(Recasts first paragraph, adds background on case, details from
decision, paragraphs 2-13)
By Lawrence Hurley
WASHINGTON May 1 The U.S. Supreme Court on
Monday tossed out a lower court's ruling that had allowed an
American oil drilling company to sue Venezuela over the seizure
of 11 drilling rigs in 2010 but allowed the business another
chance to press its claims.
Siding with Venezuela, the justices ruled 8-0 that a lower
court that had given the go-ahead for the suit must reconsider
whether claims made by Oklahoma-based Helmerich & Payne
International Drilling Company can proceed.
Writing for the court, Justice Stephen Breyer said the U.S.
Court of Appeals for the District of Columbia Circuit in 2015
used the wrong standard in denying Venezuela immunity from the
Helmerich & Payne shares fell about 2 percent in midday
trading after the ruling.
The company sued both the Venezuelan government and
state-owned oil companies under a U.S. law called the Foreign
Sovereign Immunities Act, saying among other things that the
property seizure violated international law.
The Foreign Sovereign Immunities Act allows for foreign
governments to be sued in U.S. courts under certain
circumstances, including when private property is seized.
On Monday, the justices said the appeals court wrongly
allowed claims to move forward merely because a company had
presented a "nonfrivolous" case against a foreign government.
Breyer called that too low a bar to allow a suit against
Venezuela. The lower court must decide whether any property had
been taken in violation of international law.
"For present purposes, it is important to keep in mind that
the Court of Appeals did not decide on the basis of the
stipulated facts that the plaintiffs' allegations are sufficient
to show their property was taken in violation of international
law," Breyer added.
Helmerich & Payne had long provided drilling services for
the Venezuelan government. The company disassembled its rigs in
2009 after Venezuela failed to pay $100 million in bills. In
response, Venezuela's government in 2010, assisted by armed
soldiers, seized the property. Then-President Hugo Chavez
ordered the seizure, saying the rigs could be used by
The company said Venezuela seized the rigs "in substantial
part because of the Chavez regime's pervasive anti-American
It noted in court papers that a Venezuelan official had
accused domestic opponents of the expropriation of taking orders
from the United States and trying to "subsidize the big business
transnational corporations, so that they can promote what they
know best to do, which is war" led by the military industry of
the American "empire and its allies."
The legal question before the justices was whether the
company's lawsuit succeeded in meeting the legal criteria that
would allow the case to continue. Venezuela, backed in the case
by former President Barack Obama's administration, argued it did
A U.S. district court previously ruled largely in favor of
the drilling company. The appeals court then blocked the
company's separate breach of contract claim while allowing the
expropriation claim to proceed.
Newly appointed Justice Neil Gorsuch, who was not on the
court when it heard arguments in the case in November, did not
participate. During the argument, some of the justices appeared
wary about the foreign policy implications of making it too easy
for foreign governments to be sued in U.S. courts.
(Reporting by Lawrence Hurley; Additional reporting by Andrew
Chung in New York; Editing by Will Dunham)