Petrobras Bid to Beat Investor Suit Faces Dubious Appeals Panel

A federal appeals court appeared skeptical of Petróleo Brasileiro SA’s efforts to dodge a lawsuit in the US from funds that invested over $220 million in a rig builder involved in the state-owned oil company’s bribery scandal.

Petrobras says it’s protected under the Foreign Sovereign Immunities Act, which generally prohibits lawsuits against foreign government entities. A lower court allowed the case, brought by related EIG Energy investment funds, to proceed under the law’s exception for commercial activities that have a direct effect in the US.

Much of the argument Tuesday at the US Court of Appeals for the D.C. ...