SPOKANE, WASHINGTON -- Gold Reserve Inc. has announced that the arbitral tribunal at the World Bank's International Centre for Settlement of Investment Disputes (ICSID) hearing their case against Venezuela has requested both parties to submit their costs by May 26, 2014.

“This request to submit the costs associated with our arbitration with the Bolivarian Republic of Venezuela brings the arbitration process one step closer to completion,” said Gold Reserve President Doug Belanger.


Gold Reserve, which filed the case on November 9, 2009, is claiming damages arising from violations of three provisions of the Canada-Venezuela bilateral investment treaty resulting in the effective expropriation of Gold Reserve's sizable investments in the Brisas gold/copper project and the Choco 5 property.

Gold Reserve is seeking compensation corresponding to the restitution, or fair market value, of the rights to develop the Brisas Project and Choco 5, as of the date of the Tribunal's decision, saying that the fair market value of those rights in its Reply dated July 29, 2011, was approximately $2.1 billion. In its initial filing in 2009, the company estimated the value and damages from lost earnings at $5 billion. According to the filing, the company spent $300 million on the projects.

"The oral hearings were the culmination of an extensive undertaking by the Company's counsel, technical, legal and financial experts, as well as its employees, to present Gold Reserve's case to the Tribunal," said Belanger about the 2012 oral hearings. "Upon review of the entire record of evidence, it is clear that Gold Reserve's claims are well supported."

Both parties last filed post-hearing briefs on December 23, 2013. It is typical for tribunals in this type of arbitration to require six to eighteen months (the historical average is approximately 1.2 years) to finalize and issue a decision.

The President of the Tribunal is Piero Bernardini of Italy, with Pierre-Marie Dupuy of France and David A.R. Williams of New Zealand. Gold Reserve is represented by international law firm White & Case and Venezuela is represented by Foley Hoag.

According to a 2005 feasibility study, Gold Reserve estimated that the Brisas mine would cost $552 million to develop and yield 486,500 ounces of gold and 63 million pounds of copper a year over a 16 year life. Venezuela's People's Ministry for Planning said earlier this month that gold production had fallen 64.1% in the last year to 97 kilograms in February (see page 67 below).

After a rash of expropriations and nationalizations by Venezuela's firebrand former President Hugo Chavez, Venezuela has 28 cases pending against it at ICSID -- the most of any nation in the world. Faced with the cases, Chavez withdrew Venezuela from ICSID jurisdiction in 2012, but pending cases and new cases brought under bilateral investment treaties and contracts continue to give ICSID jurisdiction to settle the arbitrations.

Other companies with pending ICSID arbitrations against Venezuela include mining and smelting companies Anglo American, Rusoro Mining Ltd., Crystallex International Corporation, and Tenaris SA; food industry companies Gruma, Polar, Longreef, Vestey, and Owens-Illinois Inc.; and oil industry companies Tidewater Inc., Williams Cos. Inc., Koch Industries Inc., ConocoPhillips, and ExxonMobil.

Experts say a decision in favor of Gold Reserve is not guaranteed.

"Last year, Canadian company Vanessa Ventures, which took over a $100 million dollar mining investment from Placer Dome to develop the Las Cristinas copper mine in Venezuela in 2001, was unsuccessful in winning compensation at ICSID," says Russ Dallen, an international lawyer and banker who closely follows the expropriation cases. "With some limited similarities between the cases, an ICSID panel found that the efforts by Venezuela to terminate the contract did not amount to expropriation and that Venezuela's actions in the case did not violate the "fair and equitable treatment" clause of the bilateral investment treaty. In this case, Venezuela began to push Gold Reserve out by not providing environmental permits, making it impossible for the company to work -- panels have gone both ways and been split on this issue as it is legally within the government's scope of powers to do that."http://www.laht.com/article.asp?ArticleId=2097824&CategoryId=10717

ICSID is an autonomous international institution established in 1965 under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID or the Washington Convention) with over one hundred and forty member States. The Convention sets forth ICSID's mandate, organization and core functions. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes.