In First Inv. Corp. of Marshall Islands v. Fujian Mawei Shipbuilding, Ltd., 703 F.3d 742 (5th Cir. 2012)), the parties entered into a series of shipbuilding contracts that included arbitration clauses. A dispute arose between First Investment and two shipbuilders (Fujian Entities), which were wholly owned by the People's Republic of China (PRC). An arbitration panel was constituted in London under the rules of the London Maritime Arbitration Association (LMAA). The panel awarded First Investment approximately US$26 million in damages.

First Investment sought enforcement of its award in a Chinese court, but enforcement was denied on grounds that one of the arbitrators (who had been detained by the PRC on bribery charges) did not fully participate in the proceeding. First Investment commenced a second confirmation proceeding in the Eastern District of Louisiana against the Fujian Entities and the PRC. After initially entering default judgment against the Fujian Entities and the PRC, the court then dismissed the claim against the Fujian Entities for lack of personal jurisdiction and against the PRC for lack of subject matter jurisdiction.

On appeal, First Investment argued that foreign entities that are neither present nor have property in the United States are not entitled to Constitutional due process protections, which require minimum contacts with the jurisdiction for exercise of personal jurisdiction. The court found no case law in support of that argument and held there was no basis to conclude that a party's status as a foreign entity permits a court to exercise such jurisdiction without first establishing sufficient contacts between the defendant and the forum state. In this case, the Fujian Entities had no contacts with the jurisdiction. As such, the court held that dismissal of the petition under the New York Convention was appropriate, because it lacked personal jurisdiction over the Fujian Entities. This is a matter of constitutional due process under US federal law, even though the New York Convention itself does not list lack of personal jurisdiction as a ground for denying enforcement.

The court also rejected First Investment's argument that the Fujian Entities were mere alter egos of the PRC and thus not entitled to due process protection under the Constitution. The court applied the Supreme Court's decision in First National City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (1983) (Bancec) to hold that First Investment did not overcome the Bancec presumption that duly constituted instrumentalities of foreign states have separate juridical identities.

Finally, the court dismissed the claim against the PRC for lack of subject matter jurisdiction because the PRC was not a party to the arbitration agreement between First Investment and the Fujian Entities. The PRC therefore retained its sovereign immunity under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. § 1604, and could not be sued in a US court on this issue.

This case illustrates that foreign entities may avail themselves of US Constitutional due process rights when sued in US courts and highlights that these fundamental rights exist independent of the terms of arbitration agreements and the New York Convention.