On May 15, 2017, the US Supreme Court decided Kindred Nursing Centers, L.P. v. Clark. The question before the Court was whether the Federal Arbitration Act (FAA) preempts a state law contract rule that singles out arbitration by requiring a power of attorney (POA) to expressly refer to arbitration agreements before the attorney-in-fact can bind her principal to an arbitration agreement.

Background

Under the FAA, arbitration agreements are ‘valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract’ (9 U. S. C. §2). This provision yields the equal treatment principle, whereby a court may invalidate an arbitration agreement based on ‘generally applicable contract defenses’ like fraud or unconscionability, but not on legal rules that ‘apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.’ Briefly put, the FAA preempts any state rule discriminating on its face against arbitration.

Petitioner, Kindred Nursing, operates nursing homes and rehabilitation centers in Kentucky. The Respondents, Clark and Wellner, represented their principals, the estates of the deceased Clark and Wellner, who were residents at Kindred Nursing’s centers.

Prior to their admission to the nursing home, the residents signed general POAs, which designated their family members (Clark and Wellner) as their respective attorney-in-fact and gave them broad authorities over all future business affairs involving the residents, including the power and authority to sign contracts and to initiate and defend against legal proceedings. Clark’s agreement granted power to “draw, make, and sign in my name any and all checks, promissory notes, contracts, deeds or agreements” and Wellner’s agreement granted power to “make, execute, and deliver deeds, releases, conveyances, and contracts of every nature.” The POAs did not mention arbitration.

When the residents were admitted to the nursing home, Clark and Wellner signed their admission paperwork and an ‘Alternative Dispute Resolution Agreement between Resident and Facility (Optional)’, according to which all disputes arising between the residents of the nursing home and the nursing home, are to be resolved in arbitration.

The proceedings in Kentucky

Following the demise of Clark and Wellner, Respondents initiated legal proceedings against the nursing home before the state circuit court for personal injury, wrongful death, abuse, and other breaches of Kentucky state laws. Kindred Nursing moved to dismiss on grounds that the arbitration agreement should be enforced. The first instance sided with Kindred Nursing and dismissed the claims.

However after this decision was handed down, the Supreme Court of Kentucky delivered its judgment in Ping v Beverly Enterprises, where it held that broadly drafted POAs do not comprise the ability to bind the principal to an arbitration agreement. Accordingly, Clark and Wellner asked the circuit court to reconsider its decision to dismiss.

The circuit court granted reconsideration and determined that the arbitration agreements are unenforceable since Clark and Wellner did not have authority to bind their principals to such agreements. Kindred Nursing appealed the decision before the Kentucky Court of Appeals, who affirmed the decision and held that Clark and Wellner’s POA did not confer upon them the authority to bind the residents to arbitration.

Kindred Nursing appealed to the Kentucky Supreme Court. By a 4-3 vote the Kentucky Supreme Court affirmed the decision of the Court of Appeal by and declined to give effect to arbitration agreements executed by individuals holding a broad POAs. According to the Court, a general grant of power (even if seemingly comprehensive) does not permit a legal representative to enter into an arbitration agreement for someone else; to form such a contract, the representative must possess specific authority (a ‘clear and convincing manifestation’) to ‘waive his principal’s fundamental constitutional rights to access the courts [and] to trial by jury’.

As for the right to jury trial, the Kentucky Supreme Court added that:

It bears emphasis that the drafters of our Constitution deemed the right to a jury trial to be inviolate, a right that cannot be taken away; and, indeed, a right that is sacred, thus denoting that right and that right alone as a divine God-given right.

Kindred Nursing petitioned the Supreme Court to review this decision.

The proceedings before the Supreme Court

On appeal, Kindred Nursing adhered to the long pedigree of cases where the Supreme Court held that arbitration agreements must be put on “equal footing” with all other contracts. Respondents on the other hand maintained in their pleadings that this case is not about the interpretation and enforcement of arbitration agreements. Rather, they suggested that this case is about agency contracts, which is plainly governed by state laws. Therefore, they maintained that the provisions of the FAA are not engaged and the FAA does not pre-empt these state laws.

Several amicus curiae briefs were filed in support of both sides. The US Chamber of Commerce supported Kindred Nursing, and focused on the benefits of arbitration compared to court litigation (enumerating duration, cost, procedure, saving precious judicial time, etc.), the underscoring rationale of the FAA, and empirical studies that demonstrate the efficiency of arbitration as a method of dispute settlement.

The American Association for Justice, the AARP, and Public Citizen, submitted briefs in support of Respondents, and stressed the importance of the right to access the courts. Additionally, Professor Ime Szalai’s brief argued that the legislative history of the FAA demonstrates that it ‘was never intended to govern personal injury claims.’

In the oral hearing, Kindred Nursing maintained a clear line whereby the Kentucky Courts discriminated against arbitration by applying a ‘different and more demanding’ rule to determine whether a POA confers authority to enter into arbitration agreements ‘than the rule for determining whether a power of attorney confers authority to enter into contracts generally’ (pp 3-17).

Clark and Wellner argued that under the rule developed by the Kentucky Supreme Court and the lower courts, ‘the power to waive generally fundamental constitutional rights must be unambiguously expressed in the text of a power of attorney’; this rule was adopted to protect ‘sacred’ constitutional rights, such as access to jury trial (pp. 18-22). Interestingly, Respondents argued that this state rule concerns the ability to enter into arbitration agreements (i.e., formation of agreements) and thus does not conflict with the FAA, which ‘has no application to contract formation issues’, but only to the enforcement of arbitration agreements.
The Court expressed skepticism. First, Justice Breyer noted in the oral hearings that he was ‘highly suspicious’ of this position that the Kentucky laws are designated to protect fundamental constitutional rights. He rather thought that ‘what really … happened is that Kentucky just doesn’t like the Federal law.’ (p 23).

On this point, the Bench’s line of questioning focused on the commonalities and distinctions between arbitration, mediation, and settlement. If, according to the Court, a general POA encompasses the authority of the attorney-in-fact to settle a claim out of court or to opt for mediation in lieu of a jury trial, why should the same POA not encompass the authority to enter into arbitration agreements? Or as Justice Breyer put it to: ‘Now, if you’re not going to tell me that those are treated exactly alike, I will tell you in my opinion right now you have discriminated against arbitration’ (p 49).

As for the proposition that the FAA is concerned with the enforcement, and not formation, of arbitration agreements, the Court was also not convinced. Justice Ginsburg was concerned that even if such a distinction is pertinent, it still results in the contradiction of the ‘equal footing’ rule:

But what about the principle that making an arbitration agreement harder to form than other agreements violates the Federal Arbitration Act … [T]he main rule is equal footing. Arbitration we thought to be on the same footing as all other contracts. If you make the arbitration agreement harder to form because you have to have this explicit reference than other contracts, doesn’t that discriminate against arbitration agreements?

At the same time, the Bench was careful not to be too suspicious of the intentions of state courts. Some of the Justices worried that it is difficult to ascertain whether the state rule in question is a general rule that calls for a narrow interpretation of all broad POAs and just happens to focus on arbitration agreements in this instance, or whether it is a rule that pin-points and discriminates against arbitration.

Justice Roberts was of the view that it is a coincidence that the Kentucky rules on the interpretation of POAs were first brought before the Court in the context of arbitration agreements. He was cautious not to attribute this coincidence too much weight by construing the state rule as discriminatory against arbitration:

I mean, basically, it seems to me what it’s coming down to is you just don’t believe the Kentucky Supreme Court when it says this is the general principle. And you’re saying, well, I really think you’re hostile to arbitration because I haven’t heard that principle before and this is the first one. But you know, if—if the Kentucky legislature passes a law that does the same thing, I mean, are you going to be suspicious of them too just because arbitration might be the first time it comes up?

Justice Kagan shared the concern and cautioned that the Court does not ‘presume that State courts are acting in ways that are not in accordance with law. Actually, we usually give them the benefit of a kind of good faith presumption’. (p 44)

The Court’s judgment reflects these views.

The judgment

By a 7-1 margin (Justice Thomas dissenting; Justice Gorsuch took no part in the case), the Supreme Court held that the Kentucky Supreme Court’s rule—that an agent could deprive her principal of the rights of access to the courts and trial by jury through an arbitration agreement only if expressly provided in the POA—violates the FAA by singling out arbitration agreements for disfavored treatment.

Justice Kagan, who delivered the opinion of the Court, returned to the Bench’s concerns with respect to the motives of the Kentucky courts, and asserted that:

No Kentucky court, so far as we know, has ever before demanded that a power of attorney explicitly confer authority to enter into contracts implicating constitutional guarantees. Nor did the opinion below indicate that such a grant would be needed for the many routine contracts—executed day in and day out by legal representatives—meeting that description … Rather, the court hypothesized a slim set of both patently objectionable and utterly fanciful contracts that would be subject to its rule: No longer could a representative lacking explicit authorization waive her “principal’s right to worship freely” or “consent to an arranged marriage” or “bind [her] principal to personal servitude.” Placing arbitration agreements within that class reveals the kind of “hostility to arbitration” that led Congress to enact the FAA.

The opinion then clarifies that Respondent’s proposition that this is not a rule that specifically singles out arbitration is tantamount to saying that it is ‘applicable to arbitration agreements and black swans’.

For sake of clarity and perhaps to balance what may appear as a harsh criticism of Kentucky courts, a footnote accompanied the above quoted segment. There, the Court clarified that it does not ‘suggest that a state court is precluded from announcing a new, generally applicable rule of law in an arbitration case.’ ‘We simply reiterate here’, continues footnote 2, ‘what we have said many times before—that the rule must in fact apply generally, rather than single out arbitration.’

Additionally, the Court rejected the argument that the state rule does not conflict with the FAA as it goes to the formation, and not enforcement, of arbitration agreements. The Court held that ‘by its terms’ the FAA ‘cares not only about the “enforce[ment]” of arbitration agreements, but also about their initial “valid[ity]”—that is, about what it takes to enter into them’. Since the state rule, by Respondent’s own submission, concerns the formation of arbitration agreements, it ‘fares no better under the Act than a rule selectively refusing to enforce those agreements once properly made.’

Further, the Court cautioned that adopting the distinction between formation and enforcement of arbitration agreements ‘would allow states to pronounce any attorney-in-fact incapable of signing an arbitration agreement—even if a power of attorney specifically authorized her to do so. (After all, such a rule would speak to only the contract’s formation).’ As a result, ‘the FAA would then mean nothing at all—its provisions rendered helpless to prevent even the most blatant discrimination against arbitration’.

On these grounds, and given the distinction that the Kentucky Supreme Court drew between the drafting of Respondents’ POAs, the Supreme Court enforced the arbitration agreement for the Clark dispute and remanded the Wellner dispute for consideration in light of the Court’s opinion.

Justice Thomas dissented and ‘continue[d] to adhere to the view’ that the FAA ‘does not apply to proceedings in state courts’. The dissent did not address the merits of the POA issue.

The decision in a broader perspective

At least professedly there is nothing new to the Court’s judgment in Kindred Nursing v Clark. Over the last decade, the Supreme Court has consistently held that the FAA preempts state laws on arbitration, and admonished the oft-cited rule of Buckeye Check Cashing v. Cardegna, 546 U.S. 440 (2006), whereby courts must put arbitration contracts “on equal footing” with other contracts.

For instance, in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), the Court held that the FAA preempts California state laws that prohibit contracts from disallowing class-wide arbitration; in Nitro-Lift Technologies, L.L.C. v. Howard, 568 U.S. ___ (2012), the Court held that the Oklahoma Supreme Court was wrong in preventing arbitration of a dispute over the scope of non-competition agreements in employment contracts; in Marmet Health Care Center, Inc. v. Brown, 565 U.S. ___ (2012), the Court held that West Virginia’s categorical prohibition of pre-dispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes is contrary to the terms and coverage of the FAA; and, just last term, in the matter of DIRECTV, Inc. v Imburgia, 577 U.S. ___ (2015), the Supreme Court held that the FAA preempts state law judicial interpretations that do not place arbitration contracts on an equal footing with other types of contracts.

Indeed the legal analysis opens with a reminder that the FAA ‘requires courts to place arbitration agreements “on equal footing with all other contracts”’, and with a reference to DIRECTV, Inc. v Imburgia. From this perspective, the decision is on the direct continuum of the Court’s previous pro-arbitration jurisprudence.

However, Kindred Nursing v Clark arguably goes beyond a mere reiteration of past case law. In past cases, such as AT&T Mobility LLC v. Concepcion, the Court stated that the FAA preempts any state law ‘prohibiting outright the arbitration of a particular type of claim’. In the matter of Kindred Nursing, this proposition was further expanded to ‘displaces any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.’ Thus, not only a law that ‘outright’ prohibits arbitration is preempted by the FAA but any ‘legal rule hinging on the primary characteristic of an arbitration agreement.’

It is also noteworthy that previous pro-arbitration Supreme Court judgments have been often associated with the late Justice Scalia. It was Justice Scalia who delivered the opinion of the Court in Buckeye Check Cashing v. Cardegna, which coined the phrase “equal footing” for arbitration agreements, and it was Scalia who authored the Court’s opinion in AT&T v Concepcion among others.

Since the passing of Justice Scalia there has been some uncertainty as to whether the Court will maintain its pro-arbitration positions, in particular because prior decisions on similar questions were far from unanimous. For instance, AT&T Mobility LLC v. Concepcion was adopted by a 5-4 vote, and the decision in DIRECTV, Inc. v Imburgia, which is closest in its factual matrix, was 6-3. The 7-1 vote in Kindred Nursing v Clark brings some reassurance with respect to the Court’s positions on arbitration; except for Justice Thomas, who has repeatedly maintained that the FAA does not apply in state courts, all participating Justices agreed.

It may be said that the relative consensus in this case stems from the Justices’ shared positions on the proper response of the US Supreme Court to insincere state supreme courts, and not from their positions about the FAA and arbitration more broadly. Insofar as this is a plausible assumption, it signals that both the conservative and the liberal wings of the Supreme Court are united in the view that state courts may not use legal artifice to avoid federal laws and Supreme Court precedents.

The post Ira Ryk-Lakhman on Kindred Nursing Centers v. Clark appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.

Yesterday, May 1, 2017, the US Supreme Court delivered the decision in Bolivarian Republic of Venezuela v. Helmerich & Payne International. The decision focused upon the threshold a party must establish for the purposes of the ‘expropriation exception’ under § 1605(a)(3) of the Foreign Sovereign Immunities Act (FSIA).

Background

As previously reported, the dispute grows out of Venezuela’s nationalization of oil and gas infrastructure and property in 2010. The oil-drilling rigs of Helmerich & Payne de Venezuela, a Venezuelan corporation, which was wholly-owned by Helmerich & Payne International, a US corporation, were among the expropriated property (H&P-V and H&P, respectively). Both corporations filed a claim against Venezuela under the FSIA in the District Court for the District of Columbia.

Under the FSIA, foreign governments cannot be sued in US courts. However, the FSIA allows for some exceptions and denies foreign sovereign immunity “in any case … in which rights in property taken in violation of international law are in issue” (28 U.S.C. § 1605(a)(3)).

In this respect, H&P and H&P-V argued that the oil-drilling rigs were taken “in violation of international law” and thus asserted jurisdiction under the FSIA’s ‘expropriation exception.’ Venezuela, on its part, moved to dismiss on grounds that the expropriation exception is inapplicable and that the entire claim was barred under the act-of-state doctrine. Venezuela’s motion to dismiss was not decided since the parties filed a joint stipulation to the District Court in which they agreed to four threshold issues:

1. Whether, for purposes of determining if a “taking in violation of international law” has occurred under the FSIA’s expropriation exception, H&P-V is a national of Venezuela under international law;
2. Whether H&P-IDC has standing to assert a taking in violation of international law on the basis of Venezuela’s expropriation of H&P-V’s property;
3. Whether the plaintiffs’ expropriation claims are barred by the act-of-state doctrine, including whether this defense may be adjudicated prior to resolution of Venezuela’s challenges to the court’s subject matter jurisdiction; and
4. Whether, for purposes of determining the applicability of the FSIA’s commercial activity exception, plaintiffs have sufficiently alleged a “direct effect” in the United States within the meaning of that provision.

The District Court resolved the first question in Venezuela’s favor but sided with H&P and H&P-V on the other three. All four issues were appealed to the DC Circuit Court of Appeals.

On appeal, the parties mainly reiterated their arguments and focused on the applicability of the expropriation exception. Venezuela maintained that the expropriation exception is inapplicable here for two reasons. First, as a Venezuelan national, H&P-V may not claim a taking in violation of international law; and, second, that under generally applicable corporate law principles, H&P, a US parent company, has no ‘rights in property,’ which belong to its subsidiary, and thus it lacks standing. H&P and H&P-V argued, inter alia, that Venezuela has unreasonably discriminated against it on the basis of its sole shareholder’s (American) nationality, thus implicating an exception to the domestic takings rule; and, that ownership in shares meets the requirement of ‘rights in property,’ in the sense of the FSIA exception.

The Court of Appeals found that the expropriation exception applies. Under the Circuit’s standard for surviving a motion to dismiss in a FSIA case, jurisdictional dismissal is allowed only where the federal claim is wholly insubstantial and frivolous. Applying this standard, the DC Circuit held that H&P’s and H&P-V’s claim against Venezuela is neither ‘wholly insubstantial’ nor ‘frivolous,’ hence the claim may proceed.

Venezuela petitioned the US Supreme Court to review the decision of the Court of Appeals on several grounds.

The proceedings before the Supreme Court

Following the invitation of the Supreme Court, the Solicitor General recommended that the Court grants cert to hear only one aspect of Venezuela’s petition, since the courts of appeals were divided on that point, and allowing that conflict to persist might facilitate forum shopping. The Supreme Court adopted this recommendation and focused on the question whether a court lacks jurisdiction under § 1605(a)(3) only when the plaintiff’s claim that it has placed in issue “rights in property taken in violation of international law” is frivolous or completely devoid of merit.

Apart from the ‘statutory’ question, during the oral arguments the bench was troubled with two interrelated policy consideration. First, and following the brief of the Solicitor General (pp 21-22), the Court was concerned with the effect of its decision on the foreign relations of the US. More pointedly, the justices worried that setting the bar too low so as to allow US companies to easily bring expropriation-related claims against foreign states would lead to a reciprocal low bar in foreign courts, and thus allow companies to easily bring claims against the US.

At the same time, the Court was mindful that adopting a narrow reading of the exceptions to immunity and setting a high standard with respect to ‘rights in property’ and ‘violations of international law’ would necessitate an in-depth factual examination at the preliminary stage of jurisdiction, instead of reserving such factual determinations for the merits. Both concerns were addressed, and perhaps eased, in the recent decision.

Justice Stephen Breyer, who delivered the opinion of the Court (8-0; Justice Gorsuch did not participate), vacated the decision of the Court of Appeals and deemed the low standard of the nonfrivolous-argument inconsistent with the FSIA.

At the outset, Justice Breyer put the main question before the Court, and its answer, in the following terms:

The question here concerns the phrase “case … in which rights in property taken in violation of international law are in issue.” Does this phrase mean that, to defeat sovereign immunity, a party need only make a “nonfrivolous” argument that the case falls within the scope of the exception?

* * *

[No] The relevant factual allegations must make out a legally valid claim that a certain kind of right is at issue (property rights) and that the relevant property was taken in a certain way (in violation of international law).

The reasoning

The Court’s decision rests on several justifications, namely, the language and structure of the Statute, the legislative history and the object and purpose of the FSIA, and policy considerations.

First, the Court addressed the language of § 1605(a)(3). Based on the wording and the structure of the provision, the Court held that the expropriation exception grants jurisdiction to US courts “only where there is a valid claim that ‘property’ has been ‘taken in violation of international law,'” while “a nonfrivolous argument to that effect is insufficient.”

The Court elucidated that “explicit statutory language,” like that used in § 1605(a)(3), would “normally foresee a judicial decision about the jurisdictional matter. And that matter is whether a certain kind of ‘right’ is ‘at issue,’ namely, a property right taken in violation of international law.”

To illustrate, the Court offered the example of a person who owns a house in a foreign country, and the house is subsequently nationalized by that foreign state. According to the Court, to resort to the expropriation exception and sue in US courts, “the claiming party would as a jurisdictional matter prove that he claimed ‘property’ (which a house obviously is) and also that the property was ‘taken in violation of international law.'” However, the claiming party “need not show as a jurisdictional matter that he, rather than someone else, owned the house,” for “that question is part of the merits of the case and remains “at issue.'”

Therefore, to successfully invoke the expropriation exception, both the property right and its violation under international law ought to be established “as near to the outset of the case as is reasonably possible.” In this respect, the Court addressed one of its main concerns on the interrelationship between the preliminary stage and the merits.

Second, to support its interpretation, the Court turned to the legislative history and the preparatory works of the Statue. The Court observed that the FSIA was tailored “to reflect basic principles of international law, in particular those principles embodied in what jurists refer to as the ‘restrictive’ theory of sovereign immunity.” This, the Court explained, is why the FSIA “starts from a premise of immunity and then creates exceptions to the general principle” in cases arising out of “a foreign state’s strictly commercial acts.”

Further, the Court “found nothing in the history of the statute that suggests Congress intended a radical departure from these basic principles” of restrictive immunity. “To the contrary,” the Court stressed that the views of the US State Department on sovereign immunity and the position of the US before international bodies (for instance, the UN General Assembly) support its narrow interpretation of the expropriation exception.

Building on the above, the Court explained that the language, structure, and history of the FSIA reveal and corroborate the main objectives of this Statute, which is “to free a foreign sovereign from suit.” With respect to expropriation, the Court explained that a “sovereign’s taking or regulating of its own nationals’ property within its own territory is often just the kind of foreign sovereign’s public act that the restrictive theory of sovereign immunity ordinarily leaves immune from suit.”

Indeed, the Court recognized that there may be cases where a sovereign’s taking of its own nationals’ property allows recourse to the expropriation exception as it amounts to an expropriation that violates international law (roughly put, to be lawful under international law, expropriation must be for a public purpose, accompanied by due process, made on a non-discriminatory basis, and accompanied by “prompt, adequate and effective” compensation). “But,” the Court stressed, “such arguments are about whether such an expropriation does violate international law.”

On this point, the Court distinguished between two instances. According to the Court, “to find jurisdiction only where a taking does violate international law is consistent with basic international law and the related statutory objectives and principles” of the FSIA. “But to find jurisdiction where a taking does not violate international law (e.g., where there is a nonfrivolous but ultimately incorrect argument that the taking violates international law) is inconsistent with those objectives.”

Finally, the Court supported its decision by reference to broader policy considerations. In this framework, the Court noted that its interpretation of the expropriation exception provides clarity, which “is doubly important here where foreign nations and foreign lawyers must understand our law.” This clear interpretation, according to the Court, simplifies the legal standard and thus saves judicial time and minimizes the duration of litigation.

Conversely, the “nonfrivolous-argument” interpretation would, in many cases, embroil the foreign sovereign in an American lawsuit for an increased period of time. It would substitute for a more workable standard (“violation of international law”) a standard limited only by the bounds of a lawyer’s (nonfrivolous) imagination. It would create increased complexity in respect to a jurisdictional matter where clarity is particularly important.

Additionally, and returning to its second concern in the oral proceedings, the Court considered the effect of its decision on the treatment of US nationals in foreign courts, and noted that the nonfrivolous-argument standard would generate “friction” with other states, and “that our grant of immunity to foreign sovereigns dovetails with our own interest in receiving similar treatment.” The Court also argued that this narrow interpretation respects the “absolute independence of every sovereign authority” and helps to “induc[e]” each nation state, as a matter of “international comity.”

Based on all the foregoing, the Supreme Court vacated the decision of the Court of Appeals and rejected the nonfrivolous-argument standard. The Court held that where the facts are not in dispute, “those facts bring the case within the scope of the expropriation exception only if they do show (and not just arguably show) a taking of property in violation of international law. Simply making a nonfrivolous argument to that effect is not sufficient.”

The Court then remanded the case to the lower courts “for further proceedings consistent with this opinion.” This means that to proceed with their claim against Venezuela, H&P and its subsidiary will now be required to demonstrate that they meet a significantly higher standard.

The practical effects and way forward

By setting out a more stringent standard this recent decision potentially reduces the prospects for successfully resorting to the expropriation exception under § 1605(a)(3). Thus arguably, the decision conforms to the Court’s aims and protects the general premise that the sovereign is immune from suit.

However, it remains to be seen whether the Court was right on the point of policy consideration and the treatment of US nationals abroad. Venezuela recently nationalized the property of several foreign investors, including US companies. Notable in this regard is the seizure of GM’s plant, an American multinational corporation headquartered in Detroit. The decision of the Supreme Court means that should GM (or other US entities) seek to sue Venezuela in US courts, they will be required to meet a new and higher standard, and will perhaps struggle to litigate in US courts.

The post Ira Ryk-Lakhman on the Venezuela v. Helmerich & Payne Case appeared first on Letters Blogatory. Letters Blogatory by Ted Folkman and contributors is © 2011-2024 and is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Images may be separately licensed.