Caracas, April 25, 2016 (venezuelanalysis.com) – The World Bank’s international arbitration court has ordered the Venezuelan state to pay USD$98 million in compensation to the British meat-producing conglomerate, Vestey Group, over land holdings expropriated in 2005.
The ruling concerns a decision taken by the administration of then-president Hugo Chávez to confiscate a 13,000-hectare estate belonging to Vestey’s AgroFlora subsidiary, known as El Charcote, which operated out of the central state of Cojedes.
The move was part of an effort by the national government to break up large idle estates and redistribute the land to poor campesinos for national production.
In the case of El Charcote, the Venezuelan government has argued that the land was not actually owned by Vestey, and that the conglomerate was illegally using a state-owned holding.
Following the nationalization, Vestey insisted that compensation be paid in US dollars in lieu of Venezuelan bolivars, leading to the breakdown of negotiations. The company's intransigence prompted the Chávez government to expropriate AgroFlora and redistribute the land among new community controlled socially productive enterprises.
However, the Washington-based International Center for Settlements of Investment Disputes (ICSID) ruled against Venezuela last week, awarding $98 million to the British firm.
Venezuela’s attorney in the case, Diego Brian Gosis, has confirmed that the country’s leftist government will likely challenge the ruling, seeking the partial or full annulment of the award.
This latest ruling by the ICSID will place a further financial burden on the OPEC nation, which is currently suffering an acute recession triggered by plunging global oil prices, the source of most of Venezuela’s foreign currency reserves.
Although Venezuela withdrew from the ICSID in 2012, the body still has jurisdiction to arbitrate in over two dozen pending cases filed before the South American nation’s departure, most which involve major nationalizations undertaken by late president Chávez.