OI European Grp. B.V. v. Bolivarian Republic of Venez.
| Decision Date | 02 March 2022 |
| Docket Number | Misc 19-290-LPS,19-342-LPS,20-257-LPS,21-46-LPS |
| Court | U.S. District Court — District of Delaware |
| Parties | OI EUROPEAN GROUP B.V., Plaintiff, v. BOLIVARIAN REPUBLIC OF VENEZUELA, Defendant. PHILLIPS PETROLEUM COMPANY VENEZUELA LIMITED and CONOCOPHILLIPS PETROZUATA B.V, Plaintiffs, v. PETROLEOS DE VENEZUELA, S.A., CORPOGUANIPA, S.A. and PDVSA PETROLEO, S.A., Defendants. NORTHROP GRUMMAN SHIP SYSTEMS, INC., Plaintiff, v. THE MINISTRY OF DEFENSE OF THE REPUBLIC OF VENEZUELA, Defendant. ACL1 INVESTMENTS LTD., ACL2 INVESTMENTS LTD., and LDO CAYMAN XVIII LTD., Plaintiff, v. BOLIVARIAN REPUBLIC OF VENEZUELA, Defendant. |
Jody C. Barillare and Kelsey A. Bomar, MORGAN, LEWIS & BOCKIUS LLP, Wilmington, DE
Sabin Willett, Jonathan Albano, and Christopher L. Carter, MORGAN LEWIS & BOCKIUS LLP, Boston, MA
Edward H. Davis, Jr., Fernando J. Menendez, and Cristina Vicens Beard, SEQUOR LAW, PA., Miami, FL
Attorneys for 01 European Group B.V.
Garrett B. Moritz, ROSS ARONSTAM & MORITZ LLP Wilmington, DE
Michael S. Kim, Marcus J. Green, and Josef M. Klazen, KOBRE & KIM LLP, New York, NY
Michael Sherwin, KOBRE & KIM LLP, Washington, DC
Attorneys for Phillips Petroleum Co. Venezuela Ltd. and ConocoPhillips Petrozuata B.V.
Laura Davis Jones and Peter J. Keane, PACHULSKI STANG ZIEHL & JONES LLP, Wilmington, DE
Alexander A. Yanos, Rajat Rana, and Robert Poole, ALSTON & BIRD, LLP, New York, NY
Attorneys for Northrop Grumman Ship Systems, Inc.
Marie M. Degnan, ASHBY & GEDDES, Wilmington, DE
Joshua S. Bolian and Keane A. Barger, RILEY WARNOCK & JACOBSON, PLC, Nashville, TN
Attorneys for ACL 1 Investments Ltd., ACL2 Investments Ltd., and LDO (Cayman) XVIII Ltd.
A. Thompson Bayliss and Stephen C. Childs, ABRAMS & BAYLISS LLP, Wilmington, DE
Sergio J. Galvis, Joseph E. Neuhaus, James L. Bromley, SULLIVAN & CROMWELL LLP, New York, NY
Angela N. Ellis, SULLIVAN & CROMWELL LLP, Washington, DC
Attorneys for Bolivarian Republic of Venezuela
Samuel Taylor Hirzel, II, Aaron M. Nelson, and Jamie L. Brown, HEYMAN ENERIO GATTUSO & HIRZEL LLP, Wilmington, DE
Joseph D. Pizzurro, Julia B. Mosse, Kevin A. Meehan, and Juan O. Perla, CURTIS, MALLET-PROVOST, COLT & MOSLE LLP, New York, NY
Attorneys for Petroleos de Venezuela, S A.
Samuel Taylor Hirzel, II and Aaron M. Nelson, HEYMAN ENERIO GATTUSO & HIRZEL LLP, Wilmington, DE
Joseph D. Pizzurro, Julia B. Mosse, Kevin A. Meehan, and Juan O. Perla, CURTIS, MALLET-PROVOST, COLT & MOSLE LLP, New York, NY
Attorneys for Corpoguanipa, S A. and PDVSA Petroleo, S A.
Pending before the Court are various motions brought by creditors who hold judgments against the Bolivarian Republic of Venezuela ("Venezuela" or the "Republic") or other entities of the Venezuelan government. Each judgment creditor seeks, through these actions, a writ of attachment fieri facias ("fi.fa.") for shares of PDV Holding, Inc. (the "PDVH Shares") held by the Republic's state-owned oil company, Petroleos de Venezuela, S.A. ("PDVSA").[1] Although the Republic and PDVSA are legally distinct entities, judgment creditors with judgments against the Republic have sought to collect on those judgments by attaching PDVSA's property in this District, under the theory that PDVSA is the Republic's alter ego.
Under certain executive orders and a sanctions regime implemented by the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC"), the PDVH Shares are "blocked property," so transactions involving those shares are prohibited. Thus, each judgment creditor admits that any writ of attachment for the PDVH Shares should not be served until either OFAC grants it a specific license to obtain an interest in the PDVH Shares or the sanctions regime changes and the PDVH Shares are no longer blocked. One common legal question in all four of these cases is whether the OFAC sanctions should stop the Court from ordering the narrow relief requested by the judgment creditors in their pending motions. For the reasons explained below, the Court concludes that the OFAC sanctions do not prevent it from authorizing the eventual issuance of a writ attachment, conditioned on some form of approval by the Executive Branch.
In 2011, 01 European Group B.V. ("OIEG") commenced an arbitration against the Republic. (Misc. No. 19-290 D.I. 49 at 2) In 2015, the arbitral tribunal concluded that the Republic, under the regime of former President Hugo Chavez, had expropriated OIEG's interests in glass container factories. (Id.) The tribunal issued a decision in OIEG's favor and awarded OIEG over $370 million, plus costs, expenses, and interest. (Id. at 2-3) In 2019, the U.S. District Court for the District of Columbia confirmed the arbitral award and entered judgment for OIEG against the Republic. (See Id. at 3) Later that year, OIEG registered its judgment with this Court. (Id.) By OIEG's calculation, the total amount of its award now stands at over $583 million. (Id.) OIEG seeks to collect on its judgment by attaching the PDVH Shares. At this point in the process, OIEG specifically asks the Court to "enter an order authorizing the issuance of... a writ of attachment fieri facias provided that such issuance and service of the writ shall be conditioned upon this Court's receipt of evidence that [OFAC] has (x) authorized such issuance and service, or (y) removed the prohibition and sanctions currently in place that prevent the issuance and service of such a writ." (D.I. 48 at 1-2; D.I. 48-3; see also D.I. 102 at 2)[2]
Northrop Grumman Ship Systems, Inc., now known as Huntington Ingalls Inc. ("Huntington Ingalls"), commenced an arbitration against the Republic's Ministry of Defense after the Republic failed to pay Huntington Ingalls for repairing two Venezuelan warships. (See Misc. No. 20-257 D.I. 26 at 1 & n.l) In 2018, the arbitral tribunal sided with Huntington Ingalls, awarding it over $128 million. (Id. at 4) Huntington Ingalls filed a motion in the U.S. District Court for the Southern District of Mississippi seeking to recognize and enforce its arbitral award, and that court granted the motion. (Id.) In July 2020, Huntington Ingalls registered its judgment in this Court. (Id. at 5) Today, Huntington Ingalls' judgment is apparently worth over $137 million. (See Id. at 4-5) Like OIEG, Huntington Ingalls seeks to collect on its judgment by attaching the PDVH Shares and obtaining a portion of the proceeds from a forced judicial sale. Given the sanctions regime, Huntington Ingalls seeks an order that the Clerk of this Court may issue a writ of attachment for the PDVH Shares "upon evidence that [OFAC] has either (i) authorized the issuance and service of such a writ or (ii) otherwise removed or modified the relevant sanctions currently prohibiting the transfer of the PDVH Shares. (D.I. 54-1 at 1-2) (emphasis omitted)
ACL1 Investments Ltd. ("ACL1"), ACL2 Investments Ltd. ("ACL2"), and LDO Cayman XVIII Ltd. ("LDO") (collectively, "ACL") own bonds issued by the Republic. (Misc. No. 21-46 D.I. 3 at 10) Because the Republic stopped paying principal and interest on the bonds in January 2018, the bonds' full principal became due in December 2018. (Id.) In September 2019, ACL1 and ACL2 sued the Republic in the U.S. District Court for the Southern District of New York. (Id.) LDO eventually joined that case. (Id.) At the end of 2020, the Republic stipulated to a judgment against it worth over $ 118 million. (Id.) ACL registered its judgment in this Court but also agreed not to enforce that judgment until October 23, 2021. (Id.) Now that the agreed-upon date has passed, ACL seeks to collect on its judgment by attaching the PDVH Shares. ACL requests an order with the following language: "upon this Court's receipt of evidence that [OFAC] has either authorized the issuance and service of such writ or removed the prohibition and sanctions currently in place that prevent the issuance and service of such a writ, the Clerk of this Court... shall issue that writ." (D.I. 31 at 1) The proposed order also would provide that "the U.S. Marshals Service is authorized, upon receipt of the issued writ, to serve" that writ on PDVH. (Id. at 2)
According to Phillips Petroleum Company Venezuela Limited and ConocoPhillips Petrozuata B.V. (together "ConocoPhillips"), the Republic and PDVSA "confiscated and nationalized ConocoPhillips' interests in major projects in the Orinoco Oil Belt." (Misc. No. 19-342 D.I. 3 at 1) ConocoPhillips commenced an arbitration against the Republic, PDVSA, and various subsidiaries of PDVSA. (Id.) The arbitral tribunal awarded ConocoPhillips nearly $2 billion. (Id.) In August 2018, the arbitral award was confirmed in the U.S. District Court for the Southern District of New York. (Id.) Notably, unlike the other judgment creditors, ConocoPhillips holds a judgment directly against PDVSA, meaning that ConocoPhillips is not required to show that PDVSA is the Republic's alter ego. (See Id. at 2-3) The parties entered into a settlement agreement, and PDVSA paid ConocoPhillips a portion of the judgment. (Id. at 1-2) PDVSA later breached its obligations under the settlement agreement, causing ConocoPhillips to seek to enforce the judgment and collect the rest of its award, as the settlement agreement allows. (Id. at 2) Thus, ConocoPhillips seeks an order "authorizing the issuance of the fi. fa. writ, with subsequent delivery and service conditioned on OFAC authorization (or the lifting of sanctions)." (D.I. 37 at 5) Unlike the other judgment creditors, who suggest there should be conditions on both the issuance and service of their requested writs, ConocoPhillips seeks the immediate issuance of its writ with...
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