Crystallex Int'l Corp. v. Bolivarian Republic of Venez.

Decision Date09 August 2018
Docket NumberC.A. No. 17-mc-151-LPS
Citation333 F.Supp.3d 380
Parties CRYSTALLEX INTERNATIONAL CORPORATION, Plaintiff, v. BOLIVARIAN REPUBLIC OF VENEZUELA, Defendant.
CourtU.S. District Court — District of Delaware

Raymond J. DiCamillo, Jeffrey L. Moyer, Travis S. Hunter, RICHARDS, LAYTON & FINGER, PA., Wilmington, DE

Robert L. Weigel, Jason W. Myatt, Rahim Moloo, GIBSON, DUNN & CRUTCHER LLP, New York, NY

Miguel A. Estrada, GIBSON, DUNN & CRUTCHER LLP, Washington, DC, Attorneys for Plaintiff.

Samuel T. Hirzel, II, HEYMAN ENERIO GATTUSO & HIRZEL LLP, Wilmington, DE

Joseph D. Pizzuro, Kevin A. Meehan, Julia B. Mosse, Juan O. Perla, CURTIS, MALLET-PREVOST, COLT & MOSLE LLP, New York, NY, Attorneys for Intervenor Petróleos de Venezuela, S.A.

LEONARD P. STARK, UNITED STATES DISTRICT JUDGE

OPINION

Plaintiff/Judgment Creditor Crystallex International Corporation ("Crystallex") holds a $1.2 billion judgment against the Bolivarian Republic of Venezuela ("Venezuela" or "the Republic"). (D.I. 1) Crystallex has registered the judgment in Delaware. (Id. ) Venezuela has not appeared in the litigation. However, Petróleos de Venezuela, S.A. ("PDVSA"), an oil company, has intervened. (D.I. 14) This is because Crystallex seeks to collect on its judgment against Venezuela by executing on property nominally owned by PDVSA, specifically shares of common stock PDVSA owns in PDV Holding Inc. ("PDVH"), a Delaware corporation. Crystallex's theory is that PDVSA is the alter ego of Venezuela, making PDVSA's property subject to execution for payment of Venezuela's debt.

Crystallex and PDVSA have each filed a motion. Crystallex moves for a writ of attachment fieri facias ("fi. fa. ") pursuant to the Foreign Sovereign Immunities Act, 28 U.S.C. § 1601(c). (D.I. 2) In turn, PDVSA has filed a motion to dismiss for lack of subject matter jurisdiction. (D.I. 25) Together, the parties'1 motions present numerous complex questions, some of which have been addressed by no previous court, and others on which different courts have reached competing conclusions. The Court's careful consideration of the issues before it has included reviewing numerous briefs (D.I. 3-1, 26, 33), letter briefs (D.I. 51-54, 70-71), submissions of supplemental authority (D.I. 41, 46, 59-60, 63-65), six substantive declarations (D.I. 7-8, 28-29, 35-36), and hundreds of exhibits (see, e.g. , D.I. 4-6, 11, 27, 34, 37, 47). The Court also heard oral argument on two separate occasions. (See Transcript of Dec. 21, 2017 Hr'g (D.I. 49) ("Tr."); Transcript of Aug. 3, 2018 Hr'g (D.I. 74) ("Aug. Tr.") )

Having undertaken the required analysis, the Court will grant Crystallex's motion and deny PDVSA's motion.

BACKGROUND

In 2002, the Government of Venezuela awarded Crystallex, a Canadian corporation, a Mine Operating Contract ("Contract") by which Crystallex was granted the opportunity to develop the Las Cristinas gold mines. (D.I. 3-1 at 1; D.I. 26 at 4-5) Completion of the mining project was dependent on Crystallex obtaining certain permits from Venezuela. (D.I. 26 at 5) Crystallex never obtained such permits. (Id. ) Instead, in 2011, Venezuela seized the Las Cristinas mines. (D.I. 3-1 at 5)

"In accordance with a bilateral investment treaty (BIT) between Canada and Venezuela, Crystallex pursued its grievances against Venezuela before an international arbitration tribunal ...." Crystallex Int'l Corp. v. Bolivarian Republic of Venezuela , 244 F. Supp. 3d 100, 105 (D.D.C. 2017) (" Crystallex "). Specifically, in 2011, Crystallex initiated arbitration proceedings against Venezuela before the International Centre for Settlement of Investment Disputes ("ICSID") in Washington, D.C. (D.I. 3-1 at 1, 5) On April 4, 2016, an arbitration panel found that Venezuela's actions constituted an indirect expropriation of Crystallex's rights under the Contract. (D.I. 26 at 5) The ICSID awarded Crystallex $1.2 billion plus interest. (Id. ; D.I. 3-1 at 5)

Crystallex then filed suit in the United States District Court for the District of Columbia (the "D.C. Court") seeking to confirm the arbitral award. See Crystallex Int'l Corp. v. Bolivarian Republic of Venezuela , C.A. No. 16-0661 (RC) D.I. 1 (D.D.C. Apr. 7, 2016). On March 25, 2017, Judge Rudolph Contreras issued an opinion and order confirming the award. (See D.I. 1; D.I. 26 at 6; D.I. 4-1 Exs. 6, 7) On April 7, 2017, the D.C. Court entered judgment against Venezuela. (D.I. 1; D.I. 26 at 6) Just over two months later, on June 9, 2017, Judge Contreras found that a "reasonable period" had elapsed since entry of judgment but Venezuela had not paid its debt. Crystallex Int'l Corp. v. Bolivarian Republic of Venezuela , C.A. No. 16-0661 (RC) D.I. 36 (D.D.C. June 9, 2017) (see D.I. 4-1 Ex. 8) ("Crystallex II "). Hence, pursuant to Section 1610(c) of the FSIA, the D.C. Court ruled that Crystallex could commence proceedings in aid of execution of the judgment. Id.2

Accordingly, on June 19, 2017, Crystallex registered the D.C. Court's judgment in this Court. (D.I. 1; see also 28 U.S.C. § 1963 (providing district court in which judgment is registered with same power to enforce it that is possessed by district court which issued judgment) )3 Crystallex filed its pending motion for a writ of attachment on August 14, 2017, seeking to attach shares of PDVH, which are owned by PDVSA, which Crystallex alleges is an alter ego of Venezuela. (D.I. 3-1 at 1; see also Tr. at 36 (PDVSA stating "the PDV Holding shares they want to attach belong to PDVSA") ) Thereafter, PDVSA moved to intervene for the purpose of opposing the attachment motion (D.I. 14), a request the Court granted on August 28, 2017 (D.I. 17), without objection from Crystallex (D.I. 16). Subsequently, on November 3, 2017, PDVSA filed its pending cross-motion to dismiss for lack of subject matter jurisdiction. (D.I. 25)

The parties initially completed briefing on the motions on November 22, 2017 (D.I. 3-1, 26, 33) and were scheduled for oral argument on December 5, 2017 (D.I. 23). When they appeared on December 5, Crystallex requested a continuance in light of a recent settlement reached between it and Venezuela. (See D.I. 40; see also Transcript of Dec. 5, 2017 Chambers Conference) The Court continued the argument until December 21, at which point the parties again appeared, indicated that Venezuela had not met a condition precedent to the settlement, and proceeded to present argument. (See D.I. 43; Aug. Tr. at 12-13)

Over the ensuing months, the parties have advised the Court of subsequent authorities and developments (see, e.g. , D.I. 59-60, 63-65) and responded to the Court's orders for supplemental briefing (see D.I. 51-54, 70-71). On July 30, 2018, the Court provided the parties with a list of additional questions on which it sought their input. (See D.I. 68) Then, on August 3, the Court heard additional oral argument. (See Aug. Tr.)

APPLICABLE LAW
A. Writ Of Attachment

Pursuant to Federal Rule of Civil Procedure 69(a)(1), "[a] money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on execution – and in proceedings supplementary to and in aid of judgment or execution – must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies." Under Rule 69, "a district court has the authority to enforce a judgment by attaching property in accordance with the law of the state in which the district court sits." Peterson v. Islamic Republic of Iran , 876 F.3d 63, 89 (2d Cir. 2017) (internal quotation marks omitted).

Delaware law permits a judgment creditor to obtain a writ of attachment fi. fa. , as set out in 10 Del. C. § 5031 :

The plaintiff in any judgment in a court of record, or any person for such plaintiff lawfully authorized, may cause an attachment, as well as any other execution, to be issued thereon, containing an order for the summoning of garnishees, to be proceeded upon and returned as in cases of foreign attachment.[4 ] The attachment, condemnation, or judgment thereon, shall be pleadable in bar by the garnishee in any action against the garnisheeat the suit of the defendant in the attachment.

As expressly provided by statute, the types of property a judgment creditor may attach include a debtor's shares in a Delaware corporation:

The shares of any person in any corporation with all the rights thereto belonging ... may be attached under this section for debt, or other demands, if such person appears on the books of the corporation to hold or own such shares, option, right or interest.

8 Del. C. § 324(a).5 Delaware law further provides that judgment creditors may execute on their judgments by "the attachment of a defendant's property in the hands of a third party." UMS Partners, Ltd. v. Jackson , 1995 WL 413395, at *5 (Del. Super. Ct. June 15, 1995).

B. Subject Matter Jurisdiction

Federal Rule of Civil Procedure 12(b)(1)"authorizes dismissal of a complaint for lack of jurisdiction over the subject matter, or if the plaintiff lacks standing to bring his claim." Samsung Elecs. Co., Ltd. v. ON Semiconductor Corp. , 541 F.Supp.2d 645, 648 (D. Del. 2008). "At issue in a Rule 12(b)(1) motion is the court's very power to hear the case." Petruska v. Gannon Univ. , 462 F.3d 294, 302 (3d Cir. 2006) (internal quotation marks omitted).

Usually, a motion to dismiss for lack of subject matter jurisdiction presents either a facial or factual challenge. See CNA v. United States , 535 F.3d 132, 139 (3d Cir. 2008). A facial attack "concerns an alleged pleading deficiency," while a factual attack concerns the "failure of a plaintiff's claim to comport factually with the jurisdictional prerequisites." Id. (internal quotation marks and brackets omitted).

Where the motion presents a facial challenge to the Court's jurisdiction, or one based purely on the sufficiency of the plaintiff's allegations, the Court must accept well-pled factual allegations as true and generally may consider only the complaint and any...

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