US COURTS ADDRESS RECOGNITION OF VENEZUELAN GOVERNMENT IN ARBITRATION ENFORCEMENT PROCEEDINGS
In recent US court proceedings to enforce international arbitration awards against the Republic of Venezuela, two federal appellate courts have ruled that the decision by the US government’s executive branch to recognise the government of Juan Guaidó, the opposition leader and head of the Venezuelan National Assembly, as the legitimate president of Venezuela is binding on the judicial branch.
By way of background, two years after Nicolás Maduro was elected president of Venezuela, a coalition of opposition parties won a super majority in Venezuela’s National Assembly. In 2018, Maduro was re-elected president in an election boycotted by the opposition. On 23 January 2019, Juan Guaidó, president of the National Assembly, declared himself interim president on the basis that the 2018 elections were illegitimate. Shortly thereafter, the US, Canada and a majority of Latin American nations recognised Guaidó as Venezuela’s president. Since declaring himself president, Guaidó has sought to defend Venezuelan assets abroad. In the US courts, Guaidó’s administration has appeared in multiple US court proceedings involving enforcement of arbitration awards against Venezuela.
One such case is Rusoro Mining Ltd. v. Venezuela (2019). That case involved enforcement of a $1.2bn award issued in August 2016 in an International Centre for Settlement of Investment Disputes (ICSID) arbitration brought by Rusoro Mining Ltd, a Canadian gold mining company, against Venezuela. Rusoro had been the controlling shareholder in several gold mining companies in Venezuela’s Bolivar state. However, in 2009, Venezuela passed a law requiring private gold producers to sell at least 50 percent of their gold to the Venezuelan Central Bank in exchange for Venezuelan currency and, in 2011, Venezuela nationalised the gold mining industry.
Jan-Mar 2020 issue
Skadden, Arps, Slate, Meagher & Flom LLP