Venezuela faces increasing lawsuits and payment rulings following the recent decision by the District Court of Columbia to recognize an arbitration award in favor of Venezuela US SRL, pertaining to unpaid investment dividends in Petroritupano S.A. The ruling mandates Venezuela to pay over USD 109 million to the claimant.
Venezuela US SRL (VUS), a company registered in Barbados and a subsidiary of Occidental Petroleum Corporation, filed a lawsuit against Venezuela in the United States District Court for the District of Columbia, seeking recognition and enforcement of a foreign arbitration award issued in 2022.
The arbitration award requires the defendant to pay VUS over USD 58.8 million in compensation, USD 46.6 million in pre-award interest, along with post-award interest, as well as USD 3.2 million and EUR 615,000 in legal and arbitration costs.
The Court’s Order
The court obligates Venezuela to pay over USD 109 million to the claimant.
On June 9, 2025, Judge Jia M. Cobb of the United States District Court for the District of Columbia granted the enforcement petition of the Arbitration Award presented by Venezuela US SRL (VUS) against the Bolivarian Republic of Venezuela, which unjustly deprived dividends from an investment in Petroritupano S.A., in violation of a bilateral investment treaty.
The court order established a deadline for the proposed judgment submission by June 23, 2025; a response deadline of July 7, 2025; a reply, if any, due by July 14, 2025; and a costs petition by June 30, 2025, with a response deadline of July 14, 2025.
The Opinion Memorandum of the Ruling
Judge Jia M. Cobb justified her ruling in favor of Venezuela US SRL (VUS) and granted their petition for recognition and enforcement of a foreign arbitration award (the “Final Award”) against the Bolivarian Republic of Venezuela under the New York Convention.
Venezuela contends that enforcing the award would violate U.S. public policy by contradicting the recognition of Juan Guaidó’s interim government by the U.S. president as the only legitimate government of Venezuela.
However, the court determined that recognizing the award would not violate this policy nor undermine the executive authority of recognition. It cites that the award is against the nation-state of Venezuela and not against a specific government. Therefore, the court grants VUS’s petition and reinforces the federal policy of supporting dispute resolution through arbitration.
The court based its decision on the Federal Arbitration Act (FAA) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), which uphold a “strong federal policy in favor of the resolution of arbitral disputes.”
The court has limited discretion to deny enforcement unless the denial grounds specified in Article V(2)(b) of the Convention are met, which includes violation of the public policy of the forum state.
Addressing Venezuela’s Arguments
The court addressed Venezuela’s arguments in three main points:
Waiver: VUS argued that Venezuela waived this defense by not timely objecting to the representation of Maduro’s regime. The court held that, while Venezuela was aware of Maduro’s regime assuming representation, there is no evidence that it knew before the conclusion of arbitration that VUS would seek enforcement in the U.S., a country recognizing the interim government. The court noted that “the public policy exception applies the public policy of the ‘forum state’ in which the petitioner seeks recognition and enforcement.”
Recognition authority as public policy: Venezuela claimed that the exclusive executive prerogative to recognize foreign governments is a fundamental public policy. The court found that Venezuela failed to demonstrate that the presidential recognition authority met the “high standard” of “basic notions of morality and justice”, especially since Supreme Court decisions on recognition focus on unifying U.S. foreign affairs viewpoints rather than moral considerations.
Violation of public policy by the requested order: Even if recognition authority were a relevant public policy, the court concluded that confirming the Final Award would not violate it.
The United States District Court for the District of Columbia concluded that Venezuela did not meet its “heavy burden” to establish a public policy defense under the New York Convention. Enforcing the Final Award does not equate to recognizing Maduro’s regime, since the award runs against the state of Venezuela, not against a specific government, and the recognized Interim Government is responsible for state obligations. Therefore, it granted the petition of Venezuela US SRL (VUS).
Petition for Recognition of the Arbitration Award
On December 27, 2022, Elliot Friedman submitted a petition to the United States District Court for the District of Columbia to recognize and enforce a foreign arbitration award between Venezuela US SRL (VUS) and the Bolivarian Republic of Venezuela.
The main objective of Venezuela US SRL is for the court to recognize and enforce a foreign arbitration award issued in its favor, following a dispute lasting nearly a decade. The case focused on VUS’s claim that Venezuela unjustly deprived it of dividends from an investment in an oil field, violating a bilateral investment treaty.
Venezuela US SRL seeks enforcement of this award, totaling over USD 58.8 million in compensation, plus interest and legal costs, based on the Federal Arbitration Act of the U.S. and the New York Convention, agreements designed to facilitate the recognition and enforcement of international arbitration awards.
The Case
Venezuela US SRL (VUS), a company organized under Barbadian law and a subsidiary of Occidental Petroleum Corporation (registered in Delaware and headquartered in Houston, Texas), claims dividends from its investment in a Venezuelan oil field that the Bolivarian Republic of Venezuela allegedly deprived it of receiving.
This action by Venezuela, according to the plaintiff, violated the Agreement between the government of Barbados and the government of the Republic of Venezuela for the Promotion and Protection of Investments of 1994. Venezuela fully participated in nearly a decade of arbitration but has not paid the amounts due under the award.
In this regard, Venezuela US SRL seeks enforcement under Chapter 2 of the Federal Arbitration Act of the United States (FAA) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Origin and Development of the Dispute
Venezuela US SRL invested in Petroritupano S.A., a mixed Venezuelan company where the claimant held an 18% share, alongside Corporación Venezolana del Petróleo S.A. (CVP, 60%) and Petrobras Energía S.A. (22%).
The complaint states that between 2006 and 2009, Petroritupano was profitable, and dividend distributions of USD 245,328,710.39 were approved for 2008 and USD 81,731,835 for 2009. VUS was entitled to 18% of these dividends, totaling USD 58,870,898. However, Venezuela US SRL never received these dividends, unlike Petrobras and CVP, which did.
Consequently, VUS initiated arbitration against Venezuela on March 22, 2013, under the aforementioned treaty of 1994, which took place under the UNCITRAL Arbitration Rules of 1976. The tribunal was constituted on November 13, 2013, in The Hague, Netherlands.
The arbitration was divided into three phases:
First phase (2014-2016): Addressed Venezuela’s jurisdictional objections. The tribunal rejected Venezuela’s objection regarding lack of consent to arbitrate.
Second phase (2017-2021): Dealt with remaining jurisdictional objections and the merits. Again, the tribunal affirmed its jurisdiction and determined that Venezuela violated the treaty by discriminating against VUS in the treatment of dividends for 2008 and 2009.
Third phase (2022): Determined the compensation amount. The tribunal unanimously ordered Venezuela to pay compensation and interests.
The Final Award, issued on November 4, 2022, mandated Venezuela to pay Venezuela US SRL:
Nominal compensation: USD 58,870,898.
Pre-award interest: USD 46,624,436.
Post-award interest: LIBOR USD rate for twelve months plus 4%, with annual capitalization.
Legal and arbitration assistance costs: USD 3,215,534.99 and EUR 615,056.47 (70% of VUS’s costs), plus simple interest of 6% starting one month after the Final Award.
Failure to pay: Venezuela has not paid any of the amounts due under the Final Award.
Statement from Elliot Friedman
On December 27, 2022, Elliot Friedman, attorney for Venezuela US SRL, presented a detailed statement regarding the arbitration process that concluded with a substantial award in favor of Venezuela US SRL, totaling over USD 109 million and EUR 617,000, as a result of Venezuela’s discrimination against VUS’s investment in Petroritupano.