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HomeNewsLocal newsN.Y. Judge Rejects Hess Suit for Lack of Jurisdiction

N.Y. Judge Rejects Hess Suit for Lack of Jurisdiction

New York District Court Judge J. Paul Oetken on Thursday rejected a lawsuit by Hovensa’s parent company, Hess Oil, seeking $84 million, saying his court lacked jurisdiction to judge the suit on its merits.

In a statement from Government House, Gov. Kenneth E. Mapp said he was pleased with the decision.

“I will continue to fight on behalf of the people of the Virgin Islands and for the territory’s best interests,” Mapp said.

In April 2011, the Hess Oil Virgin Islands Corp., or HOVIC, filed amended tax returns for 2006 and 2007, seeking a total refund of approximately $84 million based on a carryback of tax losses incurred in the 2008 and 2009 years. HOVIC filed one tax refund claim for 2006 and two claims for 2007. The Internal Revenue Bureau denied all of the claims.

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In 2014 HOVIC and its Venezuelan partner PDVSA filed suit in federal district court in New York.

In his ruling Thursday, Oetken said that under U.S. law, the district courts have original jurisdiction of "any civil action against the United States" for tax refund claims. However, the territory’s status presents a different issue of first impression for federal courts, whether the Virgin Islands qualify as “the United States” within the meaning of that provision, as HOVIC argued, in light of its “mirror” tax structure. Oetken ruled it does not.

"And, therefore, the court lacks subject matter jurisdiction over this action. Defendants’ (the territory’s) motion to dismiss is accordingly granted, and plaintiff’s motion for a stay is denied as moot," Oetken ruled.

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