Venezuela v. Helmerich & Payne International, 581 U. S. ____ (2017) [click for opinion]
Plaintiffs/Respondents are a U.S. Company, Helmerich & Payne International, and its Venezuelan subsidiary, Helmerich & Payne de Venezuela (collectively "Helmerich"). Helmerich operates oil rigs within Venezuela which were seized and nationalized by the Venezuelan government in 2010. Helmerich sued Venezuela in U.S. courts to recover the property, arguing that the property was expropriated "in violation of international law," which, if true, would provide the district court jurisdiction over the dispute due to an exception to the Foreign Sovereign Immunities Act's (the "FSIA") general prohibition against suits naming foreign governments as defendants in U.S. courts.
The FSIA provides, with specified exceptions, that a "foreign state shall be immune from the jurisdiction of the courts of the United States and of the States ...." 28 U. S. C. § 1604. One of the jurisdictional exceptions—the expropriation exception—states as follows:
"[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case ... in which 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."
In a unanimous decision, the Supreme Court concluded that a party must allege more than a "nonfrivolous" argument that case falls within the "expropriation exception." In ruling in this manner, the court distinguished cases brought in federal courts under 28 U.S.C. § 1331. Under that jurisdictional statute, courts have allowed parties to obtain federal jurisdiction as long as they presented a "nonfrivolous"—although in many cases ultimately untrue—argument that their claims arose under the Constitution, laws, or treaties of the United States.
In distinguishing this "arising under" jurisprudence, the court stressed that the issue with the expropriation exception under the FSIA is a factual one, not legal, and the court stressed that lower courts should endeavor to resolve any factual disputes regarding the expropriation exception "as near to the outset of the case as is reasonably possible." As an example, the court noted that courts regularly conduct jurisdictional discovery at the outset of a case to determine whether parties are diverse when one party has claimed federal jurisdiction under the diversity statute, 28 U.S.C. § 1332.
The Supreme Court also noted that its reading of FSIA is supported by the provision's language, which applies in a "case ... in which rights in property taken in violation of international law are in issue." The Court reasoned that such language envisions judicial decision-making regarding the jurisdictional bases for bringing a claim under the FSIA. Moreover, the Court explained that its decision was consistent with the FSIA's objective of following international legal principles, particularly that granting foreign sovereigns immunity from suit both recognizes the "absolute independence of every sovereign authority" and helps to "induc[e]" each nation state, as a matter of "international comity," to "respect the independence and dignity of every other."