Identifier
Created
Classification
Origin
08CARACAS1507
2008-10-30 20:48:00
CONFIDENTIAL
Embassy Caracas
Cable title:  

VENEZUELA: CONSTITUTIONAL COURT UPHOLDS

Tags:  ECON EFIN PREL EINV PGOV VE 
pdf how-to read a cable
VZCZCXRO0298
PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG
RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHCV #1507 3042048
ZNY CCCCC ZZH
P 302048Z OCT 08
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 2050
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHNSC/NSC WASHDC
RUMIAAA/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY
C O N F I D E N T I A L CARACAS 001507 

SIPDIS

E.O. 12958: DECL: 10/30/2018
TAGS: ECON EFIN PREL EINV PGOV VE
SUBJECT: VENEZUELA: CONSTITUTIONAL COURT UPHOLDS
INTERNATIONAL ARBITRATION

REF: CARACAS 01197

Classified By: Economic Counselor Darnall Steuart for reasons
1.4 (b) and (d).

C O N F I D E N T I A L CARACAS 001507

SIPDIS

E.O. 12958: DECL: 10/30/2018
TAGS: ECON EFIN PREL EINV PGOV VE
SUBJECT: VENEZUELA: CONSTITUTIONAL COURT UPHOLDS
INTERNATIONAL ARBITRATION

REF: CARACAS 01197

Classified By: Economic Counselor Darnall Steuart for reasons
1.4 (b) and (d).


1. (SBU) On October 17, the Venezuelan Supreme Court
(Court) upheld the constitutional viability of international
arbitration. The decision interpreted Article 258 of the
Constitution, which states "The law shall promote
arbitration, conciliation, mediation and any other means of
alternative dispute resolution." This Article, as well as
Article 22 of the 1999 Law on Promotion and Protection of
Investments, has been cited by former investors such as
ExxonMobil, as providing them access to arbitration with the
World Bank International Centre for Investment Disputes
(ICSID.)


2. (SBU) In the interpretation, the Court acknowledged the
virtues of arbitration and a constitutional right to
arbitration. However, it resolved that the Bolivarian
Republic of Venezuela (BRV) must expressly consent to
arbitration and that Article 22 does not provide a clear and
open offer of consent to ICSID arbitration. To reach this
conclusion, the Court reasoned that the determination for
arbitration rests solely in Venezuelan law rather than a
consideration of both Venezuelan and international law.


3. (C) EmbOffs spoke with an attorney, Elizabeth Elijuri
(protect),of Macleod Dixon S.C, who reported that the legal
community views the decision quite favorably. The ICSID
arbitration panels, she said, would not be bound by the fact
that the GBRV had elicited this decision from its
government-controlled Supreme Court. For cases in which
Article 22 has already been invoked, the ICSID tribunals will
have to take into account arguments in Venezuelan law as well
as those of international law to determine if ICSID has
jurisdiction. Also, this interpretation does not nullify
arbitration protection offered to investors protected by
Bilateral Investment Treaties (BITs.)


4. (SBU) Comment. Post expected the Court's interpretation
to nullify all avenues to arbitration when the BRV is party
to a legal dispute. Instead, it ratifies the existence of a
fundamental right to arbitration and holds out the
possibility that the State can submit itself to a national or
international arbitration procedure. The decision will,
however, have to be considered by the arbitration panel
convened by investors such as ExxonMobil and ConocoPhillips.
End Comment.
CAULFIELD