Venezuela will need as many as 15 years to renegotiate bilateral investment treaties before it can leave the World Bank arbitration court, said Prosecutor General Carlos Escarra.
Venezuela has treaties with 24 countries that need to be amended or canceled before authorities can pull out of the Washington-based International Centre for Settlement of Investment Disputes, or ICSID, Escarra said yesterday in an interview with Union Radio.
“There’s a problem that we’re studying,” Escarra told the Caracas-based radio station. “Investment treaties that we have with 24 countries have clauses that require us to use the ICSID, and it could take 10 to 15 years to renounce each treaty.”
President Hugo Chavez, who has seized assets in the energy, mining and telecommunications industries during his 12-year rule, said on Jan. 8 that Venezuela would pull out of the ICSID and not accept any of its rulings. The court is considering about 20 suits filed by companies such as Exxon Mobil Corp. (XOM) and Owens-Illinois Inc., the world’s largest maker of glass containers, against the Venezuelan government.
“Every treaty can be renounced,” said Escarra, the country’s chief legal official. “Nothing will happen if we leave. Bolivia, Ecuador and Argentina all left and nothing happened.”
Exxon, the world’s largest oil company by market value, abandoned Venezuela after Chavez expropriated its Cerro Negro oil assets in 2007.
The New York-based International Chamber of Commerce, a separate arbitration court, ruled last month that state oil company Petroleos de Venezuela SA must pay the Irving, Texas- based company a net $746.9 million for the Cerro Negro nationalization. The ICSID has yet to decide on the case.
Petersburg, Ohio-based Owens-Illinois (OI) in September filed for arbitration at the ICSID for compensation for two bottling plants nationalized by Chavez in 2010. Other companies with claims against the South American nation at the court include Tenaris SA (TEN), the world’s biggest maker of seamless steel tubes, and The Williams Companies (WMB) Inc., a natural gas services supplier located in Tulsa, Oklahoma. ConocoPhillips (COP) is also in arbitration with Chavez’s administration.
Venezuela’s withdrawal from the ICSID, first mentioned by Chavez in 2007, is unlikely to affect arbitration cases already under way, said Michael Nolan, a partner in the Washington office of Milbank, Tweed, Hadley & McCloy.
ICSID decisions have “strong” enforcement mechanisms in third party states, Nolan, who has represented clients in arbitration with Venezuela, said in an interview on Jan. 9.