On February 11, 2020, Judge Stanton of the U.S. District Court for the Southern District of New York denied Dresser-Rand Company’s (Dresser Rand) motion for summary judgment in a suit to collect on a promissory note issued by Petróleos de Venezuela, S.A. (PdVSA). The Court’s decision turned on a finding that payment by PdVSA was legally impossible under U.S. sanctions. That finding was based on incomplete briefing by the parties and appears seriously flawed given the licenses and guidance provided by the Department of Treasury’s Office of Foreign Assets Control (OFAC). We discuss the decision and the U.S. sanctions regime as applied to the promissory note below.
The Order and the Parties’ Submissions
According to the opinion and order issued by the Court (the Order), Dresser-Rand holds a note issued by PdVSA on January 20, 2017, and guaranteed by PdVSA Petróleo, S.A. (Petróleo), a wholly owned subsidiary of PdVSA, for the principal sum of $119,645,069.70. PdVSA made its first two payments on the note, but subsequent attempts at payment were rejected by Dresser-Rand’s bank for internal policy reasons following the U.S. imposition of targeted sanctions against PdVSA on August 25, 2017. PdVSA and Dresser-Rand discussed other methods of payment, but default on the payments continued. In February 2019, Dresser-Rand filed suit via a motion for summary judgment in lieu of complaint against PdVSA and Petróleo.
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