Case Watch: Venezuela v. Helmerich & Payne

Case Watch: Venezuela v. Helmerich & Payne

On May 1, 2017, the U.S. Supreme Court issued its decision in Bolivarian Republic of Venezuela v. Helmerich & Payne International Drilling Co., 581 U.S. ___ (2017).

In an opinion authored by Justice Breyer, the Supreme Court determined that a plaintiff is not permitted to pursue an expropriation case in U.S. court against a foreign state by alleging only and non-frivolously that there might have been rights in property taken in violation of international law. Rather, the plaintiff show, as an initial matter, that there were in fact rights taken in property in violation of international law.

Specifically, the Court held that “courts can maintain jurisdiction to hear the merits of a case only if they find that the property in which the party claims to hold rights was indeed ‘property taken in violation of international law.’ Put differently, the relevant factual allegations must make out a legally valid claim that a certain kind of right is at issue (property rights) and that the relevant property was taken in a certain way (in violation of international law). A good argument to that effect is not sufficient.” (Case No. 15-423, Slip Op. at 2).

The Court found support for this ruling in four ways. First, the language of the Foreign Sovereign Immunities Act (“FSIA”) supports the ruling. The FSIA renders lawsuits against foreign states the exception rather than the rule. 28 U.S.C. §1604 states that a “foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided” by the exceptions enumerated in the FSIA. And §1605(a)(3), the expropriation exception, provides the limited circumstances under which a court may exercise jurisdiction over a foreign state for expropriation claims. The FSIA therefore presumes that the jurisdictional question will be answered at the outset of the lawsuit rather than at the later merits stage. (See Slip Op. at 6-7).

Second, precedent supports the ruling. Specifically, in Permanent Mission of India to United Nations v. City of New York, 551 U.S. 193 (2007), the Court did not adopt a non-frivolous standard, but required more to satisfy the expropriation exception. (See Slip Op. at 7).

Third, the policy behind the FSIA lends additional support. Congress intended the FSIA to comport with international law. Were a final ruling on whether property was taken in violation of international law to await the later merits stage of the suit, the United States would be treating immunity differently than it is treated under international law. (See Slip Op. at 7-11).

Finally, Justice Breyer noted, the U.S. Solicitor General filed an amicus brief raising very serious and real foreign relations and reciprocity concerns were the Court to adopt the non-frivolous standard advocated by Helmerich & Payne. (See Slip Op. at 11-12). At oral argument, the United States had pointed out that foreign relations and comity concerns were not merely hypothetical: “this is a special context in which there is a real dignitary harm to the foreign State if the courts of another country sit in judgment as to something that foreign State….” (Tr. of Oral Argument at 25).

Ultimately, Justice Breyer wrote an opinion that was consistent with his comments at oral argument. He noted then (and in the written opinion) that, when the defendant is a foreign state, “sovereignty is at issue” so jurisdiction and immunity issues must be resolved as “soon” as a judge is able. Courts do not want to drag foreign states into U.S. courts unnecessarily. Thus, in the “ordinary case,” the issue should be decided “soon”. We don’t want to have foreign countries in our courts when there isn’t really a. . .pretty good case against them[.]” (Tr. of Oral Argument at 15).


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