CARACAS -- In a 2-1 decision, the World Bank's arbitration panel, the International Center for the Settlement of Investment Disputes (ICSID), has rejected Venezuela's request for "reconsideration" of ICSID's September 2013 finding that it had jurisdiction and that Venezuela was liable for the expropriation of ConocoPhillips' investments in the Latin American nation.
ConocoPhillips originally brought the biggest case to date against Venezuela in December of 2007 seeking $30 billion in compensation for its stakes in two Orinoco projects - Petrozuata and Hamaca - and two joint venture exploration agreements in the Gulf of Paria, all of which Venezuela expropriated in 2007.
After years of briefs and hearings -- including an attempt by Venezuela to disqualify one of the 3 arbitrating judges and the death and replacement of another -- on September 3, 2013, ICSID ruled that it had jurisdiction to hear the claim and that Venezuela had indeed breached its obligations under the Netherland's Bilateral Investment Treaty "to negotiate in good faith" to compensate ConocoPhillips for the expropriation and was therefor liable to pay damages for the expropriation.
In an unusual move that the majority of the panel ruled was not allowed, Venezuela sought to have the panel "re-consider" the jurisdiction and liability decision, after writing a letter 5 days after the decision, on September 8, 2013 (below), and claiming that new evidence had come to light via a U.S. Embassy cable leaked by Wikileaks that Venezuela had not stopped negotiating. The supposed cable, which was published by Wikileaks back in September 2008, was not really new, however.
After examining the ICSID treaty and past rulings, "the majority of the Tribunal concludes that it does not have the power to reconsider the Decision of 3 September 2013," the majority made up of Judge Kenneth Keith, President, and L. Yves Fortier, CC, QC, wrote. "Section 3 of Part IV of the ICSID Convention sets out the Powers and Functions of the Tribunal, with nothing among its provisions even hinting at such a power."
The judge appointed by Venezuela, Egyptian Professor Georges Abi-Saab, dissented (below).
Abi-Saab, who replaced English barrister Sir Ian Brownlie after Brownlie died in 2009, has a law degree from Cairo University, an MA in Economics from the University of Paris, an MA in Economics from the University of Michigan, a Masters of Law (LLM) and SJD from Harvard Law School, and Doctor of Political Science from the Graduate Institute of International Studies in Geneva, according to his biography.
"A strong case can be made for the existence of a general power of reconsideration by an ICSID tribunal of its interlocutory decisions (within certain limits or under certain conditions all the same) in a case still pending before it," wrote Abi-Saab in his lone dissent. "However, if the answer to the question whether such a power exists or not were to be in the negative, there remains the possibility ... that the Tribunal possess a specific power for dealing with requests based on a particular or certain particular legal grounds."
The ICSID panel then ordered Venezuela and ConocoPhillips to move on to arguing over how much the award should be. ConocoPhillips, which says it invested over $4.6 billion in the oil ventures starting in the 1990s, is now reportedly seeking $6.5 billion for the siezed assets. Venezuela has offered $2.3 billion.
ConocoPhillips is to file their damages brief ("Memorial on Quantum") by May 19, with Venezuela's damages brief due 10 weeks later. After that, both sides will have another 8 weeks in which each will file Reply Briefs, with ICSID fixing a hearing for oral arguments after that.
Another U.S. oil giant, Exxon Mobil Corp, has been seeking up to $10 billion at ICSID also for the expropriation in 2007 of a large heavy crude project in the Orinoco region. In February of 2012, Venezuela was ordered to pay ExxonMobil about $908
million in compensation by the International Chamber of Commerce (ICC) in lost contractual earnings because of the expropriations (decision below).
"The ICSID decision on the actual losses suffered by ExxonMobil from Venezuela's expropriation is expected soon," said Russ Dallen, an international lawyer and banker who follows the cases and studied under ICSID judge Sir Ian Brownlie at Oxford University. "Venezuela and ExxonMobil filed their final post-hearing briefs almost 2 years ago in May of 2012."
In the ConocoPhillips case, Venezuela may keep stalling for time, says Dallen. "Apparently, Venezuela now intends to try to disqualify the 2 judges that ruled against them on the panel -- even after they had already challenged one and lost."
In October of 2011, Venezuela filed a challenge to Canadian Judge L. Yves Fortier, QC, who had been appointed by ConocoPhillips. A tribunal heard the challenge and ruled against Venezuela 4 months later in February of 2012 (decision below).Click here to read the 2008 Wikileaks Cable Referred to by Venezuela as "New Evidence"
ConocoPhillips v Venezuela ICSID Judgment Rejecting Reconsideration 10 March 2014
ConocoPhillips v Venezuela ICSID Judgment Rejecting Reconsideration Dissent 10 March 2014
Venezuela Letter to ICSID 8 Sept 2013 Re ConocoPhillips by Latin American Herald Tribune
ConocoPhillips v Venezuela ICSID by Latin American Herald Tribune
ConocoPhillips v Venezuela ICSID Judgment Rejecting Challenge to Arbitrator Yves Fortier 27 February 2012
ExxonMobil v Venezuela -- ICC Decision and Award 23 December 2011