Overview
Overview
First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. This month we present our annual year-in-review.
2025 involved several key foreign sovereign immunity cases, Helms‑Burton litigation, and cross‑border enforcement. The Supreme Court narrowed the Foreign Sovereign Immunities Act (FSIA) expropriation exception in Hungary v. Simon and clarified personal jurisdiction in CC/Devas and Fuld.
And it would not be a First Tuesday Update without a discussion of the Crystallex sale. No doubt 2026 will include more updates about Venezuela and Citgo.
Supreme Court Cases
Expropriation Exception—In Hungary v. Simon, a unanimous court rejected the "commingling" theory under the FSIA's expropriation exception, holding that plaintiffs must plausibly trace the proceeds of expropriated property into the United States (or into the hands of an instrumentality engaged in US commercial activity). Recall that under § 1605(a)(3) of the FSIA1, the expropriated property, or property exchanged for it, must be present in the US in connection with a commercial activity, or be owned/operated by an agency of the foreign state engaged in a commercial activity in the US. Prior to Simon, the Supreme Court had already narrowed this exception to immunity considerably by requiring a close "nexus" between the expropriated property and the foreign state's commercial activity present in the US. Now, the court has made proving this "nexus" more difficult, especially with respect to fungible assets (e.g., the proceeds of a sale of seized property). As Justice Sotomayor wrote, it is not sufficient to merely "identify any commingled fund that was, at any time, no matter how remote, commingled with the proceeds of the foreign sovereign's sale of the expropriated property." Rather, to adequately trace fungible property like cash, a plaintiff must allege, for example, (i) a US bank account "that holds the proceeds of the sale of seized property" or (ii) a transaction occurring "soon after commingling funds from the sale of expropriated property" in which the defendant spends "all the funds from the commingled account in the United States."2Expect earlier motions to dismiss in expropriation cases.
Personal Jurisdiction—In CC/Devas v. Antrix, the court held that – in a case involving the recognition of an arbitral award – when an FSIA exception applies (here, the arbitration exception) and service is proper, personal jurisdiction over foreign states and their agents or instrumentalities is proper without a separate minimum‑contacts analysis under 28 U.S.C. § 1330(b).3The court reversed the decision of the Ninth Circuit which was widely criticized.4
In Fuld v. PLO, the court clarified that the "minimum contacts" analysis applicable to state court exercises of jurisdiction does not apply to cases in which Congress has authorized federal courts to exercise jurisdiction. The court addressed Fifth Amendment due process, upholding a federal statute targeting terrorist acts that deems nonresident defendants to have consented to personal jurisdiction if they engaged in certain activities in the United States or accepted particular forms of United States foreign assistance. The court found the provision valid because the targeted conduct implicates US interests and foreign policy well within Congress's authority. In applying Fifth Amendment due process analysis, the court emphasized the federal government's role in foreign policy over the individual fairness considerations typically dominant in state-level personal jurisdiction cases, thus distinguishing and declining to apply the Fourteenth Amendment's state‑bound "minimum contacts" framework. Expect more use of Federal Rule of Civil Procedure 4(k)(2) in federal‑question cases with nationwide service, seeking to take advantage of the more flexible and permissive Fifth Amendment analysis.
Helms‑Burton Act
Given where things are now, it is hard to recall that January 2025 started with a short‑lived suspension of new Helms Burton Act (HBA) Complaints, one of the last acts of the Biden administration before the suspension was quickly lifted when the Trump administration came into office. The Trump administration imposed additional sanctions on Cuba and has made clear that it favors a robust interpretation of the HBA.
Two cases involving the interpretation of the Act are pending at the Supreme Court. In Exxon v. CIMEX5, Exxon, whom we have the privilege of representing, asks the court to reverse the decision of the DC Circuit and decide that the HBA abrogates sovereign immunity for foreign agencies and instrumentalities and Havana Docks v. Royal Caribbean6asks whether claims based on time‑limited interests (e.g., concessions) expire if the interest would have lapsed by the time of alleged trafficking. The Solicitor General urged review in both, emphasizing the HBA's deterrent purpose, and has filed amicus briefs in support of the plaintiffs in both cases. Other amici have weighed in as well on both sides. Oral argument is scheduled for later this month.
In de Fernandez v. Seaboard, the Eleventh Circuit weighed in on the limits to and contours of Title III claims on the following issues: (1) claims inherited after 1996 are generally non‑actionable; (2) shareholders of companies whose property was seized can bring claims in defined circumstances; (3) the statutory requirement of "trafficking' in property expropriated by the Castro regime is broad enough to encompass various activities undertaken at shipping terminal on confiscated property; and (4) the lawful travel exception is narrow—people "travel"; cargo does not.7A cert petition is presently pending before the Supreme Court on various issues in the case, but Seaboard has reached a settlement in principle with plaintiff de Fernandez with a deadline of February 6 to finalize the settlement.
Also, the first jury verdict under Title III (against Expedia for $29.8 million before trebling and pre-judgment interest) was set aside post‑trial. The court ruled that the defendant timely ceased "trafficking" within the statutory cure window (and thus there could be no finding of "knowingly and intentionally" trafficking), and that Expedia, as a parent company, was not liable for the actions of subsidiaries that stopped bookings. The case is on appeal to the Eleventh Circuit with a decision expected later this year.8The Eleventh Circuit has ruled on a variety of HBA issues and to date has accepted a reasonably broad definition of "trafficking."
Crystallex / Citgo—a Sale Order Approved in 2025 with Uncertainty in 2026
The judicial sale of PDV Holding (Citgo's parent) moved through a turbulent year: a high‑price, lower‑certainty bid gave way to a lower‑price, higher‑certainty transaction backed by a settlement with PDVSA 2020 bondholders. After multi‑day hearings and post‑trial briefing—and alongside an SDNY ruling that the 2020 bonds were valid, and that the bondholders were thus senior lienholders—Judge Stark approved a stock purchase agreement with Amber Energy on November 29, 2025. Yet, 2026 brings lots of uncertainty. Not only is the Third Circuit now considering, on an expedited basis, dozens of consolidated appeals, but as manifested in recent events, the United States' policy with respect to Venezuela remains very much in flux, which is critical to the resolution of this case because any final sale remains subject to OFAC approval. We won't be making any Crystallex predictions here.
Argentina: Petersen and the Reach of US Enforcement
In Petersen (YPF), the district court ordered turnover of Argentina's YPF shares under NY CPLR 5225. The Second Circuit stayed that order and set argument on the merits of the $16 billion judgment. Decisive answers will likely come from the Second Circuit this year.
Arbitration and Enforcement: UK Modernizes; ICSID Annulment
UK Arbitration Act 2025. The UK adopted incremental arbitration reforms, which we previously reported here. The arbitration framework remains familiar but clearer.
ICSID Annulment. In Lone Star v. Korea, an ICSID ad hoc committee issued a rare full annulment for serious departure from a fundamental rule of procedure, finding the panel erred by relying on an ICC award to which the state was not a party. This could open the door to new avenues for annulment, but it remains to be seen if this is a pattern or just a unique circumstance.
What to Watch in 2026
- What will the Supreme Court do in the Helms-Burton cases—can Congress alter foreign immunity without expressly amending the FSIA?
- Is an expropriation case sustainable under the Supreme Court's new test?
- Crystallex/Citgo sale—OFAC, the Third Circuit and Venezuela.
- Evolution of personal jurisdiction against sovereigns.
We will keep you posted each first Tuesday of the month.
128 U.S.C. § 1605(a)(3)
2Hungary v. Simon, 604 U.S. 115, 128-29 (2025).
3The Court left open the question of whether "the Fifth Amendment's Due Process Clause itself requires a showing of minimum contacts before a federal court can exercise personal jurisdiction over a company owned by a foreign sovereign." CC/Devas (Mauritius) Ltd. v Antrix Corp. Ltd., 605 U.S. 223, 237 (2025).
4Id. at 237.
5No. 24-699.
6No. 24-983.
7No. 22-12966 (11th Cir. 2025).
8No. 25-13506 (11th Cir. 2025).
