Foley Hoag Obtains Another Victory for Venezuelan Sovereign Client in U.S. Courts

May 19, 2015

Foley Hoag LLP recently obtained a victory on appeal for its client, the Venezuelan Superintendency of Banks (SUDEBAN). In Mezerhane v. Republica Bolivariana de Venezuela et al., Case No. 13-14953, the U.S. Court of Appeals for the Eleventh Circuit affirmed a decision to dismiss a case against Venezuela, SUDEBAN and the Venezuelan Fund for the Protection of Bank Deposits (FOGADE) on the basis of the Foreign Sovereign Immunities Act (FSIA) and the Act of State Doctrine.

Nelson Mezerhane brought the suit in the U.S. District Court for the Southern District of Florida in 2011 (Docket No. 11-23983). Mezerhane alleged that Venezuela, SUDEBAN, and FOGADE expropriated his assets in violation of international law. The District Court dismissed the case, ruling that it lacked subject matter jurisdiction under the FSIA, which provides that a foreign state (including its agencies and instrumentalities) is immune from jurisdiction in U.S. courts unless the foreign state’s alleged actions fall within an exception to the FSIA’s general grant of immunity. The District Court also ruled that the action was barred by the Act of State Doctrine, which prevents U.S. courts from interfering with the domestic sovereign acts of foreign states.

Mezerhane sought to establish jurisdiction over Venezuela, SUDEBAN, and FOGADE under the “expropriation exception” to the FSIA, which provides that foreign sovereign immunity does not apply in cases in which rights in property taken in violation of international law are at issue, and there is a jurisdictional nexus to the United States.

The Eleventh Circuit disagreed with Mezerhane’s arguments. In an opinion published on May 7, 2015, the Court upheld the District Court’s decision that the defendants were entitled to sovereign immunity under the FSIA. The Court concluded that complaint did not allege a violation of international law because the property allegedly taken by the defendants was that of the foreign state’s own national. Hence the expropriation exception did not apply. The Court also agreed with the lower court that Mezerhane’s claims were barred by the Act of State Doctrine, which “for reasons of comity . . . forbids U.S. courts from adjudicating the acts of a foreign sovereign in its own territory.” The Court rejected Mezerhane’s argument that application of the Act of State doctrine was precluded by an act of Congress known as the Second Hickenlooper Amendment, again because the alleged taking did not violate international law.

Foley Hoag attorneys Andrew Schwartz, Rich Baldwin, and Tom Ayres represented SUDEBAN in the original case and the appeal.

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