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<h1 class="title">World Bank Rules in Venezuela's Favor, Rejects
"Exorbitant Compensation" in Tidewater Nationalization Case</h1>
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<p class="byline"> By <span class="author">Lucas Koerner</span> </p>
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<div class="block-inner"><b><small><small><a class="moz-txt-link-freetext" href="http://venezuelanalysis.com/news/11280">http://venezuelanalysis.com/news/11280</a></small></small></b><br>
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<p dir="ltr">Caracas, March 18, 2015 (<a
href="http://venezuelanalysis.com/" target="_blank">Venezuelanalysis.com</a>)
– 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. </p>
<p dir="ltr">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". </p>
<p dir="ltr">"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.</p>
<p dir="ltr">In 2007, the Chavez government issued a law-decree <a
href="http://venezuelanalysis.com/news/2245" target="_blank">nationalizing
all remaining oil production sites under foreign control</a> 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.</p>
<p dir="ltr">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 <a
href="http://venezuelanalysis.com/news/10954" target="_blank">claimed
as a victory for the Bolivarian Republic</a>.</p>
<p dir="ltr">For Kahale, the Tidewater case marks an important
landmark, setting a precedent for future cases.</p>
<p dir="ltr">"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."</p>
<p dir="ltr">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".</p>
<p dir="ltr">Venezuela announced its decision to leave the ICSID in
2012, <a href="http://venezuelanalysis.com/news/6773"
target="_blank">citing institutional bias in favor of
transnational corporations</a> 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.</p>
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