D.C. Circuit Allows Venezuela Expropriation Case to Proceed
October 14, 2025
On October 3, 2025, the D.C. Circuit issued its latest opinion in Helmerich & Payne International Drilling Co. v. Venezuela. Judge Gregory G. Katsas affirmed the district court’s rulings that the Foreign Sovereign Immunities Act’s (FSIA) expropriation exception allows the plaintiff’s claim, that the district court has personal jurisdiction, and that the act of state doctrine is inapplicable.
The Facts
Helmerich & Payne International Drilling Co. (Helmerich) is a U.S. company with a Venezuelan subsidiary (Helmerich (Venezuela)). Helmerich (Venezuela) provided services for Petróleos de Venezuela, S.A. (PDVSA), Venezuela’s state-owned oil company. When PDVSA stopped paying its invoices, Helmerich (Venezuela) decided to wind down operations and started disassembling its oil rigs. In response, PDVSA seized the rigs, and Venezuelan President Hugo Chavez issued a Decree of Expropriation.
Helmerich and its subsidiary sued Venezuela and PDVSA under the FSIA’s expropriation exception, 28 U.S.C. § 1605(a)(3), for cases “in which rights in property taken in violation of international law are in issue.” The case went to the Supreme Court in 2017 on a pleading question. On remand, the D.C. Circuit held that the U.S. parent could claim an expropriation in violation of international law but that the Venezuelan subsidiary could not, because international law does not govern a state’s expropriation of its own nationals’ property.
Subsequently, the district court dismissed Venezuela as a defendant based on the D.C. Circuit’s holding in a different case, De Csepel v. Republic of Hungary (2017), that expropriation claims can be brought against the foreign state itself only when the property or proceeds are present in the United States. There is a cert petition pending on that question in yet another case, but Helmerich did not challenge the district court’s decision on appeal. And so, this case now involves just Helmerich (the U.S. parent company) suing PDVSA (the Venezuelan state-owned oil company).
The FSIA’s Expropriation Exception
The FSIA’s expropriation exception provides, in relevant part, that a foreign state is not immune from suit in any case:
in which rights in property taken in violation of international law are in issue and … that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States.
The D.C. Circuit had to decide therefore whether Helmerich’s property was “taken in violation of international law,” whether PDVSA owned or operated that property, and whether PDVSA was engaged in a commercial activity in the United States.
Helmerich argued that Venezuela expropriated both its ownership interest in Helmerich (Venezuela) and its right to dispose of the subsidiary’s assets. Judge Katsas agreed. Reiterating that international law protects against indirect expropriations as well as direct ones, the court observed that Venezuela had taken the entire business of Helmerich’s Venezuelan subsidiary to operate as a state-owned enterprise, even though subsidiary still technically exists as a legal entity. “Venezuela did not take the assets to destroy them,” the court noted. “Instead, the record shows that the nationalization transferred the assets to PDVSA, which operates them for its own benefit.” Nor was there any doubt that PDVSA is engaged in commercial activity in the United States, since it has supply contracts with U.S. entities like CITGO and commercial property interests in the United States.
Personal Jurisdiction
PDVSA also challenged the district court’s personal jurisdiction over it. After the Supreme Court’s recent decision in Fuld v. PLO (2025), this should not be an issue. Section 1330(b) says that federal courts have personal jurisdiction over foreign states and their agencies or instrumentalities whenever such courts have subject matter jurisdiction, which is to say whenever they are not immune from suit. As I explained here, the FSIA’s provision on personal jurisdiction easily survives scrutiny under Fuld.
But Fuld was decided after Helmerich was briefed and argued. Rather than ask for additional briefing, Judge Katsas affirmed the district court’s exercise of personal jurisdiction by applying pre-Fuld case law. The D.C. Circuit had held that the Fifth Amendment’s Due Process Clause does not apply to foreign states or to instrumentalities that are alter egos of foreign states. PDVSA was an alter ego of Venezuela for constitutional purposes, the court concluded, applying the Bancec factors.
There was no inconsistency, Judge Katsas explained, between treating PDVSA as a separate entity for purposes of the FSIA’s expropriation exception and as Venezuela’s alter ego for constitutional purposes—“the constitutional and statutory tests are different.”
[T]he constitutional test for alter-ego status turns on the extent to which the sovereign controls a legally separate entity like a government-owned corporation. In contrast, when distinguishing between a foreign sovereign and an agency or instrumentality for FSIA purposes, we consider whether the entity’s “core functions are governmental or commercial.” The tests serve different purposes, and there is nothing unusual, much less inherently contradictory, in concluding that a foreign sovereign completely controls a legally separate entity that is engaged in primarily commercial activities (citations omitted).
The Act of State Doctrine
Judge Katsas also rejected PDVSA’s argument that the act of state doctrine barred Helmerich’s expropriation claim. The Supreme Court held in Banco Nacional de Cuba v. Sabbatino (1964) that the doctrine barred courts in the United States from questioning the validity of Cuba’s expropriations of U.S. owned property in Cuba. But Congress quickly passed the Second Hickenlooper Amendment, 22 U.S.C. 2370(e)(2), creating an exception to the act of state doctrine for “case[s] in which a claim of title or other rights to property is asserted … based upon … a confiscation or other taking after January 1, 1959, by an act of that state in violation of the principles of international law.”
PDVSA argued that the Hickenlooper Amendment applies only to claims for title and not to claims for damages, but the court reasoned that damages claims fall easily within the phrase “other rights to property.” Judge Katsas further noted that international law does not prohibit all takings of property but only takings without just compensation. “So it would make no sense,” he reasoned, “for Congress to greenlight a null set of claims to enjoin takings conducted by foreign sovereigns abroad, but to maintain a bar on damages claims seeking just compensation for the same group of takings.”
PDVSA also argued that the Hickenlooper Amendment applies only if the property or proceeds are present in the United States, as they were in Sabbatino. Reaffirming D.C. Circuit precedent, Judge Katsas held that the provision’s text imposes no such requirement. This holding maintains a split with the Second and Fifth Circuits, which have imposed such a limitation on the Hickenlooper Amendment. But the court dismissed these as “older cases” that would not be decided the same way today.
Finally, PDVSA argued that the presumption against extraterritoriality limited the Hickenlooper Amendment’s geographic scope. Judge Katsas dispensed with this argument in just two sentences. “The Second Hickenlooper Amendment restricts courts from applying the act-of-state doctrine, which applies only to acts committed by foreign sovereigns within their own territories,” he noted. “The Amendment thus applies exclusively to foreign takings, which is enough to rebut the presumption against extraterritoriality.”
Conclusion
Because the act of state doctrine is a defense on the merits, it would not normally have been subject to review on interlocutory appeal. The D.C. Circuit exercised pendant appellate jurisdiction on the theory that the act of state doctrine issues were “inextricably intertwined” with the FSIA issues. That seems questionable. But it also seems that the panel did not want to drag this case out any longer than necessary. That is understandable since the case is still ongoing 15 years after Helmerich’s rigs were seized.