By Luc Cohen

NEW YORK (Reuters) – Venezuelan state oil company PDVSA will make its case at a U.S. trial beginning on Tuesday that it is not liable for nearly $150 million in debts owed to a unit of Siemens Energy because U.S. sanctions prevented it from making payments.

PDVSA was cash-strapped and issued Dresser-Rand with a promissory loan for approximately $120million plus interest. PDVSA made the first two payments of around $4 million, but defaulted after Washington in August 2017 https://www.reuters.com/article/us-usa-venezuela-sanctions/trump-slaps-sanctions-on-venezuela-maduro-sees-effort-to-force-default-idUSKCN1B5216 issued sanctions preventing trade in the company’s new debt.

Dresser Rand was granted a judgment of $149.5 million by the U.S. District Court for the Southern District of New York.

PDVSA’s bench trial in front of U.S. Judge Louis Stanton will include evidence that it claims shows payments were stopped because banks were wary about sanctions. PDVSA wants to be relieved of its obligation for the debt.

PDVSA attorneys wrote that sanctions imposed on PDVSA by the U.S. government “made it impossible for PDVSA or objectively difficult for PDVSA make the necessary payments.” They filed a pre-trial motion on March 29.

This case shows that the PDVSA sanctions, Washington claims, were meant to pressure socialist President Nicolas Maduro into restoring democracy. Out of excessive caution, companies often refuse to participate in U.S.-approved transactions using PDVSA.

Dresser-Rand will try to show that an exemption to the sanctions meant PDVSA’s payments would have been allowed, and that the company offered alternative options after a Citigroup Inc (NYSE:) unit declined to process the payments, its pre-trial brief shows.

PDVSA sought to force Dresser-Rand into handing over communications to the U.S Treasury Department’s Office of Foreign Assets Control, which enforces sanctions.