Supreme Court to hear Venezuela oil rig dispute

The front columns at the U.S. Supreme Court building in Washington, October 5, 2015. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) - The U.S. Supreme Court on Tuesday agreed to weigh Venezuela’s bid to block a lawsuit filed by an American oil drilling company that claims the South American country unlawfully seized 11 drilling rigs six years ago.

The high court will review a May 2015 ruling by the U.S. Court of Appeals for the District of Columbia Circuit that allowed one of the claims made by Oklahoma-based Helmerich & Payne International Drilling Company to move forward.

The company sued both the Venezuelan government and state-owned oil companies under a U.S. law called the Foreign Sovereign Immunities Act, saying among other things that the property seizure violated international law.

Helmerich had long provided drilling services for the Venezuelan government. The company disassembled its rigs in 2009 after Venezuela had failed to pay $100 million in bills. In response, Venezuela’s government seized the properties, which were still in the country. Then-President Hugo Chavez ordered the seizure, saying the rigs could be used by the government-owned companies.

The appeals court blocked the company’s breach of contract claim, which was not at issue in the appeal. In court papers, Venezuela questioned whether the company could sue in U.S. courts in part because the property in question was owned by a Venezuela-based subsidiary.

The Supreme Court will hear oral arguments and issue a ruling in its next term, which starts in October and ends in June 2017.

Reporting by Lawrence Hurley; Editing by Will Dunham