Although an international arbitration panel ordered Venezuela to pay more than $2 billion to subsidiaries of Exxon Mobil Corp., Venezuela’s lead lawyer at Curtis, Mallet-Prevost, Colt & Mosle is crowing about the victory. The award came after a seven-year arbitration brought by Exxon Mobil to recover damages for nationalized oil assets.
On Thursday, the World Bank’s International Centre for Settlement of Investment Disputes announced the award in a 138-page ruling. The panel agreed with Venezuela that the nationalization of the facilities was lawful, but awarded Exxon Mobil damages for the expropriated property as required by international treaty. The award, however, will be reduced by $747 million, which Exxon Mobil received in a separate arbitration with Venezuela's state-oil company Petróleos de Venezuela, or Pdvsa, in 2011 before the International Chamber of Commerce.
“It’s clearly a major victory for the government [of Venezuela] and a major defeat for Exxon,” says George Kahale III, the chairman of Curtis.
According to Kahale, Exxon Mobil was seeking as much as $20 billion. “While we have questions about parts of the award, what this case shows is that this [arbitration] was entirely a seven-year waste of time. Exxon could have gotten this amount through negotiations in 2007,” he says.
Exxon Mobil is represented by a Covington & Burling team lead by Thomas Cubbage and Miguel López Forastier. The firm declined to comment, but Exxon Mobil issued a statement. “The decision confirms that the Venezuelan government failed to provide fair compensation for expropriated assets,” it said. “ExxonMobil recognizes the sovereignty of all nations and, while clearly not a desirable outcome, accepts Venezuela's legal right to expropriate the assets of our affiliates subject to compensation at fair market value.”
Exxon Mobil contests that it sought $20 billion, but it fell far short of the amount it says it wanted, which ranged from $4.5 billion to $8 billion. The earlier ICC award for $747 million was also considered a disappointment for Exxon Mobil, which was seeking $7 billion, according to the Wall Street Journal.
For a more detailed discussion of Thursday’s ruling, see Luke Eric Peterson’s post at the Investment Arbitration Reporter (subscription required).
Read more: http://www.litigationdaily.com/id=1202673100755/Ordered-To-Pay-Exxon-2B-Venezuela-Claims-Victory#ixzz3G1drRar2
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