In a decision delivered by Justice Stephen Breyer, the Supreme Court of the United States quoted Reporters’ Note 12 to § 455 (Tentative Draft No. 2, 2016) of the U.S. Foreign Relations (Sovereign Immunity) Restatement, as well as two Sections of the Restatement of the Law Third, The Foreign Relations Law of the United States.

At issue in the case, Bolivarian Republic of Venezuela v. Helmerich & Payne Int’l Drilling Co., was whether an American oil-drilling company and its Venezuelan subsidiary could, under the expropriation exception to the Foreign Sovereign Immunities Act (FSIA), sue the nation of Venezuela over Venezuela’s seizure and nationalization of the subsidiary’s drilling rigs.

The general rule under the FSIA is that a foreign state cannot be sued in U.S. courts. However, the expropriation exception permits such lawsuits when “rights in property taken in violation of international law are in issue and that property . . . is owned or operated by an agency or instrumentality of the foreign state . . . engaged in a commercial activity in the United States.”

When addressing the evolution of the doctrine of sovereign immunity and the underlying exceptions to the doctrine, the Court quoted Reporters’ Note 12 to § 455, saying “‘[n]o provision  comparable’ to the [expropriation] exception ‘has yet been adopted in the domestic immunity statutes of other countries,’ and that expropriations are considered acts jure imperii.”

The Court vacated the opinion of the Court of Appeals for the District of Columbia Circuit, which, among other things, had determined that the American parent company could proceed on its claim because it had “put its rights in property in issue in a non-frivolous way.” Remanding the case for further proceedings, the Court held that the “nonfrivolous-argument standard [was] not consistent with the statute”; parties could not merely argue that a case fell within the expropriation exception. Factual allegations had to establish a legally valid claim that property rights were at issue and that property was taken in violation of international law, and, here, because the parties stipulated to the fact that the property was taken from a Venezuelan national (the subsidiary) by the Venezuelan government, they did not claim a violation of international law.

All justices except for Justice Neil Gorsuch, who did not participate, joined the opinion.

 

Pauline Toboulidis

The American Law Institute

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