Venezuela's potential departure from the International Center for Settlement of Investment Disputes (Icsid) is to shoo the investment of foreign companies.

"Nobody in his right mind is to invest in a country which is not at Icsid," attorney Luis Alfredo Araque admonished.

The expert in arbitration explained that the organization is set not to damage States, but to prevent governments from committing abuse of authority. "The Icsid is meant to prevent States from stealing; it is not intended to punish States, but protect investments."

In Araque's judgment, the threat uttered by Venezuelan President Hugo Chávez as to leave Icsid is "very serious" and if coming true, it could cause serious damages to the nation.

"We must clear out of there. We will not acknowledge any decision from the Icsid," Chávez said last Sunday on his TV and radio show "Aló, Presidente" (Hello, President!) apropos a dispute with US oil corporation Exxon Mobil. "They are immoral; despite the decision in Paris, now they come and threat us with the Icsid," the president commented in reference to the position of the oil company.

While this is not the first time that President Chávez ponders on Venezuela's potential pullout of the arbitration center, charges against the country for expropriation and seizure of private assets have accrued, to such an extent that there are 22 ongoing cases at the Icsid, as appears from the organizational website.

Anyhow, even if Venezuela would actually leave the Icsid, present complaints between private companies and Venezuela would follow the regular proceedings set by the international arbitration agency and the national government ought to observe any decisions taken there.

"Should the Icsid agreement be denounced, we will be out after six months; but not because of that we will get rid of the complaints," Araque pointed out. He added that if the national government refuses to pay or comply with the sanctions, consequences will be worse, because Venezuela has executed bilateral investment protection treaties with several nations.

"In bilateral agreements it is stated how awards are enforced. It is possible that the award winner could, for instance, sequester a Venezuelan oil tanker."

Marianna Almeida, a legal counsel of Canadian mining company Vanessa Ventures, recalled that "President Chávez has sometime made similar comments; however, it has taken no action to make effective the departure from the Icsid."

Almeida agreed with Araque by expressing that in the event of an actual pullout of the Icsid, "matters discussed at that Center would not be affected, because Venezuela has Bilateral Investment Promotion and Protection Treaties in force with many countries; only subsequent cases would be out."

Vanessa Ventures loged a complaint against the nation in 2004, estimated at USD 1.05 billion for the unilateral termination, through the Venezuelan Guayana Corporation (CVG) of a concession on the Las Cristinas mine, located in southern Bolívar state.

The legal counsel also explained that the Icsid channeled its functions through Member and Non-Member States. "To make null and void existent claims, Venezuela would have to leave the Icsid and amend or terminate the treaties."

Araque underlined that state-run oil holding Petróleos de Venezuela (Pdvsa) and Venezuela have taken benefit from the agreements when making business with foreign companies.

Translated by Conchita Delgado

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