Ghella v. Venezuela and Metro de Valencia
ICC · Investment (ICSID and treaty) · Venezuela · 16 Mar 2022
Why it matters
This case clarifies that a bilateral framework agreement between states, without clear language offering arbitration to investors, does not create jurisdiction for an ICC arbitration. It underscores the need for explicit consent in investment arbitration and highlights the limits of umbrella clauses in such agreements. The decision also addresses cost allocation when a claimant pursues a weak jurisdictional basis.
Summary
Ghella S.p.A., an Italian company, initiated ICC arbitration against Venezuela and Metro de Valencia under the 2001 Acuerdo Marco between Italy and Venezuela, claiming breaches related to metro construction contracts. The respondents objected to jurisdiction, arguing Article XV of the Acuerdo Marco only covered disputes between companies, not investor-State claims, and that the contracts exclusively submitted disputes to Venezuelan courts. The tribunal agreed, finding no valid arbitration agreement. It noted that Article XV's language referred to disputes between 'empresas venezolanas e italianas' and did not constitute an offer to arbitrate by the State. The tribunal also rejected Ghella's argument that the Acuerdo Marco was a treaty protecting investments, as it lacked typical BIT protections. Consequently, the tribunal declined jurisdiction and ordered Ghella to pay the administrative costs and USD 600,000 of the respondents' defense costs, considering the weak jurisdictional basis and the disparity in legal fees.
The detail
Parties: Ghella v. Venezuela and Metro de Valencia
Case number: ICC Case No. 24776/JPA
Outcome: The tribunal declined jurisdiction; Ghella ordered to pay administrative costs and USD 600,000 of respondents' defense costs.
Applicable law: ICC Rules of Arbitration (2017); Acuerdo Marco de Cooperación Económica, Industrial, de Infraestructura y para el Desarrollo (2001) between Italy and Venezuela; Venezuelan law
Issues in play: The dispute centered on whether Article XV of the Acuerdo Marco constituted a valid arbitration agreement. The tribunal held it did not, as it only provided for dispute resolution between companies, not investor-State arbitration, and the parties' contracts gave exclusive jurisdiction to Venezuelan courts.
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