Supreme Court sides with Venezuela in dispute over seized oil rigs
The sun sets behind an oil drill rig near Cabimas, Venezuela, 500 km west of Caracas, Venezuela, Sunday, Aug. 1, 2004. (ANA MARIA OTERO/AP)
A unanimous Supreme Court on Monday gave the government of Venezuela another chance to fend off a lawsuit alleging the country illegally seized 11 oil drilling rigs from an Oklahoma-based company in 2010.
The justices ruled that lower courts had set the bar too low in allowing the lawsuit brought by Helmerich & Payne International Drilling Company to move forward.
Foreign countries are generally immune from lawsuits in the U.S., but a federal statute makes an exception in certain cases when private property is seized.
Writing for the court, Justice Stephen Breyer said companies must make a stronger argument at the outset of a case that property was actually taken in violation of international law. He said such cases must be more than just “non-frivolous” to avoid being tossed out.
If cases against foreign governments are allowed too easily to proceed in American courts, it could “create friction with other nations and reciprocal actions against this country,” Breyer said.
The U.S. government had sided with Venezuela, arguing that ruling for the company could harm foreign relations and lead other countries to retaliate against American interests.
The case began after Venezuela’s former president Hugo Chavez issued a decree seizing control of the oil rigs owned by U.S. driller Helmerich & Payne International Drilling Co. The company refused to operate them after Venezuela’s state-owned oil company fell more than $100-million behind in payments.
Chavez said the “forced acquisition” was necessary to put the idled rigs back to work.
Venezuela argued that the seizure did not violate international law because the rigs were owned by a Venezuelan subsidiary of Helmerich & Payne. But a federal appeals court sided with the company, ruling that it could move ahead with a lawsuit claiming the move harmed U.S. shareholders.
Justice Neil Gorsuch did not take part in the case, which was argued before he took his seat on the court.