Judge Rules Venezuelan Iron Ore Company an Agency or Instrumentality of Venezuela in $350 Million Mining Dispute

Michael Diaz

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MIAMI – October 6, 2016 — United States District Judge Andrew Carter of the Southern District of New York recently ruled that Venezuela’s iron ore company C.V.G. Ferrominera Orinoco, C.A. (FMO) is an “agency or instrumentality” of the Bolivarian Republic of Venezuela. The court’s determination could potentially derail a $350 million global arbitration and litigation assault on FMO brought by the Plaintiff, Commodities & Minerals Enterprise, Ltd. (CME), a British Virgin Islands company.

The ruling stems from a complaint initiated by CME earlier this year in which it sought and obtained an ex parte order of maritime attachment for hundreds of millions of dollars.

FMO’s attorneys, Diaz Reus partners Michael Diaz, Jr., Gary Davidson, and Brant Hadaway, moved to dismiss the Complaint and vacate the Order of Attachment, arguing that FMO is an “agency or instrumentality” of the Venezuelan government and, as such, is immune from pre-judgment attachment under the Foreign Sovereign Immunities Act (FSIA).

Judge Carter’s ruling means that FMO is presumptively immune from prejudgment attachment under the FSIA. The Court has set a mid-October deadline for CME to brief the Court to the extent it claims that an exception to the FSIA applies.

“We are pleased with the result that we achieved on behalf of FMO,” says Hadaway. Davidson explains, “We were always confident in our position that FMO was an agency of Venezuela, and we are gratified that Judge Carter has issued this decision now, as it has far-reaching implications not only in the case before him, but in the arbitrations pending in Switzerland, the UK, and the U.S.” Hadaway adds that “we will oppose any argument presented that an exception to the FSIA applies. FMO is one significant step closer to obtaining a dismissal of the proceeding in its entirety.”

Judge Carter’s ruling comes on the heels of another significant victory for FMO in the New York litigation. On August 25, 2016, Judge Carter denied CME’s petition for an anti-suit injunction seeking to enjoin FMO from proceeding with a declaratory action filed by FMO in Venezuela. Judge Carter noted that FMO’s FSIA jurisdictional challenge left it “doubtful the Court would have the necessary jurisdiction to issue an anti-suit injunction.” The Court determined that even if it had jurisdiction, it would be improper for the Court to issue the requested injunction, noting, among other things, that “principles of comity” warranted denial of CME’s motion.

About Diaz, Reus & Targ, LLP

Diaz Reus offers a global law practice centered around national and transnational parallel proceedings and transactions in sovereign, trade, commerce, finance, and fraud; civil litigation and arbitration; asset identification, location, tracing and recovery; white collar crime, regulatory, and criminal investigations and defense in matters of corruption, bribery, money laundering, FCPA, OFAC, SDNs, and the Bank Secrecy Act; and politically sensitive investigations including the recovery of U.S. immigration status and visas.

For more information, contact Gary Davidson gdavidson@diazreus.com or Brant Hadaway bhadaway@diazreus.com 305-375-9220.