On November 6, 2017 an ICSID tribunal issued an award in the current amount of about USD 53 million in favor of Longreef Investments A.V.V. (“Longreef”), finding that Venezuela: i) illegally expropriated Longreef’s interest in C.A. Café Fama de América (“CAFAMA”) and Fama de América S.A. (“FAMASA”), and, ii) breached its obligation to provide Fair and Equitable Treatment to Longreef, in both cases by taking control of CAFAMA and FAMASA through an agrarian court injunction in 2010, and failing to comply with expropriation proceedings required by Venezuelan law.  
 
This was clearly a significant victory for the Claimant.  Notably,

  • in the Jurisdiction Award dated 12 February 2014, the Tribunal found it had jurisdiction notwithstanding the termination of the Netherlands-Venezuela BIT before the initiation of the arbitration (the first tribunal to so rule) and that Longreef’s claim were admissible regardless of the fact that Longreef was held by a shell company; and
  • in the final Award, the Tribunal determined that Venezuela significantly undervalued CAFAMA and FAMASA, both in its Bs 83 million (~USD 19 million) offer prior to the agrarian court injunction, and its valuation at the proceedings. The Tribunal found that the value of CAFAMA was ~USD 43 million, and award interest on that amount at LIBOR +2%, (the amount requested by Longreef), from the date of expropriation until the date of payment. 
     
  • Venezuela was also required to pay two thirds of the costs of arbitration, including a substantial amount of Claimant’s legal and expert fees.

Baker McKenzie’s team was led by Grant Hanessian and Derek Soller in New York and Eugenio Hernandez-Breton, Maria Eugenia Salazar and Héctor Martínez Caracas.

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