Autopista Concesionada de Venezuela, C.A. v. Bolivarian Republic of Venezuela
ICSID · Investment (ICSID and treaty) · Venezuela · 23 Sep 2003
Why it matters
This case is a landmark ICSID award addressing the balance between a state's sovereign powers and contractual obligations in a public-private concession. It clarified the standard for force majeure due to civil unrest, the requirement for a state to maintain economic-financial equilibrium, and the limits on recovering lost profits when the claimant itself contributed to the termination. The award also addressed compound interest under Venezuelan law.
Summary
Aucoven, a Venezuelan company, entered into a 30-year concession agreement with Venezuela to improve and operate the Caracas-La Guaira Highway. The project required significant investment, including construction of a new bridge. Financing depended on toll revenues and government guarantees. After public protests against toll increases, Venezuela refused to raise tolls and failed to issue required guarantees. Aucoven terminated the agreement and initiated ICSID arbitration. The tribunal found Venezuela breached several clauses, including the obligation to maintain economic-financial equilibrium and to issue guarantees. However, it rejected Aucoven's claim for lost profits, finding that Aucoven had not met the contractual and legal standards for such recovery. The tribunal awarded compensation for out-of-pocket expenses and assets contributed, with simple interest. The award is notable for its detailed analysis of force majeure, the state's contractual duties, and the calculation of damages in long-term concessions.
The detail
Parties: Autopista Concesionada de Venezuela, C.A. v. Bolivarian Republic of Venezuela
Case number: ICSID Case No. ARB/00/5
Outcome: Venezuela breached the Concession Agreement; Aucoven was entitled to terminate; Venezuela ordered to pay compensation for out-of-pocket losses and assets contributed, totaling approximately Bs. 2,055,288,000 (constant as of September 30, 1995) plus simple interest.
Quantum: Bs. 2,055,288,000 (constant as of September 30, 1995) plus interest
Applicable law: Venezuelan law (Decree Law No. 138 on Concessions), Concession Agreement, ICSID Convention
Issues in play: The case involved the application of Venezuelan concession law and contract law, particularly regarding force majeure, breach of contract, and the calculation of damages for out-of-pocket expenses and lost profits.
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