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On January 9, 2026, U.S. President Trump signed an executive order ("Order") declaring a national emergency to protect certain Venezuelan government assets from judicial process. The Order follows significant developments in the political situation surrounding the U.S. and Venezuela, including the arraignment of Nicolás Maduro in U.S. court and the announcement of new U.S.–Venezuela oil initiatives. This Order frames the protection of Venezuelan government funds as essential a part of an U.S. effort to "ensure economic and political stability in Venezuela."
Scope of the order: Venezuelan oil revenues and diluent sales held in U.S. Treasury accounts
The Order defines the relevant assets ("Foreign Government Deposit Funds") ("Funds") as funds paid to or held by the U.S. Government in designated U.S. Treasury accounts, or funds on behalf of the Venezuelan Government or its agencies or instrumentalities, that are derived from either the sale of natural resources from, or the sale of diluents to, the Venezuelan Government or its agencies or instrumentalities.
The Order states that these Funds constitute the Venezuelan Government's property, and are held by the U.S. solely in a "custodial and governmental" capacity. It declares that the Funds are not being used for commercial activity and are not the property of any private party, including judgment creditors of Venezuela.
Prohibition of private claims
Relevant to U.S. oil, gas, and mining companies and investors, the Order blocks any private claims and attachment, judgment, decree, lien, execution, garnishment, or other judicial process against the Funds. In doing so, it significantly restricts the ability of investors (including those pursuing enforcement of arbitral awards arising from Venezuela's nationalizations and expropriations) to recover against these assets.
This policy choice may signal an intent by the Trump Administration to limit U.S. companies' individual ability to recover past losses in exchange for re-establishing a long-term beneficial investment relationship with Venezuela at the national level. Public statements declare that permitting private attachment of the Funds would "materially harm" U.S. national security and foreign policy by undermining efforts to stabilize Venezuela, curb illegal immigration, counter narcotics flows, and limit the influence of foreign adversaries.
Consequently, while the Administration may relax sanctions against Venezuela and issue policies aimed at encouraging future investments and operations in the Venezuelan oil and gas sector as noted in our earlier post, investors' ability to recover past losses from the Venezuelan Government still seems to remain difficult.
Implications for investor recovery
While the Order blocks individualized enforcement of rights against the Funds, it does not completely preclude recovery by U.S. investors, including a recovery coordinated by the U.S. Government. For example:
- Section 4(c) requires the U.S. Government's retention and administration of the Funds to serve various purposes, including "compliance with international obligations." The broadness of this language could support a future interpretation that it covers Venezuela's obligations arising under international law and investment treaties in connection with expropriation of foreign investors' property.
- Section 5(a)(ii) directs the Secretary of Treasury to comply with instructions regarding disbursements or transfers of the Funds "as may be determined by the Secretary of State."
These provisions leave open an avenue for the U.S. Government to order Fund disbursement for purposes of satisfying any obligations by Venezuela to render payment in connection with investors' arbitral awards or judgments. At HSF Kramer, we are closely monitoring further developments in connection with the Order's application, including any statements and/or instructions to be issued by the Secretary of State.
Relationship to prior executive orders
The Order supersedes earlier Venezuela‑related executive orders (and actions taken pursuant to such orders) to the extent they block, regulate, or otherwise affect the Funds. Although sanctions on the Venezuelan Government and the PDVSA remain in place, this Order creates a distinct custodial structure around the Funds, subject to State Department and Treasury oversight. As such, any sanctions‑related constraints must now be interpreted in light of this new framework.
Interaction with the Foreign Sovereign Immunities Act ("FSIA")
Uncertainty exists regarding the Order's enforceability, including in light of the Foreign Sovereign Immunities Act's ("FSIA") exceptions to immunities to private attachment of certain foreign property.
Under the FSIA, foreign state property in the U.S. is generally immune from attachment. However, important immunity carve-outs exist where such property is "used for a commercial activity" in the U.S. and meets additional requirements, most notably when a foreign state has waived immunity, or when a judgment concerns property taken in violation of international law. These exceptions are the very tools investors have historically relied on in cases involving Venezuela's expropriations.
In intending to bring the Funds outside the FSIA's coverage, the Order declares that the Funds "have not been, and shall not be, used for any commercial activity in the United States." However, given that the FSIA defines "commercial activity" with reference to "the nature of the course of conduct or particular transaction or act," it is unclear whether the Order's statement alone is sufficient to take the Funds outside the ambit of "commercial activity."
Another unresolved question is whether the U.S. Government can, through the Order or any future filings in court, effectively assert sovereign immunity of the Funds on Venezuela's behalf. If so, this could open up the possibility for the U.S. Government to supersede any potential express or implied waiver of sovereign immunity that Venezuela may have made in past contracts or treaties.
A third issue is how the Order, which is intended to be "implemented consistent with applicable law," would interact with the FSIA's carve-out for judgments concerning property taken in violation of international law. The Order's operation may create a significant shift in the arbitral award enforcement landscape, especially given that many investors' claims arise from expropriation awards.
We expect these issues to take shape in the coming months as creditors test the boundaries of the Order in litigation.
Further guidance may clarify the rights of investors and the scope of U.S. control over Venezuelan assets in the coming months.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
