Venezuela v. Helmerich & Payne Int’l

DOES THE FSIA PERMIT A LESSER STANDARD IN SOME CASES?

The Bolivarian Republic of Venezuela, Petróleos de Venezuela, S.A., and PDVS Petróleos, S.A. (“Venezuela”) argue that the Court of Appeals erred by departing from the typical Foreign Sovereign Immunities Act (“FSIA”) analysis and incorporating the standard for federal question jurisdiction set forth in Bell v. Hood. According to Venezuela, the FSIA sets out two threshold requirements for establishing jurisdiction under the expropriation exception: that the plaintiff must present that rights are (1) “at issue” and (2) that these rights are “in property taken in violation of international law.” Venezuela asserts that the overlap in jurisdiction pleading and pleading on the merits in Helmerich & Payne International Drilling Co. and Helmerich & Payne de Venezuela, C.A.’s (H&P) claim does not justify upsetting the strong presumption of immunity for foreign sovereigns. Venezuela maintains that allowing jurisdictional analysis to shift depending on the content of H&P’s claims is counter to the FSIA’s stated purpose. Venezuela claims that allowing a case to proceed under FSIA jurisdiction without ensuring that the plaintiff’s claim meets all the requirements of the expropriation exception eliminates the predictability and uniformity that the FSIA provides. Venezuela also highlights that one of the FSIA’s stated purposes is to resolve the question of jurisdiction over a foreign sovereign at the earliest stage possible. With that goal in mind, Venezuela contends that the Court of Appeal’s lesser standard contravenes this purpose by subjecting foreign sovereigns to the beginning stages of litigation, consequently lowering the foreign sovereign’s immunity. Venezuela asserts that the FSIA’s text does not permit the standard of review the Court of Appeals used because the expropriation exception requires that the rights in property actually be in issue, not merely alleged to be in issue.

H&P asserts that the FSIA and its presumption of immunity does not displace the Bell v. Hood standard or hold claimants to a higher standard . H&P counters the argument that Bell v. Hood is a lower standard by stating that Venezuela is in fact asking that the Court apply the usual FSIA standard, but use Bell v. Hood’s “wholly unsubstantial or frivolous” standard as a means of interpreting which rights have been put “in issue,” therefore creating a supplemented, rather than lesser standard. H&P emphasizes that this standard is not altered because of the overlap between the inquiry into both the merits and the jurisdiction but rather because the failure to prove a claim has never operated as a bar to subject matter jurisdiction. H&P further claims that the Bell v. Hood standard does not depend on the content of the plaintiff’s claim but rather its nexus to foreign commercial activity. To support this argument, H&P highlights the non-waivability of subject matter jurisdiction and the Supreme Court’s long-standing adherence to Bell v. Hood and 28 U.S.C. § 1331 as a means of determining whether subject matter jurisdiction exists. H&P also rejects Venezuela’s argument that the application of Bell v. Hood to FSIA expropriation exception claims would contravene the FSIA’s legislative purpose. H&P tracks the history of sovereign immunity and asserts that the FSIA represents a departure from the absolute theory of immunity toward a more restrictive theory that was more mindful of American resources abroad. The purpose of implementing the FSIA, according to H&P, was to allow for claims against foreign sovereigns, to allow an unnecessarily higher standard against foreign sovereigns would in fact be counter to intent of the Act.

THE COMPATIBILITY OF BELL V. HOOD AND FSIA JURISDICTION

Venezuela argues that the analogy between the FSIA’s pleading standard and the pleading standard for federal question jurisdiction elucidated in Bell v. Hood is not rational. Venezuela rebuts this analogy by emphasizing that Section 1331, which grants jurisdiction to any civil action “arising under the Constitution,” and Bell v. Hood, which allows any claim that isn’t “wholly insubstantial or frivolous,” create an “exceptionally low” and presumptively inclusive standard for jurisdiction. Venezuela juxtaposes this broad inclusion with the FSIA’s presumptive immunity as a means of illustrating that these two types of jurisdiction were not intended to be analogous standards. Venezuela highlights the disparity in pleading requirements under Bell v. Hood as further evidence of the inappropriateness of this analogy, stating that Bell v. Hood and Section 1331 merely require that the plaintiff raise a particular type of question in a way that is not “wholly insubstantial or frivolous,” while the FSIA’s expropriation exception goes much further by inquiring into the specific type of right, the alleged harm, and the legal violation before granting jurisdiction.

Venezuela further asserts that neither Congress nor the Supreme Court has treated federal question jurisdiction and FSIA jurisdiction as analogous. Petitioner argues that if Congress had wanted to import a pleading standard and broad jurisdiction from federal question jurisdiction, it had the opportunity to do so, but instead chose language unique to the FSIA and its exceptions. Likewise, Venezuela asserts that the Supreme Court has chosen to treat jurisdiction under the FSIA and federal question jurisdiction separately by giving special attention to the history and policy of the two statutes. Venezuela uses the lack of mention of Bell v. Hood and Section 1331 in previous FSIA cases as evidence of the inappropriateness of the comparison.

Venezuela emphasizes that the statutes’ diverging purposes further illustrate the inutility of comparing the two types of jurisdiction. Section 1331 and Bell v. Hood relate to the relationship between the federal and statute judicial systems and allow for claims to be brought in a limited number of courts. In contrast, the FSIA contemplates the relationship between the United States and foreign sovereigns, allowing for claims to be brought in any United States Court. Venezuela also emphasizes that Section 1331 did not contemplate the possibility of bringing a foreign sovereign into United States courts and therefore does not take into consideration the important consequences of requiring foreign sovereigns to litigate abroad.

H&P argues that the application of Bell v. Hood applies well beyond Section 1331 and therefore that the analogy between the FSIA’s pleading standard and Bell v. Hood’s is appropriate, if not necessary. H&P highlights the many different contexts and statutes to which Bell v. Hood’s standard applies, including the Sherman Act, the Tucker Act, the Securities Exchange Act, bankruptcy law, criminal law, and admiralty law. H&P also uses this broad application of Bell v. Hood to counter Venezuela’s argument concerning congressional intent. H&P contends that the Court should assume that when crafting the FSIA, Congress was aware of the broad applicability of the Bell v. Hood pleading standard and would have exempted the FSIA explicitly if it had intended to do so H&P further emphasizes that the FSIA’s statutory language, as written by Congress, does not adopt Venezuela’s proposed standard either; H&P contends that if Congress had intended to only allow claims where a judgment had already found a taking of property in violation of international law, the FSIA’s language would be more explicit to that regard. H&P next refutes Venezuela’s claim that the Supreme Court has not applied Bell v. Hood to previous FSIA cases. Instead of interpreting the Court’s failure to mention Bell v. Hood in FSIA cases, H&P argues that the Court tacitly applies Bell v. Hood to all questions of jurisdiction and would admit so if asked.

Lastly, H&P contends that the diverging purposes of the FSIA and Section 1331 do not render the application of Bell v. Hood to claims of expropriation inappropriate. H&P draws attention to the application of Bell v. Hood to determine which rights are “in issue” in other legal contexts like issue preclusion, the full faith and credit clause, the statute of limitations, and attorney client privilege. According to H&P, this consistency is important because these aspects of the law are not limited to cases where the division of labor between state and federal judicial systems is concerned, and in the case of issue preclusion does contemplate foreign parties’ relationship to American courts. H&P asserts that the Bell v. Hood standard is in fact the more efficient way of addressing the FSIA’s concerns. H&P contends that Venezuela’s interpretation of the pleading standard requires a preliminary examination of the merits of a claim and front-loads the burden of litigation, offering limited immunity to foreign sovereigns. By first determining jurisdiction, plaintiffs who have wholly unsubstantial or frivolously claims cannot force a foreign sovereign to enter discovery and thus provides greater immunity. H&P also emphasizes that the Bell v. Hood standard addresses and protects from the types of artful pleading Venezuela fears and allow courts to dismiss claims made solely for jurisdictional purposes.