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Colombian Supreme Court refuses to recognise treaty award

In an unusual decision, Colombia’s Supreme Court has refused to recognise a US$1.7 billion investment treaty award against Venezuela on the basis that the state enjoys immunity from execution. 

On 20 June, a five-judge bench of the court rejected an application by Canadian mining company Rusoro for recognition of its ICSID additional facility award. 

The Supreme Court said the ICSID Convention did not preclude states from enjoying immunity from execution where the purpose of seeking recognition was to obtain coercive measures against the state. 

Colombian arbitrator Eduardo Zuleta notes in a social media post that as it was issued under the additional facility rules, Rusoro’s award was not subject to the ICSID Convention. He said that the court should instead have applied the New York Convention. 

Rusuro brought the arbitration in 2012 with funding from Calunius Capital after Venezuela nationalised all gold mining operations in the country. 

In 2016, a Paris-seated tribunal chaired by Juan Fernández-Armesto and including the late Francisco Orrego Vicuña and Bruno Simma found Venezuela liable for expropriation under its bilateral investment treaty with Canada. It ordered the state to pay around US$968 million plus interest. The award is now worth more than US$1.7 billion. 

The Colombian Supreme Court – which is the competent court to hear applications to enforce foreign awards – noted the ICSID Convention’s requirement that member states such as Colombia recognise the binding nature of awards issued under the convention and enforce their pecuniary obligations. 

But the court said that even if Venezuela was accepted to have waived its immunity from jurisdiction, this did not mean it had waived its immunity from execution – which was an international custom that could not be displaced by the ICSID Convention. It said this was in line with the Colombian concept of international public policy. 

Rusoro’s award has been the subject of protracted set-aside proceedings in the French courts. The Paris Court of Appeal annulled key findings on quantum in the award in 2019 but this decision was overturned by the Court of Cassation in 2021. On remand, the lower court upheld the award the following year. 

Rusoro enforced the award in Ontario in 2017 and in the US District Court for the District of Columbia the following year. It is now part of a queue of the state’s creditors seeking to benefit from a Delaware court-supervised auction of Venezuelan national oil company PDVSA’s interest in a valuable US refinery business called Citgo Petroleum. 

Counsel in the Colombian proceedings is unclear. Rusoro has used Freshfields Bruckhaus Deringer for the arbitration as well as Paris and US court proceedings, and has recently turned to DLA Piper for the Citgo proceedings. 

Venezuela relied on Foley Hoag in the arbitration and set-aside proceedings. The firms were contacted for comment.

Rusoro Mining Limited v Venezuela 

In the Colombian Supreme Court