Vice Chancellor Kathaleen McCormick of the Delaware Chancery Court ruled Friday against Venezuelan President Nicolás Maduro in his legal battle to change the board of directors of Citgo.
Citgo, an American Petroleum refinery company, has been wholly owned by Petróleos de Venezuela, SA (PDVSA) since 1990. PDVSA is the Venezuelan state-owned oil and natural gas company. Maduro has been in charge of PDVSA since his ascendance to the presidency in 2013. This case derives from his ongoing legal battles with the Venezuelan National Assembly since 2015. In 2018, after disqualifying the opposition party from participating and declaring his own victory in his reelection, the National Assembly declared Maduro’s election illegitimate and declared opposition leader Juan Guaidó as the president. After the US recognized Guaidó’s administration, Guaidó was then allowed to seat a new board of directors for PDVSA and by extension Citgo.
The plaintiffs in this case are the old Maduro board of directors who are seeking to be declared the rightful board. The defendants are Guaidó’s board of directors who had filed a counterclaim seeking their own declaration as the rightful board.
McCormick reviewed the case under the political question doctrine and the act of state doctrine. McCormick ultimately held that as the president’s recognition of a foreign government is binding and as the appointment of the board was an act by the lawful government within its own borders, the appointments by Guaidó were lawful, but she did not resolve who constitutes the rightful board of directors. She has allowed the plaintiffs the opportunity to submit briefs on stockholder consent deficiencies which may still invalidate the Guaidó board. Maduro’s government is expected to respond as oil and gas are key industries of the Venezuelan economy.