Opinion ID: 815610
Heading Depth: 4
Heading Rank: 1

Heading: fsigc

Text: The district court considered declarations by Wang Darong and Lin Jiang, each a partner in a separate Chinese law firm. The Wang and Lin declarations established that FSIGC was wholly-owned by the PRC, and that a branch of the PRC appoints FSIGC’s board of directors and senior management personnel, and exercises the rights of a shareholder. The Wang and Lin declarations also conceded, however, that FSIGC possessed operational and managerial authority. The district court also considered the declaration of the vice-director of FSIGC’s legal department, who stated that FSIGC’s employees were paid by FSIGC, not the PRC; FSIGC filed independent financial statements; the PRC did not provide any funding apart from that raised by selling shares; FSIGC’s directors acted in the best interest of the company; FSIGC was responsible for its own debts, which were not paid or guaranteed by the PRC; FSIGC dealt with the PRC in arm’s- length transactions; and FSIGC managed its own daily operations apart from the PRC. There is no question that this evidence, considered alone, would not satisfy Bancec’s standard for finding an alter ego relationship between a foreign state and its instrumentality. As we have previously determined, the mere fact that a government owns 100% of a company’s stock is not sufficient to establish control. Id. at 1382 & n.11. The declarations also provide no indication that FSIGC’s officers were acting in the PRC’s interests and controlling FSIGC’s day17 No. 12-30377 to-day operations on the PRC’s behalf. Nor do the declarations evidence any injustice that would flow from respecting FSIGC’s corporate form. First Investment’s only argument in response is that the district court did not consider the declaration of Evan Breibart. That declaration shows that First Investment encountered many obstacles in confirming its arbitral award in China. These include the PRC’s London and Athens embassies following the PRC’s instructions not to authenticate documents necessary to initiate a confirmation proceeding in China. A formal protest by the Greek Deputy Foreign Minister led to the documents being authenticated, but delays continued. Following commencement of the confirmation proceeding in China, First Investment’s attorney and interpreter, as well as an employee of the Greek consulate, were denied entry into the hearing without explanation. First Investment was instead provided with a student interpreter from a local university who could not provide an adequate interpretation of the hearing. Finally, Wang, whose declaration First Investment submitted to the district court, later stated that he would be moving to China’s Fujian province, and that, as a result, it would be “inconvenient for him if the declaration was used in an enforcement proceeding against PRC state owned assets.” Nearly all the Chinese experts First Investment has approached since then have refused to provide a declaration in First Investment’s support for fear of negative repercussions by the PRC. Whatever this evidence says about the PRC’s hostility towards foreign entities, it does not demonstrate the level of control necessary to overcome the presumption in favor of FSIGC’s separate identity. The Breibart declaration does not show that the PRC exercised control over FSIGC. None of the allegations even relate to FSIGC’s management, but instead relate to actions by the PRC’s embassies and courts. First Investment’s allegations fall far short of the type of control necessary to establish an alter ego relationship. See, e.g., 18 No. 12-30377 Bridas S.A.P.I.C. v. Government of Turkmenistan, 447 F.3d 411, 419-20 (5th Cir. 2006) (“Bridas II”) (alter ego relationship established where government manipulated undercapitalized corporation to repudiate contract, paid arbitration costs, diverted corporation’s revenues into state oil and gas fund, and changed law to prevent seizure of corporation’s assets); S & Davis Int’l, Inc., 218 F.3d at 1299-300 (corporation was alter ego of government ministry where corporation was wholly owned by government, ministry ordered corporation to breach contract, and ministry failed to submit evidence that corporation was independent entity, including papers of incorporation, status of employees as public or private servants, or separation of assets). Nor has First Investment presented equitable considerations sufficient to disregard FSIGC’s corporate identity. For First Investment to meet this prong it is not sufficient for it merely to point out an injustice that would result from an adverse decision. Rather, First Investment must show how the PRC manipulated FSIGC’s corporate form to perpetuate a fraud or injustice. See Bridas II, 447 F.3d at 417 (imposition of export ban was exercise of sovereign powers that may have constituted a wrong to plaintiff, but “was not a wrong based on misuse of the corporate organizational form”). Here, First Investment has failed to show that the PRC used FSIGC’s corporate form to manipulate circumstances in such a way as to do something it otherwise would not have been able to do. First Investment has also not shown that the PRC is shielding FSIGC from an adverse arbitral award because the real burden of such an award would fall on the PRC. The only evidence First Investment puts forward is that the PRC is FSIGC’s sole shareholder. As already stated, this is insufficient to establish an alter ego relationship. Hester, 879 F.2d at 181. Were we to accept First Investment’s argument we would effectively wipe out the presumption of separateness. Following First Investment’s logic, anytime a foreign sovereign owned the majority of shares in a company, and took any action that assisted 19 No. 12-30377 that company, it would provide grounds for ignoring that company’s separate juridical identity. See id. (describing 100% ownership and appointment of board of directors as characteristics of a “typical government instrumentality”). Nor is the PRC committing a fraud against First Investment. Although the PRC may have delayed initiation of the confirmation proceeding, First Investment ultimately did bring such an action in China. Moreover, the Chinese court provided a reasoned opinion that denied enforcement on the ground that the panel’s third arbitrator did not approve the final draft. Accordingly, the district court correctly concluded that there did not exist an alter ego relationship between FSIGC and the PRC, and properly dismissed FSIGC for lack of personal jurisdiction.