The three-member tribunal found Venezuela violated its obligations under the 1991 bilateral investment treaty between the Netherlands and Venezuela and awarded OIEG more than $372m in compensation plus interest (calculated at a rate of 1 year US dollar LIBOR plus 4%).
The expropriation occurred on October 26, 2010
As part of the award, interest compounds annually from the date of expropriation until the date of effective payment. The expropriation occurred on October 26, 2010, and the interest, calculated to date, exceeds $84m. The tribunal also awarded costs and legal fees to OIEG.
FoodProductionDaily contacted O-I to speak about the award but it declined to comment.
Al Stroucken, chairman/CEO, O-I, said in a statement: "As the tribunal found, Venezuela expropriated very valuable assets, which were the result of more than half a century of hard work and commitment by O-I employees and for which the country now has to compensate O-I.
"We hope the plants continue to benefit our former employees and the Venezuelan people."
Venezuela may seek to have the award annulled or delayed
International law requires Venezuela to pay OIEG the amounts due. Venezuela may seek to have the award annulled or otherwise delayed or not comply with the award.
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. OIEG is unable at this stage to predict the amount, or timing of receipt, of compensation it will ultimately receive under the award.
A separate arbitration is pending with ICSID to obtain compensation primarily for third-party minority shareholders' lost interests in the two expropriated plants.
O-I was informed of Venezuela's plans to transition management of the company's operations to government control in October 2010.
Safety and well-being of its employees
Stroucken said at the time it would comply with the laws and directives but the safety and well-being of its employees was of the utmost importance
"Glassmaking is a highly specialized, complex and technical industry, and we are concerned by government plans to manage the operations without having the appropriate level of expertise,” he said.
“We also are concerned about the continuity of supply to customers in critical segments like food and beverage."
Hugo Chávez was president of Venezuela from 1999–2013. He styled himself as the leader of the ‘Bolivarian Revolution’, a socialist political program (Chavismo) including nationalism, a centralized economy, and a strong military engaged in public projects.
He led the charge against private property rights, ratifying legislation that grants the Executive branch absolute power to intervene private entities, without due process, for any reason and at any time.
Expropriating important sectors of the Venezuelan economy became a staple of Chávez’s economic policies over the past 12 years. Many businesses have turned into industrial ghost plants. Factories don’t assemble cars; sugar mills operate at a loss; and companies produce poor packaging for perishable goods, which then spoil easily.