Foley Hoag Obtains Victories for Venezuelan Sovereign Clients in US Courts

February 6, 2014

Foley Hoag LLP recently obtained dismissal of two separate cases brought against two of its Venezuelan sovereign clients, the Bolivarian Republic of Venezuela, and the Venezuelan banking regulator, the Superintendencia de Instituciones del Sector Bancario (SUDEBAN). Foley Hoag LLP represented SUDEBAN in Mezerhane v. Venezuela, et al., in the U.S. District Court for Southern District of Florida (Docket No. 11-23983); Foley Hoag LLP represented Venezuela and SUDEBAN in Smith Rocke Ltd. v. Venezuela, et al., in the U.S. District Court for the Southern District of New York (Docket No. 12-07316). In each case, the plaintiff alleged that Venezuela, SUDEBAN, and other Venezuelan agencies and officials had expropriated assets in violation of international law. In both cases, the Courts ruled that there was no jurisdiction over the Venezuelan sovereign entities under the Foreign Sovereign Immunities Act (FSIA). Additionally, the Court in the Mezerhane case ruled that the action was barred by the Act of State Doctrine.

In the Mezherhane case, the plaintiff, a Venezuelan national, claimed that the defendants expropriated his interests in Venezuelan banking, real estate and media companies worth in excess of $1 billion, allegedly for political purposes. In a December 30, 2013 decision, the U.S. District Court for the Southern District of Florida ruled that it lacked subject matter jurisdiction under the FSIA because the dispute was purely a domestic Venezuelan matter and thus there was no violation of international law. The Court also ruled that just the action was precluded by the Act of State Doctrine, which prevents U.S. courts from interfering with the sovereign acts of foreign states within their own borders.

In the Smith Rocke case, the U.S. District Court for the Southern District of New York issued a decision on January 27, 2014, holding that it lacked subject matter jurisdiction under the FSIA for similar reasons. The plaintiff, a British Virgin Islands company with Venezuelan shareholders, alleged that the Venezuelan government had expropriated bankruptcy claims that a predecessor entity had against Lehman. The Court held that because the predecessor was a Venezuelan entity, there was no violation of international law.

The Foley Hoag legal teams on these matters, drawn from the firm’s Washington, D.C. and Boston offices, included Andrew Schwartz, Ronald Goodman, Janis Brennan, Thomas Ayres, Richard Baldwin, Kiran Ghia, Elizabeth Holland, Diego Cadena, and Julia Amhrein.

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