CARACAS (Reuters) - U.S. bottle maker Owens-Illinois said on Thursday it had been awarded over $455 million in a nationalization claim against Venezuela, though a lawyer for the South American country said it was likely to seek an annulment.
The award comes at a tricky time for the cash-strapped OPEC country, which is struggling to foot major bond payments, other arbitration claims and debts with private companies amid a tumble in oil prices and a severe recession.
It has sought revisions and annulments in other arbitration cases that stem from massive nationalizations during the late socialist leader Hugo Chavez’s rule, though companies say they are intent on getting their due.
“If Venezuela fails to meet its obligations, OIEG will seek to enforce the award against Venezuela’s assets around the world or find alternative measures of redress,” Owens-Illinois said in a statement, referring to its Dutch subsidiary OI European Group[OIEUP.UL].
“OIEG is unable at this stage to predict the amount, or timing of receipt, of compensation it will ultimately receive under the award,” which was issued by the World Bank’s International Center for Settlement of Investment Disputes (ICSID) on Tuesday.
“It’s probable that an annulment or other revisions will be sought,” said lawyer Diego Brian Gosis of Argentine firm Guglielmino & Asociados, who is working on behalf of the Venezuelan government.
Venezuela has 120 days to request an annulment, and the evaluation process can take between around 18 and 30 months, he said. That could hand Venezuela a breather amid the economic crisis.
The country has already sought an annulment of a $1.6 billion Exxon Mobil Corp award.
However, it has been in discussion with Gold Reserve Inc over a $740 million award, and the U.S.-based company has said it is open to a settlement, which would likely be better for Venezuela’s credit ratings.
Chavez nationalized OIEG’s majority interest in two plants in a move typical of his 14-year-governance of the South American country.
Additional reporting by Diego Ore; Editing by Jonathan Oatis