Litigating Expropriation Claims in U.S. Courts
May 8, 2023
Image by David Peterson from Pixabay
Foreign sovereigns generally enjoy sovereign immunity in the United States by operation of the Foreign Sovereign Immunities Act (FSIA). The FSIA specifically provides, however, that a foreign sovereign shall not be immune in any case in which “rights in property taken in violation of international law are in issue.” On its face, this expropriation exception might seem to eliminate immunity in any case where a foreign sovereign seizes property belonging to a citizen of another country without paying compensation. A recent case out of Florida makes clear, however, that things are not always so simple.
Comparelli v. Bolivarian Republic of Venezuela
The plaintiffs in Comparelli v. Bolivarian Republic of Venezuela were Carmina Comparelli (Carmina) and Julio Comparelli (Julio). The defendant was Venezuela. In 2010, Venezuela seized a Venezuelan company owned by Carmina that sold chemical products. Venezuela also seized an affiliated Venezuelan company involved in the transport of these products that was partly owned by Julio and partly owned by Carmina. Venezuela claimed that it had seized the companies because they were involved in the illicit storage and transport of controlled chemical substances. The plaintiffs alleged that this argument was a mere pretext and that Venezuela simply wanted the companies for itself.
After bringing an unsuccessful challenge to the seizure in the Venezuelan judicial system, the plaintiffs sued Venezuela in 2014 in the United States District Court for the Southern District of Florida (Judge Kathleen M. Williams). They alleged that Venezuela had seized their companies without compensation and in violation of international law. Venezuela argued that it was immune from suit under the FSIA. The plaintiffs responded that the expropriation exception stripped away Venezuela’s sovereign immunity.
In order to satisfy the statutory exception, the plaintiffs needed to show, first, that they were not citizens of Venezuela, and, second, that the property in which they claimed to hold a right was taken in violation of international law. The plaintiffs could show that the seizure violated international law by showing that it (1) did not serve a public purpose, (2) discriminated against those who are not nationals of Venezuela, or (3) was not accompanied by just compensation. Each of these issues is explored below.
It was undisputed that Carmina was never a Venezuelan national. She was at all times an Italian citizen. Julio’s status was more complicated. Because Julio was a dual citizen of Venezuela and Italy, the court had to ascertain his “dominant and effective” nationality for purposes of his expropriation claim. Unfortunately for Julio, the court concluded that his dominant nationality was Venezuelan. Julio was born in Venezuela, grew up and went to school in Venezuela, and had lived most of his life in Venezuela. Because a seizure of property only violates international law when the plaintiff is a foreign national, and because Julio’s dominant and effective nationality was Venezuelan, the court held that the expropriation exception was inapplicable and that it lacked jurisdiction to hear his claims against Venezuela under the FSIA.
Violation of International Law
Carmina argued that the seizure was not motivated by a legitimate public purpose but instead by a “political agenda of monopolizing the petrochemical industry in Venezuela and desire to grant exclusive control of such industry” to a company more closely affiliated with the Venezuelan government. The court held that Carmina failed to carry her burden of proof on this issue. It noted that the Venezuelan government had identified a legitimate reason for the seizure – the company’s storage of hydrochloric acid in excess of legally permissible amounts – and that this reason was entitled to a presumption of regularity. Because Carmina failed to come forward with clear and specific evidence of impropriety, the court concluded that she failed to show that the seizure was not motivated by a legitimate public purpose.
The seizure of the companies by Venezuela could have violated international law if it were motivated by a discriminatory or arbitrary purpose. If, for example, Carmina could show that Venezuela had singled her out and taken her property due to her nationality, then that would have been sufficient. No such evidence was presented in this case. Carmina stated in a deposition that she did not believe that the Venezuelan government had “persecuted her because of her nationality . . . or out of political animus.” Accordingly, the district court concluded that Carmina failed to carry her burden of proof on this issue.
The court ultimately held that because Carmina had failed to show that the seizure was not motivated by a legitimate public purpose, and because she had failed to show that it was driven by a discriminatory or arbitrary purpose, there was no basis for concluding that Venezuela had an obligation to compensate her for the seizure as a matter of international law.
When a foreign government publicly states that it is seizing a person’s property on a mere whim, it is easy to establish a lack of a legitimate public purpose. Similarly, when a foreign government expropriates the property of many foreign companies all at once, it is easy to establish a discriminatory motive.
When a foreign government articulates a rationale that is superficially plausible, however, and seizes the property of just one company, then a plaintiff seeking to invoke the FSIA’s expropriation exception faces an uphill battle. In such cases, the plaintiff may not have access to internal government documents that would allow her to prove that the seizure was conducted in violation of international law. The upshot is that when the national courts of the country that initiated the seizure choose not to act – as was the case in Comparelli – the plaintiff may never receive compensation for the property that was taken.