U.S. Justice Department building in Washington. Credit: Mike Scarcella/ NLJ

The U.S. Justice Department has thrown its support behind the Venezuelan government in a long-running case over the 2010 seizure of an American company’s oil drilling rigs and other property.

The government’s friend-of-the-court brief was filed Wednesday in the U.S. Court of Appeals for the D.C. Circuit in support of Venezuela, represented by a team from Hogan Lovells.

Lawyers from Hogan Lovells in December met with attorneys from the Justice Department’s solicitor general’s office to discuss the case, according to recently disclosed federal records under the Foreign Agents Registration Act. The Justice Department earlier had supported Venezuela’s fight in the U.S. Supreme Court. The case is now back in the D.C. Circuit.

The Hogan Lovells team is going up against lawyers from Wilmer Cutler Pickering Hale and Dorr who represent Oklahoma-based Helmerich & Payne International Drill Co. The company, along with its Venezuelan subsidiary, sued in 2011 over the government’s alleged blockade of the company’s property.

The company claimed that soldiers had taken control of the oil drilling equipment at the direction of the Venezuelan government. Helmerich & Payne’s quest for compensation from Venezuela ultimately rose to the Supreme Court, which heard arguments in 2016 on the scope of the Foreign Sovereign Immunities Act, a federal law that puts constraints on suing foreign countries in U.S. courts.

Last year, in an 8-0 decision, the high court raised the bar for the so-called expropriation exception to that law, which allows cases to go forward against foreign governments when “rights in property taken in violation of international law are in issue” and there is a commercial connection with the United States. The decision reversed a ruling by a three-judge panel of the D.C. Circuit. The appeals court found that the claims brought by Helmerich & Payne could proceed so long as long they were not “wholly insubstantial or frivolous.”

In its amicus brief, the Justice Department argued the district court had properly dismissed the claims brought by Helmerich & Payne’s subsidiary in Venezuela. “International expropriation law does not restrict a state’s taking of the property of its own nationals,” DOJ lawyers wrote.

The Justice Department said it was “not in a position to opine” on whether the U.S. parent company’s claims apply for the expropriation exception. But Main Justice did lay out a suggested analysis for resolving that question.

A Hogan Lovells spokesman declined to comment. Lawyers on Helmerich & Payne’s team, including Wilmer Hale partner David Ogden, chairman of the firm’s government and regulatory litigation team, did not respond to requests for comment.

 

Main Justice’s Role in Support of Venezuela

 

Meetings between the Justice Department and outside counsel are not common, but it’s rare to get any revelatory documents showing these discussions.

The DOJ’s filing in the D.C. Circuit came a month after lawyers from Hogan Lovells and Curtis, Mallet-Prevost, Colt and Moslethe firm representing two state-owned oil companies, discussed the case with Deputy Solicitor General Edwin Kneedler, a career lawyer at the Justice Department.

Cate Stetson. Credit: Diego M. Radzinschi / NLJ

The meeting was referenced in a Jan. 2 letter that Hogan Lovells sent to Kneedler. The Hogan Lovells team, including Cate Stetson, a top appellate lawyer at the firm, told the Justice Department that Helmerich & Payne could not bring its claim in a U.S. court.

Venezuela’s legal team said Helmerich & Payne might have been able to bring an expropriation claim over its seized property if Venezuela and the United States had a bilateral investment treaty, or some similar agreement. “But there is no such agreement between the two countries, and [Helmerich & Payne] has not followed any treaty-specific procedures,” Venezuela’s lawyers said. “The company has instead brought its claim in U.S. court under customary international law. It accordingly must abide by the limits that customary international law has long imposed, and customary international law recognizes no cause of action for a corporate parent to challenge the expropriation of its subsidiary’s assets.”

The documents revealing the Hogan Lovells meeting with the Justice Department were disclosed through FARA, the 1938 law that requires firms to disclose their lobbying work for foreign governments. That law has found new scrutiny in the wake of the case against former Trump campaign manager Paul Manafort, who stands accused of failing to report the scope of his work for the Ukrainian government.

Hogan Lovells had previously disclosed through FARA its advocacy for the Venezuelan government. A team from the firm in 2016 reported a meeting they had with the Justice Department about the litigation involving Helmerich & Payne.

Hogan Lovells began defending Venezuela against Helmerich & Payne in 2012. The firm registered as an agent of Venezuela in 2014 when its portfolio for the country expanded to include policy advocacy.

The firm was not required to register two years earlier, when it began representing Venezuela in Washington federal district court.

FARA provides an exemption for attorneys engaged in the practice of law. According to a recent client alert issued by Covington & Burling, the lawyer’s exemption has been “narrowed considerably” and does not apply to a lawyer’s attempt to influence a government agency on policy matters.

“The intent behind this exemption appears to be to require registration by law firms when they act more as lobbyists, public relations advisors, or political consultants than as legal counselors,” the Covington lawyers wrote in their advisory. “But this is a very fine line, requiring careful parsing of the language of the lawyer’s exemption.”

In a December 2014 form, Hogan Lovells said it would “render advice on matters involving bilateral relations between the United States and Venezuela, including legal analysis, counsel and strategy development/as well as policy advocacy.”

In March 2016, Hogan Lovells acknowledged its role in the Helmerich & Payne litigation and said its activities in the case “have been exempt from registration.” Later that year, Hogan Lovells disclosed an earlier meeting with Kneedler concerning the Supreme Court’s request for the Justice Department’s views in the Helmerich & Payne litigation. The firm believed that meeting, along with subsequent communication with the solicitor general’s office, qualified for the lawyer’s exemption but said “we nevertheless have submitted FARA registration in case the nature of such contacts might be deemed to exceed the scope of the exemption.”

Hogan Lovells has reported receiving nearly $1.9 million from the Venezuelan government since registering as an agent of the country in late 2014. Its two most recent disclosures, covering the period between September 2016 and August 2017, reported about $1 million in payments. In each of the disclosures, Hogan Lovells said, “None of the fees received during the period from this foreign principal were for services or activities requiring registration under the Foreign Agents Registration Act.”