Some important cases fly under our radar, and shouldn’t. Today’s Commentary is about one of those. On June 12, 2026, Law360 reported online under this headline

Split DC Circ. Backs Venezuela’s $108M Arbitration Order

The first sentence of that article, available free of charge to non-subscribers, read: “A divided D.C. Circuit panel affirmed Friday that Venezuela must pay more than $100 million arbitral award to a Barbadian oil field investor, in an opinion that spends more than five pages rejecting points that U.S. Circuit Judge Justin R. Walker made in an even lengthier dissent.”

Another large arbitration-derived judgment against Venezuela? You might say, “Yawn. Put it on the sovereign debt restructuring pile, and good luck to the Barbadians (even if they are only nominally Barbadians, and are in fact US investors corporately organized in Barbados to avail themselves of a Barbados-Venezuela BIT)”  But this case is interesting, because of the controversy that separated the majority from the dissent: whether the public policy defense to award recognition under the New York Convention (Art. V(2)(b)) was available to Venezuela because the now-arrested, now-detained, now-indicted former President of Venezuela, Nicolas Maduro, selected new Venezuela arbitration counsel in 2019 after he had been de-recognized by the U.S. President as Venezuela’s sovereign representative, in January of that year, in favor of the leader then designated by Venezuela’s National Assembly, Juan Guaidó, after a 2018 national election that Maduro evidently lost but successfully resisted.

The case is Venezuela US SRL v. Bolivarian Republic of Venezuela, 178 F.4^th 679 (D.C. Cir. 2026) (hereinafter the “VUS” case). The majority rejected the public policy defense as proffered by Venezuela, and enforced the final award issued in an arbitration under the UNCITRAL Rules seated in the Netherlands and administered by the Permanent Court of Arbitration in the Hague.

The significance of Maduro’s change of arbitration counsel was the point dividing the majority from the dissent. For the majority, it made no difference, because Venezuela in the District Court and the D.C. Circuit confined its public policy defense to a narrow contention that recognizing an award in an arbitration where the foreign State’s counsel was selected by a sovereign representative not recognized by the United States would violate the President’s exclusive power, derived from the Constitution, to recognize foreign sovereign representatives. That proposition, the majority held, was barred by precedent in the U.S. Supreme Court and the D.C. Circuit. For the dissent, however, the arbitration in its final phases was a miscarriage of justice – justice viewed from a U.S. perspective – because counsel in the arbitration purporting to represent Venezuela was chosen by Maduro at a time when Maduro – from a U.S. sovereign recognition perspective – had no legitimate right to make that choice.

I became troubled by the dissent for many reasons, including its nearly 100 footnotes; its resort to dozens of authorities and law review articles evidently not put in the record by either party, and clearly not treated by the majority opinion; its quotations from and references to Trump Administration declarations, also not treated by the majority; and especially its attention-grabbing introductory, which I quote here to whet the reader’s appetite for the analysis that follows:

“On the western side of Munich sits Schloss Nymphenberg, a palace wider than Versailles. Built in 1675, it served for centuries as the summer home for the House of Wittelsbach, rulers of Bavaria until the end of the first World War. Now, for ten euros, you can take a tour.

Franz Bonaventura Adalbert Maria Herzog von Bayern lives in a side wing of the palace. He is the ninety-two-year-old great-grandson of the last king of Bavaria, Ludwig III. A former prisoner of the Nazis, today von Bayern is renowned as a collector and connoisseur of modern art. Von Bayern is also, in what he calls a “charming historical curiosity,” heir to the throne of England and Scotland. Or at least he would be, if William and Mary had not deposed James II in the “Glorious Revolution” of 1688, and if the Act of Settlement had not deposed James’s Catholic heirs in 1701.

Imagine — far-fetched though it may be this side of Culloden — that von Bayern were to enter an appearance as the sovereign representative of the United Kingdom in a $100- million international arbitration. And imagine he were then to replace the U.K.’s lawyer with one of his choosing before losing the suit.

In that arbitration, was the U.K. heard in a meaningful sense? Was von Bayern a proper representative of the U.K.? Did the U.K. enjoy the right to counsel of its choosing? Would a U.S. court’s recognition of the award evince respect for the sovereignty of the United Kingdom? Would it respect the President’s authority to recognize (as he of course does) that the House of Windsor is the U.K.’s sovereign government, not the House of Wittelsbach? If the answer is “no, no, a thousand times no,” would recognition and enforcement of the arbitral award accord with our nation’s basic notions of justice?

Swap Venezuela for the United Kingdom, the National Assembly for the House of Windsor, and Nicolás Maduro for Franz von Bayern, and you get something pretty close to the international arbitration at issue today. Venezuela was represented in that arbitration by a man, Nicolás Maduro, whom the United States did not recognize as the president of Venezuela when the arbitral tribunal ordered Venezuela to pay an opposing party $100 million. And then the district court for the District of Columbia recognized that award under the New York Convention.”

Once we get past the originality and quaint charm of this passage, and give due credit for the research and drafting effort that must have been involved, we should find ourselves troubled by the dissent. The list of reasons is rather long.

1.The historical oddity that Judge Walker selects to frame the issue presented in this case seems to have been chosen for its absurdity, and somewhat for entertainment value, not for its close analogy to the actual facts of the VUS case. To call Maduro a “stranger” to Venezuela’s sovereignty, as Judge Walker does elsewhere in the dissent, and to draw a parallel to a remote interloper with a preposterous claim to sovereign status, is rhetorical and historical excess. Obviously Maduro was the legitimate successor to Hugo Chavez in the early 2000s and for a period of years had a bona fide popular mandate to govern and was recognized by the United States until 2019.  He was still the bona fide sovereign representative recognized by the United States at the time of the events underlying the arbitration, and at the time of proceedings in the arbitration up to January 2019, and he initially chose for Venezuela to be represented by the very respected US international law firm, Curtis Mallet.

2.The choice of an absurd hypothetical effectively belittles the arbitral tribunal in the actual case for having allowed the Maduro Regime to change counsel after the Regime’s legitimacy had been undermined. But the dissent does not discuss the Tribunal’s reasoning on this point – evidently there was none, because the Guaido forces did not seek leave to appear — nor does he make any argument that, in a U.S.-seated arbitration between the Parties governed by the FAA, the President’s de-recognition of the Maduro Regime and substituted recognition of Guaido would have been mandatory arbitral procedural law requiring the Tribunal to deny the right of audience to Maduro-selected new counsel.

3.Judge Walker constructs a U.S. public policy violation from a confection of five ingredients, the first three purporting to relate to the fairness of the arbitration, in its final (damages) phase after U.S. recognition of Guaido, in the absence of counsel chosen by the Guaido camp, a fourth framed as “respect for a foreign sovereign” and a fifth under the heading “separation of powers.” In the majority’s critique of this framework, the focus is mainly on two facts: (1) that Venezuela, represented in the US enforcement case by the same US law firm that Maduro had initially appointed in the arbitration – Curtis Mallet — did not argue for denial of enforcement based on procedural irregularity under Article V(1) of the Convention, and (2) Venezuela’s only argument in the enforcement case (District Court and Circuit) under the rubric of Article V(2) (b) was that award enforcement would be a judicial usurpation of the President’s exclusive power to recognize foreign sovereign representatives.

4.Judge Walker seems to assume, but does not explain, that it is a basic principle of US public policy that a foreign arbitral tribunal sitting in the Netherlands, in an arbitration involving a non-US Claimant (a Barbadian entity) and foreign State Respondent (Venezuela) cannot have its award against the State enforced in the U.S. unless it observed the same rules governing appearance of counsel that would apply to that foreign State in a US court proceeding, i.e., presumably, that counsel whose notice of appearance would be accepted, in the event of a controversy on the point, would be the sovereign representative recognized by the Executive Branch. That position is even more difficult to embrace because there was no controversy in this arbitration about Venezuela’s change of counsel: no purported representative of Guaido applied to the Tribunal to contest the change. From an arbitration perspective, it seems anomalous that under the Federal Arbitration Act Chapter 2 and New York Convention, a foreign arbitration between non-US parties conducted at a foreign seat of arbitration under the UNCITRAL Rules would be in jeopardy of U.S. non-recognition where no infraction of the UNCITRAL Rules or the lex arbitri occurred.

5.While it may be assumed the Judge Walker knew as he wrote this dissent that U.S. case law on the public policy exception requires that the public policy invoked by the party resisting enforcement must be explicit, well-defined and dominant – and presumably he knew this not only because the majority makes this point and cites the leading Supreme Court case. 178 F.3d at 686 (citing E. Associated Coal Corp. v. United Mine Workers, 531 U.S. 57, 62 (2000)). Judge Walker ignores this requirement and presents his confection of procedural, diplomatic and separation of powers concerns in an unabashed and seemingly undisciplined extended judicial cadenza. To what end? For what audience? See para. 6 below.

6.Multiple passages in the dissent praise the President of the United States in terms that are unnecessary because only the fact of the 2019 US recognitions change ns collateral to the recognition actions. (See the footnote at the end of the Commentary).  Judge Walker takes pains to underscore that in 2019 the President stated that Maduro as a leader acted  in ways abhorrent to American democratic values. This seems to have been done with a two-fold purpose: to applaud the President, first, and to divert attention from the fact that the President’s decision on recognition is exclusively the President’s to make, even if the President acts in ways that may be abhorrent to American democratic values (as some have argued with respect to the 2026 recognition of Delcy Rodriguez as the post-Maduro leader of Venezuela).

6.1 Thus, in praise of the righteousness of the President’s 2019 Maduro de-recognition decision, the dissent reports that in January 2019 “President Trump took steps to safeguard Venezuelan assets in the United States for the sake of Guaido and the National Assembly.” (boldface added for emphasis). Was that not also for the sake American energy companies then seeking billions of dollars of compensation for expropriations by Venezuela?

6.2 Later in the dissent, Judge Walker quotes a series of statements issued by the President in 2019, all critical of Maduro for human rights abuses in Venezuela.

6.3 The dissent posits that the President’s public positions on Maduro in 2019 “reinforce the conclusion that the Maduro regime could not possibly have had the ‘best interests of’ Venezuela at heart” in the conduct of the arbitration. (boldface added for emphasis). That seems to connect the U.S. President’s position on Maduro to the fairness of the arbitration in an illogical and speculative fashion, without any reference to the substance of the advocacy for Venezuela in the final phase by the new counsel chosen by Maduro and without any record having been made by Curtis Mallet on behalf of Venezuela before the U.S. courts that there had been  any deficiencies in the advocacy of its successor counsel in the arbitration.  Why wouldn’t each competing claimant to Venezuelan leadership at the relevant time, Maduro and Guaido, have been aligned in wanting to minimize the Bolivarian Republic’s damages exposure to a foreign claimant?

7.The dissent pays little more than lip service to a 2015 Supreme Court case that heavily influenced the panel majority, called Zivotofsky v Kerry. (576 U.S. 1 (2015)). That case involved U.S. non-recognition of Jerusalem as part of the sovereign territory of Israel – a territorial limit of formal U.S. recognition of Israel since 1948. Congress had passed a statute directing the State Department to comply with the request of any U.S. passport applicant born in Jerusalem to have the place of birth on the passport stated as “Jerusalem, Israel.” No good, said the Supreme Court (6-3) with Justice Kennedy in the lead, because the passport entry connotes the position of the Executive Branch on the foreign state’s sovereignty over the passport holder’s place of birth, and the Constitution confers exclusive power on the President to formulate the State Department’s passport office position on that issue. For the panel majority in the VUS case, the award enforcement situation presented was not even close to Zivotofsky: Enforcement of  the Award against Venezuela did nothing to require the President or the Executive Branch to modify its choice of recognized regime in Venezuela, nor did it constitute a purported regime recognition by the judiciary. So, said the majority, even if the President’s exclusive foreign sovereign recognition power under the Constitution were somehow a basic notion of morality and justice – which the majority held that it was not – that principle was not violated by enforcement of a foreign arbitral award made in the Netherlands (my addition: in an arbitration involving neither any U.S. parties nor the application of U.S. law).

8.It might have been debated whether Zivotofsky controlled the VUS case, but no such debate was necessary because the D.C. Circuit in another Venezuela arbitration award enforcement case in 2023 had treated Zivotofsky as dispositive in an ICSID award enforcement setting. Valores Mundiales S.L. v. Bolivarian Republic of Venezuela, 87 F.4^th 510 (D.C. Cir. 2023). Valores was an enforcement case under the federal ICSID award enforcement statute (28 USC §1650a) not the FAA/New York Convention. And of course the obligation to grant judgment-equivalent “full faith and credit” to final ICSID awards under that statute is not subject to a public policy exception. But a unanimous D.C. Circuit panel addressed whether there was a separation of powers objection to giving full faith and credit to an ICSID award in a Venezuela case where the arbitral tribunal, after hearing full argument, had determined that it would not permit the Guaido Interim Government to appoint counsel to replace  the counsel appointed by the Maduro Regime.

8.1 The Court in Valores stated:

“Nor does our enforcement of the ICSID awards imply a denial of the President’s recognition of the Guaido government. Our enforcement cannot seriously be seen as an attempt by this court to ‘aggrandiz[e] its power at the expense of another branch’ [quoting from Zivotofsky]. Nothing in our enforcement of the ICSID awards forces the Executive to contradict his statements recognizing the Guaido regime.  (citing Zivotofsky). Nor is there anything to indicate that Section 1650a was passed with a purpose of undermining the Executive’s foreign affairs authority (again citing Zivotofsky). Instead, our decision simply follows the path that Congress and the Executive have jointly forged, we apply legislation Congress passed to implement a treaty the President signed and the Senate approved.”

Valores, supra, 87 F.4th at 522 (emphasis supplied).

8.2 One is tempted to say that the VUS case is “on all fours” with Valores, because FAA Chapter Two like Section 1650a is “legislation Congress passed to implement a treaty the President signed and the Senate approved.” The VUS panel majority considered Valores to be controlling even though the Convention’s public policy exception has no counterpart in the ICSID enforcement statute:

“But even if the President’s constitutional recognition power is a cognizable public policy under the New York Convention, the Federal Arbitration Act would still compel us to recognize the damages award if doing so would not violate the policy.  On that front, the precedent of Valores is relevant, well-reasoned, convincing, and binding…. Recognition of the damages award is not a ‘formal acknowledgment’ or ‘express declaration’ that the Maduro Regime was the ‘effective government’ of Venezuela (quoting from Valores’s quotations of Zivotofsky)….The Tribunal here never had to choose one purported government over the other. Thus, in this case the connection between recognizing the damages award and contradicting the President’s recognition power is more tenuous than in Valores.”

178 F.3d at 683-84.

9.How we assess the dissent – as the intellectually honest disagreement of an evidently brilliant young jurist, or as brilliance mis-deployed in an ambitious zealot’s pandering to the President (who nominated him to the D.C. Circuit in April 2020 when he was in month six of what ultimately was a ten-month tour of duty, by appointment of that same President, to the federal district court in Louisville, Kentucky) — essentially comes down to an assessment of Judge Walker’s take on Valores. Judge Walker posits that Valores should be distinguished, firstly, because the “who chooses Venezuela’s counsel” issue was actively contested before the ICSID Tribunal in Valores, and the anti-Maduro forces lost. Judge Walker then posits that Valores should be distinguished for the further reason that the New York Convention public policy exception opens the door to US judicial consideration of right-to-be-heard issues that, in the VUS case, were neither presented to nor adjudicated by the Tribunal. Finally, he posits that the sovereign recognition issues take on a different cast, when considered in conjunction with right-to-be-heard issues under the public policy exception, as compared to the treatment given in Zivotofsky and Valores, where no right-to-be-heard issues were alive for consideration in the U.S. courts. In something closer to Judge Walker’s actual words:  “Even if, per Valores…, we do not usurp the President’s exclusive recognition power simply by recognizing arbitral awards like this one, the President’s recognition power can and must still inform the five [“right to be heard” and “separation of powers”] considerations listed above. Those five together — not the President’s recognition power in isolation — establish that recognition of this award violates U.S. public policy.” 178 F.3d at 697-98.

9.1 It could go without saying, but should be said, that the January 2026 operation to seize Maduro and cause his rendition to the United States to face criminal charges is cosmeticized by Judge Walker as “a complex operation involving both law enforcement and military forces,” while the widespread concern in the international law community (including official statements of the American Society of International Law and the International Bar Association) that the United States violated international law by conducting this operation, is not mentioned by Judge Walker, and that the President’s ensuing recognition of Maduro’s erstwhile second-in-command Delcy Rodriguez as the sovereign representative of Venezuela also goes unmentioned. Also unmentioned are the Biden Administration’s efforts, which did not succeed, to bring about the downfall of the Maduro Regime through sanctions and other pressure short of the military incursion ordered by the next President in January 2026.

9.2 It seems to me there are two complete answers Judge Walker’s position that Valores was not controlling precedent. One is the majority’s primary answer to Judge Walker: that Venezuela only argued the Presidential recognition issue, not Judge Walker’s three “due process” considerations, and not his international comity consideration, and that choice foreclosed judicial consideration of the dissent’s “due process” concerns, whether under Article V(1) of the Convention as procedural irregularity, or under Article V(2)(b) as an affront to US public policy. 178 F.3d at 684 (“[T]he dissent’s analysis is wholly untethered from any arguments Venezuela advanced in this district court or on appeal”).

9.3 Judge Walker does not effectively answer the “wholly untethered” position of the panel majority, and I view this as evidence that zealous (albeit creative) pandering to the President motivates the dissent. Not conclusive evidence, but evidence. To be sure, Judge Walker correctly cites D.C. Circuit authority for the proposition that an Article V(2)(b) public policy defense cannot be waived, because it involves the integrity of the enforcing US court. But the majority’s position is not based on waiver of an Article V(2)(b) defense; it is based on the fact that in framing its Article V(2)(b) defense, Venezuela elected not to present either evidence or argument that the Arbitral Tribunal acted in a manner offensive to fundamental U.S. notions of arbitral procedural fairness.  In the majority’s words: “[T]he supposedly aggrieved sovereign here has never regarded the dissent’s “considerations” as worthy of assertion, and its counsel expressly disavowed theories the dissent now advances.” 178 F.3d at 685 (emphasis supplied).

9.4 Judge Walker’s “five considerations” approach to the Convention’s public policy exception — what I have referred to above  as a “confection” — is also vulnerable.  Judge Walker posits that the confectioner’s multiple-ingredient approach to the public policy exception was adopted by the Second Circuit in the PEMEX case and should be embraced by the D.C. Circuit. [Corporación Mexicana De Mantenimental Integral, S. De R.L. De C.V. v. Pemex-Exploración Y Producción, 832 F.3d 281 (2d Cir. 2016)]

9.5 I do not think Judge Walker’s PEMEX analogy holds water, for the following reasons. First — a point not covered by the panel majority — PEMEX  did not involve an Article V(2)(b)-based defense to recognition of a foreign arbitral award on the basis of U.S. public policy. The Second Circuit affirmed a District Court judgment that granted recognition to an award under the New York Convention/FAA Chapter Two even though a Mexican court (at the arbitral seat) had entered a judgment of annulment. Judge Walker makes no mention of the distinction. It does matter. The Second Circuit in PEMEX did invite analogy to Article V(2)(b) to some indirect extent, by stating that discretion to enforce an award despite a foreign set aside judgment “is appropriate only to vindicate ‘fundamental notions of what is decent and just’ in the United States.” But the Second Circuit precedent cited in PEMEX was not an award recognition case implicating the Article V(2) (b) public policy exception; it was a case about U.S. recognition of a German civil litigation default judgment, objected to based on alleged inconsistency with New York State public policy.

9.6 Further, the “four powerful considerations” identified by the Second Circuit in PEMEX were each capable, on a standalone basis, of justifying on public policy grounds a refusal to give recognition to the Mexican court’s award annulment judgment.  That is not so of the five considerations that are the ingredients in Judge Walker’s public policy confection.

9.7 The first Judge Walker ingredient — “the right to be heard” — is doubtless a fundamental general principle of US and international law in the abstract. But whether there was an actual violation in the arbitration was sufficiently doubtful that Curtis Mallet, the firm ousted by Maduro after it had represented Venezuela in the VUS arbitration’s jurisdiction and liability phases, declined to argue it to the U.S. courts. Despite this, Judge Walker wrote: “At the damages phase of the arbitration — where attorneys for the former president of Venezuela [meaning Maduro] filed briefs and made arguments after ousting attorneys for the actual president of Venezuela [meaning Guaido] — the sovereign state of Venezuela was not heard, because the voice that spoke was not its own.” 178 F.3d at 691-92 (emphasis supplied).  Nothing in the record supported the position that the “voice” of Venezuela was not “heard,” except the U.S. President’s 2019 recognition/de-recognition decisions. Judge Walker posits that those decisions are a separate consideration that “informs” how the courts should view the representation of Venezuela in the arbitration by Maduro-selected successor to Curtis Mallet. Perhaps that would be true if there was even a trace of suggestion the Maduro-selected new counsel that replaced Curtis Mallet disserved Venezuela by neglecting arguments or evidence that Guaido-selected counsel would have presented. But there is not a trace of that.

9.8 The same conclusion applies to Judge Walker’s “right to counsel” and “right to adequate representation” considerations. They have no basis in the record except that Maduro changed the choice of Venezuela counsel after having been de-recognized by the U.S. President.  The dissonance between the Maduro choice of counsel and the President’s de-recognition of Maduro is in reality the entirety of Judge Walker’s position. That is not to say that a factual record of Maduro’s illegitimacy as a sovereign spokesperson could not have been made.  But in a U.S. court two things are true: (1) the U.S. President’s decisions about foreign sovereign representatives are dispositive (so such facts should be irrelevant), and (2) that dispositive effect bars either the Congress or the courts from requiring the Executive Branch to alter its position (Zivotofsky) but does not bar courts from recognizing a foreign arbitration award pursuant to a U.S. statute giving effect to treaties on arbitration award recognition negotiated by the Executive Branch and ratified by Congress (Valores).

9.9 One could imagine a different scenario that might implicate the Convention’s public policy exception. Suppose a U.S.-backed tyrant in Venezuela recognized as Venezuela’s sovereign by the President had elected to offer no defense in the damages phase of the VUS arbitration, and the same tyrant by corrupt means prevented his/her political opponents, who claimed sovereign legitimacy, from even applying to be heard in the arbitration. In that scenario, and if those facts were presented in the U.S. recognition case, and if the point were argued, the arbitration could be seen as irreparably tainted by the tyrant’s corruption. A court in that scenario could conclude that award recognition would (1) violate basic U.S. notions of procedural justice, and (2) be consistent with Zivotovsky and Valores because refusal of award recognition would not interfere with the President’s decision to have diplomatic relations with the tyrant. But that was not the scenario in the VUS case, and Judge Walker’s portrayal of Maduro as a “stranger” to the arbitration proceedings has no foundation in the record beyond the President’s de-recognition of Maduro in 2019.

10.Moreover, it would be a mistake to equate a President’s recognition of a foreign sovereign with a basic principle of morality and justice. There have been, currently are, and in the future perhaps will be, instances in which geopolitical considerations, prudent or otherwise, motivate a U.S. President to recognize foreign sovereign representatives who are not democratically elected, who are corrupt, who commit human rights abuses or violations of international humanitarian law, and/or who manipulate the judicial systems within their own countries to deny due process entirely or selectively  to strengthen their undemocratic grip on power. Geopolitical considerations in Presidential decisions about sovereign recognition may indeed be in tension with basic principles of morality and justice at the time a foreign arbitral award against such a State is presented for recognition and enforcement in a U.S. court. To elevate the Presidential sovereign recognition decision to a cognizable New York Convention public policy exception would threaten the integrity of the U.S. Courts and fundamentally transform decades of Convention public policy jurisprudence requiring a highly restrictive approach to Article V(2)(b).

11.  The most glaring fallacy of Judge Walker’s analysis, I submit, consists of aligning the President’s de-recognition of Maduro with “morality and justice” based on Maduro’s well-documented involvement in human rights abuses, corruption and perhaps facilitating unlawful drug trafficking to the United States.  The President in 2019 could have continued to recognize Maduro. The President in 2026 has opted to recognize Delcy Rodriguez, Maduro’s erstwhile second-in-command. Many reports indicate that Ms. Rodriguez has not fundamentally altered domestic political arrangements that prevailed before Maduro’s removal, and it is evident that a transition to a democratically elected government is not a near-term priority of Ms. Rodriguez or the United States’ Executive Branch. If the U.S. President may exercise his sovereign recognition power, as he evidently may, to recognize an authoritarian government that commits human rights abuses, and that retains power by military force, by disregard of actual electoral results, by corrupt manipulation of domestic courts, and by corrupt association with drug cartels and organized crime units, how can it seriously be asserted that the President’s choice of sovereign representative is itself a fundamental US public policy under our New York Convention Article V(2)(b) case law?

12. That two members of the D.C. Circuit panel in the VUS case adhered to precedent and maintained a principled distinction between award recognition and Presidential sovereign recognition power should be encouraging to the arbitration community. And my dissection of the dissent and what may have motivated it should not be understood as a diatribe made broadly against members of the judiciary appointed by our current President. Indeed another appointee of this President was in the majority here, and that judge was on the unanimous D.C. Circuit panel in the Valores case. But it is important for our community to be sensitive to political alignments and related aspirations of all judges who address issues of significance to the law in our field. Judge Walker is not an anomaly, and the risk of aberrant decisions depending on the composition of a panel in the D.C. Circuit can have troublesome implications in litigation relating to arbitration involving foreign State parties. Sycophancy is an ailment afflicting, to one degree or another, every branch of the U.S. government.

[1] Much objective evidence in the dissent supports the concern about zealous pandering to the President. To catalog only the most glaring examples: In footnote 29, Judge Walker cites a January 2019 press release by the US Embassy in Mexico, entitled “President Donald J. Trump Supports the Venezuelan People’s Efforts to Restore Democracy.” In footnote 46, he cites a publication of the Trump White House Archives in August 2019 entitled “President Donald J. Trump is Cutting Off the Financial Resources of Maduro and His Cronies.” In footnote 47, he cites another Trump White House Archives publication, from September 2019, entitled “Remarks by President Trump in a Multilateral Meeting on the Bolivarian Republic of Venezuela.” In the same footnote, he cites a Presidential Proclamation in March 2025 entitled “Invocation of the Alien Enemies Act Regarding the Invasion of the United States by Tren De Aragua.” In footnote 68, he cites a December 23, 2025 Memorandum issued by the State Department Office of Legal Counsel entitled “Proposed War Department Operation to Support Law Enforcement Efforts in Venezuela.“

In May 2026, and again today, I have prepared a Commentary concerning the United States role in Venezuela after the removal and arrest of Nicolas Maduro during a short-duration military invasion of Venezuela by the United States. This is a subject of interest to the arbitration community for many reasons. So many of you have been involved as advocates or arbitrators in cases linked to Venezuela’s nationalizations of energy and mining interests. Some of us (not this Commentator) now have involvement as counsel in advising clients about dispute resolution aspects of new investment prospects for Venezuela. For many, the unique circumstances of the political and economic transition in Venezuela ensuing from the US military action directed by our President to remove Mr. Maduro, provide an opportunity to observe, on an ongoing basis, whether a failed State, as Venezuela evidently is, may be stabilized and revived by US diplomatic and military support for a democratically-illegitimate authoritarian regime — and whether this may be effectively done without an articulated plan for restoring democracy and rule of law, and indeed possibly with an unarticulated plan to support the post-Maduro “interim” successor regime indefinitely.

Lack of transparency is one obstacle to drawing any conclusions or making any informed predictions. But this is a subject that should interest us, and one to which our attention is drawn on an ongoing basis, because what America’s President has threatened with regard to other parts of the world — notably Cuba, Greenland, and less seriously Canada — has been implemented to a significant degree in Venezuela.  As it is said on a sign outside a theater in New York’s Theatre District: Attention Must Be Paid.

It may be too soon to assess the impact on Venezuela’s trajectory of the tragedy of the recent earthquakes. Some news media reports suggest that the relatively moderate US Government crisis response is more consistent with an underlying policy of resource exploitation than with a commitment to Venezuela’s revival. Other reports suggest that the human losses and devastation, bearing most heavily on Venezuelans with the least economic means, could galvanize public opposition to the post-Maduro US-supported regime, even though the Maduro regime’s mechanisms for suppression of dissent have not been dismantled.

It appears hat licenses granted by the US Treasury Department’s Office of Foreign Asset Control (OFAC) beginning within days after the apprehension of Mr. Maduro, have enabled Venezuela to achieve modest gains in oil production and revenue — relative to the stagnant situation of 2025 — with the main driver of such gains being a US-imposed system that channels sales to US-approved customers and sales proceeds to US Treasury accounts (initially, Foreign Government Deposit Funds, (“FGDFs”)) through US-approved oil traders acting as brokers. Effectively, an OFAC sanctions program that began in 2015 with an objective to restore democracy and civil society in Venezuela, to eliminate corruption and eradicate poverty, presently operates mainly to channel sales of Venezuelan crude oil inventories to customers in countries aligned with policies of the US Administration, and to filter sales proceeds through the FGDFs or other US Treasury accounts.  The FGDFs – which early on consisted mainly of an account or accounts in Qatar, but going forward may be in US Treasury accounts within the US – lack transparency because they are not systematically audited.

The FGDFs have one evidently constructive consequence: to prevent a disorderly race to attempt judicial execution upon Venezuelan cash assets by holders of Venezuela’s sovereign debt (recently estimated in the Financial Times to exceed $240 billion USD). But the lack of transparency leaves open questions about uses of the proceeds. How much goes to the traders as commission? How much goes to favored persons of the US President? Are any of the traders such persons? How much reaches favored persons in the post-Maduro regime of “interim” Venezuelan President Dulcy Rodriguez, as a means of maintaining US control? (This assessment is based on a variety of online sources, but one stands out deserving citation, a June 2026 article on the website of the Council on Foreign Relations presented by a former OFAC official: https://www.cfr.org/articles/the-u-s-took-over-venezuelas-oil-industry-where-has-all-the-money-gone).

But whether or not Venezuela in 2026 turns out, in retrospect, to have been a Kleptocracy dominated by the American President, Venezuela’s future — at least while its prospects for economic growth lie mainly in its natural resources — depends on new foreign investment for infrastructure to support a return to productivity levels not seen since the 1990s. Those decisions need to be made, substantially but not exclusively, by US investors, some of whom are holders of large components of Venezuela’s sovereign debt and also bear the battle scars of more than a decade of arbitrations, award enforcement cases, and litigations related to execution upon Venezuelan assets.   The outlook for dispute resolution with regard to new disputes arising from execution and performance under new contracts, at some future date if and when disputes might arise, is presumably assessed to be above the level of “normal” project risk given the dispute resolution history, the pro-Maduro legacy of the “interim” regime, the longer-term transition in US policy when a new American President takes office, and the nature and timing of any transition in Venezuela’s government with attendant risks that a new government, installed after new elections in Venezuela,  may not willingly adhere to terms of new State contracts that might be made in 2026.

Into this complex equation OFAC in June 206 inserted a new series of General Licenses. In terms of business opportunity, the new GLs generally track Licenses to conduct business in and with Venezuela that were described in the May 2026 Commentary on this site. But the June round of GLs provides a refinement of the dispute resolution options for such transactions. The new array of GLs, dated June 10, 2026, provides specific constraints on dispute resolution options, i.e. that “(i) the terms of the contract be construed and interpreted in accordance with the laws of a state or other jurisdiction within the United States and (ii) dispute resolution proceedings relating to the contract occur in the United States, the United Kingdom, France, or Singapore.”  This represents a minor refinement of the governing law language in the January round of General Licenses, and a significant expansion of the options for selection of a judicial forum or arbitral seat.

This prescription is accompanied by a new “FAQ”, posed and answered by OFAC:

“Does the requirement in certain Venezuela General Licenses (e.g., 46C, 47A, 48B, 50B, 51B, 52A, and 54A) that the terms of contracts be construed and interpreted in accordance with the laws of a state or other jurisdiction within the United States mean that U.S. law must govern all aspects of the underlying activity?”

“No.  Certain Venezuela general licenses (GLs) require that any contract for transactions authorized by the GL with the Government of Venezuela or certain other covered entities (e.g., Petróleos de Venezuela, S.A. in GL 52A or CVG Compañía General de Minería de Venezuela CA in GL 51B) specify that the terms of the contract be construed and interpreted in accordance with the laws of a state or other jurisdiction within the United States. The GLs also require dispute resolution proceedings relating to the contract or its breach to occur in the United States, the United Kingdom, France, or Singapore. If the parties agree to submit their dispute to arbitration, the procedural rules applicable are those rules agreed by the parties, or the rules of internationally recognized institutions or the rules of the seat of arbitration.

“This requirement means that the laws of a state or other jurisdiction within the United States must govern questions of contract law between the parties relating to the contract, including interpretation, contractual performance obligations, breach, contractual remedies, payment obligations, termination, validity, assignment or novation, and enforceability of the contract.”

“The requirement permits the inclusion of contract terms that recognize that certain aspects of the underlying activity in Venezuela may be subject to applicable Venezuelan law and regulations, including laws and regulations governing the exercise of Venezuela’s sovereign regulatory authority, administrative permits and licenses, concessions, labor, environmental, health and safety, and other mandatory regulatory requirements.”

The comments below seek to identify some of the challenging dispute resolution issues that may be confronting decision-makers at energy and mining companies as they consider whether to embrace the opportunity OFAC’s new General Licenses offer to resume activity in Venezuela (putting aside questions that arise in the setting of any international contract about choices of arbitral seat, rules of arbitration, and the litigation v. arbitration decision itself).

As we think about what contractual terms US and foreign energy and mining firms might consider satisfactory for arbitration seated (logically but not necessarily) in the United States with regard to a contract that must be governed by the contract law of a US jurisdiction, several potential issues come to mind. Mainly these issues arise from the possibility that (1) for an indefinite period, US policy toward Venezuela will prevent rather than facilitate elections that could result in a leadership change, and (2) the US executive branch will take aggressive steps, through sanctions policies and military threats or actions, to configure Venezuelan domestic law in regard to the energy and mining sectors – especially as it impacts contract terms for new foreign investment.

1) Civil unrest resulting from perpetuation of the “interim” post-Maduro regime is a foreseeable contract risk. Future arbitral tribunals might be called upon to adjudicate disputes over impacts of such unrest on contract performance. That prospect in turn presumably affects how potential US and other foreign energy and mining sector investors frame new contracts. And that prospect may test the US approach that assumes rejuvenation of the energy and mining sectors can be meaningfully launched while the “interim” post-Maduro regime remains in power.

2) The US role in the drafting and implementation of Venezuela’s 2026 Hydrocarbons Law and its implementing regulations is an open question of potentially disputed fact. A successor government in Venezuela might in (perhaps) the most extreme challenge raise a claim that the 2026 Hydrocarbons Law is a product of economic duress related to military threat and that contract terms agreed to based on that law may be repudiated. That claim might include a challenge to the validity of the arbitration (or judicial forum selection) clause. A less exorbitant challenge by a successor government could potentially be based on a post-transition modification of the 2026 Hydrocarbons Law in a way that requires invalidation or reformation of economic terms agreed by Venezuela and its relevant State-owned enterprises under the current post-Maduro regime.  As these are concrete foreseeable risks, investors will seek to address them via contract terms that would survive a post-transition invalidation. Or perhaps  some form of political risk insurance may be discussed (what role if any for the US International Development Finance Corporation?). Or some investors may ultimately conclude that political transition in Venezuela should precede significant new investment.

3) US actions in and in the vicinity of Venezuela in the run-up to the Maduro removal mission, and since that time, have hovered on the borderline of what international law might consider to be a belligerent occupation. Whether there was such an occupation for a brief period on the date of the Maduro mission now seems less important, from the perspective of new investment in Venezuela, that what may happen in the near-to-medium term. Assuming the presence of US troops during earthquake relief efforts is temporary and that those troops in due course return to bases outside Venezuela’s land borders, there remains a risk that the US executive branch will direct another invasion and establish a more enduring presence. That might be seen as the beginning of a new period of armed conflict or possibly as a continuation of a state of armed conflict that began with US naval assaults in Venezuela’s offshore waters in 2025.

Such a belligerent occupation would potentially align with a legal position of a post-transition Venezuelan government, if and when one emerges, taken for purposes of a dispute over contract validity or performance, that foreign investment contracts made under the current regime were a product of unlawful coercion by the US acting as agent for contractors of US (or US-aligned) nationality.

4) Under New York law – probably indicative of the law in other US jurisdictions whose law might permissibly be chosen under the OFAC licenses — a contract may be voided on the grounds of economic duress where the complaining party was compelled to agree to its terms by means of a wrongful threat which precluded the exercise of its free will. However, the mere existence of financial pressure and an unequal bargaining position are insufficient to constitute economic duress. (Southern Israel Bridging Fund Two, L.P. v. Orgenesis, Inc., 245 A.D.3d 578 (1st Dep’t Jan. 22, 2026). Could it be that a “wrongful” threat to Mr. Maduro’s incumbent successor has been or will be made at some relevant point in time? Surely there is at least a material risk that such a contention might be raised by a post-transition Venezuelan sovereign if that sovereign is unsatisfied with the terms of new contracts made under the current post-Maduro regime.

5)  A complexity that is perhaps being pondered is whether US energy and mining companies that have operated or may operate in Venezuela through entities outside the US, that are domiciled in countries that have entered into bilateral investment treaties with Venezuela, are bound by the dispute resolution provisions in the June 2026 OFAC licenses. Exxon-Mobil and Conoco Phillips, for example, contracted with the State-owned Venezuelan oil and gas entity Petroleos de Venezuela, S.A. (“PDVSA”) through Dutch holding companies, and arbitrated under the now-defunct Netherlands-Venezuela BIT (Venezuela “denounced” the treaty in January 2008, and a 15 year extension under a survival clause has expired). Presumably consideration is being given to use of similar investment vehicles domiciled in countries that have BITs still in force with Venezuela, such as Canada and Switzerland. And presumably thought is being given to whether dispute resolution under a potential new contract with PDVSA, if contracted in the name of (say) a Swiss holding company, should be compliant with the dispute resolution requirements of the latest round of sanctions.  One possible view of things is that the scope of US entities whose interactions with Venezuela are impacted is traceable to the initial 2015 Executive Order (No. 13692) that spawned the entire Venezuela Sanctions regime (31 CFR part 591). That Order prohibited any transactions regarding Venezuelan “property or interests in property” that would “come within the … control of any United States person….”  It is at least plausible that OFAC would consider that, from a sanctions perspective, PDVSA property that might pass through accounts of a new Swiss holding company — formed by a US investor having in mind potential future recourse to dispute resolution under the Switzerland-Venezuela BIT —  would come “within the control of” the US investor.

6) A further dispute resolution issue to be sorted out, one would suppose, is who shall be the Venezuelan contracting parties for purposes of any new contractual arrangements to be made with (directly or otherwise) US investors. From a future investment treaty arbitration vantage point, perhaps the Venezuelan State’s responsibility for the actions of PDVSA may be assumed. But not every potential contract dispute with PDVSA as a joint venture partner would necessarily be suitable for framing as a violation of a treaty right (protection against uncompensated expropriation, rights to fair and equitable treatment and full protection and security, etc.). Will the Venezuelan State accept to be a contracting party or a guarantor of PDVSA’s contractual performance and obligations? Even if the current post-Maduro government would make such undertakings, how would they be treated under US law if a dispute arises after the election of new Venezuelan leaders in an election whose outcomes are recognized as valid the United States? In this context, it is useful to have in mind that prior US court adjudications of alter ego relationships among the Venezuelan State and its State-owned enterprises in the energy and mining sectors would not be res judicata in an action between different parties and might not even be controlling precedent because they are to be decided on the particular facts and circumstances underlying the new dispute. In Crystallex International Corp. v. Bolivarian Republic of Venezuela, 333 F.Supp.2d 380, aff’d, 932 F.3d 126 (3d Cir. 2019), the District Court held that PDVSA was the alter ego of the Venezuelan State for purposes of execution upon a judgment obtained against the State (upon confirmation of an ICSID arbitration award), against assets nominally owned by PDVSA (shares in Delaware-domiciled CITGO). The same District Court reached the same conclusion in OI European Group B.V. v. Bolivarian Republic of Venezuela, 663 F. Supp. 3d 406 (D. Del.), aff’d, 73 F.4th 157 (2023), cert. denied, 144 S.Ct. 549 (2024). But in the latter case, the factual findings pertained to the period after Venezuela’s 2018 national elections, when the United States recognized the apparent winner of that election, Mr. Guaidó, as the duly-elected leader of the Venezuelan government even though Mr. Maduro did not accept those election results and remained in power. (Notably, for purposes of any future change in the array of Venezuelan leaders recognized as the Venezuelan Government by the United States, the Court held that “[t]he Guaidó Government’s acts are the pertinent acts for the alter ego analysis because the Guaidó Government is recognized by the United States as the legitimate government of Venezuela,” but added that the interactions of the Maduro Regime with PDVSA in Venezuela nevertheless could have “some relevance.” 663. F.Supp.3d at 432.). And in G&A Strategic Investments I LLC v. Petroleos de Venezuela, S.A., 788 F.Supp.3d 616 (S.D.N.Y. 2025), appeal filed sub nom. Amber Energy, Inc. v. Petroleos de Venezuela, S.A., No. 25-1789 (2d Cir. July 23, 2025), a District Court in New York City — giving emphasis to the principles that whether the presumption of separateness of a foreign sovereign and its affiliates has been rebutted should be addressed (i) “‘on a case by case basis'”), and (ii) “consider[ing] all relevant facts and historical events up to the present litigation” — held that CITGO had not been shown to be the alter ego of PDVSA.

The foregoing observations are meant only to give an indication of the complexity potentially involved in a US investor’s approach to the issue of dispute resolution strategy as a dimension of risk management in considering substantial new investment in and business collaboration with the Venezuelan State. This scenario suggests that the issue raised in the earlier May 2026 post on this site — whether the US vision of revival of Venezuela’s natural resources industries can effectively proceed while the existing post-Maduro Regime remain in control – continues to be a matter of considerable sensitivity and uncertainty.

Dear All:

For the fourth time in six years, I will ride 556 miles over seven days to raise funds for cancer research at Roswell Park in Buffalo. We begin at the southern tip of Manhattan on July 26, 2026 and finish in Niagara Falls on August 1. Many of you have supported this effort in the past and I hope you will do so again.

My intrepid life partner Cathy and our indefatigable dogs will sherpa all the way — an inn-to-inn tour of the Empire State in an all-electric vehicle. Your donations also provide them with moral support to support me in this effort.

Riding across New York State isn’t for the faint of heart. It takes courage and a commitment to something greater than oneself.

I’ve committed to cycling more than 500 miles from NYC to Niagara Falls for one reason: to end cancer. This is my opportunity to shape the future of cancer research and treatment while honoring everyone affected by cancer. It won’t be an easy journey, but with your support, I know my hard work will be worth every mile.

Funds raised through Empire State Ride fuel innovative cancer research at Roswell Park Comprehensive Cancer Center, an institution recently awarded the highest possible rating — “Exceptional” — during its five-year Cancer Center Support Grant renewal. Every dollar raised leads to an additional $23 in funding from external grants and leads to breakthroughs that affect how we treat cancer everywhere.

Thank you for considering to support this adventure!

PLEASE USE THE LINK BELOW. You may donate anonymously if you wish — Just be sure to check the box on the Donation Page.

https://give.roswellpark.org/site/SPageNavigator/apiSearch_parts_ESR.html?first_name=Marc&last_name=Goldstein&participant_search_submit=

• Some of you are old enough to remember a famous “Aside” in a scholarly law journal: ASIDE: The Common Law Origins of the Infield Fly Rule, 123 U. Pa. L. Rev. 1474 (1975) (https://doi.org/10.2307/3311431 (last visited June 19, 2026)). As a disclosure in the interests of transparency: At the time of publication I was the Managing Editor of The Daily Pennsylvanian, whose offices were across the street from the University of Pennsylvania Law School. However I had no role in the publication of the article.

At a time when prominent commentators in our community are asking whether arbitrators possess sufficient powers to address disruptive misconduct by parties and their counsel, a US District Judge in New York has issued a 45-page opinion that recites a five-year history of such conduct by a party in a high-value case involving a US private equity investment in Latin America. The Court’s decision – confirming a Tribunal’s final award and denying a motion to vacate based on “evident partiality” — rejects the notion that a party may engage in such misconduct during the proceedings and then achieve an ouster of the Tribunal on the basis that the arbitrators’ displeasure constitutes unacceptable bias. I was the Chair of the Tribunal in the case.  It is a rare exception to my practice in publishing this “Blog” to feature any of my own cases. But this decision is worth sharing with you.

A Jus Mundi link, where the June 17, 2026 Opinion of the Court, and several of the Court’s prior opinions and the Tribunal’s five partial final awards can be read, is here: https://jusmundi.com/en/document/decision/en-telecom-business-solution-llc-and-latam-towers-llc-v-terra-towers-corp-tbs-management-s-a-dt-holdings-inc-jorge-hernandez-alberto-arzu-and-continental-towers-latam-holdings-ltd-memorandum-opinion-of-the-united-states-district-court-for-the-southern-district-of-new-york-confirming-and-denying-vacatur-of-final-arbitration-award-wednesday-17th-june-2026#decision_89551

This Commentary is addressed to members of the arbitration community who, like this Commentator, have seen Venezuela’s political and economic situation more or less vanish from the “headlines” in the nearly six months that have elapsed since US troops removed President Maduro and his wife from Venezuela and caused them to be transferred to New York to face federal criminal charges. But Venezuela has a particular fascination for our community, as dispute resolution has been and likely will continue to be a vital part of the equation for rebuilding Venezuela’s economy, democracy and civil society.

If you are a lawyer in a U.S. law firm with clients in the energy or mining sector who are, were, and/or could be investors in Venezuela, perhaps this is the wrong webpage for you today! You know so much more than is knowable from confidential client communications and direct negotiations with representatives of the Venezuelan regime and the Trump Administration.  That is also true if you are a lawyer in a U.S. law firm that, with the recent licensing blessing of the Office of Foreign Assets Control (OFAC), may advise Venezuela on the restructuring of its foreign debt, or may sit across the table in a negotiation for such restructuring . For others, who like this Commentator, have been left in a remarkable informational gap on a matter of great importance to geopolitics and the rule of law, I invite you to read on, as I synthesize what I have been able to discern, mainly from several dozen online media sources.

1. Trajectory for Democracy in Venezuela

In the near term, there appears to be no trajectory toward democratic government in Venezuela — as minimally defined by the conducting of free and fair elections, and a transition of power to the winners of such elections.  Two positions have been articulated by the Executive Branch of the US Government, one by the President and another by the Secretary of State. Neither rendition envisions elections in the near term.

The President in a recent announcement has held out the possibility of US annexation of Venezuela as “the 51st State.” The acting President of Venezuela, Delcy Rodriguez, who succeeded Mr. Maduro following his apprehension by US forces in the January 3, 2026 military operation, has stated publicly that the position of her government is to oppose any attempt of the United States to impose such a solution.

Within his remarks, the American President commented negatively on the Venezuelan opposition leader-in-exile Maria Machado, who prevailed by a large majority in Venezuela’s 2024 elections but was prevented from taking office my Mr. Maduro’s regime that included Ms. Rodriguez as Vice President. Ms. Machado departed Venezuela in December 2025 (in part to accept the Nobel Peace Prize in Norway) and has not returned, and in recent public statements expressed the hope that she might be able to return to Venezuela before the end of 2026. It seems implicit that she views the political and social environment in Venezuela as inhospitable under Ms. Rodriguez’s leadership.

The American Secretary of State has presented to Congress and the public a position that prioritizes the rehabilitation of Venezuela’s energy industry as a precursor to a restoration of democratic government, and he adopts the view that the current governing regime in Venezuelan is the appropriate partner of the United States, at the present time, for its plan to revitalize Venezuela’s energy sector. The Secretary of State has maintained a publicly cordial relationship with the opposition leader Ms. Machado, but has not suggested that the United States would seek to influence the current regime to permit her return from exile and her political party’s lawful participation in Venezuelan political discourse.

Under either of these articulations of United States policy, it is assumed that the Venezuelan regime led by Ms. Rodriguez, is a suitable U.S. partner notwithstanding the illegitimacy of any claim it might make to an electoral mandate.  Thus the Rodriguez Government is, for an indefinite term, an undemocratic regime acting in partnership with the US Government, and tentatively with the US energy and mining sectors, in determining the future course of natural resource development in Venezuela and distribution of wealth from that activity.

Can an economic resurgence succeed within an undemocratic State? And in examining this question, it is important consider what the US objectives truly are: to encourage new US private investment in Venezuela’s energy sector?, to resolve Venezuela’s foreign sovereign debt situation or at least that portion of it that pertains to US creditors?, to restore domestic economic conditions and civil society conditions favorably? to mitigate the plight of millions of Venezuelan refugees living outside Venezuela and heavily concentrated in the United States?

2. The Venezuela Investment Outlook as Seen by “Big Oil”

ExxonMobil:  ExxonMobil’s widely-publicized statement in January 2026 that Venezuela was “uninvestable” despite the US Government intervention has more recently been adjusted by more measured remarks from the Company’s CEO. In early May, the Company’s CEO stated in an earnings call that he “feel[s] positive about what’s happening, the opportunity there,” adding that the Company is “uniquely positioned [to] play an important role” in bringing Venezuela’s oil reserves to market. (This evidently refers at least in part to ExxonMobil’s US-located refining capacity for “heavy” and “sour” crude oil). But even considered most optimistically, these remarks appeared to connote that ExxonMobil is open to being persuaded that Venezuela is “investable,” not that it has drawn a conclusion that this is so.

As this Post reached its publication date, news reports surfaced that ExxonMobil was in serious negotiations with Venezuela to return as a producer of Venezuela’s heavy crude. One wonders whether the commercial logic of high market prices and adaptable refining capacity is sufficient to entice ExxonMobil to return without further democratic reforms, rule of law advances, and clear solutions for Venezuela’s Award/Judgment debt to the company. The most recent reports in the financial press hint at a possible solution whereby ExxonMobil’s judgment creditor position might be satisfied to some degree by restoring ownership of expropriated assets.

Meanwhile, on April 7, 2026, the DC Circuit Court of Appeals summarily affirmed the District Court’s judgment enforcing under the ICSID Convention an ICSID Award made in October 2014 in favor of the Company’s Mobil Cerro Negro affiliate for $1.6 billion plus interest. See Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela, 2025 WL 2758226 (D.D.C. Sept. 26, 2025), aff’d mem., 2026 WL  1042154 (D.C. Cir. Apr. 7, 2026). ExxonMobil is evidently not among the judgment creditors of Venezuela who seek to have satisfaction from proceeds of a sale of Citgo, the U.S.-based refinery and retail subsidiary of Venezuela’s state-owned oil entity PDVSA. According to the District Court judgment approving a sale of Citgo to a bidder in a Court-supervised auction — presently unconsummated while an appeal to the US Third Circuit Court of Appeals runs its course — judgment creditors holding about $5.5 billion, out of the $20 billion of judgment creditor claims for which orders of attachment were made against Citgo USA, stand to be satisfied when and if that asset sale is consummated. See Crystallex Int’l Corp. v. Bolivarian Republic of Venezuela, 2025 WL 3281353 (D. Del. Nov. 25, 2025), appeal filed, Case No. 25-3564 (3d Cir. Dec. 29, 2025).

Still, there is no clear evidence on the public record on what role in ExxonMobil’s investment assessment will be played by Venezuela’s movement away from authoritarian and undemocratic government. CAVEAT: The US Executive Branch via the Treasury Department’s Office of Foreign Assets Control stated on March 18, 2026, that “[a] specific license will be required before any sale is executed in the Crystallex case.”

Chevron: In recent weeks, Chevron has agreed with PDVSA on what the oil industry media refer to as “asset swap deals.” It is unclear (and perhaps doubtful) that these deals involve significant new capital investment by Chevron or that they may be taken as a leading indicator of forthcoming new capital investment by Chevron or others. Chevron’s recent history in Venezuela sets is apart from its US competitors. Unlike ExxonMobil and ConocoPhillips, Chevron elected to continue its operations in Venezuela after the 2007 nationalizations and thus did not follow the route of asserting expropriation claims before ICSID Tribunals (with respect to Venezuela). It is inferable, although available publications do not say so expressly, that Chevron’s physical infrastructure in Venezuela has been largely maintained and has been in continuous use — Chevron having obtained by lobbying the Trump Administration an OFAC General License to continue its operations — and that the capital investment in infrastructure repair and construction that its competitors would require is not an obstacle to Chevron for ramping up production in certain areas where operations have continued on a limited basis.

Evidently one consequence of Chevron’s ability to continue operations was that it was able to retire Venezuela/PDVSA debt to Chevron by setoffs against oil production or revenues otherwise allocable to its sovereign partners. Thus it appears that Chevron is in a materially different economic position from its competitors who have fought arbitration and award enforcement battles with Venezuela for nearly two decades. Further, the “asset swap deals” as described in online media do not appear to involve new capital investment by Chevron, but a rearrangement of percentage interests in a joint venture coupled with some favorable reallocation of producible reserves.

A full economic analysis is obviously not possible for an outsider. But the foregoing context is a reason to regard with caution any suggestions from the Trump or Rodriguez Administrations that Chevron’s activity is proof that resuscitation of the energy sector without parallel democracy/rule of law/human rights reforms is a viable approach.

ConocoPhillips:  Like ExxonMobil, and unlike Chevron, ConocoPhillips elected not to continue operations in Venezuela after the 2007 nationalizations, and was a successful Claimant in investment arbitrations, achieving now-confirmed Awards that exceed $12 billion. Unlike ExxonMobil, ConocoPhillips pursued orders of attachment against the Citgo US assets, and stands to recover slightly less than $1.5 billion of that $12 billion from proceeds of the Citgo US auction IF (i) the purchase offer approved in November 2025 by the Delaware federal district court is affirmed in the Third Circuit appeal (or if the appeal were to be withdrawn), (ii) there is a closing of the judicially-approved sale, following, if still required, issuance of an OFAC license to permit the sale, and (iii) within an OFAC License if still required, proceeds are distributed in accordance with the judgment creditor satisfaction priority shown in the District Court’s opinion. Crystallex, supra, 2025 WL 3281353 at *15.

But ConocoPhillips evidently is comparable to Exxon Mobil in its caution (perhaps reluctance in the near term) about new investment in extracting and marketing Venezuelan oil and gas, albeit with more different rhetorical flourish (calling Venezuela’s recent reforms “woefully inadequate”). In public statements, ConocoPhillips’ CEO has indicated that recovery of the $12 billion is a priority over new investment, and that Venezuela’s new 2026 Hydrocarbons law and the Trump Administration’s policy openings to new investment are welcome but not sufficient conditions for new investment. ConocoPhillips evidently has not taken a public position concerning a timetable for Venezuelan elections. Neither has the Company indicated  its view of the connections (if any) of new elections, and political and civil society reform, to its Venezuela investment outlook.

Repsol:  In April 2026 the Spanish oil-gas producer/refiner Repsol reached an agreement with Venezuela and PDVSA “to regain operational control of key oil assets” and to increase production over a three-year period. Like Chevron, Repsol has continued operations in Venezuela — in the case of Repsol, through a joint venture with PDVSA since 1993.

The Spanish energy firm’s commitment agreement is a pathway for our understanding of how the Trump Administration participates in Venezuela’s post-Maduro energy industry initiatives. Under the pertinent OFAC license (No. 50A) allowing transactions with Venezuela and PDVSA by Repsol (and also by Shell, British Petroleum, Italy’s Eni, and Chevron) “monetary payments” payable to Venezuela-sanctioned entities and persons must be paid to the U.S. Treasury, for deposit into a “Foreign Government Deposit Fund” (“FGDF”) unless the Treasury Department issues different payment instructions. So if Repsol does indeed increase production as it has committed to do, if PDVSA meets its commitments to send tankers full of crude oil to Spain for refining in Repsol refineries, and if Repsol then sells the products, PDVSA’s share of those proceeds is payable to a U.S. controlled FGDF.

It bears mention here that Venezuela reportedly owes Repsol $5.4 Billion, and it is possible that Repsol and Venezuela would elect to treat PSVSA’s share of such proceeds as a retirement of debt and send no funds to the U.S. FDGF  It has also been written that at least one of the FGDFs has been established in a bank in Qatar, raising concerns about transparency of the US Government’s disposition of proceeds that may be deposited.

3. Legal Status of OFAC License Regime for the Chevron/Repsol Group

The arbitration community will watch with keen interest the evolution Venezuela’s parallel tracks of foreign debt restructuring and revival of the energy sector. Looming over this process are a series of OFAC Licenses (some General, some Specific) and the Executive Orders that enable some provisions in those Licenses. Here I examine one significant element in this equation: the OFAC License permitting transactions by the Chevron/Repsol Group as I have defined it above.

As noted above,  OFAC License 50(A) requires monetary payments due the Venezuela or PDVSA to be deposited in a Treasury Department-controlled Foreign Government Deposit Fund (“FGDF”). Essential terms and conditions of those FGDFs are established in Executive Order 14373, notably that the funds so deposited shall not be subject to lien or attachment by Venezuela/PDVSA creditors. The Executive Branch relies, for its power to intervene in this way in the availability of Venezuela assets to Venezuela creditors on the International Emergency Economic Powers Act (IEEPA) — the same statute relied upon by the Executive Branch to impose tariffs, the same statute that was the subject of a significant interpretive ruling by the Supreme Court of the United States, in connection with the reliance on IEEPA to impose tariffs by Executive Order, on February 19, 2026. Learning Resources, Inc. v. Trump, 146 S. Ct. 628 (2026).

At least two questions arise that the arbitration community will watch closely. First, what will US courts say, if asked, about the power of the Executive Branch to limit the rights that creditors of Venezuela would otherwise have under US law with respect to execution of their Judgments against Venezuela assets located in the United States? Second, insofar as the Treasury Department elects to locate FGDFs in foreign States, how does this action affect the rights of Venezuela creditors in the US legal system — notably creditors holding Judgments based on New York Convention/FAA enforcement of arbitral awards, or ICSID Convention Awards that have become US Judgments under 22 U.S.C. 1650a?

The IEEPA in pertinent text permits the President to issue Executive Orders to address “an[] unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States.” Arguments might be presented to a U.S. Court concerning the existence of such a threat and the scope of judicial review of the President’s threat assessment and the relationship between the threat and the adopted measures.

4.  Arbitrations Pending and Future

Public indications of pending arbitration cases against Venezuela, in the energy and mining sectors, suggest that claims valued in the tens of billions of dollars remain to be arbitrated, if settlement of those claims is not part of the debt restructuring process.

A Canadian gold and copper mining investor, already an Award creditor since 2014 based on expropriation of its interests, in 2025 filed a new BIT-based Investor-State arbitration claim alleging an estimated additional $7 billion in damages based on Venezuela’s alleged breach of a settlement agreement, relating to the unpaid obligations of that earlier Award, that contemplated a new j joint venture. As of this writing, public sources indicate that the Tribunal for that case is not yet fully constituted.

And a new arbitration under the ICSID Additional Facility Rules was filed in December 2025 by an affiliate of the oil field services firm Halliburton. The Request for Arbitration is not publicly available, but online reports suggest the damages claim may exceed $200 million.

Whether these relatively new arbitrations portend a wave of additional high-value arbitrations cannot be assessed here. But these relatively new cases do suggest that an organized multinational claims filing process, for claims arising prior to January 2026, with a fixed claim commencement deadline, might be a useful component of any overall solution to the sovereign debt predicament faced by Venezuela.

It’s worthwhile for US arbitration practitioners to consider the dispute resolution mandate of OFAC License 50A (taking that License as an example!! – This is not a survey all OFAC Licenses relating to the Venezuela energy and mining sectors issued in 2026 after the arrest of Maduro). Suppose Repsol or Chevron (or another one of the six companies to which 50A applies), through one of its joint ventures with PDVSA in which PDVSA owns at least 50%, contracts with a U.S. person to repair damaged and decommissioned FPSOs (Floating Production, Storage and Offloading Units). That contract appears to be authorized by 50A provided, inter alia, that the contract specifies “that the laws of the United States or any jurisdiction within the United States govern the contract and that any dispute resolution under the contract occur in the United States.”

How will this impact the market? Will there be an uptick in U.S. energy service provider contracts related to Venezuela that stipulate state or federal court jurisdiction in the U.S. ?  Will such contracts broadly provide for international arbitration (and mediation/conciliation if any) at a U.S. seat? Or will some service provider contract work be redirected based in part on this dispute resolution mandate to non-U.S. service providers?  What can be observed, with some confidence, is that the dispute resolution situation inherited from the Chavez-Maduro years will be ousted: U.S. service providers in OFAC 50A contracts will not, indeed may not, contract for resort to Venezuelan courts under Venezuelan law, with further recourse if possible to Investor-State arbitration if Venezuelan courts did not provide relief.

Caveat to the above: Well beyond the scope of this Blog Post is the subject of so-called “secondary sanctions” upon non-US persons for conduct outside the scope of a license granted for U.S. persons. Whether non-US service providers would err in favor in U.S. dispute resolution clauses, or whether OFAC would consider that such decisions are required, is beyond the scope of this Post.

5. Arbitration Under New Joint Ventures With And Licenses to Returning Investors ?

Within a few days after the departure of Mr. Maduro, Venezuela unveiled a new Hydrocarbons Law designed to attract new energy sector investment, and re-investment by U.S. companies like ExxonMobil and ConocoPhillips that discontinued operations and pursued expropriation claims after the Maduro-era nationalizations. The possibility of international arbitration for new joint ventures between such investors and PDVSA (or even perhaps direct concessions/licenses to foreign firms) has been held out by Venezuela —  with the proviso that details concerning the terms on which Venezuela might be willing to accept arbitration will be contained in guidelines to be issued by the Ministry of Hydrocarbons.

Nearly six months later, evidently no such guidelines have been issued, although Venezuela’s Minister of Hydrocarbons has made public hints in recent days to an industry audience in Houston that arbitration seated outside Venezuela might be accepted.

How dispute resolution will figure in new investment decisions by US and other foreign investors remains to be seen. But many of us in the arbitration community will watch the evolution of the formally offered dispute resolution frameworks closely, believing that at least some decision-makers and advisers within the energy companies invited to invest/reinvest will be strongly influenced by the legacy of unsatisfied awards and judgments .

Perhaps even more difficult to assess is whether even a satisfactory dispute resolution framework will be sufficient to induce reinvestment and new investment while Venezuela remains governed by successors to Mr. Maduro who were actors within the Maduro regime prior to his departure and have not stood for election since then.  Dispute resolution lawyers advising such potential investors are sensitive to the fact that judicial support for (or non-intervention in) the arbitral process by courts of the State where business operation of the investing party occur is a significant consideration, if not on par with the choice of the seat then perhaps not far behind.

The reinvestment-first-democracy-later approach of the U.S. Government’s Executive Branch at this time of this writing will endure stress tests in investor decisions in the coming months.

In a Commentary on this site posted March 23, 2026, I referred to a recent UK Court of Appeal decision concerning the powers of UK courts under the UK Arbitration Act to enforce the “peremptory orders” of UK-seated arbitral tribunals. Tecnimont S.p.A. and LLC MT Russia v. LLC EuroChem North-West, [2026] EWCA 5 (available on JusMundi). That case arose in the geo-political context of a commercial arbitration involving entities and persons affected by UK and EU sanctions against Russia. These sanctioned parties, despite having agreed to arbitrate in “Western” venues like London, under “Western” arbitration rules like the ICC Rules, have availed themselves of Russian legislation that declares the exclusive forum for such disputes to be the Arbitrazh Courts of Russia. The UK Court of Appeal judgment in the Tecnimont case effectively endorsed a three-step process for “antisuit” injunctive relief against such Russian court proceedings: (1) a successful application to the UK-seated arbitral tribunal for antisuit injunctive relief in the form of an order directing the Respondents participating as Claimants in the corresponding Russian cases to discontinue them (and refrain from seeking to enforce outside of Russia the judgments obtained in their favor), (2) when there has been no compliance with the initial order giving such directions, the issuance of a peremptory order by the Tribunal ordering compliance by a date certain, and (3) after the deadline for compliance has passed unheeded, an application to the UK High Court of Justice, made by the Tribunal or by a party with leave of the Tribunal, for enforcement of the peremptory order.  (The Judgment of the High Court of Justice in the Tecnimont case can also be found on JusMundi. Its UK citation is [2025] EWHC 3151).

In today’s Commentary I raise a different set of issues about the “peremptory order” framework for judicial support of case management by international arbitral tribunals: Are there good reasons supporting the adoption in the United States of a similar mechanism for use by US-seated tribunals?  I raise this question not because the US lacks effective legal tools for arbitrators who may face the Arbitrazh Court challenge from US-sanctioned Russia-related parties. Such tools exist,  generally speaking, because arbitration rules typically selected in US-seated arbitrations permit (i) interim relief including antisuit relief to be granted by tribunals in the form of a Partial/Interim Award, or (ii) direct access to the US courts may be had for such antisuit relief even after the Tribunal is constituted. Also, in the US  the party may present the Partial/Interim Award granting arbitral antisuit relief to a US District Court at the seat of arbitration for accelerated judicial enforcement through the federal motion practice procedure. What is missing in the US setting is a procedural device that a US-seated tribunal may deploy to trigger similarly accelerated judicial enforcement of arbitral procedural orders that are not regarded as awards under US law and cannot be reviewed as awards under the Federal Arbitration Act even if so denominated by the Tribunal. (Under US arbitration law whether there has been an “Award” depends on the substance not the label).

The UK is not the only major common law home to international arbitrations that provides for some judicial enforceability of arbitral procedural orders. A quick survey reveals that such relief is obtainable, for example, in Hong Kong, Singapore, Australia and Québec. The arbitration laws of many other major jurisdictions provide for judicial enforcement of arbitral interim measures, without requiring (as the US does through FAA case law) that such measures be adopted in a ruling that can be considered to be an Interim or Partial Award.  Is the United States, which hosts a considerable number of significant international arbitrations marred by serial non-compliance with arbitral procedural orders by recalcitrant parties, ready for and even in need of a “peremptory order” process, and if so how might it be enacted?

A Primer on the UK Peremptory Order Framework

US practitioners should appreciate that the peremptory orders permitted by the UK Act are not confined to what we consider as traditional categories of interim measures that may, in the discretion of a tribunal under institutional rules often used in US seated cases, be issued in the form of an Award. Section 41(5) of the UK Act states:

“If without sufficient showing of cause a party fails to comply with any order or directions of the tribunal, the tribunal may make a peremptory order to the same effect, prescribing the time for compliance with it as the tribunal considers appropriate.”   (emphasis supplied).

Section 41(5) builds upon section 41(1) — the first sub-section of Section 41 entitled  “Powers of tribunal in case of party’s default.” S. 41(5) states:

“The parties are free to agree on the powers of the Tribunal in case of a party’s failure to do something necessary for the proper and expeditious conduct of the arbitration.”

Section 41(7) then provides authority for the Tribunal to adopt the types of remedial measures for non-compliance that are familiar to US practitioners and embedded in the rules of US providers: preclusion orders, costs orders, adverse inferences. But the ability of the tribunal to adopt such remedies is expressly stated in S. 41(7) to be “without prejudice to section 42 (enforcement by court of peremptory orders)“. (emphasis supplied).

Section 42 of the UK Act, entitled “Enforcement of peremptory orders of tribunal or emergency arbitrator” states:

(1) Unless otherwise agreed by the parties, the court may make an order requiring a party to comply with a peremptory order made by the tribunal or (as the case may be) the emergency arbitrator.

(2) An application for an order under this section may be made—

(a)  by the tribunal or the emergency arbitrator (upon notice to the parties),

(b) by a party to the arbitral proceedings with the permission of the tribunal or the emergency arbitrator (and upon notice to the other parties), or

(c) where the parties have agreed that the powers of the court under this section shall be available.

(3) The court shall not act unless it is satisfied that the applicant has exhausted any available arbitral process in respect of failure to comply with the peremptory order.

(4)  No order shall be made under this section unless the court is satisfied that the person to whom the peremptory order was directed has failed to comply with it within the time prescribed in the order or, if no time was prescribed, within a reasonable time.

(5) The leave of the court is required for any appeal from a decision of the court under this section.

Thus the UK arbitration statutory scheme, where applicable, creates the possibility for judicial support for arbitral tribunals, in addressing uncooperative conduct of recalcitrant parties, that is a missing feature of US-seated arbitrations. How often resort to the UK courts is had in this fashion to discipline non-compliance with peremptory orders on matters more mundane than those implicated in Tecnimont is unclear; online newsletters from UK law firms commenting on that case suggest that use of the peremptory order enforcement process is infrequent. To be sure, Section 42 exhibits features that discourage its overuse and diminish the risk of greatly expanded ongoing judicial involvement in arbitration proceedings: the Court’s power to enforce a peremptory order is permissive not required, and a party may not proceed without leave of the tribunal unless there is an underlying mutual agreement of the parties to use this procedure. Also, the requirement that the applicant shall have “exhausted any arbitral process in respect of failure to comply with the peremptory order” may be deployed by the UK courts to screen out some applications. But the “without prejudice” language in section 41(7) (see quotation above), and the permissive language of that section (“the tribunal may do any of the following….”)  indicate that section 42 (3) “exhaustion of arbitral process” does not mean that a Tribunal must first deploy the section 41(7) powers and find them to be inadequate.  This reading is reinforced in the Judgment given by the High Court of Justice in the Tecnimont case, where section 42(3) exhaustion was addressed in a single sentence [at para. 32]: “In relation to the requirement of section 42(3), I am satisfied that there is no further arbitral process available to the Claimants to enforce POs 18 or 22 or 23, or otherwise to restrain [Respondent].” (emphasis supplied). Thus “arbitral process” was understood to mean a procedure within the arbitration, not a remedy available to the Tribunal as a consequence of the non-compliance. Section 42(3) is to be understood as allowing the possibility that the arbitration rules adopted by the parties, or specific procedural directions adopted by the Tribunal, mandate that some step beyond issuance of the peremptory order be taken within the arbitration before a peremptory order may become ripe for judicial enforcement.

It is likely true that drafters of the UK Act fashioned Sections 41 and 42 in part to address judicial enforceability of arbitral interim measures orders in cases under the London Court of International Arbitration (LCIA) Rules, having in mind that LCIA Rules, unlike many other institutional rules, do not provide for tribunals to grant interim relief in the form of a Partial/Interim Award. (See Art. 25.1 of the LCIA Rules, and compare, e.g., Art. 28.1 of the ICC Rules, Art. 27.2 of the ICDR Rules, Rule R-38(b) of the AAA Commercial Rules; Art. 45.1 of the SIAC Rules). But the statute clearly brings within its scope “any order or directions of the tribunal” (emphasis supplied) and leaves further limitation on judicial relief to the discretion of the Court.

Adoption into US arbitration law of a comparable peremptory order enforceability scheme would fill an enforcement gap for US-seated arbitrations unrelated to interim measures: potential judicial enforceability of arbitration procedural orders that would not, under FAA jurisprudence, qualify as Awards entitled to judicial enforcement, even if denominated as such by the tribunal, because they do not, unlike arbitral interim measures in many instances, finally and definitively resolve, without potential further action by the arbitral tribunal, a separate independent claim or a dispute that is time-sensitive, separable from the merits, and/or instrumental to the effectiveness of the final relief sought. [As to this dimension of the FAA jurisprudence on finality of Partial/Interim Awards, see, e.g., Arrowhead Global Solutions, Inc. v. Datapath, Inc., 166 Fed. Appx. 39, 43-44 (4th Cir. 2006); GEM Yield Bahamas Ltd. v. Mullen Technologies, Inc., 2024 WL 2959259 at *6 (S.D.N.Y. June 11, 2024); Van Andel v. Lindberg, 732 F. Supp.3d 476, 482-83 (M.D.N.C. 2024); Ecopetrol S.A. v. Offshore Expl. & Prod. LLC, 46 F. Supp.3d 327, 336-37 (S.D.N.Y. 2014); CE Int’l Resources Holdings v. S.A. Minerals Ltd. Partnership, 2012 WL 6178326 at **2-3 (S.D.N.Y. Dec. 10, 2013).]

Fitting A Peremptory Order Process Into US Arbitration Law

The Federal Arbitration Act in the US is by design not a prescriptive statute for the conduct of US-seated arbitrations, with the exception of its provision (Chap. 1 Section 7) concerning issuance of witness summonses by arbitral tribunals. As a practical matter, if a peremptory order process were to be adopted, it would be at the level of State arbitration legislation in States that frequently host international arbitrations, e.g. New York, Florida, Texas and California.  In this section I address two questions. First, would enforcement of peremptory orders in a US District Court at the seat of international arbitration be “an action or proceeding falling under the [New York or Panama] Convention” and thus within such a Court’s subject matter jurisdiction under FAA Chapter Two?  Second, would such an innovation in international arbitration law of individual States be pre-empted by the FAA, on the basis that the federal statute limits judicial involvement to enforcement of awards, arbitration agreements, and witness summonses issued by tribunals?

A good case can be made that federal subject matter jurisdiction to provide such relief would exist under FAA Chapter 2.  It is well settled that judicial interim measures based on state law, in support of arbitration, may be granted under FAA Chapter Two and that the application for such relief is properly viewed as an “action or proceeding falling under the [New York] Convention,” within Section 203. See, e.g., Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar, 927 F.3d 906, 907-11 (5th Cir. 2019) (finding subject matter jurisdiction under the Convention over application for a pre-award attachment based on Louisiana attachment statute); E.A.S.T., Inc. of Stamford v. M/V Alaia, 876 F.2d 1168, 1173 (5th Cir. 1989) (same, in setting of maritime attachment);  Borden, Inc. v. Meiji Milk Prods., 919 F.2d 822, 836 (2d Cir. 1990) (jurisdiction over preliminary injunction in aid of arbitration was proper because the remedy sought did not seek to “bypass arbitration”). By extension, federal appellate courts have held in recent years that subject matter jurisdiction exists under FAA Chapter Two, when the District Court has “primary jurisdiction” in a US-seated case, for “‘necessary ancillary proceedings that ensure the proper functioning of the underlying arbitration'”. See Molecular Dynamics, Ltd. v. Spectrum Dynamics Medical Ltd., 143 F.4th 70, 86-87 (2d Cir. 2025), quoting from Jones Day v. Orrick, Herrington & Sutcliffe, 42 F.4th 1131, 1139  (9th Cir. 2022). Accord, CollegeStreet Import & Export (Tinajin) Co. v. Loyalist, LLC, 2025 WL 4660646 at *6 (S.D.N.Y. Mar. 20, 2025).

If these cases are understood to stand for the principle that subject matter jurisdiction exists under Chapter 2 to enforce state law measures that backstop the procedural powers of the arbitrators to which the parties have agreed, then a peremptory order process adopted into State arbitration law would appear to be just such a measure.

Some federal court decisions in FAA Chapter 2 award enforcement cases have referred to state international arbitration statute standards concerning issues not addressed in the FAA. For example, in Carlton Energy Group, LLC v. Cliveden Petroleum Co., 2023 WL 168754 at *4 (S.D. Tex. Jan. 12, 2023), the District Court in addressing a motion to vacate in part a Convention Award made in the United States at a seat in Houston, Texas, referred to the Texas International Arbitration Act as a source of arbitral discretion to award costs and fees to a prevailing party. District Courts in Florida have characterized the Florida International Commercial Arbitration Act “as a gap filler to the [New York] Convention for a federal court sitting in primary jurisdiction.” See, e.g., Dominicana Renovables, S.L., v. Dominican Republic, 2022 WL 521191 at *2 (S.D. Fla. Feb.12, 2022); Sural (Barbados) Ltd. V. Republic of Trinidad, 2016 WL 4264061 at *4 n.4 (S.D. Fla. Aug. 12, 2016).  A U.S. District Court in Chicago similarly referred to the Illinois International Commercial Arbitration Act as “essentially a gap-filling law.” Certain Underwriters at Lloyd’s, London v. BCS Ins. Co., 239 F.Supp.2d 812, 8116 (N.D. Ill. 2003).

This notion of State arbitration law “filling gaps” where the FAA takes no position – and there are many such gaps — appears to be consistent with the federal courts’ approach to FAA pre-emption.  Recent federal district court decisions from California helpfully condense FAA pre-emption jurisprudence from the US Supreme Court into two categories: first, an “equal treatment principle” positing that the FAA preempts state laws that disfavor arbitration by adopting legal rules about contract enforceability that apply only in the arbitration setting or derive their meaning from the fact that an arbitration agreement is at issue, and second, an “obstacle preemption” principle that requires FAA preemption of state laws that stand as an obstacle to the achievement of the purposes and objectives of the FAA. See, e.g., Ding v. Structure Therapeutics, Inc., 755 F.Supp.3d 1200, 1211-12 (N.D. Cal. 2024); Belyea v. GreenSky, Inc., 637 F. Supp.3d 745, 755-56 (N.D. Cal. 2022). The proposed authorization of judicial enforcement of peremptory arbitral orders does not disfavor enforcement of arbitration agreements. It would operate only with respect to arbitration agreements that make applicable state arbitration laws providing for such a procedure (usually because, as State international arbitration laws provide, they are applicable if the parties have agreed to a seat of arbitration in that State).

Preemption would seem to be an issue, if at all, only if “obstacle preemption” applies — and then only if it were established that one of the objectives of the FAA was to confine judicial involvement in arbitrations to enforcement of arbitral awards and arbitration agreements (and to make arbitral subpoenas judicially enforceable). But the extension of FAA subject matter jurisdiction to “necessary ancillary proceedings” such as pre-award attachment of assets, injunctions in aid of arbitration and enforcement of arbitral witness summonses appears to disfavor such a narrow view of the FAA’s objections. Indeed the adoption by a number of states of international arbitration statutes based on the UNCITRAL Model Law (e.g. Texas, Florida, Georgia) is evidently based on the premise that the FAA does not “preempt the field” of international arbitration. Moreover, once the parties have adopted a state law-endorsed procedure for application in their arbitration, and the procedure is not in direct conflict with a provision of the FAA that the parties may not vary by agreement, the FAA’s objective of giving effect to arbitration on the parties’ chosen terms would appear to weigh against a finding of FAA preemption. Cases holding that state arbitration law does not apply due to FAA pre-emption, on the other hand, are typically cases where a losing party sought award vacatur under state arbitration law standards more favorable to the vacatur applicant than the FAA. See, e.g., Gulfstream Aerospace Corp. v. OCELTIP Aviation Pty., 451 F.Supp.3d 1370 (S.D. Ga. 2020), aff’d, 31 F.4th 1323 (5th Cir. 2022), cert denied, 143 S.Ct. 577 (2023).

Reasons State International Arbitration Laws Might Adopt a Peremptory Order Process

There are several reasons why the peremptory order procedure may be attractive to parties that regularly select US seats for their international arbitrations. It follows that such reasons might appeal to State legislatures, as innovations that would make their States more attractive for selection as US seats for international arbitration:

1. In regard to interim measures, there may be several reasons why a Tribunal would be reluctant to provide the measures in the form of an Award. Tribunals often prefer not to relinquish a degree of procedural control by issuing a ruling that the parties obligated to comply would have an immediate legal right to challenge by a petition to vacate in a federal court. The vacatur petition may make the existence of a confidential arbitration non-confidential, with the federal proceedings becoming a spectacle played out in online legal news media. The party applying for vacatur may ask the court to stay the arbitration. The Tribunal may wish to have flexibility to modify or supplement the interim measures granted and may be reluctant to fuel any argument that it has become functus officio as to some subject matter by making a Partial/Interim Award. Under the UK model of the peremptory order process, the tribunal generally retains control over judicial involvement, as the options for judicial enforcement proceedings are mainly (i) for the tribunal to apply to the Court for enforcement, or (ii) for the applicant for the measure to apply to the Court with leave of the tribunal (unless the Parties have mutually agreed in advance to the judicial enforcement process as a matter of right).
2. An Award may only properly be made to be binding upon and enforceable against parties over whom the Tribunal has jurisdiction. If certain parties who are potential addressees of the ruling have objected to jurisdiction but have accepted that the objection should be determined in the Final Award or some other later stage, the tribunal must either accelerate ruling on the jurisdiction objection or confine its Interim (or Partial) Award to parties who have not objected. Parties who have made such objections but agreed to participate in the arbitration without prejudice will have explicitly agreed (such as in procedural order on consent joining the jurisdiction objection to the merits), or arguably otherwise agreed by implication, to be subject to the tribunal’s procedural powers for so long as they are participants. Indeed the UK Court of Appeal held in S3D Interactive, Inc. v. Oovee Ltd., [2022] EWCA Civ. 1665, that a peremptory order under Arbitration Act Section 42 was enforceable against a party objecting to arbitral jurisdiction for the duration of its participation in the arbitration.
3. Some significant procedural orders are purely procedural, and not sensibly denominated as Awards, and yet their judicial enforceability in the tribunal’s discretion may enhance efficiency and efficacy. Presumably this is why the UK Arbitration Act provided for peremptory order enforceability as to “any order or direction” even though the evident main target was interim measures that would be in Order form not Award form under LCIA Rules Art. 25.1 An order for production of evidence, or that requires the testimonial appearance of a particular witness who is a party or is within the party’s control, are good examples. If unexcused non-compliance with such an order may be an early indication that the offending party will deploy all available means to resist any adverse merits outcome, substantial time and cost may be saved if that strategy can be put to an early test by placing that order before a Court that has a full panoply of civil and criminal contempt remedies at its disposal.
4. Arbitrators may regard arbitral remedies for non-compliance as inadequate. An interim cost-shifting order awarding costs to the prevailing party on a procedural dispute may not secure compliance if the amount to be paid is not large enough to affect party conduct. A judicial contempt sanction involving an escalating daily amount for continued non-compliance, backed also by the potential for coercive civil confinement, may be much more effective. In situations involving non-production of evidence or required disclosure, tribunals may wish to have the judicial enforcement option to coerce performance of the obligation, rather than be forced to rely on adverse inferences, in combination with evidence from only one side, in deciding merits issues.
5. Some applicable arbitration rules may require that an evidentiary hearing be conducted, unless waived, with respect to any issues to be resolved in an Award whether Partial or Final. Busy Tribunals can find it difficult to schedule on short notice evidentiary hearings or even oral arguments – based on their own full calendars and aggravated by the scheduling non-cooperation sometimes deployed by recalcitrant parties. A non-Award ruling based on written submissions will in practice be a tempting solution where there is felt to be an urgency for some relief to be given, and it is regrettable that in the US setting this may be at the sacrifice of the effectiveness of the measures adopted. Judicially enforceable peremptory orders, on the other hand, can as a practical matter accelerate the adoption of coercive sanctions by courts and also shift some of the time-cost burden of party disobedience to those courts in the initial discretion of the tribunal and at the further discretion of the Court.

Closing Observation

I believe we can have some confidence that there should be no FAA jurisdiction or preemption obstacles should a State legislature at a vital US international arbitration seat elect to adopt a version of the UK peremptory order scheme into its statutory law on international arbitration. Whether there is an appetite in the arbitration community for such an innovation is a separate matter. I have sought here to identify some of the reasons why such a device would enhance the case management toolkit for US seated tribunals in a constructive way.

Interested in Submitted a Comment? – Email me at Goldstein@lexmarc.us, or post a comment to the LinkedIn announcement of this post. The “comment” function on this site has been disabled due to misuse by the uninvited/unwelcome!