Venezuela, gold miners contest refiner’s parent sale at Third Circuit

PHILADELPHIA (CN) — Gold miners, an oil conglomerate and the nation of Venezuela duked it out in front of a Third Circuit panel Wednesday, seeking to resolve a 15-year battle over the rights to several natural resources.Litigation first began following Venezuela’s 2008 nationalization of Las Cristinas, one of the world’s largest undeveloped gold deposits.The problem? Venezuela had previously granted Canadian gold mining company Crystallex International Corporation the rights to mine Las Cristinas. Still, in 2011, the country formally terminated Crystallex’s project, expropriating the right to mine.Seeking compensation for the terminated contract, Crystallex filed for arbitration in a World Bank tribunal, ultimately receiving a nearly $1.4 billion verdict plus interest in 2016. A D.C. federal judge confirmed the award in 2017.Unable to find explicitly Venezuelan-held assets in the U.S. it could seize as payment, Crystallex asserted Venezuela’s state-owned oil company, PDVSA, could be considered an alter-ego of Venezuela, which would allow for seizure of PDVSA’s assets to satisfy the arbitration award.In 2019, a Third Circuit panel sided with Crystallex, ruling PDVSA’s deep ties to the Venezuelan government render it an alter-ego of the country. Additionally, because PDVSA was engaged in U.S. commerce, the appeals panel ruled, its assets could not be shielded by sovereign immunity.Included in the shares that would be used to pay Crystallex is Citgo, the U.S.’s seventh-largest petroleum refiner.Following Crystallex’s legal victory, over a dozen additional creditors scrambled to recover nearly $19 billion in debt owed by Venezuela.As part of the scramble, a bidding war emerged for the auction of Citgo’s parent company, PDV Holding. In November 2025, a Delaware judge approved a $5.9 billion bid from Amber Energy, an Elliott Investment Management affiliate. Included in the bid is a $2.1 billion to holders of defaulted Venezuelan bonds.However, nearly all parties besides Elliott and Crystallex opposed the bid’s approval, sending the case back to the Third Circuit for the parties to hash out their demands.Representing Gold Reserve — a gold mining company whose higher-sum bid was rejected — attorney Aaron M. Panner argued the lower court’s decision to accept Elliott’s bid ran afoul of the law.Asked what Gold Reserve wanted the panel to do, Panner said the company wanted the sale order vacated and sent back for an appropriate sale procedure.“What does that mean, ‘an appropriate [procedure]?’” questioned U.S. Circuit Judge L. Felipe Restrepo, a Joe Biden appointee, pressed.Citing what he said were terminal failings by the lower court, Panner argued Delaware law — not federal law — is controlling and was violated. He also claimed court-appointed Special Master Robert Pincus’ purported ties to Elliott was a conflict of interest.The latter claim centers around two companies: law firm Weil, Gotshal & Manges, and investment bank Evercore. Weil has served as counsel to Pincus for several years, and Evercore acted as Pincus’ financial advisor on the auction of PDV Holding.Both Weil and Evercore have purportedly represented bondholders who would profit from closing on the Elliott affiliate’s purchase of Citgo, and Gold Reserve has claimed the two companies have received more than $170 in fees from related legal proceedings.“No one would think that it was okay for Weil to represent a bidder in this proceeding without disclosing it,” Panner said. “But that’s exactly what happened.”While U.S. Circuit Judge David J. Porter argued discussions between Pincus’ advisors and Elliott during the special master’s appointment could be understood as “client hygiene” rather than substantive advice, Panner strongly rejected such a notion.“The appearance of impropriety is quite clear,” Panner told the Donald Trump appointee.Arguing PDV Holding should not be sold at all — as doing so would “fundamentally [hurt] the people of Venezuela at a time when they are rebuilding their economy” — PDVSA attorney Wellington reflected Panner’s conflict-of-interest concerns.“There was no ethical wall,” Wellington told the appeals panel. “Weil agreed there was no ethical wall in place. We don’t believe there was an ethical wall in place for Evercore, either. We certainly don’t think this court should write an opinion and say this kind of behavior is okay.”Representing Venezuela, attorney Dominic Draye agreed with Panner that Delaware law is controlling. However, Draye sought a wildly different result: because there was no finding of fraud — a requirement to pierce the corporate veil under Delaware law — PDV Holding cannot be legally attached to satisfy the arbitration award, he argued.When asked how to contend with imposing state law in this case and the complicated precedent it could set for future cases, Draye asserted such a question is irrelevant.“It may be the case that a national law would be more predictable, but, you know, welcome to federalism,” Draye said. “This is the exciting world we live in. The framers of [writ of execution enforcement] made a choice to go with state law — which is consistent with a long, long common law history before that.”Representing Crystallex, attorney Miguel A. Estrada characterized Venezuela’s complaints regarding the bid as little more than one of many ploys to complicate PDV Holding’s sale.“Venezuela refuses to comply with final and binding federal judgments and … candidly admitted to the district court that it has engaged in the past decade in efforts, again and again, to obstruct the sale as best as it can.”Defending the special master from conflict-of-interest accusations, Estrada downplayed the evidence of discussions between advisors and Elliott as insignificant.“He wasn’t asking for anything other than getting his calls returned, and there’s no impropriety in that ask,” Estrada said. “It wasn’t, like, ‘Get me in.’ It was part of the job of the advisors to call all of the bidders and to stay in touch with them.”U.S. Circuit Judge Paul B. Matey, a Donald Trump appointee, rounded out the panel.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads