Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co.
Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co.
Opinion
The Foreign Sovereign Immunities Act of 1976 (FSIA or Act), 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...."
"[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case ... (3) 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." § 1605(a)(3).
The question here concerns the phrase "case ... in which rights in property taken in violation of international law are in issue."
Does this phrase mean that, to defeat sovereign immunity, a party need only make a "nonfrivolous" argument that the case falls within the scope of the exception? Once made, does the existence of that nonfrivolous argument mean that the court retains jurisdiction over the case until the court decides, say, the merits of the case? Or does a more rigorous jurisdictional standard apply? To put the question more generally: What happens in a case where the party seeking to rely on the expropriation exception makes a nonfrivolous, but ultimately incorrect, claim that his property was taken in violation of international law?
In our view, a party's nonfrivolous, but ultimately incorrect, argument that property was taken in violation of international law is insufficient to confer jurisdiction. Rather, state and federal courts can maintain jurisdiction to hear the merits of a case only if they find that the property in which the party claims to hold rights was indeed "property taken in violation of international law." Put differently, the relevant factual allegations must make out a legally valid claim that a certain kind of right is at issue ( property rights) and that the relevant property was taken in a certain way (in violation of international law). A good argument to that effect is not sufficient. But a court normally need not resolve, as a jurisdictional matter, disputes about whether a party actually held rights in that property; those questions remain for the merits phase of the litigation.
Moreover, where jurisdictional questions turn upon further factual development, the trial judge may take evidence and resolve relevant factual disputes. But,
*1317
consistent with foreign sovereign immunity's basic objective, namely, to free a foreign sovereign from
suit,
the court should normally resolve those factual disputes and reach a decision about immunity as near to the outset of the case as is reasonably possible. See
Verlinden B.V. v. Central Bank of Nigeria,
I
Since the mid-1970's a wholly owned Venezuela-incorporated subsidiary (Subsidiary) of an American company (Parent) supplied oil rigs to oil development entities that were part of the Venezuelan Government. In 2011 the American Parent company and its Venezuelan Subsidiary (the respondents here) brought this lawsuit in federal court against those foreign government entities. (The entities go by their initials, PDVSA, but we shall normally refer to them as "Venezuela" or the "Venezuelan Government.") The American Parent and the Venezuelan Subsidiary claimed that the Venezuelan Government had unlawfully expropriated the Subsidiary's oil rigs. And they sought compensation.
According to stipulated facts, by early 2010 the Venezuelan Government had failed to pay more than $10 million that it owed the Subsidiary. At that point the government sent troops to the equipment yard where the rigs were stored, prevented the Subsidiary from removing the rigs, and issued a " 'Decree of Expropriation' " nationalizing the rigs. App. 72-74. Subsequently, the president of the oil development entities led a rally at the Subsidiary's offices, where he referred to the Venezuelan Subsidiary as an " 'American company' " with " 'foreign gentlemen investors.' " Id ., at 54.
Venezuela asked the court to dismiss the case on the ground that Venezuela possessed sovereign immunity and that the court consequently lacked "jurisdiction" to hear the case. See
The parties agreed that the District Court should then decide whether the exception applies, and it should do so on the basis of governing law, taking all of the plaintiffs' well-pleaded allegations as true and construing the complaint in the light most favorable to the plaintiffs. App. 119. The court decided, in relevant part, that the exception did not apply to the Venezuelan Subsidiary's claim because the Subsidiary was a national of Venezuela. See
The Venezuelan Subsidiary appealed the dismissal of its expropriation claim, and Venezuela appealed the court's refusal to dismiss the Parent's claim. The Court of Appeals for the District of Columbia Circuit reversed in part and affirmed in part the District Court's conclusions. It decided that both the Subsidiary's and the Parent's claims fell within the exception.
With respect to the Subsidiary's claim, the court agreed that a sovereign's taking of its own nationals' property
normally
does not violate international law. But, the court said, there is an "exception" to this rule. And that exception applies when a sovereign's expropriation unreasonably discriminates on the basis of a company's shareholders' nationality,
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. It decided instead that the plaintiffs
might
have such a claim. And it made clear the legal standard that it would apply. It said that, in deciding whether the expropriation exception applies, it would set an "exceptionally low bar."
Venezuela filed a petition for certiorari asking us to decide whether the Court of Appeals had applied the correct standard in deciding that the companies had met the expropriation exception's requirements. We agreed to do so.
II
Foreign sovereign immunity is jurisdictional in this case because explicit statutory language makes it so. See § 1604 ("[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided" by the FSIA's exceptions); § 1605(a) ("A foreign state shall not be immune from the jurisdiction" of federal and state courts if the exception at issue here is satisfied). Given the parties' stipulations as to all relevant facts, our inquiry poses a " 'pure question of statutory construction,' "
Republic of Austria v. Altmann,
For one thing, the provision's language, while ambiguous, supports such a reading. It says that there is jurisdiction in a "case ... in which rights in property taken in violation of international law are in issue."
We recognize that merits and jurisdiction will sometimes come intertwined. Suppose that the party asserted a claim to architectural plans for the house. It might be necessary to decide whether the law recognizes the kind of right that he asserts, or whether it is a right in "property" that was "taken in violation of international law." Perhaps that is the only serious issue in the case. If so, the court must still answer the jurisdictional question. If to do so, it must inevitably decide some, or all, of the merits issues, so be it.
Our reading of the statute is consistent with its language. The case is one which the existence of "rights" remains "at issue" until the court decides the merits of the case. But whether the rights asserted are rights of a certain kind, namely, rights in "property taken in violation of international law," is a jurisdictional matter that the court must typically decide at the outset of the case, or as close to the outset as is reasonably possible.
Precedent offers a degree of support for our interpretation. In
Permanent Mission of India to United Nations v. City of New York,
For another thing, one of the FSIA's basic objectives, as shown by its history, supports this reading. The Act for the most part embodies basic principles of international law long followed both in the United States and elsewhere. See
Schooner Exchange v. McFaddon,
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Berizzi Brothers Co. v. S.S. Pesaro,
In the mid-20th century, we, like many other nations, began to treat nations acting in a commercial capacity like other commercial entities. See
Permanent Mission, supra,
at 199-200,
At first, our courts, aware of the expertise of the Executive Branch in matters of foreign affairs, relied heavily upon the advice of that branch when deciding just when and how this "restrictive" sovereign immunity doctrine applied.
Ibid
. See also H.R. Rep. No. 94-1487, pp. 8-9 (1976) (similar). But in 1976, Congress, at the urging of the Department of State and Department of Justice, began to codify the doctrine. The resulting statute, the FSIA, "starts from a premise of immunity and then creates exceptions to the general principle."
Id.,
at 17;
Verlinden,
We have found nothing in the history of the statute that suggests Congress intended a radical departure from these basic principles. To the contrary, the State Department, which helped to draft the FSIA's language (and to whose views on sovereign immunity this Court, like Congress, has paid special attention,
Altmann,
We emphasize this point, embedded in the statute's language, history, and structure, because doing so reveals a basic objective of our sovereign immunity doctrine, which a "nonfrivolous-argument" reading of the expropriation exception would undermine. A sovereign's taking or regulating of its own nationals' property within its own territory is often just the kind of foreign sovereign's public act (a "
jure imperii
") that the restrictive theory of sovereign immunity ordinarily leaves immune from suit. See
Permanent Mission,
To be sure, there are fair arguments to be made that a sovereign's taking of its own nationals' property sometimes amounts to an expropriation that violates international law, and the expropriation exception provides that the general principle of immunity for these otherwise public acts should give way. But such arguments are about whether such an expropriation does violate international law. To find jurisdiction only where a taking does violate international law is thus consistent with basic international law and the related statutory objectives and principles that we have mentioned. But to find jurisdiction where a taking does not violate international law ( e.g., where there is a nonfrivolous but ultimately incorrect argument that the taking violates international law) is inconsistent with those objectives. And it is difficult to understand why Congress would have wanted that result.
Moreover, the "nonfrivolous-argument" interpretation would, in many cases, embroil the foreign sovereign in an American lawsuit for an increased period of time. It would substitute for a more workable standard ("violation of international law") a standard limited only by the bounds of a lawyer's (nonfrivolous) imagination. It would create increased complexity in respect to a jurisdictional matter where clarity is particularly important.
Hertz Corp. v. Friend,
Finally, the Solicitor General and the Department of State also warn us that the nonfrivolous-argument interpretation would "affron[t]" other nations, producing friction in our relations with those nations and leading some to reciprocate by granting their courts permission to embroil the United States in "expensive and difficult litigation, based on legally insufficient assertions that sovereign immunity should be vitiated." Brief for United States as
Amicus Curiae
21-22. (At any given time the Department of Justice's Office of Foreign Litigation represents the United States in about 1,000 cases in 100 courts around the world.
Ibid
.) See also
National City Bank of N.Y. v. Republic of China,
III
The plaintiffs make two important arguments to the contrary. First, they point to the federal statute that gives federal courts jurisdiction over cases "arising under the Constitution, laws, or treaties of the United States,"
Section 1331, however, uses different language from the expropriation exception ("arising under") and focuses on different concerns. Section 1331 often simply determines which court's doors are open (federal or state). Cf.
Mims v. ArrowFinancial Services, LLC,
Moreover, this Court has interpreted other jurisdictional statutes differently. Where jurisdiction depends on diversity of citizenship, for example, courts will look to see whether the parties are in fact diverse, not simply whether they are arguably so. See
Indianapolis v. Chase Nat. Bank,
*1323 Second, the plaintiffs argue that the nonfrivolous-argument approach will work little harm. They say that a court faced with an arguable, but ultimately incorrect, claim of jurisdiction can simply decide the same question-say, whether there was a "violation of international law"-as part of its decision on the merits. Thus a foreign sovereign defendant (in court because a plaintiff has made a nonfrivolous but incorrect argument that its property was taken in violation of international law) can simply move for judgment on the merits under Rule 12(b)(6), which provides for judgment where a plaintiff does not "state a claim upon which relief can be granted." Or the defendant could move for summary judgment under Rule 56. In a word, the defendant may not need to undergo a full trial and judgment, remaining in court until the bitter end.
These alternatives, however, have their own problems. For one thing, they will sometimes mean increased delay, imposing increased burdens of time and expense upon the foreign nation. For another, where a district court decides that there is a "violation of international law" as a matter of
jurisdiction,
then (according to the Courts of Appeals) the losing sovereign nation can immediately appeal the decision as a collateral order. But the same decision made to dispose of, say, a Rule 12(b)(6) motion or a Rule 56 motion would not be a "collateral order." It would be a decision on the "merits." And the foreign sovereign would not enjoy a right to take an immediate appeal. See
Coopers & Lybrand v. Livesay,
Moreover, what is a court to do in a case where a "violation of international law," while a jurisdictional prerequisite, is
not
an element of the claim to be decided on the merits? The Circuit has suggested that they arise when the plaintiffs' claim is not an "expropriation claim," but rather a simple common-law claim of conversion, restitution, or breach of contract, the merits of which do not involve the merits of international law. See
Simon v. Republic of Hungary,
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Hammerstein v. Federal Republic of Germany,
To address the problem raised by these cases in which the "jurisdictional and merits inquiries" are not fully "overlap[ping]," the Circuit has held that a district court is not to apply its nonfrivolous-argument standard in such cases.
Simon,
We can understand why the Circuit has departed from its nonfrivolous-argument standard in these latter cases. For, unless it did so, how could a foreign nation ever obtain a decision on the merits of the nonfrivolous argument that a plaintiff has advanced? But what in the statutory provision suggests that sometimes courts should, but sometimes they should not, simply look to the existence of a nonfrivolous argument when they decide whether the requirements of the expropriation exception are satisfied? It is difficult, if not impossible, to reconcile this bifurcated approach with the statute's language. It receives little, if any, support from the statute's history or purpose. And, it creates added complexity, making it more difficult for judges and lawyers, domestic and foreign, to understand the intricacies of the law.
IV
We conclude that the nonfrivolous-argument standard is not consistent with the statute. Where, as here, the facts are not in dispute, those facts bring the case within the scope of the expropriation exception only if they do show (and not just arguably show) a taking of property in violation of international law. Simply making a nonfrivolous argument to that effect is not sufficient. Moreover, as we have previously stated, a court should decide the foreign sovereign's immunity defense "[a]t the threshold" of the action.
Verlinden,
* * *
The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
Justice GORSUCH took no part in the consideration or decision of this case.
Reference
- Full Case Name
- BOLIVARIAN REPUBLIC OF VENEZUELA, Et Al., Petitioners v. HELMERICH & PAYNE INTERNATIONAL DRILLING CO., Et Al.
- Cited By
- 117 cases
- Status
- Published