Worries and warnings raised by lawyers have come true: Venezuela's detachment from the International Centre for Settlement of Investment Disputes (Icsid) would cause a "downpour" of new complaints against the Republic.

Earlier, on January 26, Venezuela announced its intention of withdrawing from this body attached to the World Bank. Six months later, the withdrawal was officially effective, as set forth in the Icsid convention. But the national government's decision has not necessarily meant to put an end to complaints.

On the contrary, between January 26 and July 26 this year, two cases have been filed at the Icsid: those of Saint Gobain Performance Plastics and Valle Verde financial holding.

Moreover, since July 26, the Icsid has admitted the lawsuits filed by six enterprises from different sectors: Glass Factory Los Andes and Owens Illinois of Venezuela; Rusoro Mining, Ternium S.A and Siderurgia Amazonia consortium; Blue Bank International; Venoklim Holding, and Tenaris and Talta.

Diana Droulers, executive director at the Caracas Chamber of Commerce Arbitration Center remarked that the complaints filed after Venezuela's definitive detachment from the Icsid was based upon legal grounds.

Droulers explained that the Icsid has issued an arbitral award in the case of Murphy Exploration versus Ecuador. That decision was announced after Ecuador's withdrawal from the Icsid.

One of the interpretations of this verdict is that "the willingness of the parties is the most important aspect," and that the option of arbitration was chosen at the time of executing the agreement.

"According to that interpretation, arbitration can still be used (...) That was approved when the investment was made, those were the ground rules," Droulers contended.

Based on these arguments, she reckons that investors "would stick to that interpretation," because willingness "can not be unilaterally broken."

In addition, Droulers remarked that given the possibility of an upcoming political change in Venezuela, enterprises have adopted the strategy of filing their complaints at the Icsid. "Once the case is filed, the negotiation power increases."

Bilateral treaty

Several lawyers think that in spite of Venezuela's departure from the Icsid, investors are still protected.

The fundamental legal framework on the matter of investments is still the one that is set forth in the bilateral treaties endorsed by Venezuela with 26 countries.

These treaties establish the means for solving conflicts between an investor and the national government. Some of these treaties designate the Icsid as the only arbitration center available, therefore, new complaints against Venezuela may be filed at that body. In other cases, the treaties designate an ad hoc tribunal that abides by the arbitration rules of the United Nations Commission on International Trade Law (Uncitral).

The 28 cases against Venezuela submitted at the Icsid are related to expropriations and regulation changes carried out by the Venezuelan Executive Office in recent years.
http://www.eluniversal.com/economia/120908/complaints-against-venezuela-continue-at-the-icsid