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International Arbitration Forum

ConocoPhillips Gulf of Paria B.V. v. Corporacion Venezolana del Petroleo, S.A. et al.

Case summary

At a glance

Parties
ConocoPhillips Gulf of Paria B.V. (petitioner) v. Corporación Venezolana del Petróleo, S.A. and Petróleos de Venezuela, S.A. (respondents)
Case no.
U.S. District Court, S.D.N.Y., No. 19 Civ. 7304 (LGS); underlying ICC Case No. 22527/ASM/JPA
Forum and rules
Petition to confirm under FAA § 207 and Article III of the New York Convention
Court
U.S. District Court for the Southern District of New York (Lorna G. Schofield, District Judge)
Underlying award(s)
ICC award rendered in New York on 29 July 2019
Treaty
Contract claim (Association Agreement); New York Convention
Sector
Oil and gas
Outcome
Order of 13 August 2020: the case was sent back to the arbitral tribunal to clarify whether the award's interest is simple or compound; the request for attorneys' fees was denied and the request for a stay was denied as moot.
Amount
Award: USD 33,700,000.00 plus interest from 22 October 2002 at LIBOR plus 1% per annum. The petitioner was ordered to pay USD 2,500,000.00 towards the respondents' costs, and the respondents to reimburse EUR 213,302,55 of the tribunal's fees and expenses. The simple-or-compound question was worth about USD 8 million.

The dispute

ConocoPhillips Gulf of Paria B.V. had made a loan to finance the purchase by Corporación Venezolana del Petróleo, S.A. (CVP) and Petróleos de Venezuela, S.A. (PDVSA) of a 35% stake in an oil field under an Association Agreement. In an ICC arbitration seated in New York, the tribunal ordered the respondents to repay USD 33,700,000.00 of the loan, with interest at "LIBOR plus 1% per annum", and dismissed ConocoPhillips' other claims. ConocoPhillips petitioned the court to confirm the award. The respondents did not oppose confirmation. The parties disagreed on whether the award granted compound interest (ConocoPhillips' view) or simple interest (the respondents' view). ConocoPhillips also asked for its attorneys' fees, and the respondents asked for a stay of enforcement under the U.S. Treasury's OFAC sanctions rules on Venezuela.

Key holdings

  1. The award does not say whether the interest is simple or compound, and neither side's reading is clearly correct. The award is therefore ambiguous. Under Second Circuit law (General Re Life Corp. v. Lincoln National Life), the court must send it back to the arbitrators for clarification of paragraph 423.iii. pp. 3–4
  2. The court refused to modify the award itself under 9 U.S.C. § 11(c). With about USD 8 million at stake, the issue is not merely a matter of wording or a clear error or oversight by the arbitrators. p. 5
  3. ConocoPhillips did not waive its compound-interest argument by failing to raise it in the arbitration. It had no duty to object until it knew the respondents would argue for simple interest on the loan repayment. pp. 5–6
  4. ConocoPhillips' request for attorneys' fees and costs of the confirmation action was denied because it cited no binding legal authority supporting it. p. 6
  5. The respondents' request to stay enforcement under the OFAC Venezuela sanctions rules (31 C.F.R. § 591.407) was denied as moot while the award is being clarified. p. 6

Procedural history

  1. 29 July 2019The ICC tribunal issued its award in New York: USD 33,700,000.00 plus interest at LIBOR plus 1% per annum.
  2. 5 August 2019ConocoPhillips filed its petition to confirm, recognize and enforce the award.
  3. 27 March 2020The respondents filed their opposition.
  4. 10 April 2020ConocoPhillips filed its reply.
  5. 13 August 2020Court order: the matter was remanded to the tribunal to clarify the interest provision; the fee request was denied and the stay request was denied as moot. The published documents do not show the outcome of the remand.

Tribunal, counsel and experts

Decided by

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Keywords

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

Case ID
U.S. District Court, Southern District of New York, No. 19 Civ. 7304 (LGS)
Country
Claimant
ConocoPhillips Gulf of Paria B.V.
Respondent
Corporacion Venezolana del Petroleo, S.A. et al.
Section

Court: United States, U.S. District Court, Southern District of New York
Date of decision: 13 August 2020
Case number: 19 Civ. 7304 (LGS)
New York Convention provisions: III
Source: New York Convention case law case database.