Justices struggle in dispute over Venezuela oil rig seizure

AP News
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Posted: Nov 02, 2016 1:31 PM

WASHINGTON (AP) — The Supreme Court struggled Wednesday over a case that could make it easier to sue foreign governments in U.S. courts, a sensitive issue that could affect foreign relations and lead to retaliation from other countries.

The court considered whether an Oklahoma-based oil company could move a head with a lawsuit that claims the government of Venezuela illegally seized 11 oil drilling rigs in 2010.

Some justices seemed to agree that a lower court had authority to take up the case and consider the merits. But others expressed concern about the impact it would have on foreign nations upset at the mere prospect of being hauled into an American court.

Justice Stephen Breyer said he was first inclined to agree with Venezuela that the suit should be thrown out, but was having doubts.

"I swing back and forth," he said.

Foreign countries are generally immune from lawsuits in the U.S. But a federal statute makes an exception where property is taken in violation of international law.

The case began after Venezuela's president at the time, Hugo Chavez, issued a decree seizing control of the oil rigs owned by U.S. driller Helmerich & Payne International Drilling Co. The company had shut them down when 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 into operation.

Venezuela argues that since the rigs were owned by a Venezuelan subsidiary of Helmerich & Payne, the seizure did not violate international law. But a federal appeals court sided with the company, ruling last year that it could move ahead with a lawsuit claiming the move harmed U.S. shareholders.

Venezuela's lawyer Catherine Stetson said the appeals court set too low a bar to let the case go forward. She said the court didn't fully consider that the parent company "possesses no right" to the rigs.

That drew skepticism from Justice Elena Kagan, who said it seemed there were enough issues in dispute to allow further proceedings. Justice Ruth Bader Ginsburg agreed, saying the company seems to have met the threshold "just to get your toe in the door."

The case is a sensitive topic for the Obama administration, which has sided with Venezuela in the case. Justice Department lawyer Elaine Goldenberg told the justices that a ruling for the company could harm foreign relations and lead other countries to retaliate.

Chief Justice John Roberts asked why it made a difference, since a court is "going to be sitting in judgment one way or another" either at the outset or further along.

Goldenberg responded that it's a "real affront" to foreign governments "if another court sits in judgment of something that foreign sovereign has done."

The company's lawyer, Catherine Carroll, said that Congress wanted the courthouse doors open to lawsuits alleging property is taken in violation of international law.

But Roberts wondered how a U.S. ambassador would explain it to other countries.

"We don't want you dragging us into your courts, but you have to come in our courts because someone has raised a claim that is not wholly insubstantial or frivolous," he said.

Justice Anthony Kennedy noted that "there is extreme sensitivity with reference to suing foreign sovereigns."

A ruling is expected by the end of June.