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Freshfields and Gibson Dunn lead on $1.4bn Canadian miner battle with Venezuela

Ranked as seasoned players on the most lucrative cases, Freshfields Bruckhaus Deringer and Gibson, Dunn & Crutcher have landed key instructions on a $1.38bn bilateral treaty arbitration taken against Venezuela by Canadian miner Crystallex International at the International Centre for Settlement of Investment Disputes (ICSID).

Toronto-headquartered Crystallex instigated the claim at ICSID in 2011 after the country denied an environmental permit for the Las Cristinas mining project, located in the south east region, despite Crystallex’s $1.2bn investment at that stage.

Crystallex is represented by Freshfields partner Nigel Blackaby, while the company is represented in a separate Delaware action by Gibson Dunn partner Robert Weigel, as well as Raymond DiCamillo, Jeffrey Moyer and Travis Hunter of Richards Layton & Finger. Venezuela was represented by US firm Foley Hoag.

In early April, an arbitral tribunal presided over by arbitrator Laurent Levy found the country had violated a bilateral treaty with Canada when it reneged on the expected mining permits and subsequently breached two articles of the investment treaty with its unfair and inequitable treatment and unlawful expropriation of the company’s investments. The court awarded the claimant roughly $1.38bn in damages which comprises $1.2bn for damages, plus pre and post-award interest.

The tribunal criticised Venezuela’s Ministry of the Environment for its ‘arbitrary’ and ‘non-transparent and inconsistent conduct’ in connection with its denial of an environmental permit.

The court further held it ‘cannot but conclude that the permit denial letter and [a report] on which the first appears to be based are so fundamentally deficient that, to the eyes of a reasonable third person, they surprise a sense of juridical propriety.’

The tribunal concluded the State had ‘frustrated Crystallex’s legitimate expectations and concluded Venezuela’s ‘overall conduct vis-à-vis Crystallex, thus violated the [Treaty] standard … and caused all of the investments made by Crystallex to become worthless.’