Published 8 February 2024
The expropriation policies carried out by the Government of Hugo Chávez between 2002 and 2012 resulted in dozens of arbitration awards, potentially totaling around USD 18 billion dollars - only a fraction of the overall external debt, estimated at USD 140 billion. To enforce some of these awards, creditors have submitted claims to seize the primary external asset of the Venezuelan national oil company: Citgo, a U.S. refinery. In 2019, two U.S. policies aimed to impede the enforcement of these awards: (i) recognizing the speaker of the National Assembly as interim president and (ii) designating the national oil company as a sanctioned entity, leading to the freezing of its assets, including Citgo.
The unique Venezuelan case imparts three key lessons regarding sanctions and International Arbitration. Firstly, under exceptional circumstances, sanctions policy can derive into an executive asset protection mechanism to hinder the enforcement of awards in the U.S. Secondly, this protection generates conflicts with the separation of powers between the Executive and the Judiciary. Lastly, leveraging these tensions, the Judiciary can potentially diminish the effectiveness of sanctions as an asset protection mechanism concerning the enforcement of arbitration awards.
This paper will be part of the TDM Special Issue on "Sanctions and International Arbitration: Impact on Substantive and Procedural Issues". More information here www.transnational-dispute-management.com/news.asp?key=1960