Petroleumworld 04 20 2021
An Owens-Illinois Inc . subsidiary fought PDVSA's bid to shut down a subpoena targeting a representative for the company, telling a Delaware federal court the testimony "is undeniably relevant" to pending questions of the state-owned company's sovereign immunity protections.
OI European Group BV urged the court Friday to reject Petróleos de Venezuela SA's argument that the chairman of its ad hoc administrative board doesn't have to comply with a subpoena for the time being. PDVSA wants the subpoena at least put on hold until after an April 30 hearing over whether OIEG has adequately alleged Venezuela's control over PDVSA is enough to support jurisdiction under the Foreign Sovereign Immunities Act. But OIEG told the court the chairman, Horacio Medina, isn't immune from discovery under FSIA and the statute doesn't insulate the company from answering questions relevant to establishing jurisdiction.
OIEG is seeking to enforce a more than $500 million arbitral award it won after Venezuela seized two factories it had invested in. It wants to satisfy the judgment through acquiring PDVSA's shares of PDV Holding Inc., the U.S. branch of PDVSA and the parent of petroleum company Citgo . OIEG told the court the subpoena seeks information related to its claim that PDVSA is the alter ego of Venezuela, which is intertwined with the question of jurisdiction.
"OIEG has presented highly-detailed, non-conclusory allegations of fact to support its claim that the court has jurisdiction based on PDVSA's alter ego relationship with Venezuela and, therefore, should be allowed to conduct jurisdictional discovery," OIEG said.
OIEG argues PDVSA's bid to avoid the subpoena "suffers from two core infirmities" by first seeking to disrupt the court-ordered schedule for the dispute and by fighting the handing over of information relevant to the alter-ego question until jurisdiction is established when the two issues are significantly intertwined.
PDVSA, which intervened in the suit between OIEG and Venezuela, has fought the alter ego theory, arguing neither former Venezuelan President Nicolas Maduro nor the interim government of Juan Guaidó, whose legitimacy is recognized by the U.S., have day-to-day control over the company.
OIEG told the court in Friday's filing "Venezuela continues to use PDVSA property as its own" and the new interim government has not significantly changed the country's relationship with the company.
OIEG asked the court to order PDVSA to produce a corporate representative, which may or may not be Medina, to attend a deposition before April 27. If the company doesn't elect to send Medina as its representative, OIEG requested the court still order Medina to be deposed prior to the same date.
OIEG took Venezuela to arbitration after the country unlawfully nationalized two of the company's plants in 2010, and the International Centre for Settlement of Investment Disputes found for OIEG in 2015, awarding the manufacturer $372 million.
OIEG in 2016 opened the award confirmation suit in a D.C. federal court and successfully confirmed it in 2019, while also winning approval to go after shares of PDV Holding Inc. In November 2019, OIEG asked the Delaware court to enforce the D.C. federal court's ruling.
OIEG is trying to replicate the ruling that mining company Crystallex International Corp . received in its $1.2 billion judgment against Venezuela. Crystallex was given the greenlight in 2018 to seize PDVH shares, successfully arguing that it was considered an alter ego for the South American country.
Since then, the Third Circuit affirmed the ruling in 2019, and other creditors whose business were impacted by the political and economic turmoil, like ConocoPhillips subsidiaries and Venezuela government-issued bondholders, have also tried replicating Crystallex's favorable shares ruling.
Counsel for PDVSA, OIEG and Venezuela did not respond to requests for comment on Monday.
PDVSA is represented by Samuel Hirzel II, Aaron Nelson and Jamie Brown of Heyman Enerio Gattuso & Hirzel LLP and Joseph Pizzurro, Julia Mosse, Kevin Meehan and Juan Perla of Curtis Mallet-Prevost Colt & Mosle LLP .
OI European Group is represented by Jody Barillare, Sabin Willett, Jonathan M. Albano and Christopher Carter of Morgan Lewis & Bockius LLP and Edward Davis Jr., Fernando Menendez and Cristina Vicens Beard of Sequor Law PA .
Venezuela is represented by A. Thompson Bayliss and Stephen Childs of Abrams & Bayliss LLP , Sergio Galvis, Joseph Neuhaus, James Bromley and Angela Ellis of Sullivan & Cromwell LLP .
The case is OI European Group BV v. Bolivarian Republic of Venezuela, case number 1:19-mc-00290 , in the U.S. District Court for the District of Delaware .