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Saint-Gobain Performance Plastics Europe v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/12/13

New
Short Name:

Saint-Gobain v. Venezuela

Case Type:
International Investment Agreement (Investor–State)
Applicable Procedural Rules:
ICSID Convention Arbitration Rules (2006)
Seat of Arbitration:
Washington D.C. (United States)
Applicable Treaty:
France-Venezuela BIT (2001)
Applicable Legal Instruments:
France - Venezuela BIT (2001)
Economic Sector:
Other Service Activities
Outcome:
In Favour of Claimant(s)
Amount of Damages:
US $29,600,000
Other Remedy:
Venezuela ordered to pay USD 29.6M in compensation, plus pre- and post-award interest, and over USD 5.9M in costs. All other claims dismissed.
See case mapped on Investor-State LawGuide

Available documents

27 Feb 2013
Decision on Claimant's Proposal to Disqualify Mr. Bottini from the Tribunal under Article 57 of the ICSID Convention (English)
Decision on Claimant's Proposal to Disqualify Mr. Bottini from the Tribunal under Article 57 of the ICSID Convention (Spanish)
Document provided by: ICSID Website
Document Details:
PARTICIPANTS
Decision on Claimant's Proposal to Disqualify Mr. Bottini from the Tribunal under Article 57 of the ICSID Convention (English)
Decision on Claimant's Proposal to Disqualify Mr. Bottini from the Tribunal under Article 57 of the ICSID Convention (Spanish)
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:
Charles N. Brower
Respondent appointee
Respondent appointee:
Gabriel Bottini
Tribunal/Panel chair
Chair/President:
Klaus M. Sachs
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Alexander A. Yanos, Elizabeth C. Solander, Hughes Hubbard & Reed, Noiana Marigo, Freshfields Bruckhaus Deringer, Giorgio F. Mandelli, Daniel Chertudi, Becca Everhardt
Respondent's counsel
Reinaldo Enrique Muñoz Pedroza, Felipe Andrés Daruiz Ferro, Los Ilustres, Attorney General of Venezuela, Benard V. Preziosi, Eloy Barbará de Parres, Gabriela Álvarez-Ávila, Kate Brown de Vejar, Dori Yoldi, Curtis Mallet-Prevost Colt & Mosle, Curtis Mallet-Prevost Colt & Mosle, George Kahale III
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Natalí Sequeira
Tribunal assistant
Country
Print reporter
Entities
Curtis Mallet-Prevost Colt & Mosle, Freshfields Bruckhaus Deringer, Venezuela
Document Summary
Decision on Claimant's Proposal to Disqualify Mr. Bottini from the Tribunal under Article 57 of the ICSID Convention (English)
Decision on Claimant's Proposal to Disqualify Mr. Bottini from the Tribunal under Article 57 of the ICSID Convention (Spanish)
This summary note is machine-generated. Always consult the original materials.

Procedural Context and Issues

This document is a decision rendered by the unchallenged members of the Arbitral Tribunal, President Klaus Sachs and Co-Arbitrator Charles N. Brower, on the Claimant's proposal to disqualify the Respondent-appointed arbitrator, Mr. Gabriel Bottini. The challenge was brought under Article 57 of the ICSID Convention, alleging a manifest lack of the qualities of independence and impartiality required by Article 14(1).

The challenge was based on two principal grounds: (i) Mr. Bottini's recent employment as National Director of International Matters and Disputes for the Government of Argentina, a role he held at the time of his appointment; and (ii) his past professional relationship with Argentina's former Attorney General, who was acting as counsel for Venezuela in another ICSID case.

Parties' Submissions and Tribunal's Analysis

The Claimant argued that Mr. Bottini's former government position was political in nature and created an "issue conflict," as he had advocated for Argentina on legal issues similar to those likely to arise in the present arbitration. The Claimant contended that his resignation, effective after his appointment, was insufficient to cure the appearance of bias. The Respondent countered that the "manifest lack" standard imposes a high burden of proof, which the Claimant had not met. It argued that Mr. Bottini's role was with a non-party State, was not political, and had terminated before he performed any arbitral functions, thus eliminating any potential incompatibility.

The tribunal analyzed the "manifest lack" standard, affirming it requires facts that make it "obvious and highly probable" that an arbitrator cannot exercise independent judgment. While considering the incompatibility rules of the ICJ Statute by analogy, the tribunal found them of limited relevance given the ad hoc nature of ICSID appointments. It held that the dispositive fact was Mr. Bottini's complete resignation from his government post before undertaking any arbitral duties, severing any potential dependency. The tribunal rejected the "issue conflict" argument, finding no evidence that Mr. Bottini would be bound by past positions advocated as counsel. It distinguished the case from situations involving simultaneous roles as counsel and arbitrator, affirming the professional capacity of a lawyer to maintain distance from past advocacy. The challenge based on the past relationship with Mr. Guglielmino was also dismissed as the relationship had ended three years prior.

Decision

The tribunal rejected the Claimant's proposal to disqualify Mr. Bottini. The rejection was made on the condition that Mr. Bottini complete, sign, and transmit a new declaration under Rule 6 of the ICSID Arbitration Rules to the ICSID Secretary-General within ten days of the date of the decision. The costs associated with the challenge proceeding were reserved.
30 Dec 2016
Concurring and Dissenting Opinion of Judge Charles N. Brower
Document Details:
PARTICIPANTS
Concurring and Dissenting Opinion of Judge Charles N. Brower
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:
Charles N. Brower
Respondent appointee
Respondent appointee:
Gabriel Bottini
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Alexander A. Yanos, Elizabeth C. Solander, Hughes Hubbard & Reed, Noiana Marigo, Freshfields Bruckhaus Deringer
Respondent's counsel
Reinaldo Enrique Muñoz Pedroza, Felipe Andrés Daruiz Ferro, Los Ilustres, Attorney General of Venezuela, Benard V. Preziosi, Eloy Barbará de Parres, Gabriela Álvarez-Ávila, Kate Brown de Vejar, Dori Yoldi, Curtis Mallet-Prevost Colt & Mosle, Curtis Mallet-Prevost Colt & Mosle
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Concurring and Dissenting Opinion of Judge Charles N. Brower
This summary note is machine-generated. Always consult the original materials.


30 Dec 2016
Decision on Liability and the Principles of Quantum
Document provided by: IA Reporter
Document Details:
PARTICIPANTS
Decision on Liability and the Principles of Quantum
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:
Charles N. Brower
Respondent appointee
Respondent appointee:
Gabriel Bottini
Tribunal/Panel chair
Chair/President:
Klaus M. Sachs
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Alexander A. Yanos, Elizabeth C. Solander, Hughes Hubbard & Reed, Noiana Marigo, Freshfields Bruckhaus Deringer
Respondent's counsel
Reinaldo Enrique Muñoz Pedroza, Felipe Andrés Daruiz Ferro, Los Ilustres, Attorney General of Venezuela, Benard V. Preziosi, Eloy Barbará de Parres, Gabriela Álvarez-Ávila, Kate Brown de Vejar, Dori Yoldi, Curtis Mallet-Prevost Colt & Mosle, Curtis Mallet-Prevost Colt & Mosle
Other counsel
Claimant's expert
Pablo T. Spiller, Allan R. Brewer Carías
Respondent's expert
Vladimir Brailovsky, Daniel Flores
Claimant's witness
Jack Larry, Jorgen Pedersen, Patrick Millot
Respondent's witness
Eduardo Rondón
Other witnesses
Tribunal secretary
Natalí Sequeira, Giuliana Canè
Tribunal assistant
Felix Lautenschlager, Susanne Häusler
Country
Print reporter
Entities
Hughes Hubbard & Reed, Freshfields Bruckhaus Deringer, Curtis Mallet-Prevost Colt & Mosle, Compass Lexecon, CVG Bauxilum, CVG Electrificación del Caroní, Corporación Venezolana de Guyana, PDVSA Gas, PDVSA Industrial, Petróleos de Venezuela, Compañía Anónima de Administración y Fomento Eléctrico, Venezuela
Document Summary
Decision on Liability and the Principles of Quantum
This summary note is machine-generated. Always consult the original materials.

In a Decision on Liability and the Principles of Quantum, an ICSID tribunal constituted under the France-Venezuela Bilateral Investment Treaty (BIT) addressed claims arising from the expropriation of Saint-Gobain's investment in a ceramic proppants plant in Venezuela. The decision establishes Respondent's liability for certain treaty breaches and sets out the detailed principles for the subsequent calculation of damages.

The Tribunal's Decision on Liability

The tribunal found that the expropriation of the Claimant's investment occurred on or shortly after 15 May 2010, the date of President Chávez's televised announcement and the subsequent takeover of the plant by the state-owned entity PDVSA. It rejected Venezuela's argument that the expropriation date was the later date of the formal Expropriation Decree in March 2011, holding that PDVSA's assumption of de facto control was the determinative event.

Consequently, the tribunal held that Venezuela breached its obligations under Article 5(1), subparagraphs 2 and 3 of the BIT by failing to specify the amount of compensation and failing to pay prompt compensation as of the date of the taking. However, the tribunal dismissed the Claimant's claims that Venezuela had also breached the Fair and Equitable Treatment (FET) and Full Protection and Security (FPS) standards in relation to unilateral price increases under a bauxite supply contract with a state-owned entity (CVG Bauxilum). The tribunal found that the Claimant had not established the existence of specific state promises that would create a legitimate expectation regarding the bauxite price, nor had it proven a breach of the underlying contract.

The Tribunal's Decision on Quantum

The tribunal determined that compensation must be based on the fair market value (FMV) of the investment as of the date of expropriation, 15 May 2010. It concluded that a Discounted Cash Flow (DCF) analysis was the appropriate method for determining the FMV of the going concern. The tribunal found it unnecessary to resolve the debate between the treaty standard for lawful expropriation and the customary international law standard for unlawful expropriation, as both parties' positions converged on valuing the asset at the date of expropriation, which yielded a higher value than the date of the award.

In setting the parameters for the DCF analysis, the tribunal established a nominal discount rate of 19.88%. This was the result of a detailed analysis of the cost of equity, including a country risk premium of 10.26%. The majority of the tribunal rejected the Claimant's argument that the risk of uncompensated expropriation should be excluded from the country risk premium, reasoning that a willing buyer would have factored in all general risks of investing in Venezuela at the time. The tribunal also directed a 25% deduction from export sales profits to account for the marketing and distribution functions that were not part of the expropriated asset. Other key findings included the use of Claimant's own 2010 business plan for price projections and the adoption of Respondent's experts' estimate for certain transportation costs.

Operative Part

The tribunal declared that Venezuela breached Article 5(1) of the BIT. It ordered that compensation be calculated based on the principles set forth in the decision, with pre-award and post-award interest to be paid at a rate of 2% over the average 6-month US Treasury bill rate, compounded annually. The award of damages and interest was to be made net of applicable Venezuelan taxes. All other claims were dismissed, and the decision on costs was reserved for the final award.
3 Nov 2017
Final Award
Document provided by: IA Reporter
Document Details:
PARTICIPANTS
Final Award
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:
Charles N. Brower
Respondent appointee
Respondent appointee:
Gabriel Bottini
Tribunal/Panel chair
Chair/President:
Klaus M. Sachs
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Alexander A. Yanos, Elizabeth C. Solander, Hughes Hubbard & Reed, Noiana Marigo, Freshfields Bruckhaus Deringer
Respondent's counsel
Reinaldo Enrique Muñoz Pedroza, Felipe Andrés Daruiz Ferro, Los Ilustres, Attorney General of Venezuela, Benard V. Preziosi, Eloy Barbará de Parres, Gabriela Álvarez-Ávila, Kate Brown de Vejar, Dori Yoldi, Curtis Mallet-Prevost Colt & Mosle, Curtis Mallet-Prevost Colt & Mosle
Other counsel
Claimant's expert
Respondent's expert
Vladimir Brailovsky, Daniel Flores
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Natalí Sequeira, Francisco Grob Duhalde
Tribunal assistant
Country
Print reporter
Entities
Alston & Bird, Compass Lexecon, Curtis Mallet-Prevost Colt & Mosle, CVG Bauxilum, Econ One, FTI Consulting, Freshfields Bruckhaus Deringer, Hughes Hubbard & Reed, Immersion Legal Graphics, LEC Partnes, Sosa & Martínez Estudio Jurídico, Venezuela
Document Summary
Final Award
This summary note is machine-generated. Always consult the original materials.

Procedural Context and Purpose

This final Award, rendered by an ICSID tribunal constituted under the France-Venezuela BIT, resolves the remaining issues in the dispute between Saint-Gobain Performance Plastics Europe and the Bolivarian Republic of Venezuela. Following the Tribunal's Decision on Liability and the Principles of Quantum of 30 December 2016, which found Venezuela liable for the unlawful expropriation of the Claimant's investment, this Award determines the final amount of compensation and addresses the allocation of costs.

Determination of Compensation

The Tribunal notes that subsequent to its Decision on Liability, the parties engaged in discussions and, based on calculations performed by their respective experts applying the Tribunal's prescribed DCF methodology, reached an agreement on the quantum of damages. The Tribunal formally records and adopts this agreement, establishing the principal amount of compensation for the expropriation at USD 29.6 million. The Award also quantifies pre-award interest up to 31 March 2017 at USD 4.8 million, for a total of USD 34.4 million as of that date. The Tribunal further orders the payment of pre-award interest from 1 April 2017 until the date of the Award, and post-award interest thereafter, both calculated at a rate of 2% over the average 6-month US Treasury bill rate, compounded annually.

Decision on Costs

The Tribunal addressed the allocation of the costs of the arbitration and the parties' legal expenses separately. It ordered Venezuela to bear the full costs of the arbitration (USD 1,303,189.99), reasoning that Venezuela's failure to pay prompt compensation necessitated the arbitration and that its subsequent refusal to pay its share of the advances on costs constituted a breach of the ICSID procedural framework.

Regarding the parties' legal and expert fees, the Tribunal adopted a more nuanced approach. While acknowledging that the Claimant was forced to arbitrate, it also considered that the Claimant did not succeed on all its claims (specifically, its 'Bauxite Claims' were dismissed) and that its three incidental procedural requests were unsuccessful. The Tribunal rejected Venezuela's argument that it was the prevailing party on quantum, noting the final award was over 300% of what Venezuela had offered. Balancing these factors, the Tribunal ordered Venezuela to reimburse the Claimant for two-thirds of its legal and other costs, amounting to USD 4,634,532.05.

Operative Rulings

The Tribunal's dispositive orders require Venezuela to pay the Claimant: (i) USD 29.6 million as principal compensation; (ii) pre-award interest in two tranches; (iii) post-award interest on the principal amount; (iv) full reimbursement of the costs of the arbitration; and (v) reimbursement of two-thirds of the Claimant's legal and expert costs. All other claims and requests are dismissed.
24 Oct 2018
Procedural Order No. 2 (Annulment Proceeding)
Document provided by: IA Reporter
Document Details:
PARTICIPANTS
Procedural Order No. 2 (Annulment Proceeding)
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
Respondent appointee
Tribunal/Panel chair
Chair/President:
Ricardo Ramírez Hernández
Arbitrator(s)
Olufunke Adekoya, Lawrence Boo
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Alexander A. Yanos, Elizabeth C. Solander, Hughes Hubbard & Reed, Noiana Marigo, Freshfields Bruckhaus Deringer
Respondent's counsel
Reinaldo Enrique Muñoz Pedroza, Felipe Andrés Daruiz Ferro, Los Ilustres, Attorney General of Venezuela, Benard V. Preziosi, Eloy Barbará de Parres, Gabriela Álvarez-Ávila, Kate Brown de Vejar, Dori Yoldi, Curtis Mallet-Prevost Colt & Mosle, Curtis Mallet-Prevost Colt & Mosle
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Procedural Order No. 2 (Annulment Proceeding)
This summary note is machine-generated. Always consult the original materials.


12 Dec 2018
Saint-Gobain's Petition to Register and Enforce ICSID Arbitration Award
Document Details:
PARTICIPANTS
Saint-Gobain's Petition to Register and Enforce ICSID Arbitration Award
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
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Laura Davis Jones, Peter J. Keane, Alexander A. Yanos, Carlos Ramos-Mrosovsky, Rajat Rana, Alston & Bird
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Saint-Gobain's Petition to Register and Enforce ICSID Arbitration Award
This summary note is machine-generated. Always consult the original materials.


7 Aug 2019
Opposition to Claimant Motion for Default Judgment
Document Details:
PARTICIPANTS
Opposition to Claimant Motion for Default Judgment
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
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Scott R. Haiber, Dennis H. Tracy III, Robin L. Muir, Hogan Lovells
Respondent's counsel
Kent A. Yalowitz, E. Whitney Debevoise, Sally L. Pei, Stephen K. Wirth, Avishai D. Don, Arnold & Porter Kaye Scholer, Alexander Thompson Bayliss, Abrams Bayliss
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Opposition to Claimant Motion for Default Judgment
This summary note is machine-generated. Always consult the original materials.


7 Aug 2019
Memorandum of Law in Opposition to Claimant Motion for Default Judgment and Motion to Vacate Default
Document Details:
PARTICIPANTS
Memorandum of Law in Opposition to Claimant Motion for Default Judgment and Motion to Vacate Default
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
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Scott R. Haiber, Dennis H. Tracy III, Robin L. Muir, Hogan Lovells
Respondent's counsel
Kent A. Yalowitz, E. Whitney Debevoise, Sally L. Pei, Stephen K. Wirth, Avishai D. Don, Arnold & Porter Kaye Scholer, Alexander Thompson Bayliss, Abrams Bayliss
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Memorandum of Law in Opposition to Claimant Motion for Default Judgment and Motion to Vacate Default
This summary note is machine-generated. Always consult the original materials.


9 Dec 2019
Respondent Letter to US District Court for the District of Delaware
Document Details:
PARTICIPANTS
Respondent Letter to US District Court for the District of Delaware
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
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Respondent Letter to US District Court for the District of Delaware
This summary note is machine-generated. Always consult the original materials.


12 Dec 2019
Memorandum Order of the US District Court for the District of Delaware
Document Details:
PARTICIPANTS
Memorandum Order of the US District Court for the District of Delaware
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
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Memorandum Order of the US District Court for the District of Delaware
This summary note is machine-generated. Always consult the original materials.


25 Jan 2022
Opinion of US Court of Appeals for the District of Columbia Circuit
Document Details:
PARTICIPANTS
Opinion of US Court of Appeals for the District of Columbia Circuit
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
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Opinion of US Court of Appeals for the District of Columbia Circuit
This summary note is machine-generated. Always consult the original materials.


3 Jun 2026
Order of the US District Court for the District of Columbia Regarding Arnold & Porter Request for Leave to Withdraw as Counsel
Document Details:
PARTICIPANTS
Order of the US District Court for the District of Columbia Regarding Arnold & Porter Request for Leave to Withdraw as Counsel
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
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Rudolph Contreras
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Country in which this occurs:
United States
Print reporter
Entities
Saint-Gobain Performance Plastics Europe, Arnold & Porter Kaye Scholer, Venezuela
Document Summary
Order of the US District Court for the District of Columbia Regarding Arnold & Porter Request for Leave to Withdraw as Counsel
This summary note is machine-generated. Always consult the original materials.

This order, issued by the United States District Court for the District of Columbia, addresses a motion filed by the law firm Arnold & Porter to withdraw as counsel for the Defendant, the Bolivarian Republic of Venezuela. The Court, finding that "good cause" had been demonstrated, granted the motion. The operative part of the order formally grants all attorneys from Arnold & Porter leave to withdraw from their representation of Venezuela in the proceedings before the court.
Case Summary
This summary note is machine-generated. Always consult the original materials.

Case Overview

In Saint-Gobain Performance Plastics Europe v. Venezuela, the Claimant, a French investor, initiated arbitration against Venezuela under the France-Venezuela Bilateral Investment Treaty (2004) for the expropriation of its investment in a ceramic proppants plant. The case was administered by the International Centre for Settlement of Investment Disputes (ICSID). A Decision on Liability was issued on December 30, 2016, which addressed the merits of the Claimant's claims and established the principles for the calculation of compensation. The case concluded with a final Award on November 3, 2017, which determined the final quantum and allocated costs.

Procedural History

The Claimant filed its Request for Arbitration on May 25, 2012, and the Tribunal was constituted on November 26, 2012. Early in the proceedings, the Claimant unsuccessfully proposed to disqualify the Respondent's appointed arbitrator, Mr. Gabriel Bottini. Following the submission of written memorials and a hearing on the merits held in February 2015, the Tribunal rendered its Decision on Liability and the Principles of Quantum. Following this decision, the parties liaised and agreed on a final compensation amount based on the Tribunal's findings. The Tribunal issued its final Award on November 3, 2017, incorporating the parties' agreement and ruling on costs.

Key Issues and Positions

Expropriation

The central dispute concerned the date and lawfulness of the expropriation. The Claimant argued that the expropriation occurred on May 15, 2010, following a televised announcement by then-President Hugo Chávez, which prompted a union takeover of the plant. It contended the expropriation was unlawful due to Venezuela's failure to pay prompt, adequate, and effective compensation. Venezuela countered that the expropriation only occurred upon the issuance of a formal Expropriation Decree on March 29, 2011. It characterized the events of May 2010 as a union-led action and the subsequent presence of the state-owned oil company, PDVSA, as a necessary "caretaker" role to ensure the plant's safety.

Other Treaty Breaches

The Claimant also alleged breaches of the Fair and Equitable Treatment (FET) and Full Protection and Security (FPS) standards. These claims related to a lack of due process in the expropriation and Venezuela's alleged sanctioning of a bauxite price increase under a supply contract between the Claimant's subsidiary and a Venezuelan state-owned entity, CVG Bauxilum. Venezuela denied these claims, arguing it had followed its domestic legal procedures and that the bauxite contract was a purely commercial matter not attributable to the State.

Tribunal/Court Reasoning and Holdings

Liability - Expropriation

The Tribunal determined that the expropriation of the Claimant's investment occurred on or shortly after May 15, 2010. It reasoned that although the initial takeover was by a union, the subsequent conduct of PDVSA—which took effective control of the plant, assessed it for nationalization, and integrated it into state plans—constituted an adoption of the union's actions, making the takeover an act of the State. The Tribunal then held that Venezuela had breached its obligations under Article 5(1), subparagraphs 2 and 3 of the BIT by failing to specify the amount of compensation and to pay prompt compensation for the expropriation. However, it dismissed claims that the expropriation violated subparagraph 1 of the same article.

Liability - FET and FPS

The Tribunal dismissed the Claimant's FET and FPS claims related to the bauxite price increase. It found that the Claimant had not established that the State had made specific promises that would create a legitimate expectation regarding the bauxite price. Furthermore, the Tribunal concluded that the price increase was not a breach of the underlying contract. The Tribunal did not find it necessary to rule on the separate FET claim concerning a lack of due process, as any resulting damages would be subsumed within the compensation for the expropriation itself.

Principles of Quantum

The Tribunal established the principles for calculating compensation based on the fair market value of the investment as of the date of expropriation, May 15, 2010. Using a DCF analysis, the majority of the Tribunal determined a nominal discount rate of 19.88%. This was based on a detailed analysis of the cost of equity, including a country risk premium of 10.26% derived from Venezuela's sovereign bond spread (the "bludgeon method"). The Tribunal also ruled that a 25% deduction should be made from the profits on export sales to account for the fact that the investor's marketing and distribution network was not part of the expropriated asset. All other claims for damages, including for historical losses related to the bauxite price increase, were dismissed.

Quantum and Costs

In its final Award, the Tribunal adopted the quantum agreed to by the parties based on the principles set out in the liability decision, ordering Venezuela to pay USD 29.6 million in principal compensation. The Tribunal also ruled on costs, ordering Venezuela to bear the full costs of the arbitration (approx. USD 1.3 million), primarily because it had breached the BIT and had failed to pay its share of the advances on costs. Further, the Tribunal ordered Venezuela to reimburse two-thirds of the Claimant's legal fees and expenses (approx. USD 4.6 million). It declined to award full legal costs because the Claimant had not prevailed on its 'Bauxite Claims' and had brought three unsuccessful incidental proceedings.

Disposition / Relief

The Tribunal ordered Venezuela to pay Saint-Gobain a principal amount of USD 29.6 million in compensation, plus USD 4.8 million in pre-award interest calculated through March 31, 2017, with further pre- and post-award interest to accrue until payment. Additionally, Venezuela was ordered to reimburse the Claimant for the full costs of the arbitration (USD 1,303,189.99) and two-thirds of its legal fees and expenses (USD 4,634,532.05). All other claims were dismissed. Judge Charles N. Brower had issued a concurring and dissenting opinion on the Decision on Liability, and Arbitrator Gabriel Bottini noted his dissent from the majority's decision on costs in the final Award.