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International Arbitration Forum

Highbury International AVV and Ramstein Trading Inc. v. Bolivarian Republic of Venezuela

Case summary

At a glance

Parties
Highbury International AVV (Netherlands) and Ramstein Trading Inc. (Panama) v. the Bolivarian Republic of Venezuela
Case no.
ICSID Case No. ARB/11/1
Forum and rules
ICSID Convention arbitration; ICSID Arbitration Rules in force from 10 April 2006; place of proceeding Washington, D.C.; language Spanish
Treaty
Netherlands–Venezuela BIT of 22 October 1991; Article 22 of Venezuela's Investment Law (Decree-Law No. 356 of 1999) invoked in the alternative
Tribunal
Enrique Barros (President), Guido S. Tawil, Claus von Wobeser
Annulment Committee
José Carlos Fernández Rozas (President), Paolo Michele Patocchi, Álvaro Rodrigo Castellanos Howell
Sector
Gold and diamond mining concessions; hydroelectric project
Outcome
Award of 26 September 2013 declined jurisdiction because the claimants did not prove they owned the investments. The ad hoc Committee rejected the application for annulment in full on 9 September 2019.
Amount
Claimed: USD 633,265,589.88 (updated valuation), or in the alternative USD 209,764,446.00 plus compound interest (USD 89,211,937.49 at the date of the Memorial). Awarded: nothing. Arbitration costs: each side bore its own legal costs and ICSID costs were split equally. Annulment costs: the applicants bear all costs of the annulment proceeding and pay Venezuela USD 495,599.66, half of its legal costs.

The dispute

The claimants said they owned, through Venezuelan companies, gold and diamond mining concessions on the lower Caroní River: the Alfa concessions, held by Compañía Minera del Bajo Caroní, C.A. (Caromin Venezuela), and the Delta concessions, said to be held by V.M.C. Mining Company, C.A. (VMC). They alleged that on 25 February 2002 the State company Edelca, with military support, took over the concession areas to build the Tocoma (Manuel Piar) hydroelectric project. They also alleged that Venezuela recognised a right to compensation in Providencia Administrativa 003 (2 December 2003) and a Pliego de Condiciones (17 December 2003), and that it never paid the USD 209,764,446 fixed by the appraiser ABECIR in 2004. They claimed unlawful expropriation, breach of fair and equitable treatment, of full protection and security and of the umbrella clause, and arbitrary and discriminatory treatment. Venezuela raised four objections to jurisdiction (lack of ownership of the investment; no Dutch investment because Manuel Fernández was the effective controller; exclusive Venezuelan forum clauses in the concession titles; waivers of claims in the titles) and denied that Article 22 of the Investment Law contains an offer to arbitrate. On the merits it argued that Providencia 003 had been annulled by Providencia 004 (4 November 2004) and that the concessionaires had waived compensation for hydroelectric works.

Key holdings

  1. Alfa concessions: Caromin Venezuela held them, and its shares passed to Compañía Minera del Bajo Caroní AVV (Caromin Aruba) in 1994. But the 6 February 1998 transfer to Highbury was not proved. The share endorsements and shareholders' book were signed only by Manuel Fernández, with no proof of his authority. There was also no reliable evidence that Highbury controlled Caromin Aruba before the dispute arose, before consent (21 June 2010), or before the proceeding began (29 October 2010). Award ¶¶ 172, 179–187
  2. Delta concessions: they lay in a reserved zone, so under Article 201 of the 1945 Mining Law their transfer needed prior ministerial permission. That permission was never shown. Mr Valerio D'Amico kept acting as titleholder, including when he applied to extend the concessions on 19 May 2003. Providencia 003 and statements made in the New York litigation did not prove that VMC held title at the relevant dates, so the Tribunal lacked jurisdiction over the Delta claims. Award ¶¶ 201–211, 217–232
  3. The first objection was upheld and jurisdiction was declined. The other objections and the merits did not need to be decided. Article 22 of the Investment Law could not found jurisdiction either: because ownership was not proved, any offer it might contain was not addressed to the claimants. Award ¶¶ 235–241, 243
  4. Costs: because the claimants had reasonable grounds to litigate, each party bore its own legal costs and the ICSID costs were shared equally. Award ¶ 242
  5. No manifest excess of powers. The Tribunal applied Venezuelan law (Article 296 of the Commercial Code and the 1945 Mining Law) and weighed the evidence under Rule 34(1). Venezuelan administrative and judicial decisions did not bind it on jurisdiction. The argument based on the Pliego de Condiciones as a 'special agreement' under Article 9(5) of the BIT was raised for the first time in the annulment. Using the date the dispute arose as the critical date would not have changed the result. Decision on Annulment ¶¶ 81–121
  6. No serious departure from a fundamental rule of procedure. The Tribunal explained why the statements made in the New York proceedings did not bind it. Venezuela had challenged Fernández's authority in ¶ 435 of its Rejoinder, so there was no 'ambush argument', and the claimants had several chances to answer it. No failure to state reasons and no contradictory reasons: the Award's reasoning can be followed. Decision on Annulment ¶¶ 158–184, 201–215
  7. The application for annulment was rejected unanimously. The applicants bear all costs of the annulment proceeding (Committee fees and ICSID charges) and pay Venezuela USD 495,599.66, half of its legal costs of USD 991,199.33. Decision on Annulment ¶¶ 221–225

Procedural history

  1. 29 October 2010Request for Arbitration filed (corrected 30 November 2010); ICSID registers it on 5 January 2011.
  2. 14 June 2011Tribunal constituted. The Chairman of the ICSID Administrative Council appointed Enrique Barros as President on 13 June 2011.
  3. 10 August 2011Tribunal rejects the claimants' request to disqualify Arnold & Porter as Venezuela's counsel.
  4. 11 November 2011Tribunal joins Venezuela's jurisdictional objections to the merits.
  5. 30 April 2012Procedural Order No. 3 rejects the claimants' request for provisional measures (a financial guarantee).
  6. 6–10 August 2012Hearing on jurisdiction and merits in Washington, D.C.
  7. 26 September 2013Award: jurisdiction declined; costs shared.
  8. 3 January 2014Claimants apply for annulment on three grounds: manifest excess of powers, serious departure from a fundamental rule of procedure, and failure to state reasons.
  9. 6 March 2014Ad hoc Committee constituted. The proceeding was later suspended twice for non-payment of advances. On 19 May 2014 a new arbitration (ICSID Case No. ARB/14/10) was registered. On 25 September 2017 the Committee held it had no power to rule on an alleged settlement.
  10. 22 February 2018Annulment hearing in Washington, D.C.
  11. 9 September 2019Decision on Annulment: application rejected; applicants ordered to pay costs.

Tribunal, counsel and experts

Decided by
For the claimant
Mezgravis & Asociados · González de Cossío Abogados, S.C. · HomerBonner
For the respondent
Procuraduría General de la República · Arnold & Porter LLP · Foley Hoag LLP
Experts
Allan Brewer-Carías (claimant) · Graciela Dixon (claimant) · Rudolf Dolzer (claimant) · Juan Carlos Cuenca Vivas (respondent) · Kadri Dagdelen (respondent) · Timothy Hart (respondent) · Carlos Enrique Mouriño Vaquero (respondent) · Héctor Peña Torrelles (respondent)

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Keywords

Summary generated with AI from the published documents — refer to the award for the authoritative text.

Case ID
ICSID Case No. ARB/11/1
Country
Claimant
Highbury International AVV, Ramstein Trading Inc.
Respondent
Venezuela
Section