Venezuela triumphs in Dutch Court of Appeals. A US$240 million claim brought by the members of the García Armas family was rejected based on their dual nationality in Manuel Garcia Armas and others v. Venezuela. According to Partner Ignacio Torterola, the judgment confirms that dual nationals bringing claims against their home state “is alien to international law, including investment law.” GST LLP served as counsel to Venezuela, while The Garcías were represented by Freshfields and Dechamps International Law.
The dual Venezuelan-Spanish nationality of claimants compelled an UNCITRAL tribunal to decline jurisdiction. GST LLP partners Ignacio Torterola and Diego Gosis noted that the decision, the third rejecting a claim of double nationals is “fundamental”, and that it provides “useful guidance” on obtaining dispute resolution.
As a Delaware-based Chancery Court hears arguments, Quinn Smith of GST LLP asserts that the letter of Venezuelan law states that only the President of Venezuela has the right to name board members to Citgo in that country. He said, “Reading powers outside the text in dangerous. That word [interim] is crucial.”
Quinn Smith of GST LLP defends Venezuela’s Ministry of Defense in a matter involving an award in favor of shipbuilder Huntington Iingalls because the tribunal did not comply with the terms of the agreement specifying that arbitration take place in Venezuela. The dispute dates back to a 1997 deal for Huntington Ingalls to modernize two warships for Venezuela’s navy.
A US court in Washington, DC has refused to enforce US shipbuilder Huntington Ingalls US$129 million award against Venezuela’s ministry of defense in a 17-year dispute over a contract to upgrade two missile-armed navy frigates. The Virginia based Huntington Ingalls had previously asked a federal court in Mississippi to retain jurisdiction in the case. GST LLP’s Quinn Smith, representing the ministry, was pleased with the ruling to dismiss.
A Washington DC Federal court judge ruled that an earlier Mississipi district court retains jurisdiction over a dispute involving US shipbuilder Huntington Ingalls and Venezuela’s Ministry of Defence. Quinn Smith of GST LLP approved of the judge’s decision to “...dismiss the case, without ordering its transfer.”
Ignacio Torterola, Argentina’s former ICSID liaison, joins Gomm & Smith, now branded as GST LLP and expanding its practice to Washington, D.C., where Torterola will be based. He joins Argentine colleague Diego Gosis there, and he brings three substantial treaty arbitration cases with him, for which he acts on behalf of Venezuela. Torterola spent nine years at Argentina’s Treasury Attorney General’s Office and five years heading the state’s ICSID office in the Argentine Embassy in Washington.
UNCITRAL declines jurisdiction over an investment treaty claim against Venezuela. GST LLP Partner Ignacio Torterola acknowledges the fairness of the outcome, citing that Clorox España’s transfer of shares is not a protected investment in its Venezuelan subsidiary.
GST attorneys for the Maduro government Quinn Smith and Katherine Sanoja rejected the suggestion by opposition leader Guaido’s attorneys that a summary judgment be issued due to “The fundamental disagreement over who has the authority to represent Venezuela.” They further explained that parallel arbitration proceedings by Owen Illinois subsidiaries are underway for the same alleged misdeeds, further complicating the matter.
Maduro-selected attorneys Quinn Smith, Diego Gosis and Katherine Sanoja of GST LLP assert that attorneys for opposition leader Juan Guaido never received permission from the Washington DC court to substitute as counsel for Venezuela, and that GST LLP never consented to such a substitution. This is one instance of an ongoing power struggle between the two Venezuelan leaders before several US courts over which government has the right to appear in litigation filed against the crisis-stricken nation.
A recent decision to dismiss an arbitration against Venezuela after the country denounced an underlying treaty has provoked speculation that other countries will be incentivized to do so. Diego Gosis of GST LLP confirms that previous tribunal findings on denunciation of treaties also apply to ICSID conventions, which Venezuela denounced in 2012.
ICSID, in a first-time move, will administer arbitration proceedings not only under its own rules but also under UNCITRAL rules, as well as ad hoc investor-state and state-state proceedings. Venezuela, meanwhile, has applied to annul a US$307 million award over the construction and operation of a fertiliser plant that was issued in October 2017 in favour of Koch Minerals Sarl and Koch Nitrogen International Sarl. Ignacio Torterola of GST LLP in Miami, who is representing the State, tells GAR the grounds for annulment are “intrinsically connected” to the dissenting opinion of an Australian arbitrator which he says “targets the more fundamental tenets of the decisions.”
A tribunal hearing BIT claims against Venezuela has ordered the third-party funded claimants to post US$1.5 million in security for costs – only the second known time such an order has been made in an investment arbitration. In support of this measure, GST LLP Partner Ignacio Torterola representing Venezuela tells GAR: “States should not be perceived as the ones footing the bill in investment arbitration, especially in cases that do not belong before the jurisdiction of international tribunals, as those brought by dual nationals with the dominant nationality of the State party in the dispute. Those cases belong to the municipal law.”
In arguments on behalf of the Ministry of Defense of Venezuela, GST LLP attorneys claim that a US federal court lacks subject-matter jurisdiction because the contract at issue is military, rather than commercial in nature, and treaties invoked by US shipbuilder Huntington Ingalls apply to commercial matters. They also declared that an award in favor of Hungtington Ingalls is unenforceable due to arbitrations occurring in venues other than Venezuela, which had been stipulated in the parties’ arbitration agreement.
Quinn Smith, representing the Ministry of Defense of Venezuela asserted that the ICSID tribunal abandoned the terms of the contract between Venezuela and US shipbuilder Huntington Ingalls by sending arbitration to Rio, and then further erroroneously refering to arbitration having taken place in Washington, DC. He stated, “We trust that the court will agree that the arbitral tribunal did not apply the will of the parties.”
Huntington Ingalls, a subsidiary of US defense contractor Northrop Grumman has won nearly US$129 million in arbitration with Venezuela’s defense ministry over repair and upgrade of naval frigates. Filings and counter-filings have appeared since this dispute began over 15 years ago, amid deteriorating US-Venezuela relations. Quinn Smith of GST LLP, handling the matter in US courts, confirms that the tribunal “accepted some of Huntington’s claims, while rejecting others, and admitted the ministry’s counterclaim.”
Diego Gosis of GST LLP, also working with Guglielmino & Asociados, questions the impartiality of an ICSID ad hoc committee member after he made derisive references to Venezuela. Venezuela requested that committee member Alvaro Castellanos Howell be removed while the committee is deciding whether to revive or annul a claim by Blue Bank International of Barbados against Venezuela.
Washington DC federal judge Amy Berman Jackson paused a glassmaker’s petition to enforce a $500 million arbitration award issued against Venezuela for expropriating two production plants. GST LLP partner Quinn Smith noted that several arbitrations launched by OEIG regarding the same asset ought to warrant dismissal, but he was pleased with the judge’s order to stay.
An ICSID tribunal rejected a claim brought against Veneuela by an investor in a BMW and MiniCooper import business. Diego Gosis, for Guglielmino & Asociados in Buenos Aires and GST LLP in Miami notes a “…consistent pattern that dismisses claims by fake foreign investors – in this case, a known Venezuelan impresario intending to sue Venezuela under the guise of a Barbadian investor”. He adds that “tribunals have rejected jurisdiction in the last three ICSID cases against Venezuela where awards were issued: Blue Bank, Favianca and now Transban.”
Diego Gosis of GST LLP applauded the ICSID tribunal’s finding of lack of jurisdiction in an arbitration against Venezuela over its expropriation of glass production plants, saying that “The case was in many ways a speculative attack against the rule of law.”
An ICSID tribunal has ruled it has no jurisdiction to hear a bottlemaker’s billion-dollar claim against Venezuela because it was filed after the state gave notice of its denunciation of the ICSID Convention nearly six years ago. Diego Gosis, of Guglielmino & Asociados in Buenos Aires and GST LLP in Miami, comments “We feel that the award reaches a good and solid decision on the issue of the form and effect of denunciation of treaties in general and of the ICSID convention in particular.”
Venezuela’s Ministry of Defense told a New York federal judge Friday that Canadian mining company Crystallex can’t seize funds from a Bank of New York Mellon account, arguing that the money belongs entirely to another company. Quinn Smith of GST LLP, counsel for Venezuela, further elucidated that the move by Crystallex to establish a New York judgment against the Ministry goes against “the trust and its language that states’ assets are immune under US and customary international law.”
After discovering that glassmaker OIEG concealed the fact that it sold the right to enforce a US$500 million award to an unnamed Irish investment fund, GST LLP attorneys are quoted as saying that the company is essentially foisting “...a flawed award on this court that takes advantage of an arbitrator’s misconduct, continues to exploit a weakness of the investment arbitration system and conceals the owner of the award and true party in interest.” Quinn Smith noted the “significant doubts” arising and further suggested that it wasn’t even clear whether the sale of the award actually took place. Law360 notes the “stiff opposition” mounted by GST LLP which asserted that federal law prohibits arbitral awards being granted in the proceedings in NY and that OIEG had also brought a parallel complaint in DC.
The sale of an award against Venezuela by glassmaker OIEG to an undisclosed third party is “problematic” according to Diego Gosis of GST LLP. He explains that any conflicts of interest are also unable to be confirmed, and that “article 27 of the ICSID convention states that no contracting state shall provide diplomatic protection to its nationals in relations to ongoing proceedings.”
GST LLP Partners Diego Gosis and Ignacio Torterola welcome the enforcement of security costs to protect against frivolous claims appearing before tribunals after two investment treaty cases against Venezuela were ordered to prove they have sufficient assets to pay costs if they lose. The García Armas family are pursuing UNCITRAL and ICSID under the Spain-Venezuela BIT over the expropriation of their food distribution businesses.
In response to Venezuela’s fourth dismissal in an effort to unseat an arbitrator involved in a dispute by US glassmaker Owens Illinois, GST LLP attorney Diego Gosis responded that the standard set in this dismissal would “make challenging conflicted arbitrators virtually impossible, and departs from established rules and principles in international arbitration.”
OIEG case against Venezuela stymied by GST LLP’s claim that federal law prohibits arbitral awards from being granted in New York federal court proceedings. Quinn Smith of GST LLP noted that his firm will represent Venezuela in actions taking place in Washington DC where it is relevant.
The risk of conflicting decisions and/or double recovery rendering any award by a NY federal court unenforceable is cited by GST LLP attorneys representing Venezuela, who faces glassmaker Owens Illinois there.