Case of the Day: Crystallex v. Venezuela

The CITGO Sign in Kenmore Square
A Boston landmark. Credit: Lunarsurface

The case of the day is Crystallex International Corp. v. Bolivarian Republic of Veneuela (3d Cir. 2019). I last wrote about the case in October 2016. Crystallex, a Canadian company that had invested in a Venezuelan gold mining project, won a $1.2 billion aribtral award against Venezuela after that country nationalized the gold deposits and transferred them to the state-owned oil company, PDVSA. Crystallex won confirmation of the award in Washington and then sought to attach PDVSA’s shares in PDVH, its American subsidiary, which is the ultimate parent of CITGO a Delaware corporation that, according to the court, is “best known for the CITGO sign outside Fenway Park in Boston.” You’ve got that right. PDVSA, and some of its other creditors as amici curiae, argued against the attachment. The district court granted the attachment, and in today’s decision the Third Circuit affirmed. (more…)

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Case of the Day: Halvorssen v. Simpson

The case of the day is Halvorssen v.Simpson (E.D.N.Y. 2018). Thor Halvorssen, a human rights advocate, claimed that after he criticized Derwick Associates, a Venezuelan power company, for corruption, Derwick hired Fusion GPS, the intelligence firm made famous for its connection with the Steele Dossier, to do a number on him. The claim was brought under the civil RICO statute. Halvorssen sought leave to serve three Venezuelan defendants, Leopoldo Betancourt-Lopez, Pedro Trebbau-Lopez, and Francisco Convit-Guruceaga, by service on their US lawyers. (more…)

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Case of the Day: Societe Hellin v. Valley Commercial Capital

The case of the day is Societe Hellin S.A. v. Valley Commercial Capital LLC (Fla. Ct. App. 2018). Valley sued Societe Hellin Francisco Morillo, alleging that they had defaulted on an airplane lease and a guaranty. The lease gave a Venezuelan address for both defendants. Valley said it had made unspecified attempts to serve process on them in Venezuela Panama. It then served process on Morillo’s wife in a condominium unit in Florida, but the court quashed the service on the grounds that Morillo didn’t reside there. Valley went back and sought to serve process at the condominium several times. Valley then sought leave to make substitute service on the Secretary of State. At the hearing on the motion for substitute service, the judge said, “At some point [VCC] needs to bring [defendants] to court and [has] to get service somehow. … What are they supposed to do, go serve him in Venezuela?” The judge granted leave, and the defendants moved to quash the service. The court denied the motion to quash, and the defendants appealed.
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Case of the Day: Diaz v. Galopy Corp.

The case of the day is Diaz v. Galopy Corp. International, N.V. (N.Y. Sup. Ct. 2018). In 2014, Anibal Montenegro Diaz, a Venezuelan lawyer, sued Galopy in a Venezuelan court for unpaid legal fees. In 2015, the court found in her favor on liability, and in 2016, it awarded Diaz the fees and sent the matter to a revaluation court for assessment, i.e., an adjustment in light of the hyperinflation afflicting the Venezuelan currency, the Bolivar. In June 2016, the court awarded fees in the adjusted amount of approximately 169 million Bolivars. In August 2016, the court adjusted the amount to more than one billion Bolivars. Diaz then sued in New York seeking recognition and enforcement.

There was no real question about recognition. The real question was the rate at which the New York court should convert Bolivars to dollars, assuming that the New York judgment would be denominated in dollars. Should it use the government’s official rate, which severely overvalues the Bolivar? Or should it use the market rate? New York’s statute requires conversion “at the rate of exchange prevailing on the date of entry of the judgment or decree.”
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Case to Watch: Helmerich & Payne International v. Venezuela

This week, the Supreme Court will hear arguments in Helmerich & Payne International v. Venezuela. I wrote about the case back in May 2015. Here was my description of the facts:

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.

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Case of the Day: Crystallex International v. Petróleos de Venezuela

The CITGO Sign in Kenmore Square
A Boston landmark. Credit: Lunarsurface

The case of the day is Crystallex International Corp. v. Petróleos de Venezuela (D. Del. 2016). Crystallex was a Canadian corporation that had brought an ICSID arbitration against Venezuela, relating primarily to Venezuela’s denial of a permit to allow Crystallex to mine gold deposits in the Las Cristinas area and to the decision of a state-owned economic development company, Corporación Venezolana de Guayana, to rescind a mining contract with Crystallex. The arbitration resulted in an award of more than $1.2 billion in damages to Crystallex.

In today’s case, Crystallex alleged that Venezuela, in anticipation of the award, had “orchestrated a scheme to monetize its American assets and pull the proceeds out of the United States, in order to evade potential arbitration creditors.” In particular, it alleged that Venezuela and its state oil company, Petróleos de Venezuela, cause CITGO, a subsidiary of Petróleos de Venezuela, to issue $2.8 in debt and then to pay the proceeds of the issuance to Petróleos de Venezuela in the form of a dividend. The main claim was for fraudulent transfer under the Uniform Fraudulent Transfer Act. CITGO moved to dismiss for failure to state a claim. (Note that I’m simplifying things a bit—there actually were two levels of subsidiaries, with the indirect subsidiary paying a dividend to the direct subsidiary and the direct subsidiary then paying a dividend to Petróleos de Venezuela. I’m using the name CITGO to refer to both, even though ultimately CITGO was dismissed from the case and the other subsidiary, PDV Holding, Inc., was not. This is mainly so I can use the picture of the CITGO sign, a Boston landmark).
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Case of the Day: In re Application of Gazprom

Gazprom Latin America logo

The case of the day is In re Gazprom Latin America Servicios, CA (S.D. Tex. 2016). Gazprom Latin America, a Venezuela company, brought a § 1782 application seeking discovery from Jean-Marc Pivert. The court granted the application ex parte, and then moved to compel and for contempt. Privert then moved to vacate the original order.
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