Venezuela US, S.R.L. (Barbados) v. Bolivarian Republic of Venezuela
PCA · Investment (ICSID and treaty) · Venezuela · 26 Jul 2016
Why it matters
This case is significant for its detailed analysis of the temporal scope of dispute resolution provisions in investment treaties, particularly the availability of ICSID, Additional Facility, and UNCITRAL arbitration. It also clarifies the application of MFN clauses to dispute resolution, holding that an MFN clause can import more favorable arbitration conditions from another treaty, even when the base treaty's dispute resolution clause is specific.
Summary
Venezuela US, S.R.L., a Barbados company, initiated arbitration against Venezuela under the Barbados-Venezuela BIT for alleged breaches related to its oil and gas investment. Venezuela objected to jurisdiction, arguing that the BIT's Article 8 only permitted ICSID or Additional Facility arbitration, and since Venezuela had ratified the ICSID Convention in 1995, the UNCITRAL option was no longer available. The Tribunal interpreted Article 8(2) as limiting UNCITRAL arbitration to the period before Venezuela became an ICSID Contracting State. However, the Claimant invoked the MFN clause in Article 3 to seek treatment as favorable as that accorded to Ecuadorian investors under the Ecuador-Venezuela BIT, which allowed UNCITRAL arbitration when ICSID or Additional Facility was unavailable. The Tribunal compared the two BITs, finding that the Ecuador-Venezuela BIT provided broader access to UNCITRAL arbitration, including after ICSID denunciation. Since Venezuela had consented to international arbitration, the MFN clause entitled Barbados investors to the same conditions. The Tribunal rejected the jurisdictional objection by a 2-1 majority, with Professor Kohen dissenting. The case continues on the merits.
The detail
Parties: Venezuela US, S.R.L. (Barbados) v. Bolivarian Republic of Venezuela
Case number: PCA Case No. 2013-34
Outcome: The Tribunal rejected Venezuela's objection to jurisdiction ratione voluntatis, allowing the arbitration to proceed on the merits.
Applicable law: Barbados-Venezuela BIT (1994), UNCITRAL Rules (1976), VCLT Articles 31-32
Issues in play: Interpretation of Article 8 (dispute resolution) of the Barbados-Venezuela BIT and application of the MFN clause in Article 3 to import more favorable dispute resolution provisions from the Ecuador-Venezuela BIT.
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