"We have to get out of the ICSID," said Chavez in a public television address as cited by AFP, in reference to the World Bank’s International Centre for Settlement of Investment Disputes. "We do not recognize any ICSID decisions at all."
The South American country is facing multiple lawsuits from various international energy companies who are seeking compensation after the Chavez government seized numerous oil assets during a nationwide nationalisation campaign in 2007.
ExxonMobil, who was awarded $970 million in a compensation claim last week by the Paris-based International Chamber of Commerce, is seeking up to $12 billion in the ICSID for its Cerro Negro project, after claiming that the Parisian court’s decision had been only in relation to a commercial dispute between Exxon and Petroleos de Venezuela, the state-owned oil company, over earnings that Exxon had lost as a result of the takeover.
A statement by Petroleos de Venezuela added that the Venezuelan government would only pay $255 million to the US firm in order to settle the dispute.
Still, most analysts believe that the Venezuelan government is unlikely the follow in the footsteps of Bolivia and Ecuador, who have pulled out from the ICSID in recent years, due to the financial consequences that could arise for the government.
Regardless of what Chavez says, Venezuela "has an obligation to accept the decisions that the ICSID is going to make with respect to Conoco and Exxon," added Oliveros.
Furthermore, a withdrawal by Venezuela would not have any impact on arbitration cases that were already under way, said Michael Nolan, a Washington lawyer who represents clients considering arbitration suits against Chavez's government.
Nolan also pointed out that Companies would still be able to file new arbitration cases against Venezeula for some time because of a six-month "sunset provision" in a key convention to which Venezuela is a party.
"President Chavez is not going to solve Venezuela's very serious international legal problems with either speeches or even a formal denunciation of the ICSID Convention," noted Nolan.