## Facts

- Bridas S.A.P.I.C. and related entities (collectively, Bridas) entered a 1993 joint venture agreement (JVA) with a Turkmen state oil-and-gas entity to develop hydrocarbon resources in the Keimir region of Turkmenistan.
- The JVA identified Bridas as the “foreign party” and the counterparty as the “Turkmenian Party,” whose identity was changed over time by presidential designation; Turkmenneft ultimately occupied that role.
- The JVA included an ICC arbitration clause covering disputes arising out of the agreement.
- Bridas alleged that Turkmenistan, acting through governmental directives and interference (including ordering suspension of work), caused the venture’s failure while later disputing that it was bound to arbitrate.
- In 1996 Bridas commenced ICC arbitration against Turkmenneft and the Government of Turkmenistan.
- The Government asserted it could not be bound because it did not sign the JVA and was not the named “Turkmenian Party.”
- The arbitral tribunal determined it could decide its own jurisdiction and ultimately treated the Government as a proper party; it issued a substantial monetary award for Bridas against Turkmenneft and the Government.
- Bridas sought confirmation in the Southern District of Texas under the New York Convention and the Federal Arbitration Act; on remand from an earlier appeal, the district court refused to enforce the award against the Government, finding no alter-ego relationship.

## Issues

1. Whether Turkmenistan, though a non-signatory to the JVA, could be bound to the arbitration clause and award as the alter ego of its wholly owned enterprise, Turkmenneft.
2. What facts and standards govern alter-ego/veil-piercing determinations when a foreign sovereign is alleged to control a state-owned enterprise in the arbitration-enforcement context.
3. Whether the district court erred in refusing to confirm or enforce the arbitral award against the Government based on its alter-ego analysis.

## Decision

- The Fifth Circuit reversed the district court and rendered judgment enforcing the arbitral award against the Government of Turkmenistan.
- The court held that, under the totality of the record, Turkmenistan was Turkmenneft’s alter ego and therefore bound by the arbitration agreement and liable for the award.
- The court concluded the district court undervalued evidence of governmental control and manipulation of the state enterprise’s role under the JVA.

## Legal Principles

- A non-signatory sovereign may be bound to an arbitration agreement and resulting award under alter-ego/veil-piercing principles when the state so dominates and controls the state-owned entity that the entity functions as the state’s instrumentality.
- Alter-ego determinations turn on the totality of the circumstances, including ownership, financial and operational control, disregard of separate identity, and use of the entity’s form to evade contractual obligations.
- In actions to confirm international arbitral awards under the Federal Arbitration Act and the New York Convention, federal courts may apply established non-signatory doctrines (including alter ego) to enforce arbitration agreements and awards consistent with recognized fairness constraints.

## Conclusion

The Fifth Circuit enforced an ICC award against Turkmenistan by finding that the sovereign’s pervasive control over, and manipulation of, Turkmenneft and the interchangeable “Turkmenian Party” made the enterprise the Government’s alter ego, binding the Government to the JVA’s arbitration clause and the resulting award.


Bridas S.A.P.I.C. v. Gov’t of Turkmenistan, 447 F.3d 411 (5th Cir. 2006)