Guyana-Venezuela boundary dispute: Maduro Administration announces resource exploitation measures

The longstanding boundary dispute between Guyana and Venezuela saw significant escalation at the end of 2023. The dispute concerns Guyanese-controlled territory to the west of the Essequibo River, referred to as the Essequibo region by Guyana, and as Essequiba by Venezuela (the "Disputed Territory"). Following a 3 December 2023 referendum organised by the administration of Venezuela's Nicolás Maduro (the "Maduro Administration"), the Maduro Administration announced, amongst other things, measures pursuing the exploitation of resources in and around the Disputed Territory. This post provides an overview of the dispute and discusses legal considerations relevant for anyone with an interest in the area who is monitoring continuing developments.

Background

The dispute between Guyana and Venezuela is currently the subject of ongoing proceedings before the International Court of Justice (the "ICJ")*. As explained further below, the ICJ has so far rendered two judgments on the case, but has not yet pronounced on the merits of the dispute.

The ICJ's judgments explain that the dispute originates from an 1897 treaty signed by the UK and Venezuela concerning the Disputed Territory (the "Washington Treaty"). The UK at the time administered British Guiana, the colonial predecessor to present day Guyana, and had competing claims with Venezuela over land in and around the Disputed Territory. The Washington Treaty provided that "[a]n Arbitral Tribunal shall be immediately appointed to determine the boundary-line between the Colony of British Guiana and the United States of Venezuela". The tribunal handed down an award on 3 October 1899, which decided that Venezuela had sovereignty over certain land around the Orinoco River, and that the UK was entitled to the Disputed Territory (the "Award").

In 1962, Venezuela wrote to the UN Secretary-General to state that it would not recognise the Award. Venezuela set out its view that the Award led to the frontier with British Guiana being "demarcated arbitrarily" and that "no account was taken of the specific rules of the arbitral agreement or of the relevant principles of international law". The UK's response was that the "Western boundary of British Guiana with Venezuela [had been] finally settled" by the Award.

Following Guyana's independence in 1966, Guyana and Venezuela participated in political processes aimed at resolving the dispute, as mandated by a further treaty of the same year between the parties, referred to as the "Geneva Agreement". These culminated in a referral of the dispute to the UN Secretary-General, who deployed "good offices" to facilitate a settlement. The UN Secretary-General decided in 2018 that the dispute should be referred to the ICJ, following which Guyana instituted proceedings on 29 March 2018.

In an 18 December 2020 judgment (available here), the ICJ held that it had jurisdiction under the Geneva Agreement to hear the dispute, insofar as it concerns the validity of the Award and whether it conclusively decides the Guyana-Venezuela land boundary. The ICJ also held it did not have jurisdiction to hear Guyanese claims arising from events occurring after the signature of the Geneva Agreement. The ICJ subsequently dismissed a further Venezuelan objection to the exercise of ICJ jurisdiction in a 6 April 2023 judgment (available here).

Recent Maduro Administration measures

On 3 December 2023, the Maduro Administration held a referendum which asked the Venezuelan public a series of questions relating to the dispute, including whether they agreed:

• "to reject by all means, in accordance with the Law, the line fraudulently imposed by the [Award] that seeks to dispossess [Venezuela] of our Guayana Esequiba";
• "with Venezuela's historic position of not recognizing the Jurisdiction of the International Court of Justice to resolve the territorial dispute…"; and
• "with the creation of the Guayana Esequiba State and that an accelerated and comprehensive plan be developed for the present and future population of that territory [entailing] incorporating that State into the map of Venezuelan territory".

The referendum was held notwithstanding provisional measures indicated by the ICJ on 1 December 2023, which ordered Venezuela to "refrain from taking any action which would modify the situation that currently prevails in the territory in dispute" (Order available here).

Claiming a mandate from the referendum's results, the Maduro Administration subsequently announced measures in respect of the Disputed Territory on 5 December 2023, including (announcement available here in Spanish):

• the provision of authorisation to State-owned oil and gas company Petróleos de Venezuela and State-owned metals company Corporación Venezolana de Guayana to establish divisions for the Disputed Territory;
• the granting of licenses for oil, gas and mineral exploration and exploitation;
• the mobilisation of the Venezuelan National Assembly to enact a law creating a Guayana Esequiba state in the Disputed Territory; and
• the appointment of a provisional Venezuelan administrator over the Disputed Territory.

In response, Guyana requested an urgent meeting of the UN Security Council in a 6 December 2023 letter (available here). Guyana made this request under Article 35(1) of the UN Charter, which permits any UN Member State to refer to the UN Security Council or General Assembly disputes or situations which could "endanger the maintenance of international peace and security".

Guyana's letter described the Maduro Administration's actions as "flagrant violations" of the ICJ's provisional measures order, and of the "most fundamental principles of international law" against the threat or use of force and annexation. Amongst other things, Guyana's letter noted the Maduro Administration's purported "termination of all concessions in the [Disputed Territory] and adjacent maritime area issued by Guyana, giving Guyana's licensees a deadline of three months to vacate the area".

Guyana issued a subsequent statement "that Guyana's land boundary is not up for discussion", and that Guyana would "strictly adhere to the ICJ process" (available here). Guyana also stated that its "development partners and investors can be assured that there will be no changes nor alterations to existing agreements".

On 14 December 2023, Guyanese President Ibrahim Ali met with Nicolás Maduro in talks aimed at calming tensions hosted by St Vincent and the Grenadines. The two signed a Joint Declaration of Argyle for Dialogue and Peace Between Guyana and Venezuela (the "Declaration") (available here), affirming that neither Venezuela nor Guyana would "threaten or use force against one another in any circumstances", and that both States would "cooperate to avoid incidents on the ground".

The Declaration also records that a joint Guyanese-Venezuelan commission will be formed to manage the situation, and that a further meeting on the dispute will take place within three months. The parties' opposing positions on the ICJ's role in resolving the dispute are noted.

Conclusion

The escalation of the Guyana-Venezuela dispute highlights how boundary disputes between States can significantly impact business operations and create complex risks. It is no coincidence, of course, that such tensions continue in an area rich with natural resources. Affected businesses should continue to monitor the situation closely, and should keep in mind that a judgment of the ICJ on the merits of the dispute will not be rendered in the short term. Ongoing communication between Guyana and the Maduro Administration may provide some indication of the dispute's trajectory. It will be of interest to observe if the joint commission established under the recent Declaration leads to a material improvement in the prevailing situation. We will continue to monitor these developments and provide updates.

*The issue of the representation of Venezuela before the ICJ and more generally is beyond the scope of this post.

For further information, please contact Christian Leathley, Partner, Hannah Ambrose, Partner, Jefferi Hamzah Sendut, Associate, or your usual Herbert Smith Freehills contact.