Venezuela seeks US Supreme Court’s ruling on CITGO Parent’s legal immunity.
The Venezuelan Government Seeks Supreme Court Review in CITGO Case
The Venezuelan government is making a plea to the U.S. Supreme Court to reconsider a lower court’s decision that allows creditors to pursue the assets of CITGO Petroleum, the parent company of Venezuela’s government-owned oil company. This ruling could have significant implications for an upcoming auction of shares in CITGO’s parent company.
The Case: Bolivarian Republic of Venezuela v. OI European Group B.V.
The case, known as Bolivarian Republic of Venezuela v. OI European Group B.V., involves the Venezuelan government and its government-owned oil company, Petróleos de Venezuela S.A. (PDVSA). The court file number is 23-140.
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CITGO Petroleum Corp., a U.S.-based company, is an indirect subsidiary of PDV Holding, a non-operating holding company incorporated in Delaware and headquartered in Texas. PDV Holding owns 100% of the shares of its direct subsidiary, CITGO Holding Inc., which in turn is the sole stockholder of CITGO Petroleum Corp.
The lead respondent in the case is OI European Group, a packaging products manufacturer based in the Netherlands. Other respondents include Northrop Grumman Ship Systems Inc. (now known as Huntington Ingalls Inc.), Koch Minerals Sarl, and Gold Reserve Inc.
The respondent companies have until September 15 to respond to the petition.
Venezuela’s lead attorney, Donald Verrilli of the law firm Munger, Tolles and Olson, emphasized the urgency of the case and stated that the petitioners will oppose any requests for extensions of time for responding to the petition.
ExxonMobil and ConocoPhillips, among other companies, are hoping that the sale of shares in PDV Holding will generate enough funds to satisfy their outstanding claims against Venezuela or PDVSA. These claims reportedly amount to around $20 billion.
A lower court previously determined that PDVSA is the “alter ego” of the Venezuelan government, which poses a risk that PDVSA’s principal asset in the United States—the shares indirectly owning 100% of CITGO Petroleum Corporation—could be sold off. Venezuela is seeking a Supreme Court declaration that the “alter ego” ruling should not stand. The U.S. Court of Appeals for the 3rd Circuit affirmed a ruling allowing six companies to add claims worth $3.4 billion to an ongoing lawsuit.
In its petition, Venezuela argues that under the Foreign Sovereign Immunities Act (FSIA), foreign states are generally immune from suit and attachment. However, the Supreme Court’s ruling in Turkiye Halk Bankasi A.S. v. United States on April 19 established that the immunity of an instrumentality of a foreign state is not absolute.
The case involved Turkiye Halk Bankasi, also known as Halkbank, which was accused of participating in a criminal conspiracy involving money laundering, bank fraud, and assisting Iran in evading U.S. economic sanctions. The Supreme Court held that the FSIA does not provide immunity from criminal prosecution.
Despite this ruling, the FSIA operates within the context of the Executive Branch’s exclusive authority to…
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