Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co.
137 S. Ct. 1312
| SCOTUS | 2017Background
- U.S. parent company (Parent) and its wholly owned Venezuelan subsidiary (Subsidiary) sued Venezuelan state oil entities alleging nationalization of Subsidiary’s oil rigs without lawful compensation.
- Parties stipulated most material facts: Venezuela failed to pay, sent troops to secure rigs, issued a Decree of Expropriation, and officials disparaged the Subsidiary as foreign-owned.
- Venezuela moved to dismiss under the Foreign Sovereign Immunities Act (FSIA), asserting sovereign immunity because the Subsidiary was a Venezuelan national and, thus, its expropriation could not violate international law; Venezuela also argued Parent lacked property rights in the Subsidiary’s assets.
- District Court dismissed the Subsidiary’s claim for lack of jurisdiction but allowed Parent’s claim to proceed, finding Parent’s shareholder rights implicated.
- D.C. Circuit reversed in part, applying a low “nonfrivolous” standard: it held an expropriation of a state’s national can violate international law if it unreasonably discriminates by shareholders’ nationality, and Parent had raised a nonfrivolous property-rights claim.
- Supreme Court granted certiorari to decide whether the FSIA expropriation exception is satisfied by a merely nonfrivolous claim or requires that the property was in fact taken in violation of international law, and whether courts must resolve such questions at the threshold.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a "nonfrivolous" claim that property was taken in violation of international law is sufficient to defeat FSIA immunity | A nonfrivolous assertion that property was taken in violation of international law suffices to invoke the expropriation exception (analogous to 28 U.S.C. §1331 practice). | The FSIA requires that the property actually be taken in violation of international law; a mere nonfrivolous argument is insufficient. | Held: Nonfrivolous argument is insufficient; the court must find that the property was taken in violation of international law for the exception to apply. |
| Whether courts should decide FSIA immunity at the threshold or allow merits-stage resolution (e.g., via Rule 12(b)(6) / Rule 56) | Allowing merits-stage resolution is acceptable because frivolous claims will be dismissed and it avoids complex early factfinding. | Immunity is jurisdictional and aims to spare foreign sovereigns from suit; courts should resolve immunity early and, if necessary, take evidence at the outset. | Held: Immunity is jurisdictional; courts should decide it at the threshold and resolve factual disputes as near to the outset as reasonably possible. |
| Whether taking a state national's property can violate international law | Plaintiffs: Expropriation of a domestic national can violate international law when it unreasonably discriminates based on shareholders’ nationality. | Defendant: A state’s taking of its own national’s property ordinarily does not violate international law. | Held: It can, in principle, violate international law (e.g., unreasonable discrimination), but the jurisdictional question requires a legal finding that the taking did violate international law, not merely an arguable claim. |
| Whether a corporate parent can assert property rights based on harms to shareholder control | Parent: As sole shareholder, Parent’s unique ownership and control rights were deprived, putting property rights in issue. | Venezuela: Parent does not own Subsidiary’s assets and thus cannot claim property rights for FSIA purposes. | Held: Whether Parent has cognizable property rights is a merits-type question to be resolved, but jurisdictional standard requires showing that the asserted rights involve property taken in violation of international law. |
Key Cases Cited
- Verlinden B. V. v. Central Bank of Nigeria, 461 U.S. 480 (discusses threshold resolution of FSIA immunity and restrictive theory of immunity)
- Permanent Mission of India to United Nations v. City of New York, 551 U.S. 193 (interpreting FSIA exception for immovable property and implying jurisdictional inquiry requires substantive connection)
- Bell v. Hood, 327 U.S. 678 (distinguishes §1331 "arising under" nonfrivolous test relied on by plaintiffs)
- Republic of Austria v. Altmann, 541 U.S. 677 (treating FSIA statutory-construction questions and Executive Branch views)
- Berizzi Brothers Co. v. S. S. Pesaro, 271 U.S. 562 (discusses sovereign immunity and principles of international comity)