Venezuela round-up: Peruvian telecoms investor turns to ICSID, while Irish packaging manufacturer threatens treaty arbitration

Peruvian businessman Dick Fernando Abanto Ishivata has initiated arbitration proceedings against the Bolivarian Republic of Venezuela at the International Centre for Settlement of Investment Disputes (ICSID).

The request for arbitration, relying on the ICSID Additional Facility Rules and the 1996 Peru-Venezuela bilateral investment treaty (BIT), was registered at ICSID on November 6, 2018.

Meanwhile, as we discuss below, Irish packaging manufacturer Smurfit Kappa has announced its intention to pursue a separate claim against Venezuela under an unspecified BIT.

Peruvian telecommunications investor alleges unlawful takeover of local company

According to local news reports from 2015, Mr. Abanto acquired the Venezuelan company Omnivision C.A. (and its commercial brand Movilmax) in 2001 and turned it into one of the major providers of telecommunication services in Venezuela. In 2014, the commercial site of Omnivision was physically taken over by Venezuelan officials who claimed that they were enforcing a court order allowing for the seizure of all real estate belonging to Venezuelan businessman Hernan Perez Belisario (as the target of certain investigations into alleged fraud and embezzlement). However, according to the same news reports, Mr. Abanto denied any connections between Mr. Belisario and Omnivision. Mr. Abanto’s subsequent official complaints were reportedly unsuccessful, and he was allegedly subjected to several death threats.

According to Mr. Abanto’s Twitter account, the Peruvian investor had considered bringing a claim to ICSID at least by 2016. (The Peru-Venezuela BIT imposes a six-month negotiation period before arbitration claims may be filed, perhaps explaining some portion of the delay in proceeding to formal arbitration.) Mr. Abanto reportedly values Omnivision at USD 102 million.

Venezuela has not yet retained outside counsel. The claimant is represented by Freshfields Bruckhaus Deringer in Washington D.C, Dechamps International Law in London and D’Empaire Reyna Abogados in Caracas.

Irish cardboard maker threatens treaty arbitration against Venezuela

Venezuela may soon be facing another treaty arbitration, brought by the Irish cardboard packaging manufacturer Smurfit Kappa.

According to local press reports, Smurfit’s Venezuelan subsidiary Smurfit Kappa Carton de Venezuela (SKCV) was recently taken over by the Caracas government for 90 days. Reportedly, the Venezuelan government considered that SKCV was charging too much for its products and abusing its dominant market position. Another local source quotes Smurfit Kappa’s CEO Tony Smurfit saying that “Smurfit Kappa will diligently pursue its international rights in this regard, including the right to claim compensation through international arbitration proceedings under the applicable Bilateral Investment Treaty”.

Ireland does not appear to maintain a bilateral investment treaty with Venezuela, but the company may be able to pursue the arbitration via an affiliate registered outside of Ireland.