Reed Smith Client Alerts

Key takeaways

  • Colombian Supreme Court’s ruling represents significant deviation from established legal precedent, marking uncommon event in nation’s judicial history regarding recognition and enforcement of foreign arbitral awards
  • The Colombian Court determined that applications for recognition of foreign arbitral awards must be scrutinized through lens of immunity from enforcement, viewing such applications as potential precursors to coercive actions against the state
  • The Colombian Court denied application for recognition of foreign arbitral award, considering that immunity from enforcement in Colombia is insurmountable

In June of this year, the Supreme Court of Justice of the Republic of Colombia (the Colombian Court) issued Judgment No. SC1453-2024, which declined to recognize an arbitral award rendered pursuant to the 2006 Additional Facility Rules of the International Centre for Settlement of Investment Disputes (ICSID) by an arbitral tribunal seated in Paris (the Tribunal). The Tribunal issued the award in favor of Rusoro Mining Ltd. (Rusoro) and against the Bolivarian Republic of Venezuela (Venezuela). Despite being previously recognized in the U.S. District Court for the District of Columbia and the Paris Court of Appeal, the Colombian Court refused to recognize the award based on principles of immunity from jurisdiction and immunity from enforcement.

Background

The arbitration, conducted under the ICSID Additional Facility Rules between Rusoro and Venezuela, arose from alleged violations of the Canada–Venezuela Bilateral Investment Treaty (Treaty), which provided for expropriation protection and dispute resolution mechanisms between investors and the host contracting party. Rusoro, a Canadian gold mining company, held significant controlling interests and mining rights for gold exploration in Venezuela.

In 2009, Venezuela implemented several restrictive measures on gold production, including the BCV Resolution, which mandated that gold producers sell 60 percent of their output to the Central Bank of Venezuela and which imposed a 30 percent limit on gold exportation. Subsequently, in 2010, all foreign exchange transactions were centralized under the Central Bank of Venezuela, requiring Rusoro to sell 50 percent of its gold production and 50 percent of its foreign currency income to the Central Bank. In 2011, the Venezuelan government nationalized the gold mining sector, resulting in the state’s acquisition of control of the property and mining rights of all gold production companies.