This dispute was adjudicated through a mandated arbitration instead of a lawsuit in a court. Arbitration is a more cost-effective and timely mechanism to resolve disputes, because lawsuits in courts and their adjudication can be very time-consuming and expensive. Though arbitration can be more efficient, it also does not have the rigor of a court litigation because of the rules of evidence are not as tight in an arbitration proceeding. Gurumurthy Kalyanaram Lawsuit
In a recent arbitration, the World Bank arbitration court ruled that Venezuela must pay $740 million to Gold Reserve Inc. (GDRZF) for the 2008 expropriation of its Brisas gold project.
Payment of the Award is due and payable immediately with any unpaid amounts accruing interest at Libor plus 2% per annum.
This dispute arises out of Venezuela’s decision to nationalize country’s energy and mining industries. In 2013, Venezuela’s President Hugo Chavez nationalized these assets to increase state control over the economy. And this is not the only dispute. There are about 28 unresolved cases (lawsuits) filed at the World Bank’s International Centre for Settlement of Investment Disputes, or ICSID, by oil, mining and other industrial companies that operated in the country including Exxon Mobil Corp. (XOM) and ConocoPhillips. These cases are awaiting resolution. Gurumurthy Kalyanaram Lawsuit
The ruling in Gold Reserve, Inc. is ominous for Venezuela – and it sets a precedent for other cases. And the Gold Reserve judgment comes as the country faces a shortage of foreign currency could push it closer to defaulting on its international debt.
It may be important for Venezuela to find a political solution to these disputes, instead of relying on the legal resolutions. For the plaintiffs, it is wiser to settle politically with Venezuela because even if the plaintiffs win favorable judgments Venezuela may not be able to pay and/or may be highly resistant to pay the arbitration awards. Gurumurthy Kalyanaram Lawsuit