On Monday, the Supreme Court of the United States issued its opinion in Venezuela v. Helmerich & Payne, a dispute over the proper pleading standards for parties suing foreign governments in U.S. courts. The decision was an 8-0 win for Hogan Lovells client Venezuela. Holding that U.S. courts have jurisdiction under the Foreign Sovereign Immunities Act only if the facts show – and not just “arguably show” – that a plaintiff’s property was taken in violation of international law, the Supreme Court vacated the judgment of the U.S. Court of Appeals for the D.C. Circuit, and remanded the case.
The Court’s decision ensures that U.S. courts will enforce FSIA’s strict limits on jurisdiction over foreign sovereigns. The case was argued by Cate Stetson, co-head of Hogan Lovells’ Appellate group; Venezuela was also represented by Hogan Lovells partners Bruce Oakley and William Monts, III, and former Hogan Lovells counsel Mary Helen Wimberly.
This case began when Helmerich & Payne sued the Republic of Venezuela in a United States district court, claiming that Venezuela had expropriated its oil rigs without offering adequate compensation. H&P brought its suit under the “expropriations exception” to the FSIA, which grants U.S. courts jurisdiction over foreign nations when “rights in property taken in violation of international law are in issue.” The D.C. Circuit determined that it had jurisdiction over H&P’s claims so long as it raised a “nonfrivolous” claim that its property had been taken in violation of international law.
Arguing that a suit against a foreign sovereign required a more rigorous standard than mere “nonfrivolous”ness, the Hogan Lovells team sought and was granted certiorari. As we explained in our briefing and at argument, the FSIA’s jurisdictional provisions set a higher bar than the general federal jurisdictional standard, which requires a plaintiff in a federal case present merely a nonfrivolous claim in order to secure jurisdiction over the matter. If plaintiffs could secure U.S. jurisdiction over foreign sovereigns by merely raising “nonfrivolous” claims of expropriation, the FSIA’s detailed jurisdictional standards would lack force; a foreign country could be haled into an American court, and made to defend the merits of the claims, before the substance of the court’s jurisdiction had been thoroughly tested. That in turn would defeat the purpose of the FSIA’s detailed jurisdictional provisions, which were designed to guard against unnecessary incursions on other nations’ sovereignty. Rather, we argued, “courts should determine whether the plaintiff has actually pleaded a taking of rights in property in violation of international law,” not whether the plaintiffs has “arguably” made such a pleading, and courts should make that determination at the outset of a case, to ensure that a foreign sovereign is not needlessly haled into court.
The Supreme Court agreed. In a unanimous opinion written by Justice Breyer, the Court determined that the FSIA indeed does set a higher jurisdictional bar than mere “frivolousness.” Rather, at the outset of a case, a plaintiff bringing a claim under the FSIA’s expropriation exception must show – and not just “arguably show” – a taking in property in violation of international law. This strict jurisdictional standard, the Court explained, ensures that foreign nations are not needlessly embroiled in an American lawsuit.