New Developments in Relation to the Legal Representation of Venezuela in International Proceedings

On 23 January 2019, after Nicolas Maduro began his second term as Venezuela’s president, the Venezuelan opposition leader Juan Guaidó proclaimed himself Venezuela’s “acting president” and swore himself as interim president of Venezuela.  Following Guaidó’s declaration, more than 50 countries, including the United States, Canada, several EU Member States, and various Latin American countries, recognized Guaidó’s legitimacy.

After swearing in as Venezuela’s interim president, Guaidó adopted several measures to retain control of Venezuela’s overseas assets.  These measures included intervening before international arbitration proceedings involving Venezuela.  Guaidó’s intervention raised a number of questions relating to Venezuela’s legal representation and specifically who holds the power to represent Venezuela before international arbitration tribunals.

The debate over Venezuela’s legitimate representation has been further complicated by the elections held in Venezuela on 6 December 2020, which saw a favorable outcome for Maduro and his allies.  Maduro’s government called the controversial December 2020 elections to renew the National Assembly’s membership, whose mandate expired on 5 January 2021.  The elections were boycotted by the opposition-led National Assembly presided by Guaidó and ignored by at least 70% of eligible voters.

While it has been claimed that the December 2020 elections were not free and fair, it has also been argued that Maduro has now strengthened his grip over Venezuela so that Guaidó’s opposition faces an uncertain future.  We discuss first how certain international tribunals have decided the issue of Venezuela’s legal representation since Guaidó’s self-proclamation in January 2019, and subsequently discuss how the December 2020 elections may impact Venezuela’s legal representation.

How have international arbitration tribunals decided over Venezuela’s legal representation?

The issue of Venezuela’s legal representation has been raised before various international arbitration tribunals, including in ICSID.  While certain decisions remain confidential, we note the decisions by the annulment committees of Valores Mundiales v. Venezuela (ICSID Case No. ARB/13/11) and ConocoPhillips v. Venezuela (ICSID Case No. ARB/07/30), as well as the recent decision by the tribunal in the resubmission proceedings of Venezuela Holdings BV and others v Bolivarian Republic of Venezuela (ICSID Case No. ARB/07/27).  In such instances, the tribunal and the annulment committees found that while they lacked the power to decide with whom lies the legitimate government of Venezuela, they were empowered to decide the procedural issue of Venezuela’s representation in the specific proceedings by Articles 44 and 52(4) of the ICSID Convention.  Articles 44 and 54(2) grant a tribunal and annulment committee with the power to decide any procedural question which is not covered by the ICSID Convention or ICSID Arbitration Rules.

In Valores Mundiales, the issue of Venezuela’s representation was prompted by a letter from the Special Attorney General (“SAG”) appointed by Guaidó to the ICSID Secretary General on 27 March 2019.  The letter stated that the SAG had the exclusive right to represent Venezuela, and requested ICSID to address any communication to the SAG and to consider any instruction or communication received by Maduro’s representatives after 5 February 2019 invalid.  The ICSID Secretary General transmitted the SAG’s letter to the Valores Mundiales annulment committee, among other tribunals and annulment committees in proceedings involving Venezuela.

On 29 August 2019, the annulment committee rejected the SAG’s application to assume the legal representation of Venezuela.  The committee held, among other things, that the request for a change in government representation must be supported by evidence of exercise of power that demonstrates the government’s effective control over the territory.  The committee specified that the international recognition of a government may be a factor to consider when determining whether that government exercises effective control, but only if that factor is coupled with evidence of material exercise of power.  The committee found that the SAG had failed to provide evidence in this respect.  The committee further stated that the Supreme Court of Venezuela had invalidated the acts appointing the SAG, and that the SAG had failed to provide evidence that the Supreme Court of Venezuela lacked legitimacy, even though it claimed that it did.  In rejecting the SAG’s application, the committee ordered the continuation of the annulment proceeding with Venezuela’s counsel on record.

In ConocoPhillips, Guaidó’s and Maduro’s representatives separately filed a request for the annulment of the award issued against Venezuela.  At the outset of the annulment proceedings, Maduro’s  legal representatives asked the annulment committee to exclude the participation of Guaidó’s legal representatives from the proceedings on the basis that they were acting on a power of attorney issued by “a person who does not exercise any authority or power within the Venezuelan legal system.”  In submitting its request, Maduro’s representatives cited to previous decisions maintaining Venezuela’s counsel on record, including Valores Mundiales.

On 3 April 2020, the annulment committee rejected the request to exclude Guaidó’s legal representatives.  The committee found that maintaining Venezuela’s counsel of record meant continuing the proceedings with the representatives of both Guaidó’s and Maduro’s governments.  Specifically, both legal representatives had been involved in the underlying arbitration proceedings since both had filed applications for rectification of the award before the arbitral tribunal.  The tribunal had found that no decision was required on Venezuela’s legal representation because the tribunal was not faced with conflicting positions by Venezuela’s representatives as the submissions of both representatives were identical.  The committee further stated that enabling both representatives to participate in the annulment proceedings would not be unfair, since it would potentially only create a greater burden for ConocoPhillips, who had however agreed to respond to submissions from both representatives.

Maduro’s legal representatives asked the committee to reconsider its April 2020 order based on new and decisive elements, including a newly-issued decision by the Supreme Court of Venezuela stating that Maduro’s Attorney General held the exclusive authority to appoint legal representatives.  On 2 November 2020, the annulment committee rejected the request for reconsideration.  The annulment committee reiterated that it did not have the power to decide Venezuela’s legitimate representation but could only decide which legal representative could participate in the annulment proceedings before it.  In light of this, the committee held that it could not vindicate the actions of the different branches of constitutional power without turning itself into a final arbiter of Venezuela’s constitutional powers.  The committee noted that the judicial and legislative branches of Venezuela had contrasting positions, and the committee could not use those differing positions as a basis for excluding counsel in the annulment proceedings.

In Venezuela Holdings, the issue of Venezuela’s representation was similarly prompted by the letter of the SAG on 27 March 2019.  On 1 March 2021, after inviting briefing on the matter, the tribunal dismissed the SAG’s request to assume the legal representation of Venezuela, and held that the arbitration proceedings would continue with Maduro’s representatives.

In setting out its reasoning, the tribunal noted that the earlier decisions on Venezuela’s legal representation accorded a central role to maintaining the status quo, placing the burden of proof with the person or body seeking to change the existing representation.  The tribunal found that the application of such principle operated in favor of the representation by Maduro’s representatives, since Maduro’s Attorney General was Venezuela’s representative of record at the time of the initiation of the resubmission proceedings, as well as Venezuela’s representative in the first arbitration and the annulment proceedings.  Accordingly, the tribunal found that continuing the proceedings with Maduro’s representatives would provide continuity in the interest of orderly proceedings and the right of defense of Venezuela.

The tribunal found that the other arguments raised by the SAG did not alter the tribunal’s status quo analysis and its findings.  In particular, the tribunal found that the SAG had failed to show that its appointment found a proven basis under Venezuelan law.  Furthermore, the tribunal noted that at the time of its decision, the SAG had failed to show that it was the representative of an effective government, meaning a government that is in control of the national territory and most, if not all, the state apparatus.  In finding this, the tribunal noted that the SAG was operating out of Bogotá.  The tribunal also found that the recognition of Guaidó’s government by other countries—including the Netherlands, a party to the treaty at the basis of the claim, and the United States, the country of incorporation of the claimants’ ultimate mother company—did not alter its status quo analysis.  The tribunal lastly found that while it did not want to proceed with two representatives of one party fighting each other, it welcomed the constitution of a coordinated or joint defense by the representatives of Maduro’s and Guaidó’s governments.

How will the December 2020 elections impact the issue of Venezuela’s legal representation before international arbitration tribunals?

As mentioned above, it has been claimed that the December 2020 elections have undermined Guaidó’s position.  For instance, on 6 January 2021 the European Union declared that it no longer recognized Guaidó as interim president of Venezuela, and considered him a “privileged interlocutor” instead. While some countries like the United States still consider Guaidó as Venezuela’s rightful leader, the decrease in international recognition may impact how international tribunals decide the issue of Venezuela’s legal representation in the future.

In particular, international tribunals have considered several different factors when deciding the issue of representation, including the degree to which Guaidó’s government exercises effective power in Venezuela, and specific procedural aspects such as who had been the counsel of record during the proceedings.  In light of this, the procedural facts of each case, together with any development following the December 2020 elections, will likely impact how international tribunals will determine which government represents Venezuela in international arbitration proceedings.