Venezuela risks disputes with other States over Exxon case

Venezuela may be exposed to disputes with other nations if authorities decide to close the book on compensation to ExxonMobil, which filed an arbitration claim against Venezuela that is still pending at the World Bank's International Centre for Settlement of Investment Disputes (Icsid).

Petroleum and Mining Minister Rafael Ramírez said on Monday that Venezuela had closed the chapter on compensation to ExxonMobil and said that arbitration with ConocoPhillips would continue under Icsid.

"There is nothing else to award; everything has been judged in the case of Exxon," Ramírez said.

Further, he recalled that the Paris-based International Chamber of Commerce (ICC) decided recently that Venezuela would have to pay USD 907 million to Exxon Mobil after the nationalization of its assets in 2007. After deductions, Venezuela will have to disburse about USD 250 million, Efe reported.

"We will not recognize any Icsid ruling; we will not," said on January 8 President Hugo Chávez, urging Foreign Minister Nicolás Maduro to create an agency under the Union of South American Nations (Unasur) in order to settle disputes.

Arbitration lawyers consulted on the subject explained that if Venezuela decides not to pay any compensation as ordered under an arbitration ruling, the provisions of an agreement with the Netherlands and the treaty establishing the Icsid would be enforced.

They added that refusal to pay compensation would translate into disputes between nations.

ExxonMobil claims that Venezuela infringed an agreement with the Kingdom of the Netherlands and, therefore, the terms of such agreement should be enforced.

The experts stressed that if no settlement is achieved or payments are not made voluntarily, ExxonMobil can resort to forcible measures, which involve the search for Venezuelan assets in other countries for liquidation.

Assets that may be liquidated are those that are not exempted from seizure or other measures. Actions would be taken against assets owned both by state-run oil company Pdvsa and the Bolivarian Republic of Venezuela.

Final ruling

The Icsid regulations and rules regarding the recognition and enforcement of the award provide that the award "shall be binding on the parties and shall not be subject to appeal or to any other remedy except those as provided for in this Agreement."

Further, the rules of Icsid, an institution which Venezuela joined in 1995, also state that "each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State."

Regarding the revision of awards, the Icsid regulations provide that "either party may request revision of the award by an application in writing addressed to the Secretary-General on the ground of discovery of some fact of such a nature as decisively to affect the award, provided that when the award was rendered that fact was unknown to the Tribunal."

Translated by Maryflor Suárez R.