OI European Group BV v. Bolivarian Republic of Venezuela, No. 23-1647 (3d Cir. 2023)Annotate this Case
Venezuela boasts the “largest proven oil reserves in the world,” long under the “significant control” of the state. Venezuela formed PDVSA to exploit those resources. In 2011, Venezuela nationalized several gold mines and seized surrounding factories without compensation. Crystallex won relief in an international arbitral tribunal--$1.2 billion plus interest. The District of Columbia confirmed the award in 2017. Venezuela did not pay, Crystallex registered its judgment with the Delaware District Court under 28 U.S.C. 1963, and sued Venezuela to attach PDVSA’s shares in PDVH, PDVSA’s wholly-owned U.S. subsidiary. Crystallex hoped to ultimately reach funds in CITGO, a Delaware corporation indirectly owned by PDVH.
The district court found that PDVSA was Venezuela’s “alter ego”; its property was subject to execution to satisfy Venezuela’s debt. The Third Circuit affirmed, citing Venezuela’s economic control over and profit-sharing with PDVSA. Other Creditors also obtained arbitration awards against Venezuela over debts incurred under broken contracts, then confirmed their arbitration awards in U.S. courts, registered those judgments, and moved for writs of attachment on PDVSA’s shares of PDVH.
In 2018-2019, Venezuela experienced political upheaval. Guaidó, the interim president, took control of the shares of PDVH, appointing an ad hoc board of directors to manage the U.S. subsidiaries.
Despite those changes, the Delaware District Court granted the Creditors’ motion, comprehensively describing PDVSA’s relationship to Venezuela and concluding PDVSA remains an alter ego of Venezuela. The Third Circuit affirmed that PDVSA remains the alter ego of Venezuela.