The International Herald Tribune asks to lift the order of the District Court of Delaware that keeps secret the agreement signed between Crystallex and the Venezuelan government

https://www.lapatilla.com

By: Maibort Petit

Dec 20, 2017

 The digital media International Herald Tribune asked the Delaware District Court to make public the terms of the agreement reached by Crystallex Corporation and the Venezuelan government that could put an end to a legal battle that the parties have been holding for years due to expropriation of the assets of the Canadian transnational in Venezuela by the government of the late President Hugo Chavez. The amount owed is US $ 1.2 billion plus interest.

Through a letter, the aforementioned digital media requested Judge Leonard P. Stark, who presides over the case of Crystallex vs. PDVSA, the elimination of the confidentiality that was imposed on the agreement between the Canadian transnational and the Venezuelan government for being contrary to the public interest. The judge of the Delaware District Court ordered the parties to explain the agreement and, in response, Crystallex's attorneys reported that such an agreement cannot be made public per the agreement with the Venezuelan government.

Following the explanation of Crystallex's lawyers, opinions have emerged that there must be something murky involved in the agreement.

US courts generally approve a priori the seal of confidential agreements under the presumption that there is no harm if there is no opposition. However, a commercial arrangement is not granted the seal of confidentiality except to protect industrial / scientific secrets as long as they do not endanger human life and the environment. For this, Judge Stark requested an explanation of the need for the seal of confidentiality. However, the fact that Venezuela opposes its publication presumes ulterior reasons of a political nature contrary to the rule of law.

In the letter sent by the International Herald Tribune - which made full coverage of Crystallex's claims in US and Canadian courts - the judge was informed of the concern that on December 1, the lawyer for Crystallex submitted a sealed document to the Federal District Court of Delaware that violates local rules for sealing without any apparent authority for the submission of such document under seal and, in doing so, violated the right of public access to the information.

The petition signed by editor Russ Dallen says that Local Rule 5.1.3 requires that "Documents [that] are under seal must be filed in accordance with CM / ECF procedures, unless the court orders otherwise." He argued that the sealing of the joint Crystallex status report filed under number Dkt # 40 violates two of the procedures of the District of Delaware in the sense that the rule states that the filing of civil documents stamped in CM / ECF requires the following:

1. "The authority to present a sealed document must be provided by an order of protection or other order of the Court."

2. "A redacted version of this stamped document must be filed electronically in 7 days".

the letter says that the sealed document was delivered on December 1 and as of December 11 (11 days later), no redacted version had been submitted, as established by law. Most importantly, Russ Dallen said, no court order or protection order is known to allow the submission of sealed documents in this case.

“It is established, without a doubt, in this Delaware Circuit that the public is entitled, both under customary law and the First Amendment of the Constitution, to observe judicial proceedings and review judicial records in civil cases”.

The applicant requested that the document # 40 in the case Crystallex v. PDVSA be made public, since that agreement does not have a protection order or other order from the Court to keep the document under seal and was declared confidential in an incorrect manner.

The request also highlights that the Crystallex cases have consequences for the public in the US, Canada and Venezuela, as well as for Crystallex shareholders in the US.

It also indicates that the case also has relevance because of the sanctions imposed by the US government that prohibits negotiations with many Venezuelan officials and blocks any new debt agreement with Venezuela and PDVSA.

The request says that the Crystallex agreement with the government of Venezuela may have clashed with the sanctions and its content could validate this by making known the terms of the agreement between the two parties that now remains sealed.

Russ Dallen indicated that in its current "post-truth" policy, the courts have become one of the few institutions that still function in the impartial search for the truth. “We hope that the seal of the agreement will be removed to continue reporting on this case which requires to be treated with absolute transparency”.

The case of Crystallex against PDVSA responds to its attempt to enforce its $ 1.2 billion award against Venezuela for the confiscation of the assets of the Canadian company by the government of President Hugo Chávez. At the end of November 2017, the parties reached an agreement, shortly before a hearing to be held on December 5 to continue Crystallex's suit seeking to attach assets belonging to PDVSA.

The procedure in the court was to address Crystallex's argument that PDVSA is the government's alter ego. A decision in favor of Crystallex would have allowed PDVSA assets to be attached to pay Venezuela's debt to Crystallex. As the Financial Times pointed out, a decision favoring Crystallex could also have broader implications, potentially allowing "holders of defaulted Venezuelan sovereign bonds to seek to seize PDVSA's assets, potentially including those of Citgo."

Mysterious Agreement

The agreement is a bit mysterious. The related documents were filed under seal, both in the Crystallex bankruptcy proceedings in Canada and in its lawsuit in the Federal Court of Delaware. Only a restricted group, which includes the debtor in possession of Crystallex, has the right to know the details of the agreement.

As reported by Bloomberg, Crystallex will receive something close to the face value of the debt, but paid over time. The delays in the payment cast doubt on how Crystallex will be paid in full. "The benefit to the government is equally questionable”. For now, the agreement postpones the planned hearing on the case.

On November 29, 2017, the Court issued an order ordering the parties to submit a status report no later than Friday, December 1, 2017, providing the positions of the parties regarding the impact, if any, of the agreement between the Plaintiff Crystallex International Corp. ("Crystallex") and the Debtor the Bolivarian Republic of Venezuela ("Venezuela") on the status of the cases currently pending before the Court (Crystallex International Corporation v. Bolivarian Republic of Venezuela, CA No 17-171-LPS, Crystallex International Corporation v. PDV Holding Inc., CA No. 15-1082, and Crystallex International Corporation v. PDV Holding Inc., CA No. 16-1007 (the "Delaware Actions")) , and advise the Court on the status of the pending appeal in CA No. 15-1082.

On November 15, 2017, Crystallex and Venezuela entered into a conditional agreement - the "Conciliation Agreement" - to address and resolve matters related to the Venezuelan debt dispute with the Canadian mining company. The parties reached this agreement to satisfy the award of approximately 1.2 billion dollars plus interest issued against Venezuela by an arbitral tribunal under the Rules of the Additional Mechanism of the International Center for the Resolution of International Disputes of the World Bank (ICSID).