We predicted this summer that the Occidental v. Ecuador $2 billion record for largest investment arbitration award would not last long. The only question after this month's liability award in Conoco v. Venezuela is whether ConocoPhillips matches that record, or breaks it eight times over. Our projection is toward the upper end.
In 2007, as Conoco refused to accept Venezuela's sharp tax and royalty increases, then-President Hugo Chávez seized the company's stakes in three oil projects that now produce about 367,000 barrels of oil per day. On September 3, an International Centre for Settlement of Investment Disputes arbitration panel found that the tax and royalty increases were lawful — but that Venezuela had acted unlawfully by failing "to negotiate in good faith" to compensate Conoco for its nationalization.
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