Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in International Law
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In 2016, Venezuela's state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), offered a bond swap whereby its noteholders could exchange unsecured notes due in 2017 for new, secured notes due in 2020. PDVSA defaulted in 2019, and the National Assembly of Venezuela passed a resolution declaring the bond swap a "national public contract" requiring its approval under Article 150 of the Venezuelan Constitution. PDVSA, along with its subsidiaries PDVSA Petróleo S.A. and PDV Holding, Inc., initiated a lawsuit seeking a judgment declaring the 2020 Notes and their governing documents "invalid, illegal, null, and void ab initio, and thus unenforceable." The case was taken to the United States Court of Appeals for the Second Circuit, which certified three questions to the New York Court of Appeals.The New York Court of Appeals, in answering the first question, ruled that Venezuelan law governs the validity of the notes under Uniform Commercial Code § 8-110 (a) (1), which encompasses plaintiffs' arguments concerning whether the issuance of the notes was duly authorized by the Venezuelan National Assembly under the Venezuelan Constitution. However, New York law governs the transaction in all other respects, including the consequences if a security was "issued with a defect going to its validity." Given the court's answer to the first certified question, it did not answer the remaining questions. View "Petróleos de Venezuela S.A. v MUFG Union Bank, N.A." on Justia Law

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Defendant-Appellant Petróleos de Venezuela, S.A. (“PDVSA”), an oil company wholly owned by the Bolivarian Republic of Venezuela, entered into two Note Agreements and a Credit Agreement with the predecessor-in-interest to now-Plaintiff-Appellee Red Tree Investments, LLC (“Red Tree”). PDVSA became delinquent on its obligations under the contracts. Red Tree’s predecessor-in-interest accelerated the outstanding debt. Then Red Tree initiated these actions in Supreme Court, New York County, which Defendants removed to district court. PDVSA claimed that any further payment under the Agreements was impossible and should therefore be excused. The district court granted summary judgment against PDVSA on the grounds that PDVSA had failed to provide sufficient evidence that payment was impossible or in the alternative, that any impediment to payment was not reasonably foreseeable. It therefore entered judgment in favor of Red Tree and imposed post-judgment interest. On appeal, PDVSA contends that the district court erred in concluding that no reasonable trier of fact could find that payment was impossible or that U.S. sanctions were unforeseeable. PDVSA further asserts that the district court incorrectly calculated post-judgment interest.   The Second Circuit affirmed. The court agreed with the district court that payment by PDVSA was not impossible. Further, the court concluded that the district court did not err in its calculation of post-judgment interest. The court explained that under the plain language of the Note and Credit Agreements, the outstanding principal and interest that accrued prejudgment—including both default and ordinary interest—are subject to default interest post-judgment. View "Red Tree Investments, LLC v. PDVSA, Petróleo" on Justia Law

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In January 2017, Defendant-Appellant Petróleos de Venezuela, S.A. (“PDVSA”), an oil company wholly owned by the Bolivarian Republic of Venezuela, entered into a Note Agreement with then-Plaintiff-Appellee Dresser-Rand Company. PDVSA made two of the twelve payments due under the Note Agreement in April and July 2017 but failed to make any subsequent payments. In February 2019, Dresser-Rand declared PDVSA to be in default, accelerated the debt, and initiated this action in Supreme Court, New York County, which Defendants removed to the district court. PDVSA claimed that any further payment was impossible and should therefore be excused. The district court concluded that PDVSA had failed to prove that repayment was impossible. It therefore entered judgment in favor of Dresser-Rand. On appeal, PDVSA contends that the district court erred in concluding that payment was not impossible. PDVSA further asserts that the district court incorrectly calculated post-judgment interest.   The Second Circuit affirmed. The court agreed with the district court that payment by PDVSA was not impossible, and the court further concluded that PDVSA forfeited any arguments relating to post-judgment interest. The court explained that the evidence demonstrates that PDVSA never attempted payment to a different bank or in an alternative currency, nor did it investigate whether this manner of payment would have been truly impossible. Instead of the evidence shows, did nothing. PDVSA cannot benefit from the impossibility defense on speculation. View "Siemens Energy, Inc. v. PDVSA" on Justia Law

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The United States seized oil cargo it claims belongs to the Islamic Republic of Iran. Appellants attached the oil in order to satisfy money judgments they hold against Iran. The district court upheld the United States' claim of sovereign immunity and quashed the attachments.
The DC Circuit affirmed the district court’s judgment. The court held (1) federal sovereign immunity prevents the attachment and garnishment of oil proceeds in a bank account of the United States and (2) the Terrorism Risk Insurance Act of 2002 (TRIA) does not waive that immunity. The court explained that the TRIA does not expressly mention the United States, its sovereign immunity, or its susceptibility to suit under the statute. Because the TRIA has nothing express to say about federal sovereign immunity, the notwithstanding clause cannot aid Appellants. Because sovereign immunity prevents Appellants from taking further steps to seize the proceeds from the United States’ sale of the contested oil, the court wrote it has no occasion to reach the alternative grounds for affirmance raised by the Government. View "Steven Greenbaum v. Islamic Republic of Iran" on Justia Law

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The Fifth Circuit affirmed the district court's order confirming a $622 million arbitration award. The parties are oil and gas companies incorporated in different countries, and the dispute arose from the Agreement for the Provision of Drilling Services (DSA). About two years into the DSA's term, Vantage and Petrobras executed the Third Novation and Amendment Agreement, which included an arbitration clause.As a preliminary matter, the court stated that it need not decide the issue of whether the appeal waiver was enforceable. On the merits, the court held that there was no public policy bar to confirmation of the arbitration award. In this case, the district court did not engage in inappropriate deference to the arbitrator's decision and the district court did not base its decision just on "mutual mistake." The court also held that Petrobras has not shown that the district court abused its discretion in denying the discovery motions. Finally, the court rejected Petrobras' motion to vacate the arbitration award. View "Vantage Deepwater Co. v. Petrobras America, Inc." on Justia Law

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The alleged misconduct tied to the trading of crude oil extracted from Europe's North Sea constitutes an impermissibly extraterritorial application of the Commodity Exchange Act. Plaintiffs, individuals and entities who traded futures and derivatives contracts involving North Sea oil, appealed the district court's dismissal of their claims alleging that defendants, entities involved in various aspects of the production of Brent crude, conspired to manipulate, and did in fact manipulate, the market for physical Brent crude and Brent Futures by executing fraudulent bids, offers, and transactions in the underlying physical Brent crude market over the course of the Class Period.The Second Circuit affirmed the district court's dismissal of plaintiffs' claims under the Act, holding that the presumption of extraterritoriality has not been displaced in this case, and plaintiffs have not pleaded a domestic application of the Act by merely alleging a winding chain of foreign, intervening events connected to the purchase of Brent Futures. The court also affirmed the district court's dismissal of all other defendants and all other claims in a separately filed summary order. View "Prime International Trading Ltd. v. BP PLC" on Justia Law

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Defendants, the Donziger Firm and others, appealed the district court's grant of certain relief against them in favor of Chevron, in connection with an $8.646 billion judgment obtained against Chevron in Ecuador by the Lago Agrio Plaintiffs represented by the Donziger Firm. The judgment award was for environmental damage in connection with the Texaco oil exploration activities in Ecuador from the 1960s-1990s. On appeal, defendants challenge the district court's judgment, arguing principally that the action should have been dismissed on the ground that Chevron lacks Article III standing, and/or that the judgment should be reversed on the grounds, inter alia, that it violates principles of international comity and judicial estoppel, exceeds any legal authorization for equitable relief, and was entered without personal jurisdiction over defendants other than Donziger and his Firm. The court found no basis for dismissal or reversal in the absence of challenges to the district court's factual findings; considering the express disclaimers by the Ecuadorian appellate courts of their own jurisdiction to "hear and resolve" the above charges of corruption, "preserving the parties' rights" to pursue those charges in actions in the United States; and considering the district court's confinement of its injunction to a grant of in personam relief against the three defendants-appellants without disturbing the Ecuadorian judgment. Accordingly, the court affirmed the judgment. View "Chevron Corp. v. Donziger" on Justia Law

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The Department of Commerce determined that utility scale wind towers from the People’s Republic of China and utility scale wind towers from the Socialist Republic of Vietnam (together, the subject merchandise) were sold in the United States at less than fair value and that it received countervailable subsidies. The International Trade Commission made a final affirmative determination of material injury to the domestic industry. The determination was by divided vote of the six-member Commission. The Court of International Trade upheld the Commission’s affirmative injury determination. Siemens Energy, Inc., an importer of utility scale wind towers, challenged the determination. The issues on appeal concerned the interpretation and effect of the divided vote. The Federal Circuit affirmed, holding that the Court of International Trade properly upheld the Commission’s affirmative injury determination. View "Simens Energy, Inc. v. United States, Wind Tower Trade Coalition" on Justia Law

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Since the early 1990s, Chevron and its predecessor Texaco, Inc., have defended litigation concerning Texaco's operations in Ecuador and the environmental contamination it allegedly produced. This litigation started in the Southern District of New York but eventually found its way to Ecuadorian courts. In 2011, the court in Lago Agrio entered an $18.2 billion judgment against Chevron, which Chevron appealed. In this case, Chevron appealed the United States district court's order granting a motion to compel production of documents pursuant to subpoenas issued under 28 U.S.C. 1782. Chevron sought relief from that judgment pursuant to investment treaty arbitration under United Nations' rules. Finding no error, the Tenth Circuit affirmed the district court's order. View "The Republic of Ecuador, et al v. Bjorkman" on Justia Law

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This case stemmed from Chevron's involvement in litigation over the alleged environmental contamination of oil fields in Ecuador. Ecuador sought discovery from John Connor and GSI Environmental, his company, for use in a foreign arbitration against Chevron. During the course of extended litigation with Ecuador, Chevron, an intervenor in the district court, benefited repeatedly by arguing against Ecuador and others that the arbitration was a "foreign or international tribunal." Because Chevron's previous positions were inconsistent with its current argument, judicial estoppel was appropriate to make discovery under 28 U.S.C. 1782 available for Ecuador. Accordingly, the court reversed and remanded for determination of the scope of discovery. View "Republic of Ecuador, et al v. Connor, et al" on Justia Law