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Experts: More lawsuits to be filed against Venezuela in Icsid

El Universal, Venezuela

Experts: More lawsuits to be filed against Venezuela in Icsid

Venezuela formally requested its withdrawal from the arbitration court, but the departure will be finalized in six months

By Roberto Deniz, Ernesto J. Tovar | El Universal

26 January 2012

Venezuela’s decision to leave the International Centre for Settlement of Investment Disputes (Icsid) may lead to further claims against the country in that court, said Diana Droulers, the executive director of the Arbitration Center, Caracas Chamber of Commerce.

"If Venezuela says that it does not want to be part of Icsid, anyone who has a doubt or the least suspicion, is going to file a complaint," Droulers said in an arbitration workshop.

Droulers noted that after Venezuela’s decision to denounce the Convention, a formal request that was introduced on Tuesday, transnational corporations that consider themselves affected may file lawsuits within six months, which is the deadline set to complete Venezuela’s pullback from the World Bank’s institution.

The Venezuelan Ministry of Foreign Affairs confirmed on Wednesday in a press release Venezuela’s decision to denounce the Icsid Convention. "The government of the Bolivarian Republic of Venezuela formally communicated to the World Bank its irreversible denunciation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States."

The statement released by the Ministry of Foreign Affairs shows a series of "inconsistencies" on arbitration by the Executive Office. The expert recalled that the Law to protect investments was enacted by the government of Hugo Chávez. Droulers also said that Article 258 of the Constitution provides that "arbitration will be encouraged by law."

Meanwhile, attorney Luis Alfredo Araque termed "incorrect" Venezuela’s move to withdraw from the Icsid by arguing that the decision was made for reasons of "public interest." Araque agreed, however, that such provision is set forth in Article 151 of the Venezuelan Constitution. But he noted that there is no law defining "public interest" and that this condition is granted by the National Assembly (AN) to investment agreements, as provided in Article 150 of the Constitution, and not subsequently, as the Executive Office is claiming.

"It seems logical to assume that when an agreement has not been approved as such, it may not be qualified as a public interest contract," said the author of a book entitled Manual del Arbitraje Comercial (The Commercial Arbitration Manual.)

According to Icsid’s data, some 20 complaints have been filed against Venezuela in the World Bank’s body in connection with the expropriations carried out by the Venezuelan government since 2007.

Translated by Gerardo Cárdenas