International Arbitration Panel Awards Owens-Illinois $455 Million
The World Bank’s International Center for Settlement of Investment Disputes has awarded bottle manufacturer Owens-Illinois $455 million in an award settling the company’s complaint against the government of Venezuela over the seizure of two manufacturing plants in that country in 2010.
Owens-Illinois had operated the plants for more than five decades. The government accused the company of being environmentally irresponsible and of exploiting workers at the plant, and seized them under special powers the Venezuelan government had granted former President Hugo Chávez.
Owens-Illinois denied all claims and filed a complaint. The award announced this week includes $372 million in damages, plus interest that will be calculated from the date of the seizures.
Venezuela has not officially commented on the decision, but its response in prior arbitration decisions has been to routinely appeal them. Venezuela’s economy has been performing very poorly and the country is believed to be experiencing a serious cash crunch, especially as oil prices have decline rapidly in recent years. The government has been pursuing an aggressive program of nationalization, seizing industries and businesses steadily. While this had led to short-term gains in terms of cash flow (especially after nationalizing the oil industry) mismanagement of the seized businesses has led to diminishing returns.
Meanwhile, arbitrations continue to go against the country. It recently applied for an annulment of a $1.6 billion award to Exxon-Mobile over seized assets. Several companies have complained that Venezuela has failed to pay arbitration awards in recent years