VENEZUELA – Smurfit Westrock, a leading provider of paper-based packaging solutions, has been awarded over US$473 million in compensation by the International Centre for Settlement of Investment Disputes (ICSID).
The decision, issued on August 28, 2024, comes in response to claims made by Smurfit Holdings BV, a subsidiary of Smurfit Westrock, against the Venezuelan government for expropriating its business operations.
The ICSID tribunal awarded Smurfit Holdings BV US$468.7 million in compensation, along with US$4.5 million in legal costs and interest from the end of May until the payment is made.
This award stems from an arbitration claim filed by Smurfit in 2018, following the Venezuelan government’s seizure of its business and landholdings.
In its ruling, the tribunal dismissed Venezuela’s objections to its jurisdiction, concluding that the country had violated its obligations under a treaty with the Netherlands, which is designed to encourage and protect investments reciprocally.
Venezuela was found to have breached provisions that protect against unfair and inequitable treatment, arbitrary and discriminatory measures, and the obligation to guarantee the repatriation of dividends without undue restriction or delay.
Additionally, the tribunal determined that Venezuela’s occupation of Smurfit’s Venezuelan subsidiaries constituted an expropriation that was neither in the public interest nor compliant with due process.
The tribunal also noted that Venezuela failed to issue VAT refunds and did not permit the prompt transfer of Smurfit’s subsidiaries’ dividends.
Smurfit Westrock CEO Tony Smurfit stated that the ruling validates the group’s stance that its Venezuelan business was unlawfully expropriated.
He emphasized that while the award cannot fully compensate for the losses incurred, particularly the significant impact on their people and the wider community in Venezuela, the company will now pursue the full value of the award from the Venezuelan government.
This case is part of a series of arbitration rulings against Venezuela related to a wave of nationalizations initiated by former President Hugo Chavez.
Venezuela currently faces claims totalling US$21 billion for past expropriations and debt defaults in an ongoing U.S. case.
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