Welcome to the Crystallex HUB on AGORACOM

Crystallex International Corporation is a Canadian-based gold company with a successful record of developing and operating gold mines in Venezuela and elsewhere in South America

Message: Judge Weighs Effect Of Sanctions In Del. Venezuela Cases

Judge Weighs Effect Of Sanctions In Del. Venezuela Cases


By Caroline Simson

Law360 (May 11, 2021, 9:23 PM EDT) -- A Delaware federal judge weighing whether to grant seizure orders for Citgo's parent company to creditors owed hundreds of millions of dollars by Venezuela indicated Tuesday that he is considering whether U.S. sanctions on Caracas preclude him from issuing such an order.

U.S. District Judge Leonard P. Stark ordered U.S. military shipbuilder Huntington Ingalls, OI European Group BV and Venezuela and its state-owned oil company, PDVSA, to provide further briefing on several questions he has on the sanctions. That includes a question as to whether, if he were to order the writ of attachment on shares in PDVSA subsidiary PDV Holding, that would create a "contingent interest in blocked property" that would be precluded by the Office of Foreign Assets Control sanctions. Venezuela indirectly holds Citgo through PDV Holding.

Judge Stark also questioned whether the sanctions prohibit him from issuing findings of fact that could support the issuance of an attachment order on the shares, even if he didn't actually issue the order, and what challenges could be raised on the validity or constitutionality of the sanctions if he denied the motions for attachment orders submitted by Huntington Ingalls and OI European Group.

The move comes as other creditors of Venezuela have begun to swarm around Citgo, Venezuela's largest U.S. asset. Crystallex, which won $1.2 billion in arbitration after Venezuela ousted it from a lucrative gold mining operating contract, secured such an attachment order from Judge Stark in 2018. The Canadian company is currently gearing up for a sale of the PDV Holding shares in order to enforce the ruling, though the sanctions — imposed by the Trump administration in early 2019 in support of Venezuelan opposition leader Juan Guaidó — have complicated matters.

In late 2019, Judge Stark denied OI European Group's bid for a seizure order like the one granted to Crystallex, saying circumstances had changed in the interim period. Crystallex had shown that PDVSA was the alter ego of Venezuela — a critical component for creditors of Venezuela seeking to target PDVSA's assets to collect their money — by pointing to Venezuelan President Nicolás Maduro's hold on the company.

Recently, however, PDVSA has been under the control of Guaidó. Lawyers for the oil company have argued that since the change in leadership, the company has "resurrected and reinforced" its independence from Venezuela.

OI European Group, a Dutch subsidiary of glassmaker Owens-Illinois Inc., won its $583 million arbitral award in 2015 after Venezuela forcibly seized two glass container factories that it had invested in.

Huntington Ingalls, meanwhile, won its $138 million arbitral award in 2018 following a dispute over cost overruns relating to a $315 million contract it signed in 1997 to refurbish two frigates for the Venezuelan Navy.

Huntington Ingalls is represented by Alexander Athan Yanos, Robert Poole, Carlos Ramos-Mrosovsky and Rajat Rana of Alston & Bird LLP, and Laura Davis Jones and Peter J. Keane of Pachulski Stang Ziehl & Jones LLP.

OI European Group is represented by Jody Barillare, Sabin Willett and Christopher Carter of Morgan Lewis & Bockius LLP, and Edward Davis Jr., Fernando Menendez and Cristina Vicens Beard of Sequor Law PA.

PDVSA is represented by Samuel Hirzel II of Heyman Enerio Gattuso & Hirzel LLP, and Joseph Pizzurro, Julia Mosse, Kevin Meehan and Juan Perla of Curtis Mallet-Prevost Colt & Mosle LLP.

Venezuela is represented in the OI European Group case by A. Thompson Bayliss and Stephen Childs of Abrams & Bayliss LLP, and by Joseph Neuhaus, James Bromley, Sergio J. Galvis and Angela N. Ellis of Sullivan & Cromwell LLP.

The cases are OI European Group BV v. Bolivarian Republic of Venezuela, case number 1:19-mc-00290, and Northrop Grumman Ship Systems Inc. v. the Ministry of Defense of the Republic of Venezuela, case number 1:20-mc-00257-LPS, in the U.S. District Court for the District of Delaware.

--Editing by Breda Lund.


For a reprint of this article, please contact [email protected].

New Message
Please login to post a reply