BOLIVARIAN REPUBLIC OF VENEZUELA ET AL.
HELMERICH & PAYNE INTERNATIONAL DRILLING CO. ET AL.
November 2, 2016
OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
DISTRICT OF COLUMBIA CIRCUIT
Foreign Sovereign Immunities Act (FSIA) shields foreign
states from suits in United States Courts, 28 U.S.C.
§1604, with specified exceptions. The expropriation
exception applies to "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
wholly owned Venezuelan subsidiary (Subsidiary) of an
American company (Parent) has long supplied oil rigs to oil
development entities that were part of the Venezuelan
Government. The American Parent and its Venezuelan
Subsidiary (plaintiffs) filed suit in federal court against
those entities (Venezuela), claiming that Venezuela had
unlawfully expropriated the Subsidiary's rigs by
nationalizing them. Venezuela moved to dismiss the case on
the ground that its sovereign immunity deprived the
District Court of jurisdiction. Plaintiffs argued that the
case falls within the expropriation exception, but
Venezuela claimed that international law did not cover the
expropriation of property belonging to a country's
nationals like the Subsidiary and that the American Parent
did not have property rights in the Subsidiary's
assets. The District Court agreed as to the Subsidiary,
dismissing its claim on jurisdictional grounds. But it
rejected the claim that the Parent had no rights in the
Subsidiary's property. The District of Columbia Circuit
reversed in part and affirmed in part, finding that both
claims fell within the exception. With respect to the
Subsidiary's claim, it concluded that a sovereign's
taking of its own nationals' property would violate
international law if the expropriation unreasonably
discriminated based on a company's shareholders'
nationality. With respect to the Parent's claim, it
held that the exception applied because the Parent had
raised its rights in a nonfrivolous way. The court decided
only whether the plaintiffs might have a nonfrivolous
expropriation claim, making clear that, under its standard,
a nonfrivolous argument would be sufficient to bring a case
within the scope of the exception. Given the factual
stipulations, the court concluded, the Subsidiary had
satisfied that standard for purposes of surviving a motion
nonfrivolous-argument standard is not consistent with the
FSIA. A case falls within the scope of the expropriation
exception only if the property in which the party claims to
hold rights was indeed "property taken in violation of
international law." A court should decide the foreign
sovereign's immunity defense "[a]t the
threshold" of the action, Verlinden B. V. v.
Central Bank of Nigeria, 461 U.S. 480, 493, resolving
any factual disputes as near to the outset of the case as
is reasonably possible. Pp. 6-16.
The expropriation exception grants jurisdiction only where
there is 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). Simply making a nonfrivolous
argument to that effect is not sufficient. This reading 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." Such
language would normally foresee a judicial decision about
the jurisdictional matter. This interpretation is supported
by precedent. See, e.g., Permanent Mission of India to
United Nations v. City of New York, 551 U.S. 193,
201-202. It is also supported by a basic objective of the
FSIA, which is to follow international law principles,
namely, that granting foreign sovereigns immunity from suit
both recognizes the "absolute independence of every
sovereign authority" and helps to "indue[e]"
each nation state, as a matter of "international
comity, " to "respect the independence and
dignity of every other, " Berizzi Brothers Co. v.
S. S. Pesaro, 271 U.S. 562, 575. Nothing in the
FSIA's history suggests that Congress intended a
radical departure from these principles in codifying the
mid-20th-century doctrine of "restrictive"
sovereign immunity, which denies immunity in cases
"arising out of a foreign state's strictly
commercial acts, " but applies immunity in "suits
involving the foreign sovereign's public acts, "
Verlinden, supra, at 487. It is thus not
surprising that the expropriation exception on its face
emphasizes conformity with international law, requiring
both a commercial connection with the United States and a
taking of property "in violation of international
"nonfrivolous-argument" reading of the exception
would under- mine the objectives embedded in the
statute's language, history, and structure. It could
also embroil a foreign sovereign in an American lawsuit for
some time by adopting a standard limited only by the bounds
of a lawyer's (nonfrivolous) imagination. And it could
cause friction with other nations, leading to reciprocal
actions against this country. Pp. 6-12.
Plaintiffs' arguments to the contrary are unpersuasive.
They suggest that the expropriation exception should be
treated similarly to 28 U.S.C. §1331's
"arising under" jurisdiction, which applies if a
plaintiff can make a nonfrivolous argument that a federal
law provides the relief sought-even if, in fact, it does
not, Bell v. Hood, 327 U.S. 678 685. But
§1331 differs from the exception in language and
concerns. Section 1331 often simply determines which court
doors- federal or state-are open, and neither it nor
related jurisdictional sections seek to provide a sovereign
foreign nation with immunity- the FSIA's basic
objective. Nor does the text of §1331 suggest that
consistency with international law is of particular
also claim that the nonfrivolous-argument approach will
work little harm since the matter could be resolved by
motion practice before the sovereign bears the expense of a
full trial. But resolving a claim pursuant to Federal Rule
of Civil Procedure 12(b)(6) or summary judgment under Rule
56 may impose increased burdens of time and expense upon
the foreign nation. And a district court's decision
that there is a "violation of international law"
as a matter of jurisdiction may be immediately appealable
as a collateral order, while the same decision made
pursuant to a Rule 12(b)(6) or Rule 56 motion would be a
decision on the "merits" not subject to immediate
appeal. Moreover, the Circuit would part with its
nonfrivolous-argument standard where a "violation of
international law" is not an element of the claim to
be decided on the merits. This bifurcated approach is
difficult to reconcile with the statute's language,
history, or purpose; and it creates needless complexity for
judges and lawyers, domestic and foreign. Pp. 12-16.
784 F.3d 804, vacated and remanded.
BREYER, J., delivered the opinion of the Court, in which all
other Members joined, except GORSUCH, J., who took no part in
the consideration or decision of the case.
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 . . . ." 28 U.S.C.
§1604. One of the jurisdictional exceptions-the
expropriation exception-says that
"[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).
question here concerns the phrase "case ... in which
rights in property taken in violation of international law
are in issue."
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?
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.
where jurisdictional questions turn upon further factual
development, the trial judge may take evidence and resolve
relevant factual disputes. But, 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 ...