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U.S. Supreme Court rules for Venezuela in oil expropriation case

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Staff Writer | May 2, 2017
Venezuela oil rig
Oil services   Seizing 11 oil rigs in 2010

The U.S. Supreme Court ruled in favor of Venezuela in a case involving the expropriation of assets belonging to oil services company Helmerich & Payne, which accused the South American country’s government of illegally seizing 11 oil rigs in 2010.

The high court ruled that the firm’s complaint should not have been upheld in lower courts because it had not adequately demonstrated that its property had been seized in violation of international law, specifically, the doctrine of sovereign immunity.

The decision was handed down unanimously by the eight magistrates on the court, who heard arguments in the case last November, when President Donald Trump’s high court nominee, Neil Gorsuch, was not yet on the bench. Consequently, the newly confirmed justice did not participate in the decision.

Helmerich & Payne, based in Oklahoma, operated for years in Venezuela and had the Caracas government as a customer, but in 2009 it ceased its activities there and shut down its wells after the government built up millions of dollars in debt with it.

In response to that move, Venezuela’s then-president Hugo Chavez, in June 2010, ordered the nationalization of 11 rigs owned by Helmerich & Payne after complaining that the firm had idled them for “a considerable time.”

Helmerich & Payne countered by suing the Venezuelan government and the state-run PDVSA oil company.

Venezuela contended that sovereign immunity prevented the filing of a suit of that kind, but the D.C. Circuit court ruled in favor of the firm in 2015, finding that the oil companies could pursue their claim because they had pleaded facts falling within the expropriation exception to the Foreign Sovereign Immunities Act.

However, the Supreme Court heard the case last year and vacated that decision by unanimous vote on Monday.

Justice Stephen Breyer wrote the court’s 17-page decision, stating that if the Supreme Court allowed foreign governments to be sued so easily, the risk of creating friction with other nations would exist and there could be “reciprocal actions” launched against the United States.


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