Oil transport company Tidewater Inc. initiates ICSID arbitration against Venezuela over expropriated assets

By Fernando Cabrera Diaz

April 8, 2010

New Orleans-based Tidewater Inc. has initiated arbitration against Venezuela at ICSID over the latter’s alleged take-over of 15 of the company’s vessels in May and July of 2009. According to the company these and other seizures of the company’s assets amount to expropriations in violation of Venezuela’s bilateral investment treaty obligations and Venezuela’s investment law.

Tidewater Inc. provides transportation services to petroleum companies, principally for offshore operations. In Venezuela the company was providing support to national oil company Petróleos de Venezuela, S.A. (PDVSA).

According to a February 17, 2010 regulatory filing with the U.S. Securities Exchange Commission (SEC), Tidewater claims that in May and July of 2009 PDVSA took possession and control of fifteen of the company’s vessels, most of which were in support of PDVSA’s operations in the Lake Maracaibo region of Venezuela.

During the same period Tidewater says PDVSA took over its operations in Lake Maracaibo and the Gulf of Paria, as well as other assets.

Before filing its claim, which it did on February 16, 2010, the company sent Venezuela a notice of dispute and requested consultations but it did not receive a response.

ITN contacted Oscar Garibaldi, of Washington DC-based Covington Burlington LLP, who represents Tidewater.

 Given that there is not bilateral investment treaty between Venezuela and the U.S., Mr. Garibaldi explained that two of the claimants are protected under the Barbados-Venezuela bilateral investment treaty, while “[a]ll of the claimants invoke ICSID jurisdiction under Art. 22 of the Venezuelan Investment Law and assert claims based on Venezuelan law and customary international law.”

He indicated those investors covered under the BIT accuse Venezuela of: (i) breaching the standard of fair and equitable treatment; (ii) breaching the obligation not to impair by arbitrary or discriminatory measures the operation, management, maintenance, use, enjoyment or disposal of the treaty claimants’ investments; (iii) failing to accord treatment no less favorable than that accorded to nationals or companies of Venezuela or a third State; and (iv) expropriating Tidewater’s the investments without observing the obligations imposed by the Treaty.

Tidewater has yet to quantify the amount of damages it seeks, but will do so at a later stage of the proceedings.

Though Venezuela has in the past made offers to provide some compensation to foreign companies for taken assets, Mr. Garibaldi says that no such offers have been made to Tidewater.


Tidewater Inc. February 17, 2010 filing to the SEC: http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=6770887&format=RTF