US Supreme Court hands Venezuela a win on expropriations

Sébastien BLANC
A US oil drilling company loses a bid to sue Venezuela in US courts for nationalizing its rigs after the US Supreme Court rules against it

Crisis-ridden Venezuela received a bit of good news Monday when the US Supreme Court ruled against an American oil firm whose equipment was expropriated under late president Hugo Chavez.

In a unanimous decision, the court rejected the basis of a suit against Venezuela brought by Oklahoma-based Helmerich & Payne International Drilling, which asserted that the 2010 seizure of 11 of its oil rigs was illegal.

At the time, the "Bolivarian revolution" was in full swing under Chavez, a former army paratrooper famous for railing against "Yankee imperialism" while promising to lead Venezuela into "the socialism of the 21st century."

From agribusiness to energy to the nation's banks, the Chavez regime nationalized whole sectors of the economy, forcing multinationals to pull back.

Helmerich, a relatively small player in the oil-drilling sector compared to giants like Schlumberger and Halliburton, had installed its own derricks and other equipment in the South American country.

So when Chavez took steps in June 2010 to prevent the company from removing its equipment, Helmerich sued.

The question before the Supreme Court was under what precise conditions one can sue a sovereign state -- in this case Venezuela -- in an American court.

Sovereign states have long been shielded from being sued in US courts, with only limited exceptions.

Under the Foreign Sovereign Immunities Act of 1976, it is however possible to sue a foreign country if it has seized American goods or if its actions have directly affected the commercial functioning of the United States.

Based on that language, the US Appeals Court for the District of Columbia had found that Helmerich had the right to sue Caracas over the expropriation.

The Venezuelan government, however, maintained that the drilling rigs were always the property of Helmerich's Venezuelan subsidiary, and thus Venezuelan property.

The Supreme Court ruled that the arguments advanced by the American firm were outweighed by the rules of international law.

The ruling, read by Justice Stephen Breyer, thus overturned the lower court's finding.

Conservative justice Neil Gorsuch, who joined the court only recently after his appointment by President Donald Trump, did not take part in the ruling.

In this sensitive case, the Venezuelan government paradoxically was supported by the United States itself, concerned about any erosion in the sacrosanct principle of the sovereign immunity of states.

Indeed, last year, then president Barack Obama vetoed a law allowing victims of the Sept. 11, 2001 terror attacks to sue Saudi Arabia, homeland to most of the attackers, arguing that the legislation could open the US to a raft of lawsuits by citizens abroad.

Congress decisively overturned the veto.