CARACAS, Venezuela — Venezuela has formally begun its withdrawal from a World Bank-affiliated arbitration body, the government announced Wednesday, a decision made by President Hugo Chavez as cases have accumulated against the country’s seizures of companies and their assets.
Chavez and his allies say that disagreements with foreign companies operating in Venezuela should be settled with local authorities and within its judicial system.
The Foreign Ministry announced Venezuela’s withdrawal from the Washington-based International Centre for Settlement of Investment Disputes, known by its initials as ICSID, in a statement, calling the government’s decision “irreversible.”
It suggested the arbitration centre unfairly favours foreign companies.
The ICSID’s website lists 18 pending cases against Venezuela, while top government lawyer Carlos Escarra said recently that Venezuela faces a total of 28 arbitration cases, many of them before the ICSID.
The cases include multimillion-dollar claims by the Houston-based oil company ConocoPhillips Co., U.S. glass manufacturer Owens-Illinois Inc. and Canadian mining company Crystallex International Corp.
Diego Moya-Ocampos, an analyst with the IHS Global Insight consulting firm in London, said Venezuela’s withdrawal from the centre would not affect pending cases.
But he said the move could scare off foreign investors, particularly oil companies with potential interest in forming joint ventures with the state-run oil firm Petroleos de Venezuela in the Orinoco Oil Belt, which holds vast deposits of extra-heavy crude.