Barbados plays role in Venezuelan firms nationalisation fight
Top Venezuela firm files arbitration against Chavez government under provisions of Barbados treaty.
BRIDGETOWN, Barbados, Thursday, February 23, 2012 – A 1999 double taxation convention signed between Barbados and Venezuela has been drawn into play in a nationalisation dispute between well known Venezuelan food and beermaker Empresas Polar and the Venezuelan government.
A Barbados-based holding company led by executives of Empresas Polar has filed an international arbitration claim against President Hugo Chavez's government over its nationalization of a fertilizer project, documents show.
According to the World Bank's International Centre for Settlement of Investment Disputes (ICSID), the Barbados-based "Gambrinus, Corp" registered a claim against Venezuela on December 2 in relation to a "fertilizer enterprise."
While the ICSID provided no further details, reports coming out of Venezuela are that the dispute was over fertilizer-maker Fertinitro, which Chavez nationalized in 2010, and in which Polar had a 10 percent stake.
Under the convention signed between Barbados and Venezuela, there is provision for dispute resolution through arbitration, which is meant to protect companies against unfair treatmentand to resolve disputes with governments without having to resort to litigation in local courts.
The move may set a precedent for Venezuelan companies seeking access to international courts to settle disputes with the socialist government that otherwise would be litigated by local judges, who critics say are controlled by Chavez.
The case is highly delicate as Chavez has repeatedly threatened to nationalize Polar, the South American nation's largest private employer. Its products range from beer to corn flour and reach nearly all of Venezuela's 29 million people.
Arbitration claims by Venezuelan companies could become more frequent if Chavez begins a more widescale expropriation of local businesses after five years of taking over assets of many of Venezuela's top foreign firms.
Chavez, who says his widespread nationalizations have redressed decades of inequality and unscrupulous business practices, has lambasted the World Bank tribunal as an instrument of colonial domination.
Other Venezuelan companies facing threat of seizure, such as the country's banks, also appear to be creating foreign subsidiaries that would let them pursue disputes through international arbitration rather than local courts.
Venezuela's withdrawal from ICSID, which takes effect in mid-2012, will not affect litigation of cases currently pending such as the one filed by Gambrinus or those that are filed in the next few months, Nolan said.
Chavez has said he will refuse to pay out any claims ordered by ICSID, but legal experts say 140 other member nations would see judgments as enforceable, meaning companies could obtain court orders to seize Venezuelan assets abroad.