On 24 January 2012, President Hugo Chávez followed through on his repeated threats to withdraw Venezuela’s membership from the International Centre for the Settlement of Investment Disputes ("ICSID"), the most widely used facility for the settlement of global investment disputes. (See our previous report on these threats in September 2011.) The timing coincides with the merits hearing in the ICSID arbitration by Exxon Mobil against Venezuela scheduled to occur this month in Paris.
In its notice, Venezuela noted a concern for its sovereignty and for alleged partiality by ICSID tribunals in favor of investors. Venezuela also has separately indicated that it intends to “re-negotiate” existing BITs.
The ICSID Convention provides a number of protections for current and some future claims despite Venezuela’s withdrawal. For instance, in accordance with Article 71 of the ICSID Convention, the denunciation of Venezuela’s ICSID membership will take effect only six months after the receipt of Venezuela’s notice by ICSID, i.e., on 25 July 2012. Moreover, in accordance with Article 72 of the ICSID Convention, notice of withdrawal will not “affect [Venezuela’s or its subdivisions’ or agencies’] rights or obligations under [the ICSID] Convention…arising out of consent to the jurisdiction of the Centre given by one of them before such notice was received” by ICSID.
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