Canadian exploration stage company Gold Reserve has announced that the Lisbon Court of Appeal issued a judgment of more than $1.1bn, including various interest payments and legal fees, for enforcing its 2014 arbitral award against the Bolivarian Republic of Venezuela in Portugal.
The judgment includes the original award amount of around $713m, pre-award interest of $22.29m, post-award interest calculated at LIBOR plus 2% compounded annually from the award dated 22 September 2014 until full payment, and $5m in legal fees and costs.
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The arbitration case was decided in Paris, France, by a tribunal of three arbitrators in September 2014.
The tribunal unanimously ruled that Venezuela must pay Gold Reserve $740.3m plus interest. However, Venezuela did not fully pay the amount.
Gold Reserve sought official recognition and enforcement of this award in Portugal, aiming to seize Venezuelan assets.
Venezuela, upon being served, argued immunity from jurisdiction, a common defence in sovereign debt and arbitration enforcement cases.
Gold Reserve responded that Venezuela is not immune from the jurisdiction of Portuguese courts, particularly in this enforcement matter.
As part of these efforts, the company has secured attachment orders against multiple bank accounts in Portugal, with total holdings exceeding $1.4bn.
However, the recovery of the awarded amount is not guaranteed within the Portuguese legal system due to various factors.
Further court orders are necessary to collect against the attached funds. Additionally, the priority of Gold Reserve’s attachments on each bank account is not uniform and remains uncertain, as does the priority of the company’s claims compared with other creditors.
In addition to the legal proceedings in Portugal, Gold Reserve is pursuing recognition and enforcement actions in the US.
This includes participation in sales and bidding procedures overseen by the US District Court for the District of Delaware concerning the sale of shares of PDV Holdings, the indirect parent company of CITGO Petroleum. Any recovery from the Delaware proceedings will be offset against the amount recoverable from the proceedings in Portugal, and vice versa.
