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        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                United States Court of Appeals
                                                                         Fifth Circuit

                                                                       FILED
                                 No. 15-10545                   October 26, 2016
                             Cons. w/ No. 15-10548
                                                                  Lyle W. Cayce
                                                                       Clerk
RALPH S. JANVEY, In His Capacity as Court-Appointed Receiver for the
Stanford International Bank, Limited, Et Al,

             Plaintiff - Appellant

v.

LIBYAN INVESTMENT AUTHORITY,

             Defendant - Appellee


_________________________

Cons. w/ No. 15-10548

RALPH S. JANVEY, In His Capacity as Court-Appointed Receiver for the
Stanford International Bank, Limited, Et Al,

             Plaintiff - Appellee

v.

LIBYAN FOREIGN INVESTMENT COMPANY,

             Defendant - Appellant




                Appeals from the United States District Court
                     for the Northern District of Texas
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Before WIENER, PRADO, and OWEN, Circuit Judges.
PER CURIAM:
      Ralph S. Janvey, the court-appointed receiver (“the receiver”) for a Ponzi
scheme orchestrated by Allen Stanford (the “Stanford scheme”), brought claims
against the Libyan Investment Authority (“LIA”) and the Libyan Foreign
Investment Company (“LFICO”) in the district court, seeking to recover the
proceeds of certificates of deposit (“CDs”) previously transferred to LFICO by
the Stanford International Bank, Ltd. (“SIB”). LIA and LFICO moved to
dismiss the receiver’s claims, insisting that they were immune from the court’s
jurisdiction under the Foreign Sovereign Immunities Act (“FSIA”). The
receiver opposed dismissal, asserting that the commercial activity exception to
FSIA immunity applied. After the parties conducted limited jurisdictional
discovery, the district court ruled that LIA was immune but that LFICO was
not. Both the receiver and LFICO timely filed appeals, which have been
consolidated. We affirm in part and vacate and remand in part.
                                         I.
                              FACTS & PROCEEDINGS
      Stanford and his associates perpetrated the Stanford scheme through a
group of entities (collectively, the “Stanford entities”) that, inter alia, sold sham
CDs issued by SIB to unsuspecting investors. The Stanford entities promised
those investors that the CDs from SIB would yield extraordinarily high rates
of return. Rather than investing the funds they received from later investors,
however, the Stanford entities paid those funds to earlier investors, redeeming
their maturing CDs. In so doing, the Stanford entities made it appear that the




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CDs from SIB were producing the phenomenal rates of return they
had promised. 1
       In early 2009, the Securities and Exchange Commission (“SEC”) filed
suit against the Stanford entities, including SIB. The Stanford entities were
then placed in receivership, and Janvey was appointed their receiver. The
receiver is responsible for bringing claims on behalf of the Stanford entities to
recover assets for distribution to their defrauded investors.
       The instant consolidated appeals relate to the Stanford entities’ transfer
of funds to LFICO, an earlier investor that had redeemed some of its
maturing CDs.
       In 2006, LFICO had developed relationships with SIB, a Stanford entity
based in Antigua, and Stanford Group (Suisse) S.A. (“SGS”), a Stanford entity
based in Switzerland. LFICO’s relationship with SIB related solely to its
purchase of $138 million in CDs from SIB. LFICO’s relationship with SGS
related solely to a discretionary management agreement between itself and
SGS, under which SGS managed $100 million of LFICO’s funds in an account
it held in Switzerland. The agreement was formed in Libya and governed by
Swiss law.
       These relationships were ongoing when, in 2007, two SGS financial
advisors accompanied two LFICO analysts on a training program conducted
by SIB. The program began and ended in Switzerland but included visits to
Antigua and the United States—in particular, to Houston, Memphis,
Washington, and Miami. Otherwise, LFICO’s relationship with the Stanford
entities did not include any other acts or activities in the United States. 2



       1 In addition to transferring funds to earlier investors, the Stanford entities also
transferred funds to other persons and entities, often for divergent purposes.
       2 In late 2008, the then-chairperson of LIA visited the United States for meetings of
the International Monetary Fund (“IMF”) and, while here, met with Stanford himself. There

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       In 2008, LFICO decided to divest its SIB-issued CDs, “given the size of
[these] deposits and the problems facing the international financial market.” 3
It instructed SGS in Switzerland to redeem its SIB-issued CDs as they
matured rather than to repurchase them at that time. (In a single exception,
LFICO instructed SGS to repurchase $50 million in CDs from SIB several
months later.) SGS appears to have complied with these requests: As the CDs
matured, SIB transferred their proceeds from its accounts in Canada and
England to LFICO’s accounts in Libya and Switzerland. None of these accounts
was held in the United States. 4 When SIB entered receivership, LFICO had
already received about $50 million in redemption proceeds, far less than it had
paid for all of its CDs. As a result, it suffered a greater loss than any other
investor in the Stanford scheme.
       LFICO’s only shareholder is LIA, whose only shareholder is Libya. Both
LFICO and LIA are based in Libya. Unlike LFICO, LIA never purchased SIB-
issued CDs, although it apparently considered doing so. LIA asserts that it was
wholly uninvolved in LFICO’s purchases and redemptions of the SIB-issued
CDs. 5 LIA is not referenced in the discretionary management agreement
between LFICO and SGS or in the CDs themselves, which were agreements


is no indication that they discussed LFICO’s purchase, repurchase, or redemption of SIB-
issued CDs.
       3The management committee’s decision to redeem the CDs in 2008 appears to have
been unrelated to the analysts’ visit to the United States in 2007.
       4 Although Stanford himself briefly visited Libya several days before SIB transferred
the proceeds of these CDs to LFICO in 2009, this was months after LFICO had decided to
divest and notified SIB that it would redeem its SIB-issued CDs rather than repurchase them
as they matured.
       5 The receiver suggests that LFICO has stated that LIA was uninvolved with LFICO’s
purchase of SIB-issued CDs but has not stated that it was uninvolved with the redemption of
those same CDs. This too closely parses LFICO’s language, which actually states that LIA
was uninvolved with LFICO’s investment in SIB-issued CDs; use of the term “investment” is
sufficiently broad to encompass both LFICO’s purchase and subsequent redemption of
the CDs.


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between SIB and LFICO. After Stanford’s arrest, the then-chief investment
officer of LIA stated that LIA itself had not purchased any SIB-issued CDs but
that he “suspect[ed] a[n] LIA affiliate or [s]ubsidiary may have [$]150 million
at most” invested. 6
      In 2009, the receiver filed suit against investors, including LFICO, that
had purchased SIB-issued CDs and later had redeemed them. He sought
disgorgement of any proceeds of those CDs, but in Janvey v. Adams, this court
precluded such claims, holding that the investors had a legitimate ownership
interest in those proceeds. 7 The receiver then made new claims against some
of those investors for fraudulent transfer and unjust enrichment. Eventually,
he asserted such claims against LFICO and LIA, too, alleging that LFICO was
LIA’s alter ego. The receiver filed a motion for a preliminary injunction on
those claims. The district court denied the receiver’s motion, and we affirmed
the district court’s denial.
      LIA and LFICO eventually filed a motion to dismiss under Federal Rule
of Civil Procedure 12(b)(1) and (2), claiming that the district court lacked
personal and subject matter jurisdiction because (1) they had presumptive
immunity under the FSIA as agents or instrumentalities of a foreign state and
(2) the commercial activity exception to immunity under the FSIA did not
apply. The parties conducted jurisdictional discovery regarding whether LIA
and LFICO engaged in activities that fall within the scope of the commercial
activity exception under the FSIA.
      When that discovery was complete, the district court denied the motion
to dismiss as to LFICO. In so doing, it ruled that (1) LFICO had engaged in


      6 Notably, the Libyan-African Investment Portfolio (“LAP”), an entity similar to
LFICO, also purchased SIB-issued CDs between 2007 and 2008. Unlike LFICO, however, it
repurchased about $50 million in CDs from SIB as they matured in late 2008. As a result,
SIB never transferred any proceeds to LAP.
      7   588 F.3d 831, 834 (5th Cir. 2009).


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commercial activity by purchasing, repurchasing, and redeeming the SIB-
issued CDs and (2) this activity, which occurred outside the United States, had
a “direct effect” on the United States because the Stanford scheme was based
in the United States. The court concluded that the commercial activity
exception to immunity under FSIA gave it personal and subject matter
jurisdiction over LFICO.
       The district court granted the motion to dismiss as to LIA. The court
concluded that LIA had not engaged in commercial activity at all and that,
although LFICO had engaged in such activity, its acts were not attributable to
LIA. The court ruled that LFICO was not LIA’s agent or alter ego in
purchasing, repurchasing, or redeeming the SIB-issued CDs and that the
proceeds of those CDs were not redeemed for LIA’s benefit. Both LFICO and
the receiver then appealed.
                                                II.
                                           ANALYSIS
A.     STANDARD OF REVIEW
       We have appellate jurisdiction over any final order that grants immunity
under the FSIA 8 and over any collateral order that denies it. 9 We also have
pendant appellate jurisdiction over any closely related issues. 10 In exercising
that jurisdiction, we review the district court’s conclusions of law de novo, 11



       8   28 U.S.C. § 1291.
       9See Stena Rederi AB v. Comision de Contratos del Comite Ejecutivo General del
Sindicato Revolucionario de Trabajadores Petroleros de la Republica Mexicana, S.C., 923
F.2d 380, 385 (5th Cir. 1991).
       10See Walter Fuller Aircraft Sales, Inc., v. Rep. of Phil., 965 F.2d 1375, 1387 (5th Cir.
1992) (“In the exercise of [this Court’s] discretion and in the interest of judicial economy . . . ,
we may consider claims under our pendent appellate jurisdiction that are closely related to
the order properly before us.”); Morin v. Caire, 77 F.3d 116, 119 (5th Cir. 1996).
       11 Bd. of Regents of Univ. of Tex. Sys. v. Nippon Tel. & Tel. Corp., 478 F.3d 274, 279
(5th Cir. 2007); see Ynclan v. Dep’t of Air Force, 943 F.2d 1388, 1390 (5th Cir. 1991).


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and, to the extent it makes any findings of fact, 12 we review them for clear
error. 13 A finding of fact is clearly erroneous if it is inconsistent with the record
in its entirety. 14 Such a finding may be clearly erroneous if (1) it is not based
on “substantial evidence,” (2) it is based on a misinterpretation of the evidence,
or (3) it is inconsistent with “the preponderance of credible testimony.” 15 If the
district court’s conclusions of law “affected” its findings of fact, “remand is the
proper course unless the record permits only one resolution of the [fact].” 16
       These appeals require us to determine whether there is any basis for
personal and subject matter jurisdiction over LIA and LFICO. The FSIA
provides “the sole basis for obtaining jurisdiction over a foreign state in [federal
and state] courts.” 17 It furnishes both the immunity itself, which applies to any
“foreign state,” 18 and the only exceptions to that immunity. 19 If an exception
applies, the FSIA also specifies the only basis for personal and subject matter
jurisdiction over the foreign state. That jurisdiction extends to “any nonjury
civil action against a foreign state . . . as to any claim for relief in
personam . . . .” 20 If no exception applies, there is no other basis for personal or
subject matter jurisdiction over a foreign state. 21


       12Bd. of Regents of Univ. of Tex. Sys., 478 F.3d at 279; see Moran v. Kingdom of Saudi
Arabia, 27 F.3d 169, 171–72 (5th Cir. 1994).
       13   Moran, 27 F.3d at 171–72.
       14   Hollinger v. Home State Mut. Ins. Co., 654 F.3d 564, 569 (5th Cir. 2011).
       15   Ball v. LeBlanc, 792 F.3d 584, 592 (5th Cir. 2015) (internal quotation marks
omitted).
       16   Id. at 596 (quoting Pullman-Standard v. Swint, 456 U.S. 273, 292 (1982)).
       17   Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 & n.2 (1989).
       18   28 U.S.C. §§ 1602–11.
       19   Id. § 1605(a).
       20   Id. § 1330(a).
       21Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 489 (1983). See also Argentine
Republic, 488 U.S. at 435 n.3 (“Subsection (b) of 28 U.S.C. § 1330 provides that ‘[p]ersonal

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       The parties claiming immunity under the FSIA—here, LIA and LFICO—
have the initial burden of persuasion that they are foreign states and therefore
entitled to a presumption of immunity. 22 If they bear that burden, then the
party opposing immunity—here, the receiver—has the burden of producing
evidence that LIA and LFICO fall within an exception enumerated in the FSIA,
refuting the presumption of immunity. 23 If the receiver bears his burden, LIA
and LFICO then have the ultimate burden of persuasion that the exception
does not apply to them and that they are entitled to immunity. 24
B.     WHETHER LFICO AND LIA ARE “FOREIGN STATES” UNDER THE FSIA
       The parties agreed that both LIA and LFICO are “foreign states” under
the FSIA. Relying on the parties’ agreement, the district court determined that
LIA and LFICO “qualify as foreign states.” Subject matter jurisdiction,
however, “can never be forfeited or waived.” 25 We therefore “have an
independent obligation to determine whether [it] exists, even in the absence of




jurisdiction over a foreign state shall exist as to every claim for relief over which the district
courts have [subject-matter] jurisdiction under subsection (a) where service has been made
under [28 U.S.C. § 1608].’ Thus, personal jurisdiction, like subject-matter jurisdiction, exists
only when one of the exceptions to foreign sovereign immunity . . . applies.” (alterations in
original)).
       22   See United States v. Moats, 961 F.2d 1198, 1205 (5th Cir. 1992).
       23   Id.
       24   Id.
       25 Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). Importantly, the subject matter
jurisdiction inquiry under the FSIA involves determining first whether a party is a “foreign
state” to which the Act applies, and then whether any exception to the presumption of foreign
sovereign immunity applies under the circumstances. See Verlinden, 461 U.S. at 488–89.
Whether the party is a “foreign state” clearly cannot be waived by the parties, just as is the
case with any typical question regarding subject matter jurisdiction. A foreign state entitled
to immunity under the FSIA, however, may waive its immunity. See 28 U.S.C. § 1605(a)(1)
(providing that a party can expressly or implicitly waive its immunity from the jurisdiction
of the United States courts). In this case, when we state that subject matter jurisdiction can
never be waived, our statement applies only to whether a party is a “foreign state” under
the FSIA.


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a challenge from any party.” 26 Accordingly, we must determine whether LIA
and LFICO are “foreign states” under the FSIA.
       In the context of the FSIA, the term “foreign state” refers not only to the
state itself, viz., the “body politic that governs a particular territory,” 27 but also
to its “agenc[ies] or instrumentalit[ies].” 28 Absent a clear distinction
between the terms “agency” and “instrumentality,” 29 they are read together or
treated interchangeably. 30
       An agency or instrumentality of a foreign state is a separate entity,
“corporate or otherwise,” that is either (1) majority owned by a foreign state or
(2) an “organ” of a foreign state. 31 There is a distinction between those agencies
or instrumentalities that qualify because they are “organs” of a foreign state




       26   Arbaugh, 546 U.S. at 514.
       27   Samantar v. Yousuf, 560 U.S. 305, 314 (2010).
       28   28 U.S.C. § 1603(a).
       29 See Agency, BLACK’S LAW DICTIONARY (10th ed. 2014) (defining “agency,” in relevant
part, as “[a]n official body, esp. within the government, with the authority to implement and
administer particular legislation”); see Instrumentality, BLACK’S LAW DICTIONARY (10th ed.
2014) (defining “instrumentality,” in relevant part, as “[a] means or agency through which a
function of another entity is accomplished, such as a branch of a governing body”).
       30 We have previously explained: “The use of the single term ‘agency’ for two purposes
in the context of this case may cause some confusion. The FSIA uses it to determine whether
an ‘agency’ of the state may potentially qualify for foreign sovereign immunity itself under
the FSIA. This is a completely different question from . . . whether or not [such an agency]
enjoyed an alter ego relationship with the [foreign state] so that it could bind [the foreign
state as a result of its acts]. Although such an alter ego relationship may be described in
terms of ‘agency,’ it is a completely different inquiry than that which might be conducted
under [the FSIA’s ‘agency or instrumentality’ requirement]. . . . [T]he level of state control
required to establish an ‘alter ego’ relationship is more extensive than that required to
establish FSIA ‘agency.’” Hester Int’l Corp. v. Fed. Republic of Nigeria, 879 F.2d 170, 176 n.5
(5th Cir. 1989).
       31   28 U.S.C. § 1603(b) (“An ‘agency or instrumentality of a foreign state’ means any
entity . . . (1) which is a separate legal person, corporate or otherwise, and . . . (2) which is an
organ of a foreign state . . . or a majority of whose shares or other ownership interest is owned
by a foreign state . . . .” (emphasis added)).


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and those that qualify because they are “majority owned” by one. 32 In some
instances, however, an agency or instrumentality may be both and thus qualify
as either.
1.     MAJORITY OWNED BY A FOREIGN STATE
       The Supreme Court has clarified that, because “[c]ontrol and
ownership . . . are distinct concepts,” “[m]ajority ownership by [the] foreign
state, not control, is the benchmark.” 33 As “only direct ownership” counts, 34 “a
subsidiary of an [agency or] instrumentality [of the state] is not itself entitled
to [such] status.” 35 Therefore, “[a] corporation is an [agency or an]
instrumentality of a foreign state under the FSIA only if the foreign state itself
owns a majority of the corporation’s shares.” 36 It is not an agency or
instrumentality on the basis of majority ownership, however, if the “the foreign
state does not own a majority of its shares but does own a majority of the shares
of a corporate parent one or more tiers above the subsidiary.” 37
       LIA is majority owned by Libya itself and thus is an agency or
instrumentality of Libya. 38 LFICO, however, does not qualify on that basis
because it is not majority owned by Libya directly, but by LIA. LFICO is merely
a subsidiary of LIA, and that is not sufficient.


       32 Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 846 (5th Cir. 2000)
(“[B]ecause we conclude that [the entity] is an organ of a foreign state, we need not consider
[the] ownership requirements.”).
       33   Dole Food Co. v. Patrickson, 538 U.S. 468, 477 (2003).
       34   Id. at 474.
       35 Id. at 473. The Supreme Court discusses only “instrumentalities” in this context,
and it does not distinguish agencies from instrumentalities. As discussed above, these appear
to be synonymous.
       36   Id. at 477 (emphasis added).
       37   Id. at 471.
       38As another panel noted, LIA is “an agency of the Libyan government.” Janvey v.
Libyan Inv. Auth., 478 F. App’x 233, 236 (5th Cir. 2012).


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2.     ORGAN OF A FOREIGN STATE
       LFICO could qualify as an agency or instrumentality, however, if it is an
organ of Libya. We have suggested that there is no clear test for determining
whether an entity is an organ of a state but that the following factors are
useful: “(1) whether the foreign state created the entity for a national purpose;
(2) whether the foreign state actively supervises the entity; (3) whether the
foreign state requires the hiring of public employees and pays their salaries;
(4) whether the entity holds exclusive rights to some right in the [foreign]
country; and (5) how the entity is treated under foreign state law.” 39
Considering whether an entity is an “organ” is, in some respects, similar to
considering whether it is an “agent.” (We note that the term “agent” should
not to be confused with the term “agency” in the phrase “agency
or instrumentality.”)
       Because the parties agreed that LFICO is a “foreign state” under the
FSIA, they did not address whether LFICO is an organ, and thus an agency or
instrumentality, of Libya. The district court did determine, in another context,
that LFICO was not LIA’s agent but was Libya’s agent. The court explained
that “there is a sufficient connection between LFICO and [Libya] such that
LFICO can be considered Libya’s agent.” 40 In so doing, the court determined:
“LFICO operates solely in the national interest of Libya”; “LFICO possesses
‘special status and is treated as an organ of . . . Libya”; “LFICO is comprised in
large part of government representatives”; and “the Libyan legislature has the
power to appoint members of . . . LFICO[’s board] and to fix their salaries, and
[its board] is subordinate to the Libyan legislature.”




       39Bd. of Regents of Univ. of Tex. Sys., 478 F.3d at 279 (alteration in original) (quoting
Kelly, 213 F.3d at 846–47 (5th Cir. 2000))
       40   Notably, LFICO is owned by LIA, not by Libya proper.


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       The district court, however, erred by relying on a description of the act
that created LFICO initially rather than the description of the subsequent act
that transferred LFICO to LIA. The subsequent act disentangled LFICO from
Libya itself. As a result, LIA became—and remains—Libya’s subsidiary, and
LFICO became—and remains—LIA’s subsidiary. This is significant because,
as with subsidiaries, “duly created [agencies or] instrumentalities of a foreign
state are to be accorded a presumption of independent status.” 41 The party
opposing immunity—here, the receiver—“can overcome that presumption
. . . by demonstrating that the [agency or] instrumentality is the agent or alter
ego of the foreign state.” 42 The theories underlying alter egos and agents are
“distinct” and, for this reason, are not to be applied “as if they were
interchangeable.” 43 Alter egos are created equitably; agents are created
contractually. 44 Both, however, are bases for overcoming the presumption that
an agency or instrumentality of a foreign state is separate from the foreign
state itself. 45
       LIA is majority owned by Libya proper and therefore an agency or
instrumentality of a foreign state. In contrast, LFICO is not majority owned by
Libya proper. As noted above, the parties agreed that, in addition to LIA,
LFICO is a foreign state under the FSIA, so the parties did not develop the
record on the precise issue of whether LFICO is an organ of Libya and thus a



       41 First Inv. Corp. of Marsh. Is. v. Fujian Mawei Shipbuilding, Ltd., 703 F.3d 742, 752
(5th Cir. 2012) (quoting First Nat’l City Bank v. Banco Para el Comercio Exterior de Cuba,
462 U.S. 611, 627 (1983)).
       42 Dale v. Colagiovanni, 443 F.3d 425, 429 (5th Cir. 2006); see First Inv. Corp. of Marsh.
Is., 703 F.3d at 753.
       43   Bridas S.A.P.I.C. v. Gov’t of Turkm., 345 F.3d 347, 358 (5th Cir. 2003).
       44Id. at 359 (“The laws of agency, in contrast, are not equitable in nature, but
contractual, and do not necessarily bend in favor of justice.”).
       45   First Nat’l City Bank, 462 U.S. at 633.


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“foreign state” under the FSIA. Accordingly, we vacate the district court’s
ruling that it had jurisdiction over the claims against LFICO under the FSIA
and remand for development of the factual record on this issue and for a
determination whether LFICO is an organ, and thus an agent or
instrumentality, of Libya under the FSIA.
C.     WHETHER THE CLAIMS AGAINST LFICO ARE SUBJECT TO THE
       COMMERCIAL ACTIVITY EXCEPTION TO THE FSIA
       If we were to assume arguendo that LFICO is an agency or
instrumentality of Libya proper and therefore presumptively entitled to
immunity under the FSIA, there would be no basis for jurisdiction over the
receiver’s claims against LFICO under the commercial activity exception to
the FSIA. The FSIA provides an exception to sovereign immunity “in any case
in which the action is based upon commercial activity that has a jurisdictional
nexus with the United States.” 46 The commercial activity exception contains
three clauses, each identifying a type of act that is sufficiently connected to the
United States to satisfy the jurisdictional nexus requirement: (1) “a
commercial activity carried on in the United States by the foreign state”;
(2) “an act performed in the United States in connection with a commercial
activity of the foreign state elsewhere”; and (3) “an act outside the territory of
the United States in connection with a commercial activity of the foreign state
elsewhere and that act causes a direct effect in the United States.” 47
       The        parties     dispute     whether       LFICO’s       activity—purchasing,
repurchasing, and redeeming SIB-issued CDs—fell within any of the clauses
of FSIA’s commercial activity exception. LFICO argues that the district court
erred in determining that it had jurisdiction to hear the receiver’s claims




       46   Stena Rederi AB, 923 F.2d at 386 (citing 28 U.S.C. § 1605(a)(2)).
       47   28 U.S.C. § 1605(a); see Stena Rederi AB, 923 F.2d at 386.


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against it under any clause of the commercial activity exception. Because the
district court based its decision on the third clause, we begin there.
1.     THIRD CLAUSE
       The third clause of the exception applies when a claim “is
[i] based . . . upon an act outside . . . of the United States [ii] in connection with
a commercial activity” 48—“either a regular course of commercial conduct or a
particular commercial transaction or act” 49—“of the foreign state elsewhere
and [iii] that act causes a direct effect in the United States.” 50 The parties do
not dispute that the receiver’s claim is based “upon an act outside the territory
of the United States in connection with [LFICO’s] commercial activity [outside
the United States].” 51
       The district court determined, however, that the third clause applied
because it concluded that LFICO’s acts caused a direct effect in the United
States. An effect is “direct” if it follows as an immediate consequence of the
foreign state’s activity. 52 “[A] consequence is ‘immediate’ if no intervening act
breaks ‘the chain of causation leading from the asserted wrongful act to its




       48   28 U.S.C. § 1605(a).
       49   Id. § 1603(d) (emphasis added) (defining “commercial activity”).
       50   Id. § 1605(a)(2).
       51   Id. There is a “difference between [claims] ‘based upon’ commercial activity and
[those] ‘based upon’ acts performed ‘in connection with’ such activity.” Saudi Arabia v. Nelson,
507 U.S. 349, 358 (1993) (emphasis added). The third clause of the commercial activity
exception provides that the claim must be “based . . . upon an act outside the territory of the
United States in connection with a commercial activity of the foreign state elsewhere” and
that the act “causes a direct effect in the United States.” 28 U.S.C. § 1605(a)(2) (emphasis
added). In contrast, the first clause specifies that the claim must be “based upon a commercial
activity . . . by the foreign state.” Id. (emphasis added). Because “[d]istinctions among
descriptions juxtaposed against each other are naturally understood to be significant,” the
first clause “calls for something more than a mere connection with, or relation to, commercial
activity.” Nelson, 507 U.S. at 357–58.
       52   Republic of Arg. v. Weltover, Inc., 504 U.S. 607, 618 (1992).


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impact in the United States.’” 53 In considering the effect, we must “isolate those
specific acts of the [agency or instrumentality] that form the basis of the
plaintiff’s [claims].” 54 As the Second Circuit has noted, “even if . . . a particular
effect might be foreseeable,” such an effect is not “direct” if it “hinge[s] on third
parties’ independent . . . conduct.” 55 “[T]he mere fact that [an agency or
instrumentality]’s      commercial       activity    outside     of   the   United      States
caused . . . financial injury to a United States citizen is not itself sufficient to
constitute a direct effect in the United States.” 56 Such an injury will constitute
a direct effect only if the agency or instrumentality of a foreign state causes
the injury through its failure to perform an obligation that it was required to
perform in the United States. 57

       53Terenkian v. Republic of Iraq, 694 F.3d 1122, 1133 (9th Cir. 2012) (quoting Lyon v.
Agusta S.P.A., 252 F.3d 1078, 1083 (9th Cir. 2001)); see also Odhiambo v. Republic of Kenya,
764 F.3d 31, 41 (D.C. Cir. 2014).
       54de Sanchez v. Banco Cent. de Nicar., 770 F.2d 1385, 1391 (5th Cir. 1985); see
Guirlando v. T.C. Ziraat Bankasi A.S., 602 F.3d 69, 75 (2d Cir. 2010) (“[T]he requisite
immediacy is lacking where the alleged effect depends crucially on variables independent of
the conduct of the [agency or instrumentality].” (internal quotation marks omitted)).
       55  Virtual Countries v. Republic of S. Afr., 300 F.3d 230, 238 (2d Cir. 2002) (“Defining
‘direct effect’ to permit jurisdiction when [an agency or instrumentality]’s actions precipitate
reactions by third parties, which reactions then have an impact on a plaintiff, would foster
uncertainty in both [agencies or instrumentalities] and private counter-parties. Neither could
predict when an action would create jurisdiction, which would hinge on third parties’
independent reactions and conduct, even if in individual cases, such as the one at bar, a
particular effect might be foreseeable. To permit jurisdiction in such cases would thus be
contrary to the predictability interest fostered by the [FSIA].”).
       56 Guirlando, 602 F.3d at 78; see also Westfield v. Fed. Republic of Ger., 633 F.3d 409,
417 (6th Cir. 2011) (“[A]n American entity’s mere financial loss is insufficient to establish a
direct effect in the United States.”). If financial injury to a United States citizen were
considered a sufficiently direct effect, “the commercial activity exception would in large part
eviscerate the FSIA’s provision of immunity for foreign states.” Antares Aircraft, L.P. v. Fed.
Republic of Nigeria, 999 F.2d 33, 36 (2d Cir. 1993).
       57 Weltover, 504 U.S. at 619; see Energy Allied Int’l Corp. v. Petroleum Oil & Gas Corp.
of S. Afr., No. H-08-2387, 2009 WL 2923035, at *4 (S.D. Tex. Sept. 4, 2009); Voest-Alpine
Trading USA Corp. v. Bank of China, 142 F.3d 887, 896 (5th Cir. 1998) (noting that there
was a direct effect in the United States because an agency or instrumentality of the foreign
state failed to perform its obligation to transfer assets to an entity in the United States);
Callejo v. Bancomer, S.A., 764 F.2d 1101 (5th Cir. 1985) (same); UNC Lear Servs., Inc. v.

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       The district court determined that LFICO’s acts, which occurred outside
the United States, had a “direct effect” in the United States. The district court
explained that, “by doing business with SIB in Antigua, LFICO was in reality
doing business with Stanford in [the United States].” It concluded that, “as an
immediate consequence of LFICO’s investments [in Antigua], the [U.S.]-based
Stanford Ponzi scheme slipped further into insolvency and received funds it
needed to keep its scheme afloat.” This assumption is erroneous.
       LFICO purchased, repurchased, and redeemed the CDs from SIB, which
was based in Antigua; all of LFICO’s acts occurred in Switzerland and Libya;
and all of SIB’s acts occurred in Antigua, Canada, and England. LFICO had
nothing to do with SIB’s transfer of funds to or from other Stanford entities as
part of the scheme. The district court observed that “[m]oney put into and
taken out of SIB’s coffers in Antigua was money being funneled through
Stanford’s [U.S.]-based enterprise.” It did not state that LFICO was funneling
that money. In fact, it did not identify who was doing the funneling but ducked
that issue by relying on the passive voice: “[m]oney . . . was being funneled.”
       LFICO acted only pursuant to its obligations under the SIB-issued CDs,
which constituted agreements between LFICO and SIB. Those instruments did
not require any act in the United States, much less the act of funneling money
through the Stanford scheme or any Stanford entities in the United States.
Accordingly, the district court erred in deciding that the third clause of the
commercial activity exception applied to the receiver’s claims against LFICO.
2.     FIRST AND SECOND CLAUSES
       The receiver asserts that the district court erred in determining that the
first and second clauses of the commercial activity exception do not apply.


Kingdom of Saudi Arabia, 581 F.3d 210, 218–19 (5th Cir. 2009) (same); Westfield, 633 F.3d
at 415 (noting that there was no direct effect in the United States because the foreign state
“had not obligated itself to do anything in the United States”); Peterson v. Royal Kingdom of
Saudi Arabia, 416 F.3d 83, 90–91 (D.C. Cir. 2005).


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Those clauses provide exceptions to sovereign immunity when “the action is
based [1] upon a commercial activity carried on in the United States by the
foreign state . . . or [2] upon an act performed in the United States in
connection with a commercial activity of the foreign state elsewhere . . . .” 58
The receiver contends that SIB was, in fact, the Stanford scheme itself. But, as
discussed above, LFICO’s commercial activity was limited to its obligations
and rights under the SIB-issued CDs, which were contracts between LFICO
and SIB. The CDs did not require any activity in the United States. LFICO
properly assumed that its relationship was with SIB and that SIB was what it
represented itself to be, i.e., a bank based in Antigua. Even though a few of
LFICO’s analysts participated in SIB’s training program, which included a
visit to the United States, there is nothing to suggest that this activity was
related to LFICO’s relevant acts made pursuant to its obligations or rights
under the SIB-issued CDs. 59 Thus, if LFICO is an agency or instrumentality
of a foreign state, the commercial activity exception would not strip it of its
presumptive immunity under the FSIA.
D.     WHETHER THE CLAIMS AGAINST LIA ARE SUBJECT TO THE COMMERCIAL
       ACTIVITY EXCEPTION UNDER THE FSIA
       The receiver insists that, even though LIA did not purchase, repurchase
and redeem SIB-issued CDs, or receive proceeds of such CDs itself, LFICO did
and LFICO’s acts were attributable to LIA. He avers specifically that LFICO
is LIA’s alter ego or agent and that LIA was the beneficiary of the transfers
from SIB to LFICO. He concludes that, as with LFICO, the FSIA’s commercial
activity exception applies to his claims against LIA.



       58   28 U.S.C. § 1605(a)(2).
       59Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528, 533 (5th Cir. 1992) (“Isolated or
unrelated commercial actions by a foreign sovereign in the United States do not authorize
the exception.”).


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1.     AGENT OR ALTER EGO
       The parties do not appear to dispute the relationship between LIA and
Libya. Instead, they dispute the relationship between LIA and LFICO.
Specifically, they disagree on whether LFICO’s acts are attributable to LIA. As
we observed above, “[a] corporate parent which owns the shares of a subsidiary
does not, for that reason alone, own or have legal title to the assets of the
subsidiary . . . .” 60 “The fact that the shareholder is [an agency or
instrumentality of a foreign state] does not change the analysis.” 61 Subsidiaries
that are “established as juridical entities distinct and independent . . . should
normally be treated as such.” 62 In the context of the FSIA, a court must apply
“the general rules regarding corporate formalities.” 63 For this reason, “duly
created [agencies or] instrumentalities of a foreign state are to be accorded a
presumption of independent status.” 64 “A plaintiff can overcome that
presumption, however, in certain circumstances by demonstrating that the
instrumentality is the agent or alter ego of the foreign state.” 65 Yet, the theories
underlying alter egos and agents are “distinct” and are therefore not to be
applied “as if they were interchangeable.” 66 Again, alter egos are created
equitably; agents are created contractually. 67 Each is a basis for overcoming
the presumption that an agency or instrumentality of a foreign state is


       60   Dole Food Co., 538 U.S. at 475.
       61   Id.
       62   First Nat’l City Bank, 462 U.S. at 626–27.
       63   Dole Food Co., 538 U.S. at 476.
       64First Inv. Corp. of Marsh. Is., 703 F.3d at 752–53 (quoting First Nat’l City Bank,
462 U.S. at 627).
       65   Dale, 443 F.3d at 429; see First Inv. Corp. of Marsh. Is., 703 F.3d at 753.
       66   Bridas, 345 F.3d at 358.
       67Id. at 359 (“The laws of agency, in contrast, are not equitable in nature, but
contractual, and do not necessarily bend in favor of justice.”).


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separate from the foreign state itself. 68 In both instances, the analysis is
conducted with reference to federal law, not foreign law or state law. 69
       To determine if one entity is the alter ego of another, “[t]he corporate veil
may be pierced to hold a[ parent] liable for the [acts] of its [subsidiary] only if
(1) the [parent] exercised complete control over the [subsidiary] with respect to
the [acts] at issue and (2) such control was used to commit a fraud or wrong
that injured the party seeking to pierce the veil.” 70 In contrast, when
determining whether one entity is the agent of another, it is necessary to
consider “whether the [parent] exercises day-to-day control over the
[subsidiary].” 71 In the context of the commercial activity exception, we further
consider “whether the commercial activity is ‘of the foreign state.’” 72 Thus, both
the principal-agent and alter ego relationships require an element of control.
       A declaration provided by LIA, and which the district court
credited, states:
                  LFICO has always operated independently of LIA as
                  described in the [Layas and Mokhtar declarations].
                  For the avoidance of doubt: (a) LIA has no right to
                  manage LFICO’s investments directly. (b) LIA has no
                  right to actually own and deal directly with LFICO’s
                  assets. (c) LIA has no right to hold LFICO’s assets as
                  LIA’s own. (d) LIA has no right to assign LFICO’s
                  personnel, choose its managers, prepare its accounts,




       68   First Nat’l City Bank, 462 U.S. at 633.
       69See, e.g., id. at 622 n.11 (“[M]atters bearing on the nation’s foreign relations should
not be left to divergent and perhaps parochial state interpretations.” (internal quotation
marks omitted)).
       70   Bridas, 345 F.3d at 359.
       71   Dale, 443 F.3d at 429.
       72   Id.


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                 or determine with what third parties LFICO will
                 contract for services. 73
Considering this declaration offered by LIA, it is apparent that LIA and LFICO
are entitled to the presumption that they are separate entities. There is
nothing to indicate that LIA had or exercised any significant control over
LFICO, either generally or with specific regard to LFICO’s purchase,
repurchase, or redemption of the SIB-issued CDs or the receipt of proceeds
from such CDs. Any control that LIA might have exercised was not nearly
enough to justify disregarding the legal distinction between them. The district
court did not err in determining that LFICO was not LIA’s agent or its
alter ego.
2.     TRANSFER BENEFICIARY UNDER TUFTA
       The receiver further argues that LIA is liable for the transfer from SIB
to LFICO because, under the Texas Uniform Fraudulent Transfer Act
(“TUFTA”), LIA was the “person” for whose benefit the transfer was made. The
district court rejected this contention.
       TUFTA provides that a transfer from a debtor to a creditor is fraudulent
if made with actual intent to hinder, delay, or defraud any other creditor of
that debtor. 74 In relevant part, it states that either “the first transferee of the
asset or the person for whose benefit the transfer was made” may be held liable
for such a transfer. 75 Regardless of whether LIA is a beneficiary of the transfer,
under TUFTA, we must consider whether the commercial activity exception to
the FSIA provides a source of subject matter jurisdiction over such a claim.




       73 The receiver submitted his own contrary declaration, but the district court
discredited it and its reasons for doing so were sound.
       74   TEX. BUS. & COM. CODE ANN. § 24.005.
       75   Id. § 24.009(b)(1).


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       As discussed above, the commercial activity exception focuses on the acts
or activities of the agency or instrumentality of the foreign state. The receiver’s
TUFTA claim is based on SIB’s transfer of proceeds to LFICO, allegedly for the
benefit of LIA. As alleged, LIA neither made nor received the transfer. It
merely benefited from it.
       Notably, “[TUFTA] and the . . . Bankruptcy Code are of common
ancestry; cases under one are considered authoritative under the other.” 76 Both
refer to the person “for whose benefit [a] transfer was made.” 77 In the context
of bankruptcy, a transfer beneficiary is typically the guarantor of a debt that
was extinguished by the transfer. 78 The obligation of the insolvent debtor in
such a circumstance would generally be the guarantor’s obligation, as well.
Absent the transfer from debtor to creditor, the guarantor would have had to
make the transfer itself. As the transfer beneficiary, it avoids that obligation.
       The receiver nevertheless insists that when a debtor makes a transfer to
a creditor, that creditor’s shareholder may also be considered a transfer
beneficiary. The receiver relies on Esse v. Empire Energy III, Ltd. 79 and
Citizens National Bank of Texas v. NXS Construction, Inc., 80 but both are
inapplicable. The Esse court determined that shareholders were transfer
beneficiaries because they had “‘assented to and benefitted from these


        GE Capital Commercial, Inc. v. Wright & Wright, Inc., No. 3:09-CV-572-L, 2009 WL
       76

5173954, at *7 n.1 (N.D. Tex. Dec. 31, 2009).
       77   11 U.S.C. § 550(a)(1); TEX. BUS. & COM. CODE ANN. § 24.009(b)(1).
       78 See, e.g., In re Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson &
Casey, 130 F.3d 52, 57 (2d Cir. 1997); In re Columbia Data Prods., Inc., 892 F.2d 26, 29 (4th
Cir. 1989); see also COLLIER ON BANKRUPTCY ¶ 550.02[4] (16th ed. 2011) (“Two frequently
cited examples of an entity for whose benefit the transfer was made are (1) a third-party
guarantor of the debtor whose liability is reduced by the debtor’s payment of the guaranteed
debt and (2) a third party whose debt is paid by the debtor (with payment going to the third
party’s creditor as the initial transferee).”).
       79   333 S.W.3d 166, 181 (Tex. App. 2010).
       80   387 S.W.3d 74 (Tex. App. 2012).


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transfers’      and      knowingly    participated      in   the    wrongdoing.” 81   Those
shareholders had also waived any argument that they were not transfer
beneficiaries. 82 The Citizens National Bank court determined that a
shareholder was a transfer beneficiary because the shareholder was actually
involved with the transfer. 83
      By contrast, LIA insists that, without more, a shareholder is not a
beneficiary of a transfer made to the corporation. It notes, for instance, that in
In re Hansen, a bankruptcy court held that the creditor’s majority shareholder
was not a transfer beneficiary. 84 The court explained:
                      Nothing in [§] 550(a)(1) [of the Bankruptcy
                Code] indicates that corporate form can be thrust aside
                and all voidable transfers to a corporation recovered
                from its shareholders on the mere assumption that
                shareholders somehow automatically “benefit” from
                such transfers. If corporate existence is to be observed,
                transfers cannot be recovered even from a shareholder
                who by virtue of his majority ownership ostensibly
                “controls” the corporation. Something more than mere
                status as a shareholder, officer, or director must be
                shown.
                      The better view—and the one consistent with
                corporate law—is that shareholders, officers, and
                directors are not liable for transfers to their
                corporation unless they actually received distributions
                of the transferred property . . . or a showing can be
                made to pierce the corporate veil. 85
      This appears to be the right approach. When a debtor transfers assets to
a creditor to satisfy a guaranteed debt, there are independent benefits: The


      81   333 S.W.3d at 174.
      82   Id. at 181.
      83   387 S.W.3d at 85.
      84   341 B.R. 638, 644 (Bankr. N.D. Ill. 2006).
      85   Id. at 645–46 (citations omitted).


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creditor, as transferee, receives the assets, and the guarantor, as the
beneficiary, retains assets that he would otherwise have lost as a result of the
debtor’s insolvency. Another creditor might seek to recover either the assets
transferred by the debtor or the assets saved by the creditor, or both. This is
because the transferee and beneficiary have independent obligations. Here,
only LFICO, as the transferee, has an obligation. LIA’s obligation is merely
derivative of that obligation, not independent of it. LIA did not receive an
independent benefit as a result of the transfer from SIB to LFICO. Even if LIA
itself owned and controlled LFICO’s assets, either LIA or LFICO would have
received the benefit of the transfer, but not both. Further, when a debtor
transfers assets to a creditor to satisfy a guaranteed debt, the guarantor is
involved as a party, or at least an independent obligor, to the contract giving
rise to the transfer. But LIA was not a party to the subject contract.
      As Collier on Bankruptcy explains, any “approach that permits recovery
based merely on the intent of the debtor/transferor without any benefit being
conferred on the third party results in the harsh outcome that the third party
can be liable for the return of an avoidable transfer without having received
any benefit, which is generally contrary to the disgorgement remedy of
avoidance actions.” 86
      Because LIA was not a transfer beneficiary under TUFTA, we do not
consider LIA and LFICO’s contention that TUFTA may not be applied
extraterritorially. Neither do we consider whether, if LIA were a transfer
beneficiary, its status as such would be a basis for jurisdiction under the FSIA.




      86   COLLIER ON BANKRUPTCY ¶ 550.02[4].


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                                     III.
                                CONCLUSION
      We hold that the FSIA provides no basis for jurisdiction over LIA. We
therefore AFFIRM the district court’s holding that it had no jurisdiction over
the claims against LIA under the FSIA. However, we VACATE the district
court’s holding that it had jurisdiction over the claims against LFICO under
the FSIA and REMAND to the district court for it to determine in the first
place whether LFICO is an “organ” of Libya, and thus a “foreign state,” under
the FSIA.




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