Case of the Day: Venezuela v. Helmerich & Payne

The case of the day is Bolivarian Republic of Venezuela v. Helmerich & Payne International Drilling Co. (S. Ct. 2017). I’ve covered the case twice before, in May 2015 and November 2016. Here was my statement of the facts from before:

Helmerich & Payne, an Oklahoma oil company, operated in Venezuela through subsidiaries incorporated under Venezuelan law. Beginning in 2007, its subsidiary made contracts with the Venezuelan state oil company, PDVSA, for the use of the subsidiary’s drilling rigs. But PDVSA quickly fell behind on payments under the contract. PDVSA did, however, promise that payments would be forthcoming, and H&P’s subsidiary completed the work under the contract. The subsidiary then prepared its equipment to be removed from the country, but the Venezuelan government then sent its national guard to prevent removal of the equipment and to force the negotiation of new contractual terms. Venezuela issued press releases stating that the drilling rigs had been nationalized. The government later issued a decree of expropriation and some Hugo Chavez-flavored anti-American press releases. Venezuela brought two eminent domain actions in its courts, supposedly to compensate H&P’s subsidiary. But the subsidiary never received service of process in the first case, and the second case was stayed indefinitely. H&P sued Venezuela and PDVSA. The defendants argued the claim was barred by the FSIA and under the act-of-state doctrine.

The issue for the court was the pleading standard that applies when a plaintiff pleads a case within the expropriation exception to FSIA immunity. The unanimous holding (Justice Gorsuch did not participate): “[T]he expropriation exception grants jurisdiction only where there is a valid claim that ‘property’ has been ‘taken in violation of international law.’ § 1605(a)(3). A nonfrivolous argument to that effect is insufficient.”

It’s interesting to compare the language of the expropriation exception with other FSIA exceptions. I think the Court was right to suggest that the language of the statute itself shows that the merits and the jurisdictional inquiries are intertwined: the statute requires that the property have been “taken in violation of international law” in order for jurisdiction to exist, but precisely what the plaintiff seeks to prove is that the property was taken in violation of international law. Other FSIA exceptions do not mingle jurisdiction and the merits in this way. The commercial activity exception, for example, requires only that the action be based on the foreign state’s commercial activity in the United States; and the immovable property exception requires only that rights in real property located in the United States be at issue. On the other hand, the non-commercial tort exception applies only if the injury was caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment.” I wonder if the Court will eventually reach a similar holding on the non-commercial tort exception. Such a move would seem to be justified by the text.

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