” is proximate causation,
which turns on “whether any of the defendant’s contacts with the forum are relevant
to the merits of the plaintiff’s claim.”
Id. (citation omitted).
This court on several occasions has declined to choose between but-for and
proximate causation, finding that neither test was outcome determinative given the
facts at hand. E.g.,
Newsome, 722 F.3d at 1270;
Dudnikov, 514 F.3d at 1079.
Nonetheless, “[i]n contract actions, we have consistently applied the more-restrictive
proximate-cause approach,” Emp’rs Mut. Cas. Co. v. Bartile Roofs, Inc.,
618 F.3d
1153, 1161 n.7 (10th Cir. 2010), and the parties here agree that proximate causation
is required. Consequently, in evaluating the “arising out of” requirement, we must
“determine whether a nexus exists” between GCC’s “forum-related contacts” and
CIMSA’s “cause of action.”
Monge, 701 F.3d at 614 (citation omitted); see also
Bristol-Myers
Squibb, 137 S. Ct. at 1781 (stating that “there must be an affiliation
between the forum and the underlying controversy, principally, [an] activity or an
occurrence that takes place in the forum State”) (brackets in original, citation and
22
internal quotation marks omitted).2 The “arising out of” requirement is not satisfied
when a plaintiff “would have suffered the same injury even if none of the
[defendant’s forum] contacts had taken place.” Kuenzle v. HTM Sport-Und
Freizeitgerate AG, 102 F.3d 453, 456–57 (10th Cir. 1996) (brackets in original,
citation and internal quotation marks omitted).
We have, however, rejected a “third approach” which veers away from
“causation-based principles.” Dudnikov, 514 F.3d at 1078. This third approach
“asks whether there is a ‘substantial connection’ or ‘discernible relationship’ between
the contacts and the suit.”
Id. (citation omitted). Put another way, the “substantial
connection” test “merely requires the tie between the defendant’s contacts and the
plaintiff’s claim [to be] close enough to make jurisdiction fair and reasonable.”
Emp’rs
Mut., 618 F.3d at 1160–61 n.6 (brackets in original, citation and internal
quotation marks omitted). Among other things, we have held that “the ‘substantial
connection’ test inappropriately blurs the distinction between specific and general
personal jurisdiction.”
Dudnikov, 514 F.3d at 1078; see also Emp’rs
Mut., 618 F.3d
at 1161 (confirming that “we have rejected the substantial-connection approach
outright”).
Although the parties agree that a “proximate cause” test applies, they dispute
which contacts are relevant to the analysis. GCC contends that because the claim at
2
The Supreme Court explained in Bristol-Myers Squibb that “since our decision
concerns the due process limits on the exercise of specific jurisdiction by a State, we
leave open the question whether the Fifth Amendment imposes the same restrictions on
the exercise of personal jurisdiction by a federal court.” 137 S. Ct. at 1783–84.
23
this stage is merely to confirm a foreign arbitral award, the only contacts that matter
are those relating to the arbitration. To press this point, GCC argues that the
jurisdictional landscape changed with the Supreme Court’s decision in Bristol-Myers
Squibb. But that case merely applied the principle that there must be “a connection
between the forum and the specific claims at issue,” holding that personal jurisdiction
over a corporate defendant was lacking with respect to nonresident products liability
plaintiffs who suffered no harm in, and whose claims were based on conduct outside,
the forum. 137 S. Ct. at 1780–83. The Supreme Court made clear that it resolved the
matter using “settled principles” of personal jurisdiction.
Id. at 1781, 1783.
Based on the facts and arguments presented here, we conclude that contacts
relating to the underlying claim (i.e., the formation and alleged violation of the 2005
Shareholder Agreement) are pertinent. Consistent with the Due Process Clause, a
court may exercise specific personal jurisdiction only if “the litigation results from
alleged injuries” that arise out of or relate to activities by the defendant which were
purposefully directed at the forum. Burger King, 471 U.S. at 472–73 (emphasis
added, citations omitted); accord
Newsome, 722 F.3d at 1269–71. In a case like this
one, this guidance makes more sense—and perhaps only makes sense—if applied
with an eye toward the underlying dispute. Although personal jurisdiction turns on
due process principles, rather than the elements of a given claim, an action to confirm
or enforce an arbitral award does not involve a conventional “injury.”
“Under the New York Convention, a court must ‘confirm the award unless it
finds one of the grounds for refusal or deferral of recognition or enforcement of the
24
award specified in the said Convention.’” CEEG (Shanghai) Solar Sci. & Tech. Co.
v. LUMOS LLC, 829 F.3d 1201, 1206 (10th Cir. 2016) (quoting 9 U.S.C. § 207). The
New York Convention thus enumerates “specific” and exclusive grounds “on which a
court with secondary jurisdiction may refuse enforcement.” Karaha Bodas Co., LLC
v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
364 F.3d 274, 287–88
(5th Cir. 2004). Article V sets forth those seven grounds:
1. Recognition and enforcement of the award may be refused, at
the request of the party against whom it is invoked, only if that party
furnishes to the competent authority where the recognition and
enforcement is sought, proof that:
(a) The parties to the agreement referred to in article II
were, under the law applicable to them, under some incapacity, or
the said agreement is not valid under the law to which the parties
have subjected it or, failing any indication thereon, under the law
of the country where the award was made; or
(b) The party against whom the award is invoked was not
given proper notice of the appointment of the arbitrator or of the
arbitration proceedings or was otherwise unable to present his
case; or
(c) The award deals with a difference not contemplated by
or not falling within the terms of the submission to arbitration, or
it contains decisions on matters beyond the scope of the
submission to arbitration, provided that, if the decisions on
matters submitted to arbitration can be separated from those not
so submitted, that part of the award which contains decisions on
matters submitted to arbitration may be recognized and enforced;
or
(d) The composition of the arbitral authority or the arbitral
procedure was not in accordance with the agreement of the
parties, or, failing such agreement, was not in accordance with
the law of the country where the arbitration took place; or
(e) The award has not yet become binding on the parties,
25
or has been set aside or suspended by a competent authority of
the country in which, or under the law of which, that award was
made.
2. Recognition and enforcement of an arbitral award may also be
refused if the competent authority in the country where recognition and
enforcement is sought finds that:
(a) The subject matter of the difference is not capable of
settlement by arbitration under the law of that country; or
(b) The recognition or enforcement of the award would be
contrary to the public policy of that country.
New York Convention, 21 U.S.T. 2157, art. V(1)–(2).
A confirmation action under the New York Convention “is a summary
proceeding in nature, which is not intended to involve complex factual
determinations, other than a determination of the limited statutory conditions for
confirmation or grounds for refusal to confirm.” Zeiler v. Deitsch, 500 F.3d 157, 169
(2d Cir. 2007); accord Argentine Republic v. Nat’l Grid PLC,
637 F.3d 365, 369
(D.C. Cir. 2011). This more limited focus means that “[t]he party opposing
enforcement of an arbitral award has the burden to prove that one of the seven
defenses under the New York Convention applies.”
Zeiler, 500 F.3d at 164; see also
CEEG, 829 F.3d at 1206 (“As the party opposing enforcement of the arbitral award,
LUMOS bears the burden of proving that one of the defenses applies.”). These
substantive and procedural features of an action to confirm an arbitration award
support the conclusion that the proper jurisdictional inquiry is whether the
beneficiary of an award can show he or she sustained an injury caused by the
defendant’s forum activities in connection with the claim that led to the arbitration,
26
as opposed to an injury caused by the defendant’s forum activities in connection with
the arbitration proceeding itself. We therefore agree with CIMSA’s suggested
approach to the due process analysis, which is not limited to GCC’s conduct at the
arbitration.
As it is a close question whether CIMSA’s underlying claim arose out of
GCC’s nationwide contacts, it is important that we apply the operative legal standard
with precision. The Supreme Court “has not yet explained the scope” of the “arising
out of” requirement. O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 318 (3d Cir.
2007); see also SPV Osus Ltd. v. UBS AG,
882 F.3d 333, 344 (2d Cir. 2018) (“The
Supreme Court has yet to address exactly how a defendant’s activities must be tied to
the forum for a court to properly exercise specific personal jurisdiction over a
defendant.”). In Dudnikov, we cited O’Connor when articulating the type of
proximate causation required for purposes of personal jurisdiction.
Dudnikov, 514
F.3d at 1078. O’Connor clarified that proximate causation in this context is not
necessarily coterminous with proximate causation in the tort context:
With each purposeful contact by an out-of-state resident, the forum
state’s laws will extend certain benefits and impose certain
obligations. . . . The relatedness requirement’s function is to maintain
balance in this reciprocal exchange. In order to do so, it must keep the
jurisdictional exposure that results from a contact tailored to that
contact’s accompanying substantive obligations. The causal connection
can be somewhat looser than the tort concept of proximate causation,
but it must nonetheless be intimate enough to keep the quid pro quo
proportional and personal jurisdiction reasonably foreseeable.
496 F.3d at 323 (citations omitted). Other cases similarly suggest that tort-level
proximate causation may not always be required. See SPV
Osus, 882 F.3d at 344
27
(indicating that proximate cause is required when a defendant “had only limited
contacts,” but may not be required where the defendant’s contacts “are more
substantial”) (citation omitted); Nowak v. Tak How Invs., Ltd., 94 F.3d 708, 716 (1st
Cir. 1996) (“[W]e intend to emphasize the importance of proximate causation, but to
allow a slight loosening of that standard when circumstances dictate. We think such
flexibility is necessary in the jurisdictional inquiry; relatedness cannot merely be
reduced to one tort concept for all circumstances.”).
We agree that the test for proximate causation for purposes of personal
jurisdiction may be, in appropriate circumstances, somewhat looser than the tort
concept of proximate causation. CIMSA has satisfied that test in this case. GCC met
with CIMSA in Miami in 2005 to discuss a potential purchase of shares of SOBOCE.
See supra § I. After the Miami meeting, GCC and CIMSA consummated the 2005
Shareholder Agreement with a right of first refusal. Id. In 2009 and 2010, the parties
met multiple times in Miami to discuss how CIMSA would exercise its right of first
refusal once GCC indicated it intended to sell its SOBOCE shares.
Id. The parties
then signed the 2010 Shareholder Agreement in Bolivia, but the actions of the
Bolivian government prevented the transaction from closing.
Id. CIMSA proposed
new terms in Houston in 2011, which GCC subsequently appeared to accept.
Id.
Using New York counsel and contemplating the application of New York law, the
parties began drafting the 2011 Agreement.
Id. At the eleventh hour, GCC took the
position that there was no agreement and CIMSA could not exercise its right of first
28
refusal, a position that was later rejected by arbitrators in Bolivia who awarded
CIMSA more than $36 million. Id.
GCC’s American contacts bear at least some causal relationship with CIMSA’s
injury, even if CIMSA’s loss was not proximately caused in a tort sense by GCC’s
activities in the United States. CIMSA’s injury became manifest when GCC declined
to honor the right of first refusal. Although GCC technically rejected CIMSA’s offer
after the parties met in Houston in 2011 (which came after the parties’ meetings in
Miami in 2005, 2009, and 2010), those prior meetings contributed to CIMSA’s
understanding that the parties had agreed on terms for CIMSA to exercise the right of
first refusal and purchase GCC’s SOBOCE shares.
Id. Had GCC allegedly not led
CIMSA to this belief, GCC’s excuse for not honoring the right of first refusal in the
2005 Shareholder Agreement might have carried more weight, and at a minimum the
timing and circumstances of the breach could have been different. These contacts in
2005, 2009, 2010, and 2011 are all “relevant to the merits of the plaintiff’s claim,”
Dudnikov, 514 F.3d at 1078, thereby satisfying the “arising out of” requirement.
Our holding that CIMSA’s harm arises out of GCC’s American contacts
should not be understood as unduly diluting the proximate causation standard or
adopting a “substantial connection” test. As noted, under the but-for test, a plaintiff
must show that “any event in the causal chain” leading to injury is “sufficiently
related to the claim.” Dudnikov, 514 F.3d at 1078 (citation omitted). Under the
“substantial connection” test, the plaintiff’s only obligation is to show some
reasonable tie “between the defendant’s contacts and the plaintiff’s claim.” Emp’rs
29
Mut., 618 F.3d at 1160–61 n.6 (citation and internal quotation marks omitted).
GCC’s contacts not only constitute events in the causal chain leading to CIMSA’s
financial loss, but also form part of the narrative determining when and how GCC’s
breach occurred. And because GCC’s contacts have causative features, relying on
them should not and cannot be interpreted as reviving any “substantial connection”
standard.
Likewise, finding some form of proximate causation is not inconsistent with
our prior decisions. Previous contract cases that have addressed the “arising out of”
element do not necessarily speak to the specific facts now before the court, but
several of those earlier decisions deem that element satisfied. See, e.g., TH Agric. &
Nutrition, LLC v. ACE European Grp. Ltd., 488 F.3d 1282, 1291–92 (10th Cir. 2007)
(finding the “arising out of” requirement satisfied where the defendants’ contacts
included a denial of insurance coverage under one or more contracts classifying the
forum as “covered territory,” with at least one allegedly covered claim filed in the
forum); Pro Axess, Inc. v. Orlux Distribution, Inc.,
428 F.3d 1270, 1278–79 (10th
Cir. 2005) (finding the requirement satisfied where the defendant knowingly solicited
the plaintiff in the forum, developed and supposedly broke a business agreement with
the plaintiff in the forum, and communicated with the plaintiff in the forum); Benton
v. Cameco Corp.,
375 F.3d 1070, 1076–78 (10th Cir. 2004) (finding the requirement
satisfied where the defendant knowingly entered into a contract with a forum resident
calling for at least partial performance in the forum, sent employees to the forum to
conduct due diligence, and sent correspondence to the forum); OMI Holdings, Inc. v.
30
Royal Ins. Co. of Canada, 149 F.3d 1086, 1095 (10th Cir. 1998) (finding the
requirement satisfied where the defendant issued, but allegedly failed to honor,
insurance policies requiring a defense from suit in the forum). We conclude that
GCC’s contacts in connection with the claim underlying the arbitration satisfy the
test for “proximate cause” for purposes of personal jurisdiction.
2. Relying on GCC’s contacts was consistent with fair play and
substantial justice
The next issue is whether the district court’s exercise of personal jurisdiction
was reasonable. “Even when a defendant has purposefully established minimum
contacts with a forum state, ‘minimum requirements inherent in the concept of fair
play and substantial justice may defeat the reasonableness of jurisdiction.’” TH, 488
F.3d at 1292 (quoting Burger
King, 471 U.S. at 477–78). We consider “(1) the
burden on the defendant, (2) the forum state’s interest in resolving the dispute, (3) the
plaintiff’s interest in receiving convenient and effective relief, (4) the interstate
judicial system’s interest in obtaining the most efficient resolution of controversies,
and (5) the shared interest of the several states in furthering fundamental substantive
social policies.”
OMI, 149 F.3d at 1095. A defendant must present a “compelling”
case that factors like these render jurisdiction unreasonable. Burger
King, 471 U.S.
at 477. The reasonableness inquiry “evokes a sliding scale: the weaker the plaintiff’s
showing on [minimum contacts], the less a defendant need show in terms of
unreasonableness to defeat jurisdiction.”
TH, 488 F.3d at 1292 (brackets in original,
citation and internal quotation marks omitted). Still, instances where the exercise of
31
personal jurisdiction offends fair play and substantial justice are “rare.” Rusakiewicz
v. Lowe, 556 F.3d 1095, 1102 (10th Cir. 2009); accord
Newsome, 722 F.3d at 1271.
GCC’s case for unreasonableness has some traction, but is less than
compelling. Even taking into account a sliding scale, CIMSA’s demonstration of
minimum contacts is not so feeble as to provide a definitive advantage to GCC.
CIMSA may only narrowly satisfy the “arising out of” requirement, but there is no
bona fide challenge in GCC’s opening appellate brief to CIMSA’s showing of
“purposeful availment.” GCC asserts in its appellate reply brief that it did not
surrender the debate over purposeful availment, but GCC’s point heading in its
opening brief only referred to the “arising out of” requirement, with any “purposeful
availment” arguments buried at the end of that section (Aplt. Br. at 29–32). That is
not enough to preserve the issue. See Bronson v. Swensen, 500 F.3d 1099, 1104
(10th Cir. 2007) (“[W]e routinely have declined to consider arguments that are not
raised, or are inadequately presented, in an appellant’s opening brief.”); Adams-
Arapahoe Joint Sch. Dist. No. 28-J v. Cont’l Ins. Co.,
891 F.2d 772, 776 (10th Cir.
1989) (“An issue not included in either the docketing statement or the statement of
issues in the party’s initial brief is waived on appeal.”). Furthermore, with only one
possible exception, each of the five reasonableness factors at best only marginally
supports GCC.
The first reasonableness factor recognizes that “[t]he unique burdens placed
upon one who must defend oneself in a foreign legal system should have significant
weight in assessing the reasonableness of stretching the long arm of personal
32
jurisdiction over national borders.” Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480
U.S. 102, 114 (1987); see also
OMI, 149 F.3d at 1096 (urging “great care and
reserve” before exercising personal jurisdiction over a defendant from another
country) (citation omitted). GCC’s onus associated with litigating an arbitration
confirmation action in the United States is real but not crushing. GCC previously
traveled to the United States for meetings, has its General Counsel located here, and
does hundreds of millions of dollars of business here. See supra § I; Supp. App. at
179–81. “[M]odern transportation and communications have made it much less
burdensome for a party sued to defend himself in a State where he engaged in
economic activity.” Burger
King, 471 U.S. at 474 (citation omitted). The
progression of this case has shown that GCC has the wherewithal to defend itself in
an American forum.
As to the second reasonableness factor, “States have an important interest in
providing a forum in which their residents can seek redress for injuries caused by
out-of-state actors.” OMI, 149 F.3d at 1096; see also
id. (explaining that a state’s
interest “is also implicated where resolution of the dispute requires a general
application of the forum state’s law”). CIMSA is not a United States resident, so
America’s “interests in the dispute” are “considerably diminished.”
Asahi, 480 U.S.
at 114. Similarly, the financial harm which prompted CIMSA’s arbitration
confirmation action involves a Bolivian plaintiff, a Mexican defendant (though with
ties to the United States), and a contract governed by Bolivian law. See supra § I.
Nevertheless, the Supreme Court has declared that the “emphatic federal policy in
33
favor of arbitral dispute resolution” applies “with special force in the field of
international commerce.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 631 (1985); see also Coors Brewing Co. v. Molson Breweries,
51 F.3d
1511, 1514 (10th Cir. 1995) (commenting that the “federal policy favoring arbitration
for dispute resolution” is “particularly strong in the context of international
transactions”) (citations omitted). Given the New York Convention and its
implementation in the United States through the Federal Arbitration Act, America has
at least some interest in providing a forum.
The third reasonableness factor “evaluates whether the plaintiff may receive
convenient and effective relief in another forum.” TH, 488 F.3d at 1294. This factor
“may weigh heavily in cases where a Plaintiff’s chances of recovery will be greatly
diminished by forcing him to litigate in another forum because of that forum’s laws
or because the burden may be so overwhelming as to practically foreclose pursuit of
the lawsuit.”
Benton, 375 F.3d at 1079 (citation omitted). GCC argues that Mexico
can confirm any arbitration award, and it appears Mexico is indeed a signatory to the
New York Convention. See New York Arbitration Convention (“NYAC”) website,
http://www.newyorkconvention.org/countries (last visited July 17, 2020) (indicating
that Mexico signed in 1971). We also recognize that in the context of motions
seeking dismissal based on the doctrine of forum non conveniens, courts frequently
hold (or affirm, under an abuse of discretion standard) that Mexico is an available
and adequate forum. E.g., In re Ford Motor Co.,
591 F.3d 406, 412–13 (5th Cir.
2009); Loya v. Starwood Hotels & Resorts Worldwide, Inc.,
583 F.3d 656, 664 (9th
34
Cir. 2009). The Fifth Circuit, for instance, has held not only that Mexico is adequate
in certain circumstances, but also that there is “a nearly airtight presumption” that
Mexico is available. Saqui v. Pride Cent. Am., LLC, 595 F.3d 206, 211–13 (5th Cir.
2010).
Yet even if we assume for purposes of argument that Mexico generally is an
available and adequate forum, the record shows CIMSA has encountered specific
roadblocks in this case. The district court found that GCC obtained “an ex parte
order from a Mexican court expressly enjoin[ing] CIMSA from commencing any
proceedings to confirm the award in Mexico.” App. at 1142 (brackets and emphasis
in original, citation and internal quotation marks omitted). The district court
additionally detected an inability or unwillingness on the part of the Mexican central
authority to timely serve GCC with process at the publicized address of GCC’s
corporate headquarters. Id. at 1143 n.6. Relief (including an appeal of the ex parte
order) may be theoretically available in Mexico, but that does not negate the actual,
practical difficulties CIMSA has faced. We make no broad declarations about the
competence or good faith of any foreign court, in Mexico or elsewhere. Cf.
Saqui,
595 F.3d at 212–13 (concluding that the record was insufficient to establish
“corruption” and “long delays” in the Mexican court system). Instead, we merely
conclude that the third reasonableness factor does not favor GCC based on evidence
particular to this dispute.3
3
GCC hints that Bolivia, too, could confirm any arbitration award. Because
CIMSA has established minimum contacts, however, it is GCC’s responsibility to
35
The fourth reasonableness factor “asks whether the forum state is the most
efficient place to litigate the dispute.” TH, 488 F.3d at 1296 (citation and internal
quotation marks omitted). “Key to this inquiry are the location of witnesses, where
the wrong underlying the lawsuit occurred, what forum’s substantive law governs the
case, and whether jurisdiction is necessary to prevent piecemeal litigation.”
OMI,
149 F.3d at 1097 (citations omitted). Neither GCC nor CIMSA contends that the
location of witnesses points toward any specific forum. But the underlying
controversy is governed by Bolivian law, and it is by no means clear that GCC’s
breach of the right of first refusal occurred in the United States. See supra § I.
Moreover, a confirmation proceeding in Mexico would be somewhat more efficient
than a confirmation proceeding in the United States. Judicial proceedings concerning
the legal validity of the arbitral award are pending in Mexico, so a confirmation
action in that country could consolidate at least parts of the litigation. All of this
means that the fourth factor is the one most aligned with GCC’s position.
The fifth reasonableness factor focuses on “the procedural and substantive
policies of other nations whose interests are affected by the assertion of jurisdiction.”
Asahi, 480 U.S. at 115 (emphasis omitted). “Important to this inquiry is the extent to
make a compelling case for “unreasonableness.” Burger
King, 471 U.S. at 477.
Although it appears that Bolivia signed the New York Convention, see NYAC
website, http://www.newyorkconvention.org/countries (last visited July 17, 2020)
(indicating that Bolivia signed in 1995), GCC has not established that a Bolivian
confirmation proceeding would be convenient and effective. In fact, the evidence
provided by CIMSA describing Bolivian court developments in this matter suggests
the opposite. Hence, on this record, we lack a sufficient basis to construe the third
factor in GCC’s favor.
36
which jurisdiction in the forum state interferes with the foreign nation’s sovereignty.”
OMI, 149 F.3d at 1098. “Relevant considerations include whether one of the parties
is a citizen of a foreign nation, whether the foreign nation’s law governs the dispute,
and whether the foreign nation’s citizen chose to conduct business with a forum
resident.”
TH, 488 F.3d at 1297 (citation and internal quotation marks omitted).
Here, no party is a citizen of the United States, Bolivian law governs the underlying
dispute, and American confirmation might initiate enforcement of an arbitration
award that is later invalidated by Bolivian courts. See supra § I. These facts point in
GCC’s direction. Yet the possibility of foreign confirmation of an award that is
unenforceable in the home country was contemplated by all signatories to the New
York Convention, including Bolivia, thereby reducing the threat of sovereign
intrusion. See infra § III. And although CIMSA chose to work with a pair of
Mexican entities, GCC does a substantial amount of business in the United States
(even if that business is largely unconnected to the dispute giving rise to the
arbitration), and the parties conducted multiple meetings in America. See supra § I.
It follows that while GCC’s showing on the fifth reasonableness factor is more than
colorable, there are countervailing considerations as well.
In sum, GCC’s “unreasonableness” arguments are far from frivolous, but they
are not so compelling as to overcome CIMSA’s demonstration of minimum contacts.
See Emp’rs Mut., 618 F.3d at 1164 (“Although certain traditional notions of fair play
and substantial justice favored [the defendant], it failed to establish a ‘compelling
case’ that personal jurisdiction would be unreasonable.”) (brackets added); see also
37
Newsome, 722 F.3d at 1274 (“A handful of considerations favor defendants. But they
have not carried their overall burden of convincing us that [forum] jurisdiction would
offend fair play and substantial justice.”) (brackets added). We conclude that the
district court’s exercise of personal jurisdiction over GCC was consistent with due
process.
C. CIMSA properly served GCC with process
GCC’s final jurisdictional objections relate to service of process. “Before a
federal court may exercise personal jurisdiction over a defendant, the procedural
requirement of service of summons must be satisfied.” Omni Capital Int’l, Ltd. v.
Rudolf Wolff & Co., 484 U.S. 97, 104 (1987). Service of process notifies a defendant
of the commencement of an action against him and “marks the court’s assertion of
jurisdiction over the lawsuit.” Okla. Radio Assocs. v. FDIC,
969 F.2d 940, 943 (10th
Cir. 1992). Stated differently, “service of summons is the procedure by which a
court having venue and jurisdiction of the subject matter of the suit asserts
jurisdiction over the person of the party served.”
Omni, 484 U.S. at 104 (citation and
brackets omitted); see also BNSF Ry. Co. v. Tyrrell,
137 S. Ct. 1549, 1556 (2017)
(“[A]bsent consent, a basis for service of a summons on the defendant is prerequisite
to the exercise of personal jurisdiction.”) (brackets added).
Evaluating GCC’s challenges requires us to examine the Hague Service
Convention. The purpose of that agreement is to “simplify, standardize, and
generally improve the process of serving documents abroad.” Water Splash, Inc. v.
Menon, 137 S. Ct. 1504, 1507 (2017). The “primary invention” of the Convention
38
“is that it requires each state to establish a central authority to receive requests for
service of other documents from other countries.” Volkswagenwerk
Aktiengesellschaft v. Schlunk, 486 U.S. 694, 698–99 (1988) (citing Article 2).
“When a central authority receives an appropriate request, it must serve the
documents or arrange for their service, and then provide a certificate of service.”
Water
Splash, 137 S. Ct. at 1508 (citing Articles 5–6). “A state also may consent to
methods of service within its boundaries other than a request to its central authority.”
Schlunk, 486 U.S. at 699 (citing Articles 8–11 and 19). For example, Article 10 says
that “[p]rovided the State of destination does not object,” the Convention “shall not
interfere” with “the freedom to send judicial documents, by postal channels, directly
to persons abroad,” or with the freedom of certain individuals “to effect service of
judicial documents directly” through “judicial officers, officials or other competent
persons in the State of destination.” 20 U.S.T. 361, art. 10(a)–(c). “[C]ompliance
with the Convention is mandatory in all cases to which it applies[.]”
Schlunk, 486
U.S. at 705 (brackets added).
Both Mexico and the United States are signatories to the Hague Service
Convention. See Hague Conference on Private International Law (“HCCH”) website,
https://www.hcch.net/en/instruments/conventions/status-table/?cid=17 (last visited
July 17, 2020) (indicating that the treaty entered into force for Mexico in 2000 and
the United States in 1969). Mexico has lodged certain objections to alternative forms
of service. Continuing with the Article 10 example, Mexico declared in 1999 that
“[i]n relation to Article 10, the United Mexican States are opposed to the direct
39
service of documents through diplomatic or consular agents to persons in Mexican
territory” according to the procedures described in sub-paragraphs (a), (b), and (c),
“unless the Judicial Authority exceptionally grants the simplification different from
the national regulations and provided that such a procedure does not contravene
public law or violate individual guarantees.” HCCH website,
https://www.hcch.net/en/instruments/conventions/status-
table/notifications/?csid=412&disp=resdn (last visited July 17, 2020).4 In 2011,
Mexico stated that “[i]n accordance with Article 21, second paragraph, subparagraph
a), Mexico declares that it is opposed to the use in its territory of the methods of
transmission provided for in Article 10.” Id.
Evaluating GCC’s challenges also requires us to examine Rule 4. Rule 4(h)
states in part that absent a waiver or federal law to the contrary, a “foreign
corporation” must be served “at a place not within any judicial district of the United
States, in any manner prescribed by Rule 4(f) for serving an individual, except
personal delivery under (f)(2)(C)(i).” Fed. R. Civ. P. 4(h)(2). Rule 4(f), in turn,
states as follows:
4
In carrying treaties into effect, the “public acts and proclamations of
[foreign] governments, and those of their publicly recognized agents,” are “historical
and notorious facts, of which the court can take regular judicial notice.” Gross v.
German Found. Indus. Initiative, 549 F.3d 605, 612 (3d Cir. 2008) (brackets in
original, quoting United States v. Reynes, 50 U.S. (9 How.) 127, 147–48 (1850)).
Because the statements of Mexico’s position appearing on the Hague Service
Convention website are “not subject to reasonable factual dispute” and “capable of
determination using sources whose accuracy cannot reasonably be questioned,” New
Mexico ex rel. Richardson v. Bureau of Land Mgmt.,
565 F.3d 683, 702 n.22 (10th
Cir. 2009), they are subject to judicial notice.
40
(f) SERVING AN INDIVIDUAL IN A FOREIGN COUNTRY. Unless
federal law provides otherwise, an individual—other than a minor, an
incompetent person, or a person whose waiver has been filed—may be
served at a place not within any judicial district of the United States:
(1) by any internationally agreed means of service that is
reasonably calculated to give notice, such as those authorized by the
Hague Convention on the Service Abroad of Judicial and
Extrajudicial Documents;
(2) if there is no internationally agreed means, or if an
international agreement allows but does not specify other means, by
a method that is reasonably calculated to give notice:
(A) as prescribed by the foreign country’s law for service
in that country in an action in its courts of general jurisdiction;
(B) as the foreign authority directs in response to a letter
rogatory or letter of request; or
(C) unless prohibited by the foreign country’s law, by:
(i) delivering a copy of the summons and of the
complaint to the individual personally; or
(ii) using any form of mail that the clerk addresses and
sends to the individual and that requires a signed receipt; or
(3) by other means not prohibited by international agreement,
as the court orders.
Fed. R. Civ. P. 4(f)(1)–(3).
GCC contends that in light of Mexico’s objections, the Hague Service
Convention does not authorize service methods beyond the use of that country’s
central authority. But the relevant inquiry under Rule 4(f)(3) is not whether the
agreement affirmatively endorses service outside the central authority. Cf. Fed. R.
Civ. P. 4(f)(1) (contemplating “any internationally agreed means” of service under
41
the Hague Service Convention). It is whether the alternative service method in
question is “prohibited” by the agreement. Fed. R. Civ. P. 4(f)(3). The district court
approved service on GCC’s American counsel because the Mexican central authority
did not or would not serve GCC, despite a well-known headquarters address. See
supra § I; App. at 1143 n.6. Several tribunals have held—Article 10 objections
notwithstanding—that the Convention does not contain a specific prohibition on this
form of service. See, e.g., SEC v. de Nicolas Gutierrez, No. 17cv2086-JAH (JLB),
2020 WL 1307143, at *3 (S.D. Cal. Mar. 19, 2020) (holding that service on
American counsel is permissible “even taking into account Mexico’s objection to
certain articles of the Hague Convention,” including Article 10); FTC v. Repair All
PC, LLC, No. 1:17 CV 869,
2017 WL 2362946, at *3–4 (N.D. Ohio May 31, 2017)
(remarking that “[t]here are numerous cases where courts have permitted service
through U.S. counsel despite the foreign signatory’s objection to Article 10 of the
Hague Convention,” and upholding such service even though “India has objected to
Article 10”); Carrico v. Samsung Elecs. Co., Ltd., No. 15-cv-02087-DMR,
2016 WL
2654392, at *4 (N.D. Cal. May 10, 2016) (holding that “[n]othing in the Hague
Convention bars Plaintiffs’ requested service on Park through her attorney,” despite
the Republic of Korea’s objections to various articles); In re Cathode Ray Tube
(CRT) Antitrust Litig.,
27 F. Supp. 3d 1002, 1010 (N.D. Cal. 2014) (holding, despite
China’s objection to Article 10, that the Convention “does not prohibit” service on
United States counsel, “a common method of service under Rule 4(f)(3)”); RSM
Prod. Corp. v. Fridman, No. 06 Civ. 11512(DLC),
2007 WL 2295907, at *4
42
(S.D.N.Y. Aug. 10, 2007) (determining that the Convention was inapplicable, but
even so, “the Russian Federation’s objections to Articles 8 and 10 do not prohibit”
service through an American attorney). In short, “numerous courts have authorized
alternative service under Rule 4(f)(3),” including “[s]ervice upon a foreign
defendant’s United States-based counsel,” in cases involving countries that “have
objected to the alternative forms of service permitted under Article 10 of the Hague
Convention.” Richmond Techs., Inc. v. Aumtech Bus. Sols., No. 11-CV-02460-LHK,
2011 WL 2607158, at *11–13 (N.D. Cal. July 1, 2011).5 We therefore decline to
embrace GCC’s complaint based on the Convention.
GCC additionally asserts that service on United States counsel is foreclosed by
the text of Rule 4(f), which envisions service “at a place not within any judicial
district of the United States[.]” Here too, however, courts have held that the “proper
construction” of Rule 4(f)(3) vis-à-vis a foreign defendant includes service via
“delivery to the defendant’s attorney.” Rio Props., Inc. v. Rio Int’l Interlink, 284
F.3d 1007, 1016 (9th Cir. 2002); see also Marks Law Offices, LLC v. Mireskandari,
704 F. App’x 171, 177 (3d Cir. 2017) (unpublished) (citing Rio Props. for the same
point); Freedom Watch, Inc. v. Org. of the Petroleum Exporting Countries (OPEC),
5
The parties have not briefed whether an objection to Article 10 of the Hague
Service Convention prohibits service by email. We express no view on that issue.
Nor have the parties briefed whether service on GCC’s American counsel was
“reasonably calculated, under all of the circumstances, to apprise interested parties of
the pendency of the action and afford them an opportunity to present their
objections.” Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950).
We likewise save that topic for another day.
43
766 F.3d 74, 83 (D.C. Cir. 2014) (“A number of courts thus have sanctioned service
on United States counsel as an alternative means of service under Rule 4(f)(3)
without requiring any specific authorization by the defendant for the recipient to
accept service on its behalf.”); Nuance Commc’ns, Inc. v. Abbyy Software House,
626
F.3d 1222, 1239–40 (Fed. Cir. 2010) (indicating that service may be made under
Rule 4(f)(3) “on Defendants’ domestic subsidiaries or domestic counsel”). Among
the theories supporting this view is that “court orders generally crafted under Rule
4(f)(3) require transmission of service papers to a foreign defendant via a domestic
conduit like a law firm or agent—ultimately, the foreign individual is served and
thereby provided notice outside a United States judicial district, in accordance with
Rule 4’s plain language.” Cathode Ray
Tube, 27 F. Supp. 3d at 1010; see also
Bazarian Int’l Fin. Assocs., LLC v. Desarrollos Aerohotelco, C.A.,
168 F. Supp. 3d 1,
14 (D.D.C. 2016) (“This Court disagrees with the defendants’ cramped interpretation
of Rule 4(f) and instead holds that permitting service of a foreign individual or
corporation through retained United States counsel does not run afoul of the rule’s
application to individuals and corporations located in foreign countries, where
service will be completed.”). We thus decline to adopt GCC’s complaint based on
Rule 4(f)(3) as well.
III. The district court did not err in confirming the arbitration tribunal’s
decisions
As described supra in § II.B.1, a district court must confirm a foreign
arbitration award under the New York Convention unless the party opposing
44
confirmation makes a specified showing. The New York Convention states in Article
V that “[r]ecognition and enforcement of the award may be refused, at the request of
the party against whom it is invoked, only if that party furnishes to the competent
authority where the recognition and enforcement is sought, proof” of an enumerated
defense. 21 U.S.T. 2157, art. V(1). Courts construe Article V defenses “narrowly,”
to “encourage recognition and enforcement of commercial arbitration agreements in
international contracts.” OJSC Ukrnafta v. Carpatsky Petroleum Corp., 957 F.3d
487, 497 (5th Cir. 2020) (citations and internal quotation marks omitted); see also
Ministry of Def. & Support for the Armed Forces of the Islamic Republic of Iran v.
Cubic Def. Sys., Inc.,
665 F.3d 1091, 1096 (9th Cir. 2011) (“These defenses are
construed narrowly, and the party opposing recognition or enforcement bears the
burden of establishing that a defense applies.”). One such defense is that “[t]he
award has not yet become binding on the parties, or has been set aside or suspended
by a competent authority of the country in which, or under the law of which, that
award was made.” New York Convention, 21 U.S.T. 2157, art. V(1)(e).
Relying on this portion of Article V, GCC argues that the district court should
not have confirmed CIMSA’s arbitration award for two reasons. First, GCC contends
that the award on the merits has been set aside or suspended by a competent Bolivian
authority. Second, GCC maintains that the damages award is not binding because
GCC is in the process of challenging it in a Bolivian court. “We review a district
court’s legal interpretations of the New York Convention as well as its contract
interpretation de novo; findings of fact are reviewed for clear error.” VRG Linhas
45
Aeras S.A. v. MatlinPatterson Global Opportunities Partners II L.P., 717 F.3d 322,
325 (2d Cir. 2013). If an interpretation of Bolivian law is required, “the court’s
determination of an issue of foreign law is to be treated as a ruling on a question of
‘law,’ not ‘fact,’ so that appellate review will not be narrowly confined to the ‘clearly
erroneous’ standard of Rule 52(a).” Advisory committee’s note to 1966 adoption of
Fed. R. Civ. P. 44.1; see also Animal Sci. Prods., Inc. v. Hebei Welcome Pharm. Co.,
138 S. Ct. 1865, 1873 (2018) (reasoning that under Rule 44.1 “a federal court should
carefully consider a foreign state’s views about the meaning of its own laws,” but
“the appropriate weight in each case will depend upon the circumstances”).
Whether the arbitration tribunal’s award on the merits has been set aside or
suspended is a knotty issue. Not surprisingly, the parties cite almost no American
case law to support their positions. That is because the validity of the merits award
turns on whether various procedural maneuvers in, and substantive rulings of,
Bolivian courts were proper. And Bolivian judicial proceedings on the merits award
did not follow an entirely familiar pattern. In some ways, the proceedings resembled
an American interlocutory appeal in which trial court litigation is not stayed. In
other ways, they did not.
Although our review of foreign law is de novo, the district court’s opinion is
instructive. That court concluded the merits award had not been set aside for several
reasons. First, the district court reasoned that once the PCT in March 2016 reversed
the Guarantee Court’s decision on GCC’s amparo against the Eighth Judge, none of
the orders that arose out of the simultaneous remand (and which appeared to sustain
46
the Ninth Judge Decision) had any legal effect. App. at 1251–54; see also id. at 1252
(stating that because the March 2016 PCT order “revoked the legal basis for the
Ninth Judge Decision, the Ninth Judge Decision cannot be reasonably understood to
supersede the Eighth Judge Decision”);
id. at 1254 (rejecting, with respect to the
November 2016 PCT order, GCC’s request to “view the Ninth Judge Decision in a
vacuum and ignore the significance of” the March 2016 PCT order). Second, the
district court determined that the January 2017 PCT order, despite referring to the
“subsistence” of the Ninth Judge Decision, served a limited procedural purpose “and
could not have given substantive validity to the Ninth Judge Decision after it had
been rendered a nullity” by the March 2016 PCT order.
Id. at 1254–55; see also
id.
at 1254
(noting that GCC sought, but did not receive, a statement in the January 2017
PCT order that “the Ninth Judge Decision was valid and in effect” notwithstanding
the March 2016 PCT order). Third, the district court observed that “[t]he expert
reports make clear” the President of the PCT had “no legal authority to unilaterally
issue” his November 2016 decree.
Id. at 1255; see also
id. (referencing the “three
types of decisions” the PCT is authorized to make under Bolivian law).
After independently reviewing the record, we agree with the district court’s
analysis. We recognize that the district court’s ruling and our ruling insinuate that
the November 2016 PCT order, the November 2016 PCT Presidential decree, and the
January 2017 PCT order were improvidently issued and/or do not mean that the Ninth
Judge Decision remains in effect, even though that is what each order or decree
arguably states or implies. No party, however, fits together all of the pieces of the
47
puzzle. In other words, no party provides an explanation which renders consistent
and logical all of the twists, turns, and orders in the Bolivian proceedings, at least by
standards recognizable to American jurists and litigants. So while CIMSA’s
interpretation may not be seamless, we are convinced there is no perfect explanation
of what has happened in Bolivia, and CIMSA’s construction is more defensible than
the alternative.
A more detailed examination of the evidence and authorities proffered by
CIMSA bears this out. Those materials indicate that GCC sought to annul the merits
award. App. at 180–81, 381–82. The Eighth Judge denied the request. Id. at 181–
82, 382–83. GCC had no right to appeal that decision.
Id. at 182–83, 383. GCC’s
only option was to pursue the “extraordinary remedy” of an amparo, which is what
GCC did, asserting that the Eighth Judge failed to sufficiently explain her reasoning.
Id. at 182–83, 383–84. A Guarantee Court agreed with GCC, temporarily revoked
the Eighth Judge Decision, and remanded the case to the Eighth Judge to issue a new
ruling.
Id. at 183–84, 384–86. However, the validity of the Guarantee Court’s
actions was contingent upon further review by the PCT.
Id. at 184–85, 384–86. In a
March 2016 order, the PCT reversed the Guarantee Court, holding that the Eighth
Judge had acted properly.
Id. at 191–92, 387–88, 873–74.
In the interim, the Ninth Judge entered the picture. Instead of promptly
remanding the matter to the Eighth Judge for a new decision, the Guarantee Court
held on to the case for nearly two months, sending it back when the Eighth Judge was
on vacation.
Id. at 185, 390.
That resulted in the matter being routed to a substitute
48
judge—the Ninth Judge—who faced a disqualification request from CIMSA and had
only approximately a week to review the voluminous record; the Ninth Judge granted
GCC’s annulment request the day before the Eighth Judge returned from vacation,
despite the fact that substitute judges typically do not issue substantive final
judgments. Id. at 185–86, 390–92, 899–902. CIMSA filed an amparo against the
Ninth Judge, which a Guarantee Court granted in February 2016.
Id. at 189–90, 396–
97. That led to the case being remanded to the Eighth Judge, with the validity of the
actions of the Guarantee Court again being contingent on PCT review.
Id. at 190.
As indicated, though, roughly a month later, the PCT in GCC’s original
amparo concluded there was no basis to challenge the Eighth Judge’s actions in the
first place.
Id. at 191–92, 387–88, 873–74.
That effectively reinstated the merits
award as a final and binding judgment.
Id. at 192, 388–90. Once CIMSA found out
about this PCT order, CIMSA reasonably concluded that the reinstatement of the
Eighth Judge Decision and the merits award rendered superfluous a separate attack
on the Ninth Judge’s rulings.
Id. at 191–92, 871. In the words of one of CIMSA’s
experts, the Ninth Judge Decision had “no legal effect” and was “rendered void” by
the March 2016 PCT order, which “revoked the only legal authority for a new
decision on GCC’s request for annulment.”
Id. at 393; accord
id. at 393–96, 399–
400, 869–70, 876–79. CIMSA consequently withdrew its amparo against the Ninth
Judge.
Id. at 192, 397–98. Even with the withdrawal, a PCT ruled on CIMSA’s
amparo anyway, issuing an order that was backdated almost six months.
Id. at 192–
93, 398–99.
49
This prompted GCC to file (without notice to CIMSA) requests for
“clarification.”
Id. at 193, 401, 406–07. GCC’s clarification requests produced a
decree from the President of the PCT regarding GCC’s amparo and a January 2017
PCT order regarding CIMSA’s amparo (both of which were issued without notice to
CIMSA).
Id. at 193–94, 402. The presidential decree used language that is difficult
to understand, and in any event, the President lacked authority under Bolivian law to
issue the order.
Id. at 195–96, 402–06, 873, 879–80. The President was also one of
the signatories of the January 2017 PCT order, which (like the November 2016 PCT
order) did not and could not overturn the March 2016 PCT order finalizing the merits
award and rejecting GCC’s challenge to the Eighth Judge.
Id. at 196–97, 407–10,
870–71, 880–86. Accordingly, we conclude that the merits award has not been set
aside or suspended for purposes of the New York Convention.
We also reject GCC’s argument that the arbitration tribunal’s damages award
is not binding because annulment proceedings are pending in Bolivian courts. A
court action in the country where the arbitration took place does not create a defense
to confirmation. American judges hold—virtually unanimously—that under the New
York Convention “[a]n arbitration award becomes binding when no further recourse
may be had to another arbitral tribunal (that is, an appeals tribunal).” Ministry, 665
F.3d at 1100–01 (emphasis added, citation and internal quotation marks omitted).
American judges further hold that “[u]nder the [New York] Convention, a court
maintains the discretion to enforce an arbitral award even when nullification
proceedings are occurring in the country where the award was rendered.” Karaha
50
Bodas Co., LLC v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335
F.3d 357, 367 (5th Cir. 2003) (brackets added).6
The rationale for this rule is straightforward. “When the [New York]
Convention was drafted, one of its main purposes was to facilitate the enforcement of
arbitration awards by enabling parties to enforce them in third countries without first
having to obtain either confirmation of such awards or leave to enforce them from a
court in the country of the arbitral situs.” Id. at 366–67 (brackets added). “By
allowing concurrent enforcement and annulment actions, as well as simultaneous
enforcement actions in third countries, the [New York] Convention necessarily
envisions multiple proceedings that address the same substantive challenges to an
arbitral award.”
Id. at 367 (brackets added); see also Ingaseosas Int’l Co. v.
Aconcagua Investing Ltd., 479 F. App’x 955, 961 (11th Cir. 2012) (unpublished) (“It
is true that the [New York] Convention envisions multiple proceedings that address
6
For additional examples of cases holding that the exhaustion of arbitration
proceedings makes an award “binding,” see Aperture Software GmbH v. Avocent
Huntsville Corp., No. 5:14-cv-00211-JHE, 2015 WL 12838967, at *2 (N.D. Ala. Jan.
5, 2015); Boeing Co. v. KB Yuzhnoye, No. CV 13-730 ABC (AJWx),
2013 WL
12131183, at *6 (C.D. Cal. Dec. 18, 2013); Jorf Lasfar Energy Co., S.C.A. v. AMCI
Export Corp., No. Civ. A. 05-0423,
2006 WL 1228930, at *4 (W.D. Pa. May 5,
2006); Ukrvneshprom State Foreign Econ. Enter. v. Tradeway, Inc., No. 95 Civ.
10278 (RPP),
1996 WL 107285, at *4 (S.D.N.Y. Mar. 12, 1996); and Fertilizer Corp.
of India v. IDI Mgmt., Inc.,
517 F. Supp. 948, 957–58 (S.D. Ohio 1981). For more
examples of cases holding that enforcement may proceed despite pending judicial
proceedings in the country where the arbitration occurred, see Fakhri v. Marriot Int’l
Hotels, Inc.,
201 F. Supp. 3d 696, 711 n.11 (D. Md. 2016); OJSC Ukrnafta v.
Carpatsky Petroleum Corp., No. Civ. A. H-09-891,
2011 WL 13131147, at *3 (S.D.
Tex. Oct. 12, 2011); Jorf Lasfar,
2006 WL 1228930, at *4; and Alto Mar Girassol v.
Lumbermens Mut. Cas. Co., No. 04 C 7731,
2005 WL 947126, at *4 (N.D. Ill. Apr.
12, 2005).
51
the same substantive challenges to an arbitral award.”) (citation and internal
quotation marks omitted, brackets added).
New York Convention provisions anticipate the possibility of a party seeking
confirmation in one country even though nullification proceedings are underway in
another. The New York Convention states:
If an application for the setting aside or suspension of the award has
been made to a competent authority referred to in article V(1)(e), the
authority before which the award is sought to be relied upon may, if it
considers it proper, adjourn the decision on the enforcement of the
award and may also, on the application of the party claiming
enforcement of the award, order the other party to give suitable security.
21 U.S.T. 2157, art. VI. American judges recognize that “a district court faced with a
decision whether to adjourn arbitral enforcement proceedings to await the outcome of
foreign proceedings must take into account the inherent tension between competing
concerns.” Europcar Italia, S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310, 317 (2d
Cir. 1998). Factors relevant to the adjournment analysis include, without limitation,
(1) the general objective of the arbitration; (2) the status of the foreign proceedings
and the estimated time for those proceedings to be resolved; (3) the level of scrutiny
and the standard of review in the foreign proceedings; (4) other characteristics of the
foreign proceedings; and (5) the balance of possible hardships to each of the parties.
Id. at 317–18.
GCC elides the distinction between an arbitration and a subsequent judicial
challenge by attempting to portray the issue as whether the law of the country where
the arbitration took place determines whether an award is binding. The pivotal
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inquiry under any forum’s law is whether the arbitration proceedings have
sufficiently run their course, not whether post-arbitration judicial proceedings are
available. Courts typically look to the parties’ arbitration agreement, the rules
governing the arbitration, and other forum laws to decide whether an award is
binding. See, e.g., Aperture, 2015 WL 12838967, at *3 (relying on the parties’
contract and arbitration rules); Fertilizer
Corp., 517 F. Supp. at 956–58 (relying on
the parties’ contract, arbitration rules, and the law of the forum). That is logical,
because the parties are free to agree on the terms and conditions of their arbitration,
as permitted by law. Looking to the rules of the forum in this context is quite
different from looking to the law of the forum with respect to judicial nullification
options.
Diag Human S.E. v. Czech Republic—Ministry of Health, 907 F.3d 606 (D.C.
Cir. 2018), illustrates the point. In that case, the D.C. Circuit affirmed a district
court’s ruling that an arbitration award was not binding under the New York
Convention.
Id. at 607–12. The D.C. Circuit recognized that the parties, as
permitted by “Czech arbitration law,” agreed to “a review process in which a second
arbitration panel can revisit the original award with the power to uphold, nullify, or
modify it.”
Id. at 608. Citing cases like
Ministry, 665 F.3d at 1100–01, and
Fertilizer
Corp., 517 F. Supp. at 958, the D.C. Circuit found not only that “the parties
had recourse to another arbitration panel, which was sufficient to prevent the award
from becoming binding at that time,” but also that the second panel had “invalidated”
the award.
Diag, 907 F.3d at 609. The D.C. Circuit observed that “[w]hen the
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binding status of an award is in doubt under Article V(1)(e) of the New York
Convention, the court may look to the law of the rendering jurisdiction, though
litigation of that issue is rare. This is true particularly when the agreement
incorporates local arbitral law, as this agreement did here.” Id. at 611 (citing, among
other cases, Aperture,
2015 WL 12838967, at *2–3).
In the case before us, the parties’ agreement demonstrates that the arbitration
award became binding upon issuance for purposes of the New York Convention. The
2005 Shareholder Agreement’s “Waiver of Remedies” clause stated that “[a]ny
awards or order issued by the Arbitration Court shall be final and of mandatory
compliance for the Parties to the Arbitration who expressly waive all actions for
annulment, objection, or appeal against the award.” Supp. App. at 2. The 2005
Shareholder Agreement also specified the use of IACAC arbitration rules, id., which
rules provided that “[t]he award shall be made in writing and shall be final and
binding on the parties and subject to no appeal.” See 22 C.F.R. pt. 194, app. A, art.
29.2 (setting forth the IACAC rules as amended April 1, 2002). Bolivian law may
very well permit a judicial challenge to the damages award. That does not detract
from the “binding” nature of the arbitration under the New York Convention.
IV. Conclusion
For the foregoing reasons, we AFFIRM the district court’s orders exercising
personal jurisdiction over GCC and confirming the arbitration award under the New
York Convention.
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