Shubhangi Agarwalla1
- Foreign Attorney at Alston & Bird, New York. Yale Law LLM. ↩︎
Introduction
Starting in 2010, the Hugo Chávez administration nationalized entire sectors, of oil, energy and infrastructure in Venezuela, often without prompt or adequate compensation. These takings gave foreign investors treaty-based causes of action, alleging violations of standards such as expropriation without compensation, fair and equitable treatment, and full protection and security, see for example, Gold Reserve Inc. v. Bolivarian Republic of Venez., ICSID Case No. ARB(AF)/09/1. Many of those foreign investors have won substantial arbitral awards. However, getting paid on those awards has proven exceptionally difficult, especially under the U.S. sanctions regime against Venezuela. The U.S. Office of Foreign Assets Control (OFAC) has blocked most transfers or dealings involving Venezuelan state assets, meaning that even if a creditor has a valid award, any attempt to attach or sell Venezuelan property in the U.S. requires specific OFAC licensing.
Against this backdrop, the D.C. Circuit Court’s decision in Helmerich & Payne International Drilling Co. v. Petroleos de Venezuela, S.A. & PDVSA Petroleo, S.A., No. 24-7161made for fascinating reading. The D.C. Circuit’s decision makes the Oklahoma based company, Helmerich & Payne the first plaintiff seeking monetary relief for a foreign state’s expropriation of its property to establish jurisdiction under the FSIA’s expropriation exception and survive past the motion to dismiss stage on appeal. The decision then marks a path for U.S. companies to recover based on a foreign sovereign’s indirect expropriations of their shareholder rights in foreign subsidiaries.
FSIA Exception
Sovereigns were considered immune “as a matter of grace and comity,” Verlinden B.V. v. Central Bank of Nigeria 461 U.S. 480, 486 (1983). That approach worked tolerably well when states stayed in the lane of public governance. It began to fray as states entered markets as owners, lenders, and traders. In 1952, the State Department’s Tate Letter announced the “restrictive” theory: immunity for sovereign or public acts (acta jure imperii), not for private or commercial acts (acta jure gestionis). This shift raised two enduring questions:
- how to delineate sovereign acts from commercial conduct, and
- how to address state takings of property, quintessential sovereign acts that nevertheless affect private investors
The Supreme Court’s decision in Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964) underscored the tension. Confronted with Cuba’s expropriation of a sugar enterprise, the Court declined, under the act-of-state doctrine, to “examine the validity of a taking of property within its own territory by a foreign sovereign government,” emphasizing separation-of-powers and foreign-relations sensitivities. Congress quickly narrowed that stance through the Second Hickenlooper Amendment which partially reversed Sabbatino, reopening judicial scrutiny for international-law violations while maintaining the domestic-takings rule, see Federal Republic of Germany v. Philipp, 592 U.S. 169, 179 (2021).
When Congress enacted the Foreign Sovereign Immunities Act (28 U.S.C. §§1602-1611, FSIA) in 1976, it consolidated this restrictive approach Turkiye Halk Bankasi A.S. v. United States, 598 U.S. 264, 272 (2023). The FSIA created a presumption of immunity for foreign states (28 U.S.C. § 1604) but codified exceptions. One such exception, the expropriation exception (§ 1605(a)(3)), is central to the Helmerich litigation.
Under § 1605(a)(3), U.S. courts have jurisdiction when “rights in property taken in violation of international law are in issue,” provided a U.S. nexus exists. That nexus can be shown in two ways:
- Foreign state ownership (prong one): If the state itself owns the expropriated property (or its substitute), it must be present in the United States and connected to commercial activity carried on here by the state.
- Instrumentality ownership (prong two): If an agency or instrumentality owns or operates the property, jurisdiction exists so long as that entity engages in commercial activity in the United States, see 28 U.S.C. § 1605 (2016).
The two prongs reflect a structural logic: foreign states act as regulators, while state-owned enterprises act as market participants. Congress narrowed immunity for the latter because they operate within commercial, not sovereign, capacity. By insisting on a tangible commercial nexus, the statute ensures that U.S. courts do not become tribunals for every global expropriation dispute.
Helmerich & Payne: From Arbitration to Federal Court
Helmerich & Payne International Drilling Co. a U.S.‐based drilling company, wholly owned a Venezuelan subsidiary that provided oil‐rig drilling services to Petróleos de Venezuela, S.A. (PDVSA), the Venezuelan state-owned oil company. In the late 2000s, the relationship deteriorated: PDVSA reportedly defaulted on large unpaid invoices; in 2010, Venezuelan authorities blockade of the rigs, a National Assembly “public benefit” expropriation declaration, and a presidential decree of expropriation were issued. The rigs and assets were transferred to PDVSA.
H&P filed suit in the U.S. District Court for the District of Columbia, invoking the expropriation exception of the Foreign Sovereign Immunities Act (FSIA), codified at 28 U.S.C. § 1605(a)(3). H&P alleged that Venezuela (and PDVSA) had unlawfully expropriated its property in violation of international law. The defendants invoked sovereign immunity, the act-of-state doctrine, and lack of personal jurisdiction. The district court denied parts of the motion to dismiss, allowing the case to proceed, see Helmerich & Payne Int’l Drilling Co. v. Bolivarian Republic of Venezuela, 971 F. Supp. 2d 49 (D.D.C. 2013).
Then, in Venezuela v. Helmerich & Payne, 581 U.S. 170 (2017), the Supreme Court held that plaintiffs invoking § 1605(a)(3) must plead a legally valid international‐law taking, not merely a non-frivolous argument. 581 U.S. 170 (2017), see Bolivarian Republic of Venezuela v. Helmerich & Payne Int’l Drilling Co., 581 U.S. 170 (2017). On remand, the D.C. Circuit examined whether H&P had alleged factually sufficient claims. It held that the U.S. parent company, H&P, had done so; but H&P-V, the Venezuelan subsidiary, had not, because under the domestic-takings rule, a state’s taking of property from its own nationals generally does not violate international law, see Helmerich & Payne Int’l Drilling Co. v. Bolivarian Republic of Venezuela, 743 F. App’x 442, 453–55 (D.C. Cir. Aug. 7, 2018). The court articulated a test for indirect expropriation of shareholder rights: when a state permanently takes management and control of a business, leaving the shareholder with “shares that have been rendered useless,” the state may be liable under international law. Applying this, the court found that H&P’s intangible rights, the shares in its subsidiary and the right to dispose of the subsidiary’s assets, qualified as property taken.
On October 3 2025, the D.C. Circuit issued its decision in No. 24-7161: the court affirmed the district court’s denial of PDVSA’s motion to dismiss. Among other holdings, the court held that the expropriation exception applied because (1) Venezuela indirectly took Helmerich’s property in violation of international law; (2) PDVSA owns and operates the expropriated property; (3) PDVSA engages in commercial activity in the U.S. (instrumentality prong) under § 1605(a)(3). The court also resolved that personal jurisdiction was proper over PDVSA, and that the act-of-state defense was unavailable given the Second Hickenlooper Amendment’s displacement of that doctrine in confiscation cases.
The doctrinal innovation, then, is twofold. First, Helmerich transforms the shareholder–subsidiary distinction into a jurisdictional gateway, allowing U.S. investors to invoke the FSIA even when local subsidiaries are the immediate victims of expropriation. Second, it implicitly aligns U.S. sovereign immunity jurisprudence with investment arbitration standards, drawing convergence between national courts and arbitral forums on what counts as an international-law taking.
Why it Matters: Enforcement in a Fragmented Sovereign Order
The D.C. Circuit’s decision in Helmerich & Payne marks a quiet but significant turning point in the relationship between international investment law and U.S. sovereign immunity doctrine. For the first time, a plaintiff seeking monetary relief for a foreign state’s expropriation of property has successfully established jurisdiction under the FSIA’s expropriation exception and survived appeal past the motion-to-dismiss stage. This precedent offers a new pathway for U.S. investors to recover losses arising from indirect expropriations of shareholder rights in their foreign subsidiaries, an area previously beyond the reach of domestic courts. In practical terms, this limits the use of the act-of-state defense as a jurisdictional shield, rebalancing the separation of powers by ensuring that acts violating international law remain justiciable even when politically sensitive.
More broadly, Helmerich illustrates a structural evolution in how international law is enforced when arbitration alone cannot deliver relief. When sanctions and sovereign default render treaty enforcement impracticable, domestic statutes like the FSIA become the new battleground for vindicating investor rights. Finally, Helmerich offers a blueprint for multi-forum enforcement strategy. Successful recovery against sovereign debtors now requires coordination across treaty arbitration, national-law remedies, sanctions licensing, and bankruptcy-style creditor litigation.