More Government Arbitration Against Venezuela
Monday, February, 20, 2012
Venezuelan President Hugo Chavez has yet another government arbitration to face. Gambrinus Corporation, an affiliate of Empresas Polar based in Barbados, is taking Venezuela to arbitration court over their expropriation of Fertinitro fertilizer companies in 2010. As yet, Venezuelan officials have not acknowledged this action.
Why Gambrinus Is Seeking Legal Arbitration
In October of 2010, President Chavez nationalized the assets of Fertinitro, of which Gambrinus owned 10 percent. This action was a part of an overall plan to create Chavez's vision of a “21st century socialism.” They received no compensation for this seizure, and all attempts at dialogue with the Venezuelan government have failed. Gambrinus is not alone among companies that were not compensated in the nationalization of Fertinitro—3 other investors were also left in the lurch.
Chavez and the Venezuelan government are also being called to arbitration by at least 15 other companies as a result of this move to socialism. Notably, Exxon Mobil, ConocoPhillips and Cemex S.A.B. De C.V. All of these companies have had Venezuelan assets expropriated by Chavez.
Venezuela Resists Commercial Arbitration
Taking Venezuela to arbitration court will not be an easy task for Gambrinus. On January 8, President Chavez announced that Venezuela would be leaving the World Bank's International Centre for Settlement of Investment Disputes (ICSID) and that they would not acknowledge any rulings they make in regard to Venezuela.
While this avoidance of government arbitration can aggravate Gambrinus' possibility of compensation, the likelihood of Venezuela succeeding is unlikely. Leaving ICSID, especially with multiple arbitrations pending, is not as easy as leaving a grocery store. In all likelihood, the process of leaving ICSID could take Venezuela as much as 15 years to accomplish.