Venezuela Pays for Expropriation Mistakes
Venezuela today is paying for the irresponsible and insatiable wave of expropriations which, on the one hand, has taken national production to critical levels and led the country to rely on imports for its livelihood; and on the other, has discouraged investment capital while making the State go to arbitration courts so it can respond to complaints from international companies whose rights have been violated.
At least two rulings from the courts of the International Center for Settlement of Investment Disputes (ICSID) ordering the Venezuelan government to compensate complainant companies over the seizure of projects or cessation of contracts in an arbitrary manner have been made public this month.
One of those rulings favored mining company Gold Reserve, Inc., to whom the Venezuelan State must pay $740 million for the seizure of a project at Las Brisas gold mine (the world’s fourth largest) located in Bolívar state.
Two weeks ago, a court of the ICSID also ruled against the Venezuelan State after ordering it to pay oil company ExxonMobil $1.6 billion for the expropriation of a stake at the Cerro Negro upgrader ($1.41 billion) and La Ceiba joint venture ($179.3 million), besides a $9.0 million charge for tax discount. It should be noted that even though the Cerro Negro amount was the highest ever granted by an ICSID arbitration court, it turned out far less than expected. However, no matter how much the government of Nicolás Maduro wants to make a fuss about the matter, the reality is that this reduction in the amount is no great victory for it, although it may not represent a significant burden for the country.
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