“From an investigative standpoint, sovereign immunity is not always a binary question. Rather, it may be gradually contextualised.”

Sovereign immunity is a legal doctrine that protects states and their assets from being sued or subjected to enforcement in foreign courts. Yet it is also regularly encountered terrain within the investigative domain.

For investigators, sovereign immunity is not a single question to be answered, but a condition that shapes how information is gathered, assessed and interpreted over time. Facts emerge unevenly, behaviour matters as much as formal structure, and certainty is rarely available at the outset. Within this context, investigators develop ways of working that sit alongside, but are distinct from, legal analysis. Set out below are four observations drawn from that investigative standpoint.

Observation 1: Sovereign immunity as a spectrum, not a status

From an investigative perspective, sovereign immunity may be considered as a structural factor that shapes how an asset can be assessed and which avenues of analysis are viable. A good illustration of this is the long‑running Crystallex v. Venezuela enforcement proceedings, where the assessment of an asset’s immunity relied on analysing its practical function rather than its legal description.

In that case, Crystallex sought to enforce a USD 1.2bn arbitral award against the state of Venezuela by attaching shares of PDV Holding (“PDVH”), a US-registered subsidiary of PDVSA,  Venezuela’s state‑owned oil company and owner of US-registered CITGO Petroleum Corporation (“CITGO”).Although the shares were nominally owned by PDVSA,  CITGO was one of Venezuela’s most valuable foreign assets, making the structure PDVSA → PDVH → CITGO central to assessing what could realistically be reached through enforcement proceedings.^[1]

At the investigative stage, immunity is rarely treated as a clear yes or no question, and assets are not simply categorised as immune or non‑immune. Instead, they are assessed along a spectrum of exposure, informed by a elements including operational context, ownership history, and how they have been involved in transactions. Crystallex v. Venezuela illustrates this point: although PDVSA is formally a separate juridical entity, the courts’ reasoning suggests that they examined information pertaining to how PDVSA operated within the Venezuelan state apparatus. Publicly available judgments refer to governance, state direction, financial dependency and the practical role PDVSA played in implementing government policy.^[2] The US District Court for Delaware found PDVSA to be Venezuela’s alter ego, a conclusion later affirmed by the Third Circuit.

This shift, from presumptive immunity to attachability, reflects an approach that treats exposure as a spectrum and suggests that the available evidence was capable of supporting a different characterisation of PDVSA. This also illustrates how modern states increasingly pursue their interests through companies and commercial arrangements, rather than through traditional forms of government activity.

Investigators tend to treat immunity claims as provisional, capable of being narrowed or refined as further facts emerge. Much of the information relevant to these assessments can be found outside formal litigation channels. In Crystallex v. Venezuela, the court did not outline its fact‑gathering, but publicly available filings suggest that it had access to corporate documents, financial disclosures, bond prospectuses, and information on dividend flows, asset pledges, and PDVSA’s conduct within the PDVH/CITGO structure. Such commercially derived material can often shed more light on an asset’s actual function as opposed to sovereign assertions alone.

This broader way of looking at sovereign immunity also helps explain why outcomes in sovereign enforcement can be less predictable than their private‑sector equivalents. The legal doctrine sets the framework, but its application often turns on factual patterns that are complex, incomplete, or disputed. Investigators operate within this space, assembling the facts that give the doctrine practical meaning and revealing where an asset’s real‑world use may diverge from its formal classification. The investigator’s role is not to determine whether immunity applies, but to develop the factual foundation on which that legal assessment rests.

Observation 2: Alter ego as a question of behaviour over time

Number Analytics describes the doctrine of alter ego as a legal theory that allows a court or tribunal to disregard the separate legal personality of a corporation and hold its shareholders or affiliated entities liable for its actions.^[3] From an investigative perspective, alter ego is less a fixed status and more a pattern of behaviour that develops over time. In some cases, this behaviour only becomes apparent through extended observation, for example when examining how decisions are made, how assets are deployed, or how financial flows consistently track state direction.

Entities linked to sovereign states may operate with a high degree of independence during periods of political stability or favourable market conditions but move into closer alignment with state priorities when circumstances shift. Investigative work therefore looks beyond formal governance structures and focuses on how those arrangements function in practice, particularly when they come under pressure. Boards may appear independent on paper but be made up of individuals whose positions depend on political support in practice. Management teams may have freedom in day to day commercial decisions, yet defer completely to the state on matters of strategic importance. Financial links can add further complexity, particularly through state guarantees, subsidies or capital injections are used to support or steer an entity’s activities.

None of these factors, taken on their own, necessarily defeat separateness. Taken together, however, they can weaken it in ways that are not obvious from corporate records alone.

Investigators also look closely at how decisions are made, including through informal channels. In entities linked to sovereign states, significant decisions may rely on consultation or clearance processes that leave little documentary trace, but the absence of written instructions does not mean that influence is absent. This creates evidential challenges, as influence that is well understood internally may remain largely invisible to outsiders. As a result, alter ego analysis from an investigative perspective may become a matter of probability rather than certainty, supported by repeated behavioural patterns rather than definitive proof of control.

Over time, these behavioural signals can build into a picture of conditional dependence. An entity may not function as a direct arm of the state in all matters, yet its autonomy may narrow at moments of pressure in ways that warrant closer scrutiny. Investigators do not decide whether this dependence meets the legal threshold for alter ego; instead, they identify where formal separation appears most vulnerable. In doing so, they provide factual depth often missing from more conceptual discussions of sovereign corporate autonomy.

Observation 3: Commercial use as a functional, not categorical, concept

Commercial use is often discussed as if it were an inherent feature of an asset, capable of being identified by classification alone. However, this approach does not always apply.

In fact, assets rarely declare themselves as commercial. Instead, their character becomes clear through how they are used, who they deal with, and the practical motives driving their activity. For this reason, investigators tend to focus on function rather than form, looking at the role an asset plays within wider financial and operational arrangements.

In ConocoPhillips v. Venezuela, ConocoPhillips sought to enforce an USD 8.5bn arbitral award and turned to US-based assets linked to PDVSA. Although PDVSA formally qualified as a sovereign instrumentality, the publicly available decisions suggest that the courts considered how it behaved in practice (its commercial dealings, revenue‑generating operations, and the way it deployed and controlled subsidiaries abroad) to determine whether the assets were being used commercially.^[4] As discussed above, these behavioural indicators appear to have contributed to the conclusion that PDVSA functioned as Venezuela’s alter ego for enforcement purposes, rather than relying solely on its legal status.

In practice, this involves close scrutiny of transactional behaviour. Regular dealings with private counterparties and sustained revenue‑generating activity strongly indicate commercial use, whatever the asset’s formal description. Pricing, contract terms, and risk allocation often reveal more about its true purpose than ownership or stated mandate. Commerciality is therefore usually understood as something demonstrated over time, through consistent and repeated conduct, rather than proved by a single transaction.

Importantly, disputes over commercial use often arise not because such use is absent, but because its importance is contested. From an investigative perspective, that distinction matters. An asset that engages in commercial activity on an occasional basis looks very different from one that operates much like a private company. By placing this behaviour along a chronological spectrum, investigators can build a more nuanced view of exposure without drawing hard lines. This reflects the broader reality of sovereign disputes, where outcomes can depend on small factual differences rather than neat categories.

Observation 4: Mixed-used assets and the practical limits of sovereign asset tracing

Some sovereign assets occupy a grey area between public policy functions and commercial activity. In such cases, the investigative task is not to remove the ambiguity, but to map it: assessing how often the asset engages in commercial dealings, how significant that activity is compared with any public function, and whether that balance shifts over time, especially around moments of dispute or enforcement risk. Attempts to label such assets as purely sovereign or purely commercial overlook how these roles interact in practice.

Tracing mixed-use assets requires a level of detail that is not always possible given limits of time, jurisdiction, or access to information. Financial flows may be commingled, governance structures may be layered, and decision-making may be spread across several entities and jurisdictions. Separating these elements to isolate commercial activity can be time consuming and may not always produce clear results. Investigators therefore have to strike a balance between seeking precision and recognising when further analysis would rely too heavily on assumption. This judgement is rarely visible in the legal record, but it has a significant influence on the scope and depth of investigative work.

There are also practical limits that arise from the way sovereign systems function. Officials may take decisions informally, records can disappear quickly or never be created, and corporate structures may shift at short notice in response to perceived risk. Jurisdictional complexity compounds these challenges, especially when assets sit in places that discourage scrutiny. Even when investigators obtain information, it may arrive too late to capture the asset’s position at the point in time that matters. These constraints do not diminish the value of asset tracing, but they do define the boundaries of what investigators can realistically achieve.

Recognising these limits is an important part of a credible investigative approach. It shows that a lack of firm conclusions does not mean the facts are missing but may reflect structural or temporal constraints. Mixed‑use assets often produce findings that fall along a range of exposure rather than clear yes‑or‑no answers. Investigators work within this partial clarity, providing useful factual insight even if it cannot be complete. In the sovereign context, this kind of qualified understanding is a highly relevant and practical contributions asset tracing can offer.

Concluding observation

Across all four observations, a common theme emerges: sovereign immunity takes practical meaning not from doctrine alone, but from facts that develop unevenly and resist neat categorisation. Investigators operate in this space of qualified certainty, assembling the substance that allows legal analysis to function. In sovereign enforcement, this contextual understanding is not peripheral, it is essential.

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[1] https://www.alston.com/-/media/files/insights/publications/2023/11/sovereign–states-article.pdf?rev=60c53a720a15430da15b00aad4468c7e&sc_lang=en

[2] https://www.courtlistener.com/docket/6169439/crystallex-international-corporation-v-bolivarian-republic-of-venezuela/, and  https://law.justia.com/cases/federal/appellate-courts/ca3/18-2797/18-2797-2019-07-29.html

[3] https://www.numberanalytics.com/blog/alter-ego-doctrine-in-international-arbitration

[4] https://jusmundi.com/en/document/decision/en-conocophillips-petrozuata-b-v-conocophillips-hamaca-b-v-and-conocophillips-gulf-of-paria-b-v-v-bolivarian-republic-of-venezuela-decision-on-annulment-wednesday-22nd-january-2025

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About the author

Fiona Harmsen is an investigator specialising in global complex investigations and cross‑border evidence gathering. She has helped law firms, in‑house teams, and award holders turn incomplete datasets into actionable insight, most often where assets, people, and jurisdictions intersect.

Her work provided critical intelligence and evidence to inform legal strategy and enforcement measures. Her expertise includes identifying leverage points to facilitate settlement, identifying and supporting the recovery of assets, and developing strategies to overcome challenges such as sovereign immunity and alter ego arguments. She has successfully evidenced ownership and control of state assets, and contributed to lobbying and communications strategies to strengthen enforcement efforts. Fiona has worked on disputes in sectors such as logistics, mining, construction, energy, and telecommunications.