Anglo American PLC v. Bolivarian Republic of Venezuela

Case summary

At a glance

Parties: Anglo American PLC (United Kingdom) v. Bolivarian Republic of Venezuela
Case no.: ICSID Case No. ARB(AF)/14/1
Forum and rules: ICSID Additional Facility; Arbitration (AF) Rules 2006; seat Paris
Treaty: United Kingdom–Venezuela BIT of 15 March 1995
Tribunal: Yves Derains (President), Guido Santiago Tawil, Raúl E. Vinuesa
Sector: Mining (nickel / ferronickel)
Outcome: Jurisdiction upheld but all claims dismissed on the merits; Venezuela's counterclaim dismissed for lack of jurisdiction (Award dispatched 18 January 2019). Guido Santiago Tawil dissented on expropriation and fair and equitable treatment.
Amount: Claimed: USD 235.4 million plus USD 157.2 million pre-award interest. Counterclaim: USD 123,583,598.84. Awarded: nothing. Each party bears its own costs; the costs of the proceeding totalled USD 917,204.85.

The dispute

Anglo American held an indirect 91.37% interest in Minera Loma de Níquel C.A. (MLDN). MLDN mined the Loma de Níquel nickel deposit under mining concessions and processed the ore into ferronickel at its own plant. The three Remaining Concessions expired on 10 November 2012, after Venezuela refused to extend them. Venezuela then took over the whole project, including the processing plant and the inventory, as reversionary assets. Anglo American argued that the Processing Assets and the Inventory did not revert to the State. It claimed that their taking without compensation was an unlawful expropriation (Article 5) and a breach of fair and equitable treatment and of full protection and security (Article 2(2)). Separately, it claimed that SENIAT's failure to issue VAT credit certificates (VAT CERTS) to MLDN breached Articles 2(2) and 3. Venezuela objected that indirect investments are not protected and that the forum clause in the mining titles gave the dispute to its own courts. On the merits, it argued that Clause 18 of the Mining Titles transferred the assets to the State without compensation. It also brought a counterclaim for unpaid exploitation taxes and special advantages.

Key holdings

The Treaty protects indirect investments. The definition "every kind of asset", with its non-exhaustive list, contains no limit to direct holdings. Anglo American's indirect shareholding in MLDN and its indirect interest in MLDN's assets are protected investments, the latter also by reference to Article 5(2). ¶¶ 191–213
The exclusive Venezuelan forum clause in the Mining Titles does not bind Anglo American, which is not party to them. The claims are treaty claims, even though they require the Tribunal to interpret Venezuelan law. The Tribunal has jurisdiction over all of the claims. ¶¶ 216–220
No expropriation. Read in light of the 1945 Mining Law, Clause 18 of the Mining Titles makes the Processing Assets and the Inventory revert to the State without compensation. The object of the concession included the utilization and processing of the ore. Article 129 of the 1999 Mining Law and Article 63 of the Investment Law preserve that contractual agreement. This also defeats the alternative claim for the non-amortized value of the assets under Article 48 of the Investment Law. ¶¶ 347–402
The fair and equitable treatment clause sets an autonomous standard. The VAT deduction requirement was not contrary to the VAT Law. SENIAT's silence and its lack of transparency did not breach the standard: once informed of the requirement in 2012, MLDN refused to comply and waited until February 2015 to challenge SENIAT's silence. The earlier practice created no legitimate expectation that it would not change. ¶¶ 439–472
The full protection and security claim fails for the same reasons, although the standard covers legal as well as physical security. The national treatment claim fails because Anglo American did not prove that VAT CERTS were issued to exporters that did not comply with the deduction requirement. ¶¶ 480–501
No jurisdiction over the counterclaim. Article 8(3) of the Treaty limits jurisdiction to breaches by the host State of its Treaty obligations, so the counterclaim falls outside the arbitration agreement required by Article 47(1) of the Arbitration (AF) Rules. ¶¶ 524–530
Each party bears its own costs. The Claimant won on jurisdiction but lost on the merits, and had withdrawn its export-suspension claim. Venezuela had obstructed the proceeding by not contributing to the advances on costs. ¶¶ 557–560
Dissent: Guido Santiago Tawil agreed on jurisdiction. In his view, the Processing Assets and the Inventory were non-reversionary and should have been compensated. He also found that SENIAT's unexplained change of practice and its failure to answer MLDN's formal requests breached fair and equitable treatment. Dissenting Opinion ¶¶ 3–17

Procedural history

13 March 2014Request for Arbitration filed. ICSID registers it and approves access to the Additional Facility on 10 April 2014.
2 October 2014Tribunal constituted.
19 June 2015Procedural Order No. 2 rejects Venezuela's request for bifurcation.
13 November 2015Counter-Memorial filed, with Venezuela's counterclaim.
26 September 2016Anglo American withdraws part of its claims, including the export-prohibition claim.
9–16 December 2016Hearing on jurisdiction and the merits.
1 August 2018Proceeding declared closed.
18 December 2018Dissenting Opinion of Guido Santiago Tawil.
18 January 2019Award dispatched: jurisdiction upheld, claims dismissed, counterclaim dismissed for lack of jurisdiction.