Justices conflicted in battle over oil-rig seizures

By Amanda Reilly | 11/02/2016 01:28 PM EDT

Supreme Court justices today appeared conflicted about how to resolve a case over an alleged seizure of oil drilling rigs by Venezuela. The case is pitting Venezuela and the United States, hardly allies, against an American firm.

During oral arguments this morning, justices grappled with what standard of review the courts should have used in deciding whether Venezuela was immune from litigation by Oklahoma-based Helmerich & Payne Inc.

In 2010, the company says, Venezuelan state-owned oil corporations blockaded drilling rights owned by one of its subsidiaries.


After the Venezuelan government enacted a measure for expropriating the rigs, Helmerich & Payne sued Venezuela in U.S. federal court.

In a split decision last year, the U.S. Court of Appeals for the District of Columbia Circuit allowed the case to go forward over Venezuela’s objections that it was immune from suit under the 1976 Foreign Sovereign Immunities Act.

The court found that the alleged seizure fell under the "expropriation exception," which bars immunity for foreign states in cases where property is taken in violation of international law.

In the Supreme Court today, Helmerich argued that the D.C. Circuit was correct in finding that, because Helmerich’s claims were "non-frivolous," the case could move forward.

But Venezuela, backed by the U.S. government, argued that the court should have examined whether Helmerich had any direct property rights and whether those rights were taken in violation of international law.

"This is a very sensitive issue," said Elaine Goldenberg, assistant to the solicitor general at the Department of Justice.

The United States warned that other nations could retaliate if U.S. courts don’t apply a much more substantive standard of review in deciding whether an expropriation case against a foreign country can move forward.

But Chief Justice John Roberts questioned whether the standard of review makes a difference to a foreign nation if a case has already been launched in a U.S. court.

"Does it really make a difference to a foreign sovereign?" Roberts asked the government’s attorney. "I can’t believe it makes a difference."

Justice Stephen Breyer, of the court’s liberal wing, said he was swinging "back and forth" on how to rule in the case.

"I came in on your side," Breyer told Goldenberg.

But while Breyer said he saw the reasoning behind not wanting a low bar for bringing foreign nations into U.S. courts, he also said he had trouble wrapping his head around the role of the factual dispute in the jurisdiction stage.

Justice Elena Kagan, also of the court’s liberal wing, said she had "sympathy" for the government’s reading of the law.

But she questioned whether there would be anything left for a court to decide at the merits stage if the factual disputes were hashed out at the threshold stage of the case, as the U.S. and Venezuelan governments want.

Catherine Carroll, an attorney for Helmerich, argued that the government parties were essentially seeking a "mini trial" at the jurisdiction stage.

Carroll said Helmerich would lose no matter what the court found: Either federal courts have no jurisdiction, or they have jurisdiction only to rule in favor of Venezuela.

"That makes no sense," she said.