In an opinion Friday, Judge Failla ruled that Venezuela’s state oil company was required to pay certain bonds, despite the Venezuela National Assembly having declared last year that the bonds violated the Venezuelan Constitution. The declaration occurred against the backdrop of a power struggle in the Venezuelan government. The National Assembly’s President Juan Guaidó has been recognized by the United States as the Interim President of Venezuela, over the competing claims of Nicolás Maduro (see our prior coverage here).
Under the doctrine of international comity, the Court could have deferred to the National Assembly’s declaration, particularly if the Executive Branch supported that view. But the Executive Branch was “non-committal” in this case, and so the Court was “left to determine for itself whether it should extend comity to the National Assembly’s actions.”
Judge Failla ultimately concluded that the bonds should be enforced because, accepting a rule to the contrary would invite other governments to shortchange legitimate creditors after-the-fact:
Continue Reading Judge Failla: Venezuela Cannot Void Bonds Based on Alleged Illegality Under Venezuelan Law