Helmerich & Payne International Drilling Co. v. Bolivarian Republic of Venezuela
971 F. Supp. 2d 49
D.D.C.2013Background
- H&P-V is a Venezuelan-incorporated subsidiary of Helmerich & Payne, with contracts to provide drilling services in Venezuela since the 1970s.
- PDVSA and Petróleo are Venezuelan state-owned entities with a monopoly on oil, defendants in the suit.
- Ten fixed-term drilling contracts signed in 2007 provided for mixed USD and bolívar payments to H&P-V, with USD payments routed to a Tulsa, Oklahoma account.
- A 2008 agreement required 61% of foreign-currency invoices in USD to a U.S. bank account and 39% in bolívares, under a prior 2003 arrangement.
- From 2007 onward, PDVSA Defendants allegedly breached the contracts, halting payments and causing substantial arrears, culminating in 2010-2011 dissolution of H&P-V’s operations in Venezuela.
- In June 2010 Venezuela expropriated H&P-V’s drilling rigs and assets, leading to seizures and related eminent-domain proceedings without compensation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether H&P-V is a Venezuelan national under international law for expropriation analysis. | H&P-V is Venezuela’s national; incorporation and activity in Venezuela support nationality. | (Not explicit in summary) Likely challenges nationality. | H&P-V is a Venezuelan national under international law. |
| Whether the expropriation claims are barred by the act of state doctrine. | Expropriation claims fall within FSIA exceptions and should be considered. | Act of state doctrine may bar review of foreign sovereign acts. | Not decided now; jurisdictional issues predominate; act of state shelving pending jurisdiction. |
| Whether Plaintiffs adequately allege a direct effect in the United States under FSIA §1605(a)(2). | Contracts and payments in U.S. dollars and U.S. financial arrangements create a direct effect in the U.S. | Direct effect must be more narrowly tied to U.S. location or payments. | Plaintiffs have sufficiently alleged a direct effect. |
| Whether H&P-IDC has standing to pursue the expropriation claim. | H&P-IDC, as sole shareholder, has a direct, personal interest in expropriation of its subsidiary. | Standing denied because H&P-IDC isn’t a direct party to the contracts. | H&P-IDC has standing to pursue the expropriation claim. |
Key Cases Cited
- Barcelona Traction, Light and Power Co. (Belg. v. Spain), 1970 I.C.J. 3 (I.C.J. 1970) (recognizes corporate nationality based on incorporation as a general rule)
- Diallo (Ahmadou Sadio Diallo), 2007 I.C.J. 582 (I.C.J. 2007) (reaffirms Barcelona Traction; no express exception to corporate nationality)
- Tokios Tokelės v. Ukraine, (ICSID Case No. ARB/02/18) (ICSID 2004) (officially recognizes incorporation-based nationality under BITs; cited by ICSID)
- Weltover, Inc. (Republic of Argentina), 504 U.S. 607 (S. Ct. 1992) (direct effect requires immediate consequence, not substantiality/foreseeability)
- Ramirez de Arellano v. Weinberger, 745 F.2d 1500 (D.C. Cir. 1984) (standing for FSIA expropriation under corporate ownership challenges)
- Siderman de Blake v. Republic of Argentina, 965 F.2d 699 (9th Cir. 1992) (support for shareholder standing in expropriation contexts)
- Cruise Connections Charter Mgmt. v. Attorney General of Canada, 600 F.3d 661 (D.C. Cir. 2010) (direct effect can arise from third-party revenue losses; direct effect need not be on plaintiff)
- Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (S. Ct. 1964) (act of state doctrine; limits on reviewing foreign sovereign acts)