An ad hoc committee has rejected Venezuela’s attempt to annul an $8.5 billion arbitration award owed to ConocoPhillips, marking a significant victory for the oil giant in a 17-year dispute over Venezuela’s expropriation of its oil projects. The International Centre for Settlement of Investment Disputes (ICSID) administered the arbitration, and the committee’s 356-page decision on Wednesday comprehensively dismissed Venezuela’s challenges.
Venezuela’s Challenges Rejected
The arbitration dispute stems from Venezuela’s 2007 nationalization of ConocoPhillips’ interests in two extra-heavy oil projects in the Orinoco Oil Belt and an offshore project. Venezuela argued that:
- The tribunal was improperly constituted.
- Arbitrators exceeded their powers or failed to adequately explain their reasoning.
- The damages calculation was flawed.
The annulment committee dismissed these arguments, stating the tribunal’s decision was “easily understood” and that Venezuela had ample opportunity to present its case. It further noted that evidence excluded by the tribunal would not have altered its damages assessment.
Legal and Financial Implications
The award, initially granted in 2019, requires Venezuela to compensate ConocoPhillips subsidiaries for the unlawful expropriation of their investments. The committee also ordered Venezuela to pay over $6.4 million in legal fees and expenses incurred by ConocoPhillips during the annulment proceedings.
