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Crystallex International Corporation is a Canadian-based gold company with a successful record of developing and operating gold mines in Venezuela and elsewhere in South America

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Message: Repeat!

Repeat!

posted on Nov 14, 2009 09:28PM

I am repeating a post that i made last August of an e-mail i had with the Canadian embassy. I see a few posts lately about what the Canadian government should do if we file for arbitration. It is strickly a private legal matter according to Canadian officials,up to a court to decide. The thing i didnt notice before is they said an investor,(sounds like us the retail investor) could use the treaty to recover money that we illegally lost, using the treaty in the court system.Anybody with a legal mind care to interpret the responce i got? Could a private investor use the treaty to recover lost investments?
Dear Mr Bristow
I am e-mailing you regarding the situation between the Canadian miner Crystallex and the Venezuelain government.I have invested thousands of dollars in good faith in Venezuela through Crystallex with the clear understanding that in partnership with Venezuela,the Las Cristinas would be developed.It has become quite clear from the Venezuelain government and from Crystallex management that this will never happen.The distain that the Venezuelain government has for anything North American has made this impossible.My question for you regards the Foreign Investment Promotion and Protection Agreement (FIPA).The Venezuelan government collected bond money,operating taxes and demanded social obligation projects be completed before they would give the required permit to begin the project.These have all been collected and completed.They have now given the company all the signals that this is as far as they will get towards operating in Venezuela.Crystallex,in fullfilling these requirements and the dragged out wait for permitting has gotten to the point of becoming insolvent because of the cash drain during this drawnout affair.My question is ,if the company filed for arbitration before operating cash ran out,and during the arbitration process became insolvent,does the trade agreement still protect stockholders/investors until the decision was rendered.I am also wondering if FIBA has insurance for helping a company(operating expenses) through the arbitration process,which could take a number of years.The other question i have is,with Venezuela being our 3rd largest trading partner in South America,could Canada not put forth some sort of pressure on Venezuela to stop other Canadian companies from having to go through what Crystallex has.
Thank you
Bill Goodwin

Please excuse our belated answer to your e-mail, and thank you for your correspondence of August 28, 2009, regarding to Crystallex International Corporation’s Las Cristinas project. Let us assure you that we share your concerns and are taking this matter very seriously.

1) If the company filed for arbitration before operating cash ran out,and during the arbitration process became insolvent,does the trade agreement still protect stockholders/investors until the decision was rendered.

The Canadian Embassy in Venezuela has worked closely with Crystallex for several years in its efforts to obtain the necessary authorizations in order to develop the Las Cristinas Project. Our Embassy has raised this issue repeatedly with senior Venezuelan government officials. We assure you that both the Canadian Embassy and officials in Ottawa are following up on the statements of the Venezuelan government concerning Las Cristinas. The Foreign Investment Promotion and Protection Agreement (FIPA) provides Canadian investors with guarantees against discrimination and expropriation without compensation, which, if breached, can be the basis for a monetary claim by affected investors before an international arbitration tribunal. The Government of Canada expects that the Government of Venezuela will fully honour its obligations under this Agreement. The Government of Canada will continue to monitor developments closely and, in consultation with Crystallex, make every effort to defend the interests of the company and its shareholders.

Mr. Goodwin, the question of whether the company will pursue litigation can/should only be addressed by its shareholders to the company. We note that the company's website (in the information about its last general meeting) has a series of detailed questions and answers about the prospects for litigation.

In the case of Loewen versus the United States (a NAFTA chapter 11 case) the company launched a claim against the U.S. government and before the case was resolved the company was sold. While the facts of this case are specific to the dispute between Loewen and the United States, the award rendered by the tribunal may be of interest to you in light of the question you have raised. Documents related to the arbitration of the Loewen case can be found at the following web site. >http://www.state.gov/s/l/c3755.htm
2) If there is FIPA insurance for helping a company(operating expenses) through the arbitration process,which could take a number of years.
The FIPA is a bilateral treaty between Canada and Venezuela. Investors may make use of the dispute resolution mechanism of the treaty in order to challenge a measure that the investor believes to be a breach of the treaty. Costs of the arbitral tribunal are shared by the disputing parties and each party must absorb the cost of litigating its case.
3) With Venezuela being our 3rd largest trading partner in South America,could Canada not put forth some sort of pressure on Venezuela to stop other Canadian companies from having to go through what Crystallex has.
Our officials at Posts often work to facilitate communications between the Parties and to seek clarification with the host government with a view to promoting a mutually acceptable solution. However, the Canadian Government considers a formal dispute between an investor and the state to be a private matter and would encourage companies that wish to claim a breach of the treaty to seek private legal counsel.
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