Venezuela Investment Protections
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1. ICSID CONVENTION
Venezuela signed the ICSID Convention on August 8, 1993, ratified it on May 2, 1995 and has made no notifications pursuant to articles 25(1)(3)(4), 54(2), 68, 69 and 70 of the ICSID Convention. Venezuela denounced the ICSID Convention on January 24, 2012.[1] The denunciation will take effect on July 25, 2012.[2]
2. INVESTMENT TREATIES
Venezuela has signed BITs with the following countries: Argentina, Barbados, Belgium and Luxembourg, Bolivia, Brazil, Canada, Chile, Costa Rica, Cuba, Czech Republic, Denmark, Ecuador, France, Germany, Indonesia, Iran, Italy, Lithuania, Netherlands, Paraguay, Peru, Portugal, Russia, Spain, Sweden, Switzerland, United Kingdom, Uruguay and Vietnam.
It has ratified the BITs with all of those countries except for Brazil and it denounced its BIT with the Netherlands.[3] Additionally, the G3 trade agreement entered into by Venezuela, Colombia and Mexico which included a chapter on investment[4] was effectively terminated in November 2006.
3. RECOGNITION AND ENFORCEMENT OF AWARDS
An ICSID award would be enforced as per the terms of Article 54 of the ICSID Convention. According to Article 54 (3) of the Convention, execution of the award shall be governed by the laws concerning the execution of judgments of the State where execution is sought.
Under the Law on Commercial Arbitration, any arbitral award shall be recognized by the courts as binding and final upon a written enforcement request.[5] Accordingly, the procedure of exequatur established in the Civil Procedure Code for foreign court judgments[6] need not be followed. However, the Venezuelan Supreme Tribunal has established that foreign judicial awards shall not be enforced in the country if contrary to the public constitutional order[7] and the Tribunal has extended the same rationale to international arbitral awards.[8]
The Tribunal expressly stated that, in order to be enforceable, an ICSID award should be undertaken in accordance with local law and that award would need to comply with local law.[9] The following laws are relevant for recognition and enforcement of a foreign arbitral award:
- Law on Private International Law (1998): Article 62, everything related to international commercial arbitration will be ruled by the special rules on the subject.
- Law on Promotion and Protection of Investment (1999): Article 23, the investor has the option of arbitration.
- Law on Commercial Arbitration (1998): Article 48, the arbitral award of any country will be recognized as binding and final and shall be enforced with no need of exequatur procedure. The award will have the force of a judgment from a local court.
[Relevant international law includes the following:]
- Convention on the International Center for Settlement of Investment Disputes (ICSID) (entry into force for Venezuela in 1995). It was denounced on January 24, 2012.
- Multilateral Investment Guarantee Agency (MIGA) Convention. Disputes about a risk guarantee contract between a country and the agency will be subject to arbitration where the award will be final.
- Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) (entry into force for Venezuela in 1995): established the obligation of contracting States to recognize an arbitral award if arbitration was agreed to expressly.
- Inter-American Convention on the Extraterritorial Efficacy of Foreign Judgments and Arbitral Awards (entry into force for Venezuela in 1985): Article 2, for a judgment issued by a foreign court to have extraterritorial efficacy the judgment shall meet the conditions set forth therein.
- Inter-American Convention on International Commercial Arbitration (entry into force for Venezuela in 1985): Article 4, arbitral awards not subject to appeal under the applicable law or procedural rules shall have the force of a final judicial judgment. The award could be enforced as if it were a judgment.
[3] The BIT was denounced on March 21, 2008 and effectively terminated on September 14, 2008. Marianna Párraga, Venezuela Denuncia Tratado De Inversiones Con Holanda, El Universal, May 1, 2008. http://www.eluniversal.com/2008/05/01/eco_art_venezuela-denuncia-t_01A1549161.shtml (last Visited February 9, 2011)
[4] Omar E. García-Bolívar, G3 agreement: a comparison of its investment chapter with the emerging international law of foreign investment, 10 Law and Business Review of the Americas, 779 (2004).
[5] Law on Commercial Arbitration, Art. 48.
[6] Civil Procedure Code, Art. 850-858.
[7] Supreme Tribunal of Justice, Decision No. 1541 of Oct. 17, 2008; Decision No. 1942 of July 15, 2003.
[8] Supreme Tribunal of Justice, Decision No. 1541 of October 17, 2008; Decision No. 1942ofJuly 15, 2003. See also, Supreme Tribunal of Venezuela, Constitutional Chamber, Decision No. 05-1853 of August 5, 2008, on the enforcement of a decision by the Inter-American Court on Human Rights.
[9] Supreme Tribunal of Justice of Venezuela, Constitutional Chamber, Decision No. 1942of July 15, 2003.
