World Bank Court Rules for Venezuela in Gold Mining Case
The World Bank’s arbitration court dismissed claims brought by a Canadian mining company against Venezuela in its first ruling on mining and energy seizures that started when President Hugo Chavez came to power in 1999.
The case, initially filed at the Washington-based International Centre for Settlement of Investment Disputes in 2004, was brought by Vannessa Ventures Ltd. over the nationalization of the Las Cristinas gold mine in 2001.
The court, known as ICSID, concluded that the mining company’s rights under the Canada-Venezuela bilateral investment treaty weren’t violated in a ruling issued Jan. 16 and posted on its website. Venezuela is facing 29 pending cases at the ICSID, including claims filed by oil companies Exxon Mobil Corp. (XOM) and ConocoPhillips. (COP)
“The exaggerated and illegitimate efforts of this transnational to recover $1 billion plus interest and costs were totally rejected by the court, making Venezuela the victor in this controversy,” Venezuela’s Information Ministry said yesterday in a statement on its website.
Venezuela’s National Guard seized control of the Las Cristinas mine, which has reserves of about 27 million ounces of gold, in November 2001 from Vannessa Ventures. The rights were transfered to Crystallex International Corp. (CRYFQ) in late 2002 before being taken over again by Venezuela in 2011.
Toronto-based Crystallex has pending arbitration at the ICSID against Venezuela for the nationalization.
The South American country said last year that it would develop the mine with China’s Citic Group.
John Terry, a lawyer at Torys LLP in Toronto listed as a legal contact for Vannessa Ventures in the ICSID ruling, said today in an e-mailed response to questions that he didn’t have a comment on the arbitration decision.
Venezuela’s government, which has been an ICSID member since 1993, officially asked to leave in January 2012. Chavez, who is receiving treatment for an undisclosed type of cancer in Cuba, said last year that he wouldn’t accept rulings from the arbitration court.
Other companies with pending ICSID arbitration against Venezuela include Gold Reserve Inc. (GRZ), Tidewater Inc. (TDW), Williams Cos. Inc. (WMB), Koch Industries Inc., Owens-Illinois Inc. (OI), Tenaris SA (TEN) and Rusoro Mining Ltd. (RML)
ConocoPhillips and Exxon Mobil have won mixed rulings from arbitration claims against state oil company Petroleos de Venezuela SA at the Paris-based International Chamber of Commerce, a separate court known as the ICC.
“Transnational interests are trying to corner us on our sovereign decisions in both the oil and mining sectors,” Oil Minister Rafael Ramirez said today on state television. “We’re going to defend our country’s sovereignty as a strategic principle and this triumph that was announced yesterday is one more step in that direction.”
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