Arbitration Initiated Against Venezuela by Harvest Natural Resources
Saturday, January, 24, 2015
In a move that solidifies international perception of Venezuela as a poor investment risk, Harvest Natural Resources has filed a request for arbitration with the International Center for Settlement of Investment Disputes (ICSID). The arbitration request concerns Harvest Natural Resources’ investments in Venezuela, and specifically the government’s attempts to thwart all efforts the company has made to divest itself and sell its interests in Venezuela.
Harvest Natural Resources has stated that it has acted in ‘good faith’ but that the Venezuelan government has violated its rights by both inhibiting its ability to grow its investments in the country and to sell those investments when it determined it would not be able to develop them as intended.
Harvest claims that when it attempted to sell two wholly-owned and legally operated divisions in Venezuela, the sale was compromised at the last minutes by the imposition of new conditions on the sale by Venezuelan authorities. Harvest believes these conditions were imposed solely to cause the failure of the sale.
Harvest Natural Resources has been an investor in Venezuela for more than two decades. However, Venezuela’s economic situation has changed drastically over that time, as the policies of its socialist government and declining profits from its oil fields have left the economy in disarray, and confidence in its role as a fair player in the international economy has eroded. The tactics of impeding legal sales and other divestiture attempts are largely seen as desperate moves to retain the small amounts of foreign investment the country still boasts.