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Wednesday, July 17, 2024 | Back issues
Courthouse News Service Courthouse News Service

Justices Debate Immunity for Venezuela in Oil-Rig Case

WASHINGTON (CN) - The Supreme Court on Wednesday closely scrutinized the delicate issue of when a foreign government can be sued in the United States - a case whose outcome could make it easier to file such lawsuits, but could also lead to retaliation against the United States by other countries.

Before the justices was the question of whether an Oklahoma-based oil company, Helmerich and Payne International, can move ahead with a lawsuit that claims the government of Venezuela illegally seized 11 of its oil drilling rigs in 2010.

Generally, foreign nations are granted immunity from U.S. complaints, but justices argued over whether or not an exception to a federal statute is applicable when it involves the seizure of property that was taken in violation of international law.

Helmerich and Payne and Venezuelan oil companies once cooperated quite closely. But in 2010, Petroleos de Venezuela and the Venezuelan National Guard cordoned off Helmerich's rigs for what then-Venezuelan President Hugo Chavez said was necessary to recoup $100 million losses stemming from the rigs' operation.

Shortly thereafter, Chavez announced the nationalization of the U.S. rigs publically, saying that the seizure would increase oil and gas production in his country as well as jobs.

After being hauled into court, Venezuela argued that because the rigs were owned by a Venezuelan subsidiary of Helmerich's, no violation of international law occurred.

In 2015, a federal appeals court sided with the company and allowed the lawsuit to move forward, holding that the seizure was detrimental to American stakeholders.

On Wednesday, Venezuela's lawyer, Catherine Stetson, argued that lower courts had not yet fully considered the state company's possession rights.

As arguments got underway Wednesday morning, jurisdictional matters dominated, with Justice Sonia Sotomayor engaging in a terse exchange with Stetson over whether or not what her client was actually seeking is an advisory opinion on a jurisdictional matter.

"I'm sorry. What more do you want? I mean, it seems as if you're asking us for an advisory opinion on what the court's next step should be with respect to what issues of discovery it should have on other legal issues and not this one," Sotomayor said.

"It's already ruled that this complaint is sufficient as a matter of law, that this parent, under international law - I'm not even questioning whether its right or wrong," she said. "I know you say it's wrong and there's a serious issue of whether it's right or wrong. But are you asking for an advisory opinion ... ?"

Stetson maintained she wasn't asking for an advisory opinion at all.

"The problem ... when you're talking about jurisdiction ... you can't just decide that the plaintiff might have stated a jurisdictional predicate," she said. "You have to decide whether that right actually exists."

Since Helmerich was a subsidiary of the Venezuelan-owned entity, Stetson argued that the republic's claim to rights did have its merits in this case.

Justice Stephen Breyer initially appeared to agree with the plaintiff's position, but later admitted that his thoughts had become muddied.

"It sounds, the more I hear you speak, that there isn't a good thing that we're going to write in this case that isn't going to get everybody good and mixed up," he said.

"It reminds me of a case where we set a kind of order of battle," Breyer continued. "First you have to decide the jurisdiction, then you decide [the right]. I've never received so much criticism from the district judges as [I did] for that case."

A few of the justices seemed to feel that a lower court should be able to take the case, but ultimately the concern over the impact of foreign nations being dragged into U.S. courts lingered.

Justice Department attorney Elaine Goldenberg tried to address those concerns, stating that a ruling for the company could be detrimental to foreign relations.

Goldenberg warned that "there actually have been real problems, real sensitivities, real foreign relations concerned that have been raised in this area," which she said stemmed from a 2008 D.C. circuit case, Chabad v. Russian Federation.

In Chabad, Goldenberg explained, the court decided there were "19 non-frivolous allegations that property had been taken in violation of international law. At that point, Russia, feeling that it was immune and it hadn't [sic] gotten full determination of its immunity, dropped out of the case."

After dropping out, the D.C. court sanctioned the federation with a $50,000-a-day fine. Russia, Goldenberg says, "in response, initiated an expropriation action against us in Moscow and started imposing $50,000-a-day sanctions on the U.S."

"It's very sensitive and there are very sensitive concerns here," she added.

Helmerich attorney Catherine Carroll countered by saying the court may find it more prudent to consider the wishes of Congress, which has traditionally endorsed having courthouse doors open to lawsuits where a defendant has violated international law or, as Carroll argued, where "the defendant's title is no good because the property was taken in violation of international law."

"All those are within the scope," Carroll said.

Chief Justice John Roberts did not seem fully convinced, questioning how a diplomatic quagmire like this one could play out.

"Our ambassadors have to go to these other countries and say ... you're being sued," Roberts said. "You have to come into our courts, even though you're a sovereign and we don't want you dragged us into your courts. But you have to come into ours because someone has raised a claim that is not wholly insubstantial or frivolous. That's a very low standard in that context."

A ruling will be issued next year.

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