Participants listed are for this document only and may not include all participants involved in the entire case. Always consult the original documents.

Claimant appointee

Claimant appointee:

Joseph Tirado

Respondent appointee

Respondent appointee:

Franco Ferrari

Tribunal/Panel chair

Chair/President:

Diego P. Fernández Arroyo

Arbitrator(s)

José Alfredo Martínez de Hoz, Joseph Tirado, Franco Ferrari

Sole Arbitrator

ICSID Annulment Committee president

ICSID Annulment Committee members

WTO Appellate Body members

WTO Appellate Body chair

Judges

Claimant's counsel

Jean Paul Dechamps, Dechamps International Law, Gustavo Topalian, Pablo Jaroslavsky, Juan Ignacio González Mayer, Marcos Sassot, Florencia Wajnman, Horacio Risso, Sofia Ottaviano, Julieta Cappelletti, Santiago Álvarez, Sabrina Tosi, Sofia Ottaviano

Respondent's counsel

Reinaldo Enrique Muñoz Pedroza, Henry Rodríguez Facchinetti, Office of the Attorney General of Venezuela, Osvaldo Cesar Guglielmino, Alejandro Vulejser, María Eugenia Borrajo, Miguel Colquicocha, Francisco Calvo, Catalina Aguirre Jones, Lara Jarsun, Matías Toselli, Abril Elverdin, Gonzalo Brukman, Guglielmino Derecho Internacional, Osvaldo Cesar Guglielmino, Guillermo Moro

Other counsel

Claimant's expert

Julián M. Delamer, Alan Rozenberg, Juan Carlos Croce

Respondent's expert

Eduard Saura, Alberto Fernández, María Esther Lyon, Alejandro Canónico Sarabia

Claimant's witness

Ángel Herrera Herrera, Servando Herrera Herrera

Respondent's witness

César Ferrer Dupuy, Gerardo Ramón Buroz Romero

Other witnesses

Tribunal secretary

José Luis Aragón Cardiel

Tribunal assistant

Country

Print reporter

Entities

Permanent Court of Arbitration, Dechamps International Law, Guglielmino Derecho Internacional, Compass Lexecon, Accuracy, Venezuela, Spain, Diamante Trading Investments, Corporación de Abastecimiento y Servicios Agrícolas, Compañía para el Desarrollo de la Zona Industrial de Maturín

Document Summary

Diamante Trading Investments and others v. Venezuela

Final Award (Spanish)

This summary note is machine-generated. Always consult the original materials.

Procedural Background and Jurisdictional Objections

This Final Award, rendered on 27 May 2025 under the 1976 UNCITRAL Arbitration Rules and administered by the Permanent Court of Arbitration (PCA Case No. 2019-49), resolves the remaining jurisdictional, admissibility, merits, and quantum issues in the dispute brought by Diamante Trading Investments Ltd. and six individual members of the Herrera family against the Bolivarian Republic of Venezuela. The dispute arose under both the Spain-Venezuela Bilateral Investment Treaty (BIT) and the Barbados-Venezuela BIT in connection with the state takeover, occupation, and dismantling of Herrera C.A., a wholesale distributor of food, personal care, and household products, along with associated companies and extensive real estate holdings.

Venezuela raised multiple preliminary objections. Ratione personae, Venezuela asserted that the five individual Claimants holding dual Spanish-Venezuelan nationality could not invoke the Spain-Venezuela BIT under customary principles of non-responsibility and effective/dominant nationality, and contended that Diamante Trading was a mere shell entity. The Tribunal rejected these objections, holding that Article I(1)(a) of the Spain-Venezuela BIT defines investors autonomously solely by reference to Spanish municipal law, without negative restrictions regarding dual nationality or effective nationality tests. The Tribunal confirmed that the BIT operates as lex specialis over general international law rules, a conclusion reinforced by the negotiating preparatory works. Regarding Diamante Trading, the Tribunal found that incorporation in Barbados satisfied the express requirements of the Barbados-Venezuela BIT.

Ratione materiae and voluntatis, Venezuela argued that Claimants held only passive shareholdings without making active cross-border contributions, and objected to multi-party, multi-treaty proceedings without separate state consent. The Tribunal dismissed these objections, deciding that the definition of investment in both treaties broadly encompasses shares and real property without requiring active capital transfers or meeting the Salini test in non-ICSID arbitrations. It further ruled that open offers to arbitrate under investment treaties do not preclude joint claims sharing an identical factual matrix, and dismissed Venezuela's admissibility objection regarding reflective shareholder loss pursuant to Articles V(3) of the Spain-Venezuela BIT and 5(2) of the Barbados-Venezuela BIT.

Merits, Expropriation, and Police Powers

On the merits, Claimants alleged unlawful expropriation following inspections by the National Superintendence for the Defense of Socioeconomic Rights (SUNDDE) and the National Guard in January 2015, criminal arrest warrants, asset freezes, and indefinite administrative occupation by a state-appointed board (Junta Temporal), which destroyed the business. Venezuela contended its measures were legitimate, temporary exercises of regulatory and police powers aimed at combating hoarding and safeguarding national food security in an economic crisis.

The Tribunal held that Venezuela's indefinite physical and operational seizure of Herrera C.A., which lasted over a decade without formal renewal or resolution of administrative defenses, constituted an unlawful indirect expropriation. The Tribunal found no substantiated factual basis for allegations of hoarding or boycott, observing that Venezuelan criminal courts ultimately acquitted local management. Consequently, the measures were disproportionate, disregarded due process, failed to pursue a bona fide public purpose, and lacked any prompt, adequate, and effective compensation.

Quantum, Currency, and Operative Decision

Applying the Chorzów Factory standard of full reparation, the Tribunal evaluated the fair market value of Herrera C.A. using a Discounted Cash Flow (DCF) model and real estate through historical costs updated for inflation and comparable transactions. Addressing currency and exchange rate controversies, the Tribunal ruled that damages must be expressed in US Dollars, rejecting the official SICAD I rate as inaccessible in practice and adopting a Purchasing Power Parity (PPP) implied exchange rate of 21.63 BsF/USD derived from pre-control market data.

The Tribunal awarded the Herrera family a collective sum of USD 50,879,841.80 (apportioned individually based on consolidated shareholdings in Herrera C.A. and Garajonay) and awarded Diamante Trading USD 46.748.265,02, subject to a strict mutual deduction mechanism preventing double recovery. Pre- and post-award compound interest was granted at 11.54% annually from 11 January 2015, free of Venezuelan taxes. Venezuela was also ordered to pay Claimants EUR 1,341,661.83 in arbitration costs and USD 6,287,316.35 in legal fees and expenses.

Case Summary

Diamante Trading Investments and others v. Venezuela

This summary note is machine-generated. Always consult the original materials.

Case Overview

In Diamante Trading Investments and others v. Venezuela, a Barbadian company and six individual Spanish investors initiated arbitration against the Bolivarian Republic of Venezuela under the UNCITRAL Arbitration Rules (1976) pursuant to the 1995 Spain-Venezuela BIT and the 1994 Barbados-Venezuela BIT. The dispute arose out of the Venezuelan government's regulatory interventions, criminal proceedings, seizure of assets, and permanent occupation of Herrera, C.A., a wholesale distributor of food, hygiene, and cleaning products, alongside related transportation and real estate holdings. On 27 May 2025, the Arbitral Tribunal rendered its Final Award, finding that Venezuela unlawfully expropriated Claimants' protected investments in breach of Article V of the Spain-Venezuela BIT and Article 5 of the Barbados-Venezuela BIT. The Tribunal ordered Venezuela to pay USD 50,879,841.80 in principal damages, plus pre- and post-award compound interest and procedural and legal costs.

Procedural History

The proceedings commenced on 22 January 2019. Following an initial phase bifurcated on jurisdiction, the Tribunal issued a Partial Award on Jurisdiction on 20 January 2022 rejecting Venezuela's objection regarding arbitral consent under the UNCITRAL Rules. Following the resignation of arbitrator José A. Martínez de Hoz and substitute arbitrator Federico Campolieti in May and June 2023, Joseph Tirado was appointed to the Tribunal alongside Franco Ferrari and presiding arbitrator Diego P. Fernández Arroyo. The hearing was held in Buenos Aires from 3 to 6 June 2024. In December 2024, the Tribunal denied an application by Venezuela's Asset Administration and Protection Board (CAPA) to intervene or substitute Respondent's legal representation.

Key Issues and Positions

Jurisdiction

Respondent raised three jurisdictional objections: ratione personae, ratione materiae, and a second objection ratione voluntatis, alongside an admissibility challenge against indirect shareholder claims. Venezuela argued that dual Venezuelan-Spanish nationals were barred from bringing claims against their home State under principles of non-responsibility and dominant nationality, and that Diamante Trading was a mere shell holding company. Respondent further contended that Claimants made no active cross-border investment and that multiparty and multi-treaty proceedings lacked State consent. Claimants maintained that the Spain-Venezuela BIT sets forth an autonomous definition of investor that does not exclude dual nationals. They asserted that Diamante Trading satisfied all incorporation criteria under the Barbados-Venezuela BIT, that shareholdings and real estate constitute protected assets, and that standing offers in investment treaties allow multiparty claims without supplementary State consent.

Merits

Claimants alleged that Venezuela directly and indirectly expropriated Herrera's operations, vehicles, inventory, and non-operating real estate assets through unjustified inspections by the SUNDDE, retaliatory criminal arrest warrants, and an indefinite temporary occupation. Respondent contended that it acted in good faith under legitimate police powers to combat hoarding and shortages during a national economic emergency.

Tribunal/Court Reasoning and Holdings

Jurisdiction

The Tribunal rejected all of Respondent's jurisdictional and admissibility objections. Interpreting Article I.1(a) of the Spain-Venezuela BIT pursuant to the Vienna Convention on the Law of Treaties, the majority held that possessing Spanish nationality and holding an investment in Venezuela sufficed for protection, without any implicit exclusion of dual nationals. The Tribunal noted that the negotiating history confirmed that contracting parties deliberately opted not to exclude dual nationals. Regarding Diamante Trading, the Tribunal confirmed that the Barbados-Venezuela BIT requires only incorporation under Barbadian law. The Tribunal also upheld jurisdiction over multiparty claims and confirmed shareholder standing under Articles V.3 and 5.2 of the respective treaties. Arbitrator Ferrari dissented on ratione materiae jurisdiction, finding that Article I.2 of the Spain-Venezuela BIT requires an active investment contribution lacking in the case of inherited shares.

Merits

The Tribunal held that Venezuela committed an unlawful indirect expropriation. The Tribunal found that the government's measures went far beyond temporary supervision, resulting in the indefinite occupation of Herrera's facilities, the total destruction of its business, and permanent loss of control. The Tribunal ruled that these measures were disproportionate, breached due process, and lacked prompt, adequate, and effective compensation, thereby falling outside the scope of legitimate police powers.

Quantum/Damages

Applying the Chorzów Factory standard of full reparation and fair market value as of 11 January 2015, the Tribunal evaluated Herrera using a DCF methodology. The Tribunal rejected the official SICAD I rate as inaccessible and adopted a purchasing power parity exchange rate based on 29 November 2002 updated for inflation differentials (BsF 21.63/USD). The Tribunal valued Herrera at USD 36,026,758.38 and the real estate assets at USD 14,853,083.42, yielding a total of USD 50,879,841.80, with an anti-double-recovery mechanism governing allocations between Diamante Trading and the Herrera family. Compound interest was awarded at 11.54% annually, net of Venezuelan taxes.

Costs

Applying the loser-pays principle under the UNCITRAL Rules, the Tribunal ordered Venezuela to reimburse Claimants EUR 1,341,661.83 for arbitration costs and USD 6,287,316.35 in legal fees and expenses.

Disposition / Relief

The Tribunal declared jurisdiction, rejected Venezuela's admissibility defense, found Venezuela liable for unlawful indirect expropriation, and ordered Respondent to pay USD 50,879,841.80 in damages, plus annual compound interest at 11.54% from 11 January 2015, net of taxes, together with EUR 1,341,661.83 and USD 6,287,316.35 in costs.