When law becomes ...
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Given reports of Iran’s roughly $2 billion claims on Venezuela, how will a change of power in Caracas affect the prospects for recovering these debts? And amid expanding US influence, what legal or international tools does Iran have to pursue and reclaim them?
The change of power in Venezuela forces the recovery of Iran’s claims to face the challenge of “state succession;” according to international law, the new government is legally responsible for the financial obligations of the previous government. Of course, in this case, by citing the “Agreement for the Promotion and Reciprocal Protection of Investments between the Government of the Islamic Republic of Iran and the Government of the Bolivarian Republic of Venezuela,” the Iranian government and the interested investors can use the dispute resolution mechanisms provided in this treaty: according to Article 11 of this agreement, if a dispute arises between an Iranian investor and the Venezuelan government, the parties must first attempt to settle it through friendly negotiation and consultation. If an agreement is not reached within six months, the Iranian investor can refer the case to one of the following authorities:
• Competent Venezuelan courts: Referring the lawsuit to the domestic judicial system of the host country.
• Ad hoc arbitration: Establishing an arbitral tribunal based on UNCITRAL (UN Commission on International Trade Law) rules.
• The International Court of Arbitration of the International Chamber of Commerce (ICC) in Paris: Referring to this reputable international body.
• The International Centre for Settlement of Investment Disputes (ICSID): Provided that both countries are members of the relevant convention.
• Governing Law: In these arbitrations, the provisions of this agreement itself and the general principles of international law will be the criteria for action.
If the dispute is over the interpretation or implementation of the agreement itself (for example, if Venezuela violates its protection obligations), the Iranian government can act directly against the Venezuelan government based on the following:
• Consultations: The parties first attempt to resolve the dispute amicably.
• Arbitration: In the absence of an agreement within six months, Iran can refer the matter to an arbitral tribunal consisting of three arbitrators.
• If Venezuela does not cooperate in appointing its arbitrator, Iran can request the President of the International Court of Justice to appoint the opposing party’s arbitrator or the third arbitrator.