Summary

Reproduced from www.worldbank.org/icsid with permission of ICSID. (Document, does not apply to summary and/or TDM IACL Case Report below).

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Case report (free download)

Case Report by Louise Woods, editor Maria I. Pradilla Picas

Summary

In the Award rendered on January 29, 2016, the Tribunal found that it had jurisdiction to hear the dispute between Tenaris S.A. and Talta -Trading E Marketing Sociedade Unipessoal LDA, on the one hand, and the Bolivarian Republic of Venezuela, on the other hand under the Venezuela-Belgium-Luxembourg Economic Union and the Venezuela-Portugal BITs because: (1) contrary to Venezuela's contention, Tenaris and Talta were "investors" for the purposes of the BITs, having their effective places of management in their respective countries of incorporation; (2) their investments (with the exception of one claim relating to an Off-Take Agreement which the Tribunal found was not an "investment" for the purpose of either BIT) qualified for protection under the terms of the relevant BITs; (3) Claimants' fair and equitable treatment and protection and security claims were properly notified to Respondent in accordance with the requirements of the BITs; and (4) the Tribunal was entitled to determine Claimants' claims arising under a supply contract with a State-owned entity where those claims were expressed to be breaches of the relevant BITs.

However, the Tribunal went on to find that Venezuela's pre-expropriation conduct vis-à-vis Claimants' investments did not violate either BITs' fair and equitable treatment standard, nor did it violate either BITs' protection and security guarantee, even though the Tribunal expressly acknowledged that such protection and security is not limited to physical protection from third parties. Nonetheless, the Tribunal did conclude that Respondent's nationalization of the Claimants' investment was contrary to Venezuelan law, without payment of compensation and therefore amounted to a breach of the relevant BIT provisions. On that basis, the Tribunal awarded damages to Claimants to compensate them for the value of their expropriated investments, actualized to the date of the Award and with interest, compounded semi-annually from the date of Award until paid in full.

Main Issues

Jurisdiction - personal: "registered office" versus place of "effective management"; jurisdiction - material: contents of notice of dispute; purely commercial transaction; contractual claims; Fair and Equitable Treatment: whether organ of the State; Protection and Security: not limited to physical protection; Expropriation: no compensation, renvoi to local law; Damages: fair market value, asset-based approach; Costs: no order as to costs.

Tenaris S.A. and Talta-Trading E Marketing Sociedade Unipessoal Lda v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/26) - Award (English)

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