U.S. court upholds award to miner Crystallex in Venezuela dispute

Reuters | 27 March 2017

U.S. court upholds award to miner Crystallex in Venezuela dispute

by Brian Ellsworth

A U.S. court has upheld an award by a World Bank Tribunal that orders Venezuela to pay more than $1 billion to Canadian mining company Crystallex, paving the way for the firm to seize assets for the 2008 expropriation of the Las Cristinas gold project.

The tribunal known as the International Centre for Settlement of Investment Disputes (ICSID) last year ordered Venezuela to pay Crystallex $1.2 billion plus accrued interest, which adds an additional $200 million for a total of $1.4 billion.

The ICSID is often used by global companies seeking compensation from governments that have nationalized their assets.

The U.S. district court for the District of Columbia on Saturday upheld the Crystallex award and dismissed Venezuela’s request to have the award vacated.

Venezuela’s information ministry did not respond to an email seeking comment.

Companies seeking to collect on such awards first need to obtain rulings from courts in the countries where it wants to seize assets. Venezuelan assets in the United States include refineries owned by Citgo, a subsidiary of state oil company PDVSA.

Crystallex in November sued Citgo on the grounds that its 2016 debt swap, which used Citgo shares as collateral, could prevent it from collecting on its arbitration awards.

Las Cristinas in Venezuela was Crystallex’s flagship project and at the time was regarded as one of the world’s biggest undeveloped gold deposits with estimated gold reserves of 12.5 million ounces. But development was delayed for years by legal disputes and permitting hold-ups.

Venezuela, which is struggling under triple-digit inflation and a severe recession, is immersed in nearly 20 arbitration disputes with foreign companies resulting mainly from a wave of state takeovers by late socialist leader Hugo Chavez.

It has reached negotiated settlements to some of the disputes, but companies that have won ICSID awards have not been able to collect on them due to frequent appeals and the complexity of attaching Venezuelan assets.

source: Reuters