There is nowhere to hide when it comes to paying your debts. Crystallex, the Canadian miner that had its stake in Las Cristinas mine (expropriated in 2008), has requested the U.S. District Court in Delaware to seize Citgo’s holding company shares belonging to PDVSA.

If the US court decides in favor of Crystallex, that company could sell the shares and collect a portion of the $1.4 billion award granted by the International Centre for Settlement of Investment Disputes (ICSID) in 2016.

The magic of the ICSID awards is that they are enforceable. Investors earn the right to seize assets outside the borders of the State in case of non-payment, making this tribunal an attractive dispute resolution mechanism. For example, the “vulture funds” in Argentina resulted in the holding of one of Argentina’s naval training vessels, the 103-meters-long sailing-ship ARA Libertad, docked in Ghana in 2012. An attempt in 2007 to seize Argentina’s Tanto 01, the presidential plane, deprived President Cristina Fernández of using it for official visits in territories where investors could attempt to collect their debts.

Countries may try to annul the award by blaming the procedure, but these are exceptions to the rule. Interestingly enough, Venezuela has had victories at the ICSID, with arbitration tribunals that have dismissed cases on 13 occasions for things like non-payment of the claimant or lack of jurisdiction. In the Crystallex case, Venezuela is exposed through Citgo, but this could escalate as high as buildings and bank accounts around the world.

Each day, Venezuela comes closer to the moment it cannot “correr la arruga” any longer.

There are caveats, though. First, unlike the Argentina case, Venezuela is not the direct owner of the shares PDVSA is. The Court would have to accept Crystallex’ alter ego theory, and pierce through PDV Holding’s corporate veil to grant the motion in their favor.

Secondly, CITGO Holding Inc.’s shares (owned by PDV Holding) are already pledged to Rosneft and the bondholders who agreed to PDVSA’s 2016 bond exchange.

You can bet that PDVSA, Rosneft, and the big bondholders are ready to fight this to the hilt, using all motions, appeals and stays at their disposal, dragging the case on for years, all the way to the US Supreme Court, as Argentina did.

And we shouldn’t forget that the real market value of Citgo is probably well below $1.4 billion. We are talking about a company with a billion-dollar-debt, whose shares are pledged as collateral for what pretty much amounts to junk bonds, and the equivalent of a payday loan.

However, even the longest trial is bound to end, and Crystallex has its fancy lawyers to play chess too. Each day, Venezuela comes closer to the moment it cannot “correr la arruga” any longer.

Venezuela is bound to pay a part of this debt, and all others resulting from cases at arbitral tribunals with enforceable awards. The lesson remains: do not take something from an investor, unless you can compensate the damage or they’ll take it from you by force.

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Carlos is from Valencia. He has a Master's in International Economic Policy, is interested in energy markets and trade, and makes amazing parrillas. He is also a columnist for


  1. I think the lesson for chavismo is, do not take something from an investor if they’ve got a means to get back at you, otherwise, dale clavo.

  2. Wow. What a mess. Has the alter ego remedy had much traction against state oil companies? I seem to recall something out of Libya with the Lockerbee litigation but don’t know how it landed.

    • It wasn’t intended as a quip. Judicial decisions are “land” in the vernacular. That’s just you looking for a target of outrage to make your day brighter.

      Anyway, I don’t think there is anything in the example to shed any light on my question.

      • Come on, I know you are a smart man. I read your posts
        Words have meaning. Double meanings can be brilliant, can sting, and are sneaky to those who do not speak the mother tongue well. I should know, I do not speak spanish beyond a few thousand words, and am baffled at the simplest slang.

        Whatever, just seemed to me, “Landed” was in bad taste. If you did not intend, my apologies.

        Outrage NOT; my day is bright though.

  3. Overt physical bullying is not an option (invasion), but economic bullying is, in the form or economic sanctions or even an economic blockade. Silly sanctions against individuals who are totally indifferent to same gives foreign powers no leverage against such an unscrupulous opponent. Clearly, he laughs, and keeps doing exactly as he pleases according to the Cuban script. So force is out. Not an option.

    Till foreign powers are willing to take bold steps to literally starve Maduro out of power, to cut off his cash flow of foreign currency (since the Bolo is virtually worthless), this rat is going to continue being defiant of all the toothless efforts to get rid of him, especially so-called dialogue or diplomatic solutions (talking). He makes the very idea of this a kind of fool’s theater, with the best intentions, but still playing to his hole card: That he is impervious to outside influence.

    Time for some power to step up and stop playing Maduro’s game. It ain’t gonna be popular, but till his cash is cut off, he’ll just keep laughing. Talk, at this point, will find no traction in Venezuela.

    Hope I’m wrong.

    • You are wrong. Military intervention is the only option.

      And since you said you hoped you were wrong, you should be happy that I’m confirming this.

      But how in the world ANY fucking body thinks that Maduro gives ANY fucking shit about how ANY fucking economic sanctions impact ANY poor fucking Venezuelans is beyond me.


      What universe are some of you living in?

      Fidel was ready for Cuba to be NUKED. Do you think Maduro cares how many babies die because of malnutrition and lack of proper maternity and infant health care?

  4. Crystallex must obviously keep the litigation out of Venezuela with their rigged Judicial system. They must also be aware that Maduro et al will try to bribe judges at every opportunity in any country. The U.S. may be in the best position to prevent such bribes.

  5. Remember that one way to successfully evict tenants in Caracas was to “pledge” a building as collateral and “default” on a debt to a different company that you controlled. Note that in this case, Russia has an interest in getting PDVSA to default “before” any ICSID judgement can be enforced. What a mess.

  6. Ira, people suggesting economic sanctions are under no illusions that Maduro will let the country starve before giving up power. Basically he is willing to sacrifice the entire country rather than give up control – that’s also part of the Cuban script. The difference is that Cuba is NOT Venezuela. The entire Chavista thing was funded by oil money and paternal handouts. Venezuela is totally and inexorably hooked into the world financial market. Once that market says “game over,” Maduro cannot possibly survive. The question is: How much of the country will he talk down with him, and how much of the country is willing to give to this lunatic.

    Rambo strategies like a full blown invasion are simply not an option for the US. The Iraq debacle basically bankrupted the US, and any force that invaded would be on the hook to linger around while the country rebuilds, and the US is not willing to be on the hook for that tab. Perhaps a peace keeping force would work, but by the time one could get organized Maduro will be out of money.

    Fidel could survive without money because Cuban ever really had any. Oil extraction costs bank – huge bank – so Venezuela’s need for foreign funds – especially now, as the infrastructure crumbles and foreign operators are unwilling to shoulder the tab any more – is acute. You can figure out the rest.

    But no. The US is not going to invade, much as most of us would like to see Maduro et al crushed into the gran sabana.


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