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