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Favorable outcome for the Republic in the long legal battle by Exxon Mobil against the country

STATEMENT (unofficial translation)

Transnational Exxon Mobil has been attacking the sovereignty of the Bolivarian Republic of Venezuela continuously for the past seven years, challenging the nationalization of the Orinoco Oil Belt and the extinction of the association agreements signed by PDVSA for the oil opening in the 90′s all actions led by the Supreme Commander Hugo Chavez as part of our Full Oil Sovereignty Policy. This attack began with an attempt to bring PDVSA to its knees by an abusive process that can only be described as “judicial terrorism” when Exxon Mobil obtained from a court in London a warrant for freezing PDVSA assets with global reach (the infamous “Mareva Injunction”). At the time, Exxon Mobil said PDVSA owed ​​12 billion dollars for the nationalization of the Cerro Negro Project and that this powerful transnational needed court protection in London. The strong defense of PDVSA was successful in defeating this abusive maneuver by Exxon Mobil, showing that his actions were totally unfounded. When Exxon Mobil initiated the arbitration against PDVSA at the International Chamber of Commerce, PDVSA was able to show that ExxonMobil’s claims were highly exaggerated and that if ExxonMobil had had any interest in negotiating an agreement in good faith, could have obtained the appropriate compensation by a friendly agreement.

Back then, in early 2012, ExxonMobil tried to downplay the success of PDVSA, informing everyone around the world that his main complaint was still billions of dollars now against the Venezuelan State to the ICSID. To this end the transnational used the questioned international investment arbitration system, which has attacked the sovereignty of differet states many times and imposed punitive damages to different countries in order to inhibit them in the exercise of their permanent sovereignty over exploitation of its natural resources.

But now, even that system has rejected the exaggerated claims of ExxonMobil. The ICSID arbitral tribunal has just issued its final decision in the case, ending the unfounded speculations that have been circulating for several years that the Republic would have to pay damages of billions of dollars to Exxon Mobil and confirming that the level of compensation sought by Exxon Mobil for nationalization has always been outrageous and completely unjustified, as the Republic has made it clear from the beginning of the dispute in 2007 the total amount of compensation determined by the arbitral tribunal for the old Cerro Negro Projects and La Ceiba is 1,591 million dollars, an amount that bears no relation to the unreasonable claims of Exxon Mobil in this case, which totaled to about 20 billion dollars. These absurd amounts sought by multinationals such as Exxon Mobil and Conoco, if they are taken seriously by arbitration courts, could result in the destruction of the economy of many countries and the total collapse of the system of international law.

Is noteworthy that the ICSID arbitral tribunal has recognized a credit on favor of the Republic for the amount already paid by PDVSA of $ 907 million in 2012 for the Cerro Negro Project, to be deducted, plus interest, substantially reducing the amount remaining to be paid. Although the amount paid by PDVSA should have put an end to the dispute over compensation for the Cerro Negro Project, the overall amount determined by the arbitral tribunal ICSID for all Exxon Mobil projects in the country is within the range considered reasonable by the Republic in 2007, when the Republic made its best efforts to reach a friendly agreement, which were rejected by Exxon Mobil abruptly at that time.

The decision of the arbitral tribunal makes clear that this seven-year issue, of gigantic proportions and outrageous maneuvers by Exxon Mobil, was totally unnecessary, not serving any legitimate purpose. Venezuela’s withdrawal from ICSID, which occurred in 2012 in reaction to elements of the system of investment arbitration with whom we disagree in any way diminished our discretion to recognize the principle of fair compensation for the nationalization, but what the Republic does not has accepted and will never accept is kowtowing to exorbitant claims. The ultimate success in this litigation is due to the strong commitment of the Republic to be faithful to this fundamental principle.

Once again the Bolivarian Republic of Venezuela, its government, institutions and workers come their way and managed to defeat the attacks of the powerful corporate interests, and their shamefully supporters national officials  in the country. We reiterate that Venezuela is respected, we are determined to defend our independence and sovereignty in any scenario.


AVN / Press – Venezuelan Embassy in the US / October 9, 2014

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