Anglo American PLC v. Bolivarian Republic of Venezuela
ICSID · Investment (ICSID and treaty) · Venezuela · 18 Jan 2019
Why it matters
This award clarifies the distinction between reversionary and non-reversionary assets under Venezuelan mining concessions, and the limits of fair and equitable treatment claims based on administrative silence. The dissenting opinion highlights disagreement on the treatment of processing assets and the standard of transparency owed to investors.
Summary
Anglo American PLC, a UK company, held an indirect 91.37% stake in Minera Loma de Níquel C.A. (MLDN), a Venezuelan company that operated mining concessions for nickel ore and processed it into ferronickel. The concessions expired on November 10, 2012. Under Venezuelan law, assets used for the reserved mining activity (reversionary assets) revert to the state without compensation, while non-reversionary assets (e.g., processing plant) should be compensated if taken. Anglo American claimed that Venezuela expropriated its non-reversionary assets (processing plant and inventory) without compensation, violated fair and equitable treatment (FET) by failing to issue VAT credit certificates (VAT CERTS) and not responding to requests, and breached full protection and security and national treatment. Venezuela objected to jurisdiction, arguing Anglo American had no protected investment because its indirect shareholding was not covered by the BIT and the dispute should be heard in Venezuelan courts. The Tribunal upheld jurisdiction, finding that indirect shareholdings can constitute an investment under the BIT. On the merits, the majority (President Derains and Arbitrator Vinuesa) held that the processing assets were reversionary under the 1999 Mining Law because processing was an integral part of the mining activity, so no compensation was due. They also found no FET violation because the VAT issue was a legitimate tax dispute and Venezuela's administrative silence did not breach the standard. The full protection and security and national treatment claims were also dismissed. The Tribunal rejected Venezuela's counterclaim for alleged environmental damages. Arbitrator Tawil dissented, arguing that the processing assets were non-reversionary and that Venezuela's failure to respond to VAT refund requests violated FET. The award is significant for its analysis of reversion clauses and the standard of transparency in tax matters.
The detail
Parties: Anglo American PLC v. Bolivarian Republic of Venezuela
Case number: ICSID Case No. ARB(AF)/14/1
Outcome: The Tribunal dismissed all claims and the counterclaim. Each party bears its own costs and half of the ICSID costs.
Applicable law: UK-Venezuela BIT (1995), ICSID Additional Facility Rules, Venezuelan law (1999 Mining Law, Investment Law, VAT Law)
Issues in play: The definition of 'investment' under the BIT and whether indirect shareholdings and assets used for processing (non-reversionary) were protected; the interaction between the BIT's fair and equitable treatment standard and Venezuelan tax administration procedures.
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