[News] World Bank Rules in Venezuela's Favor, Rejects "Exorbitant Compensation" in Tidewater Nationalization Case

Anti-Imperialist News news at freedomarchives.org
Thu Mar 19 16:06:35 EDT 2015

  World Bank Rules in Venezuela's Favor, Rejects "Exorbitant
  Compensation" in Tidewater Nationalization Case

By Lucas Koerner


Caracas, March 18, 2015 (Venezuelanalysis.com 
<http://venezuelanalysis.com/>) – The International Center for 
Settlement of Investment Disputes (ICSID) of the World Bank ruled in 
favor of Venezuela on Monday, rejecting the "exorbitant compensation" 
demanded by Tidewater. The U.S.-based energy shipping firm was awarded 
US$46 million in compensation for eleven vessels expropriated by the 
Bolivarian government of late President Hugo Chavez in 2009.

According to the Venezuelan Ministry of Petroleum, the ICSID decision 
confirms that the government's nationalization of Tidewater's assets in 
Venezuela was "totally legal in all aspects".

"The much higher amounts claimed were rejected because the tribunal 
found that the nationalization was lawful," stated lawyer George Kahale, 
who represented Venezuela in the case.

In 2007, the Chavez government issued a law-decree nationalizing all 
remaining oil production sites under foreign control 
<http://venezuelanalysis.com/news/2245> and mandating that all all oil 
extraction in Venezuela be undertaken in the context of joint ventures, 
in which the state oil company PDVSA retains the majority stake.

This move subsequently triggered a wave of lawsuits by foreign 
transnationals in international arbitration bodies demanding 
compensation for nationalized assets. Last year, ICSID ordered Venezuela 
to pay Exxon Mobil US$1.6 billion, which represented only 13% of the 
amount demanded by the transnational firm and was consequently claimed 
as a victory for the Bolivarian Republic 

For Kahale, the Tidewater case marks an important landmark, setting a 
precedent for future cases.

"Venezuela's positions on the central issues of the legality of the 
nationalization, the appropriate valuation date for determining 
compensation, and the appropriate discount rate for calculating 
compensation were all accepted by the tribunal in what is likely to be 
an important precedent for other cases."

The Bolivarian government has yet to declare if it will seek revisions 
or annulment of the US$46 million award, but Kahale added that the 
decision was being "carefully reviewed".

Venezuela announced its decision to leave the ICSID in 2012, citing 
institutional bias in favor of transnational corporations 
<http://venezuelanalysis.com/news/6773> on the part of the 
Washington-based body. Venezuela's departure from the international 
arbitrations organization does not, however, affect the status of the 27 
pending cases against the Bolivarian nation.

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