Tag Archives: arbitration

Case of the Day: Crystallex International v. Petróleos de Venezuela

The CITGO Sign in Kenmore Square
A Boston landmark. Credit: Lunarsurface

The case of the day is Crystallex International Corp. v. Petróleos de Venezuela (D. Del. 2016). Crystallex was a Canadian corporation that had brought an ICSID arbitration against Venezuela, relating primarily to Venezuela’s denial of a permit to allow Crystallex to mine gold deposits in the Las Cristinas area and to the decision of a state-owned economic development company, Corporación Venezolana de Guayana, to rescind a mining contract with Crystallex. The arbitration resulted in an award of more than $1.2 billion in damages to Crystallex.

In today’s case, Crystallex alleged that Venezuela, in anticipation of the award, had “orchestrated a scheme to monetize its American assets and pull the proceeds out of the United States, in order to evade potential arbitration creditors.” In particular, it alleged that Venezuela and its state oil company, Petróleos de Venezuela, cause CITGO, a subsidiary of Petróleos de Venezuela, to issue $2.8 in debt and then to pay the proceeds of the issuance to Petróleos de Venezuela in the form of a dividend. The main claim was for fraudulent transfer under the Uniform Fraudulent Transfer Act. CITGO moved to dismiss for failure to state a claim. (Note that I’m simplifying things a bit—there actually were two levels of subsidiaries, with the indirect subsidiary paying a dividend to the direct subsidiary and the direct subsidiary then paying a dividend to Petróleos de Venezuela. I’m using the name CITGO to refer to both, even though ultimately CITGO was dismissed from the case and the other subsidiary, PDV Holding, Inc., was not. This is mainly so I can use the picture of the CITGO sign, a Boston landmark).
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Lago Agrio: Tribunal Says US Decision Has No Preclusive Effect

Chevron won a victory when the tribunal hearing its investment treaty claim against Ecuador granted its application to add the Second Circuit’s recent decision to the record in the arbitration. But the tribunal’s order is, in an important sense, a much bigger victory for Ecuador.
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Case of the Day: CEEG (Shanghai) Solar v. LUMOS LLC

The case of the day is CEEG (Shanghai) Solar Science & Technology Co. v. LUMOS LLC (10th Cir. 2016). CEEG was a Chinese solar panel manufacturer. LUMOS was a solar energy company in Colorado. The parties had a co-branding agreement under which LUMOS agreed to purchase at least a minimum number of solar panels from CEEG over three years and CEEG warranted that the goods would conform to the contract specification. The agreement provided: “all documentation, notices, judicial proceedings, and dispute resolution and arbitration entered into, given, instituted pursuant to, or relating to, this Agreement be drawn up in the English language.” And it provided for arbitration before CIETAC. On the other hand, it provided that each order for goods would be subject to subsequent purchase contracts. The parties did enter into a subsequent contract, which again provided for CIETAC arbitration but did not provide for the use of English. The CIETAC Rules provide that if

the parties have agreed on the language of arbitration, their agreement shall prevail. In the absence of such agreement, the language of arbitration … shall be Chinese or any other language designated by CIETAC having regard to the circumstances of the case.

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