Summary
The D.C. Circuit affirms the district court's denial of Petróleos de Venezuela, S.A.'s motion to dismiss based on foreign sovereign immunity, lack of personal jurisdiction, and the act-of-state doctrine. Applying the Foreign Sovereign Immunities Act's expropriation exception, the court finds that Venezuela indirectly expropriated Helmerich's property in violation of international law, and that PDVSA owns, operates, and commercially exploits the assets in the United States. Additionally, the court exercises pendent appellate jurisdiction over the act-of-state defense and upholds the district court's alter-ego finding to establish personal jurisdiction over PDVSA.
Topics
Practice areas
Questions Presented
- Whether the court had appellate jurisdiction to review the denial of PDVSA's foreign-sovereign-immunity motion and pendent jurisdiction to review the personal-jurisdiction and act-of-state issues.
- Whether the FSIA expropriation exception applied because Venezuela indirectly expropriated Helmerich's property in violation of international law, PDVSA owned or operated the property, and PDVSA engaged in commercial activity in the United States.
- Whether the district court properly exercised personal jurisdiction over PDVSA under the FSIA and the Fifth Amendment.
- Whether PDVSA was Venezuela's alter ego for constitutional personal-jurisdiction purposes while remaining an agency or instrumentality under the FSIA.
- Whether the Second Hickenlooper Amendment barred application of the act-of-state doctrine to Helmerich's damages-based expropriation claim without a United States territorial nexus.
Holdings
- The court had collateral-order jurisdiction to review the denial of foreign sovereign immunity, pendent appellate jurisdiction over the personal-jurisdiction issue, and discretionary pendent appellate jurisdiction over the act-of-state issue because that issue was inextricably intertwined with the immunity question.
- The FSIA expropriation exception applied to PDVSA because Venezuela indirectly took Helmerich's protected property interests in violation of international law, PDVSA owned or operated the expropriated property, and PDVSA engaged in commercial activity in the United States.
- Personal jurisdiction existed over PDVSA because the FSIA provides personal jurisdiction over a foreign state for claims within an immunity exception when service is proper, and PDVSA failed to establish a separate Fifth Amendment bar.
- PDVSA was Venezuela's alter ego for Fifth Amendment purposes, but it remained an agency or instrumentality of Venezuela under the FSIA.
- The Second Hickenlooper Amendment bars application of the act-of-state doctrine to Helmerich's expropriation claim, including a damages claim, and does not require that the expropriated property be present in the United States.
Key quotations
“For these reasons, Helmerich is correct that the Second Hickenlooper Amendment bars application of the act-of-state doctrine to its expropriation claim here.” (23)
“We affirm the denial of PDVSA's motion to dismiss.” (23)
Factual background
Helmerich & Payne International Drilling Co. wholly owned a Venezuelan subsidiary that operated drilling rigs and provided services to PDVSA. After PDVSA accumulated approximately $90 million in unpaid invoices, PDVSA employees and Venezuelan National Guard personnel blocked removal of the rigs, Venezuela issued an expropriation decree, and PDVSA took possession of and operated the rigs and other assets. The subsidiary ceased commercial operations, rendering Helmerich's ownership interest effectively worthless, while PDVSA continued commercial activities in the United States.
Procedural history
Helmerich and its Venezuelan subsidiary sued Venezuela and PDVSA over Venezuela's expropriation of drilling rigs and other assets. The district court denied the defendants' motion to dismiss; earlier appellate proceedings addressed the FSIA expropriation exception, and the Supreme Court vacated the D.C. Circuit's prior non-frivolous-claim standard in Bolivarian Republic of Venezuela v. Helmerich & Payne International Drilling Co. On remand, Venezuela was dismissed under the domestic-nexus requirement applicable to a foreign state, while PDVSA remained a defendant. After jurisdictional discovery, the district court again denied PDVSA's motion to dismiss, and PDVSA took this interlocutory appeal.