An international tribunal has awarded a subsidiary of packaging company Smurfit Westrock compensation of US$468.7 million (€422 million) plus costs in a claim made by the company against Venezuela.

The company, then Smurfit Kappa, withdrew from the country in 2018, citing “continuing actions and interference” by Venezuela’s government.

Smurfit Holdings took the case to an arbitral tribunal constituted under the auspices of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

In a statement yesterday (29 August), the company said that the award was made pursuant to the agreement on encouragement and reciprocal protection of investments between the Netherlands and Venezuela.

By majority, the tribunal dismissed Venezuela’s objections to its jurisdiction, and held that Venezuela breached the treaty’s protections against unlawful expropriation, unfair and inequitable treatment, and arbitrary and discriminatory measures, as well as the treaty’s obligation to guarantee the repatriation of dividends without undue restriction or delay.

‘Unlawfully expropriated’

Smurfit Westrock said that the breaches arose from Venezuela’s seizure of Smurfit’s Venezuelan subsidiaries’ landholdings, failure to issue VAT refunds to Smurfit’s subsidiaries, a failure to permit the transfer of Smurfit’s subsidiaries’ dividends without undue restriction and delay, and the seizure of the Venezuelan business in 2018.

Tony Smurfit (Smurfit Westrock chief executive) stated that the award validated the firm’s assertion that its Venezuelan business was unlawfully expropriated in 2018.

“While the award cannot compensate us for the full loss in relation to our operations in Venezuela – including the significant impact it had on our people and the wider community there – we will now pursue the full value of this award from the Venezuelan government”.