This week’s developments in Venezuela underscore the significance of the Second Circuit’s recent decision in CITGO Petro. Corp. v. Ascot Underwriting Ltd.  The Court’s October 28, 2025, decision addressed an insurance claim involving the Maduro Regime in Venezuela. The decision arose from an insurance dispute between ship operators and reinsurers over whether the Maduro faction in Venezuela should be considered “insurrectionists” for the purposes of insurance coverage under a war risks clause.

The dispute began while a CITGO chartered ship was transporting a large quantity of oil.  Venezuelan authorities loyal to Maduro seized the cargo. CITGO determined that they were incapable of completing the payment for the oil, since the producing company was a sanctioned entity, and as a result, CITGO could not safely conduct business with it. The Venezuelan authorities were unrelenting and eventually sent a naval patrol to escort the vessel back to the Port of Jose to return the oil. CITGO was then denied coverage by Ascot Underwriting for their claim under the insurance contract’s insurrection clause.

CITGO filed suit in the United States District Court for the Southern District of New York, alleging that an insurrection caused the loss of the cargo, while Ascot argued that the Maduro regime’s actions were not part of an insurrection. After cross-summary judgment motions, the trial court determined that an insurrection occurred in Venezuela after January 2019, when the Maduro government refused to cede power to the newly elected Guaidó. The primary reasoning for this decision was that insurrection was left undefined in the contract, and many definitions of the word can result in different outcomes in cases such as this one. The court applied the doctrine of contra proferentem, which requires ambiguity to be determined against the insurer if they drafted the contract. The case went before a jury, which ultimately determined that the loss of the crude “arose from” the Maduro regime and its actions. In other words, the Maduro regime was one of the major reasons why the loss occurred, but not necessarily the only one. Plaintiff won a judgment of $54,235,187.24.

Defendants then appealed the judgment to the Second Circuit, arguing that the trial court abused its discretion in considering the Maduro regime an insurrectionist movement, accepting information from Plaintiff as judicial notice, and applying a “but for” standard of causation. The Second Circuit then considered whether the Maduro regime was an insurrection and determined that the trial court did not abuse its discretion, as the term “insurrection” was highly ambiguous in the contract. The Second Circuit also determined that the judicially noticed facts were not improper to admit, due to the fact the fact they were from sources traditionally considered highly reliable, and that the use of the “but for” causation test, which can recognize multiple causes, was not only appropriate, but also more in line with the contract, and waived for having not been preserved for appeal. As such, the judgment was affirmed in its entirety.

For more information on the District Court or Second Circuit decisions in CITGO Petro. Corp. v. Ascot Underwriting Ltd., or more on the evolving landscape of Venezuela sanctions, please do not hesitate to contact us at: info@chaloslaw.com