Payment of the award is due immediately and the company has commenced steps to ensure recognition and collection, Gold Reserve said yesterday in a statement.
“We feel vindicated by the tribunal’s clear conclusion that the Venezuelan government acted unlawfully,” Gold Reserve president Doug Belanger said in the statement. “There are well documented procedures in place for identifying and attaching sovereign commercial assets.”
Venezuela’s Former President Hugo Chavez nationalized assets in the country’s energy and mining industries to increase state control over the economy before he died from cancer in 2013. The nation is now involved in 28 unresolved cases 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.
The Gold Reserve judgment comes as Venezuela faces concern that a shortage of foreign currency could push it closer to defaulting on its international debt. Gold Reserve said on July 23 that it was seeking $2.1 billion for the nationalization of the gold and copper project.
Default Concerns
The South American country must honor ICSID rulings to avoid default of sovereign bonds, Joe Kogan, an analyst at the Bank of Nova Scotia, wrote in an Aug. 8 note to clients.
Venezuelan dollar debt suffered a selloff this month as Standard & Poor’s cut the country’s rating to CCC+ and predicted at least a 50 percent chance of non-payment in two years. Government notes now yield 15.7 percent on average, the most in developing nations.
The proposed sale of Citgo Petroleum Corp., a U.S. subsidiary of state oil company Petroleos de Venezuela SA, would be negative for both bondholders and international arbitration claimants, as it would reduce the government’s external vulnerabilities, Eurasia Group analyst Risa Grais-Targow said in a note on Sept. 10.
Venezuela’s Information Ministry did not immediately respond to an e-mail sent after business hours yesterday seeking comment on the Gold Reserve judgment.
Source: bloomberg.com
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