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While the decision did not rule on the merits of the fine, the three-judge appeals panel overturned a US district court decision saying ExxonMobil had not met the procedural requirements that would allow the lower court to rule.
The company "did not serve Venezuela in accordance with the" Foreign Sovereign Immunities Act in order to require a foreign government to respect an international arbitration decision and allow the company to collect the funds, the ruling said.
"We vacate the judgement against Venezuela."
The ruling is the latest legal ripple from an October 2014 decision by the World Bank's International Center for Settlement of Investment Disputes.
However, the ruling leaves open the possibility for the company to resubmit and fulfill the requirements under US law.
An Exxon spokesman said the company is examining its legal options.
"We disagree with the decision of the court," Exxon spokesman Todd Spitler said.
"The ruling does not affect the underlying award, but requires us to use a different method to have it converted to a US judgment."
Spitler said Exxon has reached an agreement in principal with Venezuela on the expropriation and looks forward to a resolution "in the near future.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)