Update on PDVSA US Litigation Trust v. Lukoil Pan Americas, et al.

Abstract

This is an update to the article we published on March 15, 2018 on the lawsuit filed by the PDVSA US Litigation Trust (the “Trust”) in federal court in Miami, Florida on behalf of Venezuela’s state-owned oil company, Petroleos de Venezuela, S.A. (“PDVSA”) against a group of 44 oil trading companies, banks and individuals, alleging that they participated in a 14-year scheme to rig bids, underpay on purchases and overcharge on sales, allegedly resulting in billions of dollars of losses to PDVSA. Our prior article flagged a number of interesting legal and factual questions raised by the suit, such as how the Trust was created, whether it has standing to assert PDVSA’s claims, whether some or all of the claims would be barred by applicable statutes of limitation and adequately assert an injury in the United States, and whether the Trust would be able to obtain the cooperation from PDVSA necessary to respond to discovery requests, among others. The case also may have implications for financial creditors of PDVSA, and even creditors of the Republic of Venezuela, who may be able to lay claim to the economic value of the Trust’s lawsuit or to any recovery, on the theory that the Trust is pursuing the claims for PDVSA’s sole benefit. The filings in the suit thus far provide insight into some, though certainly not all, of the questions raised by this suit and also introduce new issues of their own. Defendants are pursuing a vigorous challenge to the standing of the Trust to assert PDVSA’s claims under both Venezuelan and New York law, which the Court has agreed to hear as a preliminary issue. The agreement by which the Trust was formed has been filed with the Court and it reveals the role of the Venezuelan government in entering into the Trust agreement on PDVSA’s behalf and the economic interests of the Trust’s lawyers and other professionals versus those of the beneficiary of ultimate recoveries, PDVSA. The defendants’ opposition to the Trust’s motion for a preliminary injunction seeking a seizure of evidence and freeze of assets also has revealed defenses to the federal and state claims asserted in the complaint and confirmed that some of the issues we identified are already arising in the litigation.