(MENAFN- Venezuelanalysis)
Caracas, March 31, 2022 (venezuelanalysis.com ) – An international arbitration tribunal has ruled in favor of Spanish multinational companies in a lawsuit against the Venezuelan state.
In a March 24 ruling, a three-person tribunal from the World Bank's International Centre for Settlement of investment Disputes (ICSID) ordered Caracas to pay US $1.6 billion to Agroinsumos Ibero-Americanos SL, Inica Latinoamericana SL, Proyefa Internacional SL and Verica Atlántica SL for the 2010 takeover of their assets in the Caribbean nation.
The four companies filed a joint lawsuit before the ICSID in 2016. The award is based on the court's valuation of the assets as well as accumulated interests. Venezuela has also been sentenced to cover the process' legal costs.
According to Law360 , the tribunal found that the South American country had violated its investment treaty with Spain. However, the legal affairs portal reported that Venezuela's appointed arbitrator Gabriel Bottini“partially dissented” from the decision on jurisdictional grounds, claiming that the companies were structured in a way that no foreign funds or assets were brought to Venezuela.
Likewise on the board were Horacio Grigera Naón, appointed by the claimants, and tribunal president Eduardo Zuleta. At the time of writing, the Nicolás Maduro government has not reacted to the ruling.
The main Spanish agribusiness firm in Venezuela was Agroinsumos Ibero-Americanos' Agroisleña which supplied seeds, fertilizer and other inputs to rural producers. It was founded in 1958 and grew to establish a monopolistic position with more than 60 silos and distribution centers.
In October 2010, the former Hugo Chávez government charged the corporation with abusing its dominant market position and decreed its expropriation as a step to support small-scale farmers and boost food sovereignty. The nationalized company was named Agropatria.
The socialist leader's measure was part of a larger offensive to establish greater state control over the economy with similar takeovers of idle land estates and other multinational corporate assets.
Though Agropatria initially increased access to inputs for small producers and rural movements, the economic crisis and the company's unchanged dependence on imports saw it face severe difficulties.
The firm also began to draw heavy criticism from communes and other popular organizations for directing its scarce supplies to large-scale producers as well as engaging in speculation and smuggling practices.
With the Maduro government turning to orthodox measures to stabilize the economy in recent years and increasingly courting private capital, Agropatria was transferred to Agrollano 2910 in 2020. The previously little-known private enterprise reportedly received Agropatria's network of locales and assets in a 20-year concession under the so-called“strategic alliance” model.
The agricultural input supplier has been one of several previously nationalized companies placed back in private hands by the executive. The measures have generated fierce debates as leftist organizations claim the economic difficulties and US sanctions provide cover to favor capitalist interests.
For its part, the March 24 ICSID ruling was the latest in a number of setbacks for Venezuela at the Washington DC-based court.
Though Caracas officially withdrew from the ICSID convention in 2012, it has remained liable to claims because of bilateral treaties that set the body as the venue to settle disputes. The arbitration court has overwhelmingly ruled in favor of corporations, though Venezuela has managed to reduce some awards on appeal.
The largest award was a $9.7 billion sum granted to ConocoPhillips over the 2008 nationalization of its assets in the Orinoco Oil Belt. Venezuela's defense has been hampered by the US recognition of self-proclaimed“Interim President” Juan Guaidó and the ICSID's acceptance of parallel representation. The US-backed politician has come under fire for endangering the country's assets, with suspicions of collusion likewise falling on his team's legal actions.
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