Caracas, Venezuela (VA) – Venezuela’s request to review a $46 million compensation claim filed by the oil service firm Tidewater has been rejected by the World Bank’s International Center for Settlement of Investment Disputes (ICSID) on Wednesday.
The South American nation had originally petitioned the ICSID for a revision of the claim, “based on what it describes as an error in the tribunal’s damages calculation,” a motion which was thrown out by the tribunal in a ruling that favored the US-based energy shipping company seeking compensation for eleven vessels expropriated by the government of then-president Hugo Chavez in 2009.
The ruling follows a previous decision handed down by the ICSID in March, which confirmed the legality of the nationalization and rejected the “exorbitant compensation” of $234 million demanded by Tidewater.
Nonetheless, the World Bank tribunal rejected further legal efforts on the part of the Bolivarian government to reduce the amount owed, claiming that the award had “taken into account the totality of the evidence presented to it in determining the appropriate level of compensation to be awarded, based upon a discounted cash flow analysis.”
In 2007, the Bolivarian government emitted a law-decree nationalizing all remaining oil production sites under foreign control and mandating that all oil extraction in Venezuela be undertaken within the framework of joint ventures, in which the state oil company PDVSA retains the majority stake.
This move sparked a wave of lawsuits by foreign transnationals in international arbitration bodies demanding compensation for expropriated assets. In response, Venezuela withdrew from the ICSID in 2012, citing institutional bias in favor of transnational corporations on the part of the Washington-based body.
Venezuela’s departure from the World Bank tribunal does not, however, affect the status of the 27 pending cases against the South American nation, which could pose a serious economic burden in the wake of collapsing oil prices that have severely diminished the country’s foreign currency reserves.