## Facts

- Helmerich & Payne International Drilling Co. (U.S. parent) operated in Venezuela through Helmerich & Payne de Venezuela, C.A. (Venezuelan subsidiary), which owned drilling rigs used to provide services to PDVSA entities.
- PDVSA entities accumulated more than $100 million in unpaid debt under drilling contracts, prompting the subsidiary to refuse renewals and attempt to demobilize rigs.
- PDVSA personnel, with assistance from the Venezuelan National Guard, allegedly blockaded the subsidiary’s yards to prevent removal of equipment.
- Venezuela issued an expropriation decree and took control of the rigs and related assets.
- The parent and subsidiary sued Venezuela, PDVSA, and a PDVSA subsidiary, asserting (1) expropriation of property in violation of international law and (2) contract-based claims for unpaid services.
- Plaintiffs invoked FSIA immunity exceptions: the expropriation exception, 28 U.S.C. § 1605(a)(3), and the commercial activity exception, 28 U.S.C. § 1605(a)(2).
- The district court dismissed the subsidiary’s expropriation claim as a domestic taking but allowed the parent’s expropriation claim and certain commercial activity claims to proceed.

## Issues

1. Whether a foreign state’s taking of a domestically incorporated entity’s property can qualify as a taking “in violation of international law” under FSIA § 1605(a)(3) when the taking is alleged to discriminate based on the foreign nationality of shareholders.
2. Whether a shareholder may assert “rights in property” under FSIA § 1605(a)(3) based on ownership of shares in a still-existing corporation whose assets were expropriated.
3. What jurisdictional threshold applies at the immunity stage for determining whether “rights in property taken in violation of international law are in issue” under FSIA § 1605(a)(3).

## Decision

- The D.C. Circuit reversed the dismissal of the subsidiary’s expropriation claim, concluding the expropriation exception could apply at the jurisdictional stage.
- The court held that allegations of discrimination against foreign shareholders could bring a taking of a domestic company’s assets within “international law” for FSIA § 1605(a)(3) purposes.
- The court held the parent’s shareholder-based claim of “rights in property” was sufficient at the jurisdictional stage because it was not wholly insubstantial or frivolous.
- The court adopted a “nonfrivolous” (not “wholly insubstantial or frivolous”) standard for FSIA expropriation-exception jurisdiction at the motion-to-dismiss stage.
- The court affirmed in part the district court’s rulings allowing certain contract claims to proceed under the commercial activity exception.

## Legal Principles

- Under FSIA § 1605(a)(3), a court may deny sovereign immunity at the threshold where plaintiffs present a nonfrivolous argument that rights in property taken in violation of international law are in issue.
- The domestic-takings rule (no international-law violation when a state expropriates its own nationals’ property) may be avoided, for jurisdictional purposes, by plausible allegations that the taking was discriminatory against aliens (including discrimination tied to shareholders’ foreign nationality).
- A shareholder’s asserted interest in the value of its investment may constitute sufficiently alleged “rights in property” under FSIA § 1605(a)(3) to proceed past the immunity stage where the claim is not wholly insubstantial or frivolous.
- Under FSIA § 1605(a)(2), contract and payment-dispute claims tied to a foreign state’s commercial conduct may proceed when the statutory nexus requirements are satisfied.

## Conclusion

The D.C. Circuit held that Venezuela and its state oil entities were not entitled to dismissal on sovereign-immunity grounds where plaintiffs advanced nonfrivolous allegations that Venezuela discriminatorily expropriated drilling assets and impaired a U.S. shareholder’s investment rights, and it permitted certain related contract claims to proceed under the FSIA’s commercial activity exception.


Helmerich & Payne Int'l Drilling Co. v. Bolivarian Republic of Venez., 784 F.3d 804 (D.C. Cir. 2015)