|TABLE OF ABBREVIATIONS|
|2001 Hydrocarbons Law||Decree with Force of the Organic Hydrocarbons Law, Official Gazette No. 37,323, 13 November 2001|
|2007 Law on Effects of Migration||Law on the Effects of the Process of Migration into Mixed Companies of the Association Agreements of the Orinoco Oil Belt, as well as the Exploration at Risk and Profit Sharing Agreements, Official Gazette No. 38,785, 8 October 2007|
|2007 Nationalization Decree||Decree Having the Rank, Value and Force of Law of Migration to Mixed Companies of the Association Agreements of the Orinoco Oil Belt, as well as the Risk and Profit Sharing Exploration Agreements, Decree No. 5,200, Official Gazette No. 38,632, 26 February 2007|
|2008 Transfer Decree||Decree No. 5,811, transferring to PetroSucre the right to develop primary exploration activities detailed therein, Official Gazette No. 38,851, 16 January 2008|
|AGIP||AGIP Venezuela B.V.|
|Bicameral Commission||Bicameral Commission of Energy and Mines|
|Bicameral Commission Report||Report on Association Agreements for the Exploration at Risk of New Areas and the Production of Hydrocarbons under the Shared Profits System, Bicameral Commission of Energy and Mines, dated June 1995|
|Claimant or CGP||ConocoPhillips Gulf of Paria B.V.|
|Clause 28.1||Clause 28.1 of the Corocoro AA|
|COBV||Conoco Venezuela B.V.|
|Congressional Approval||Congressional Authorization for the Execution of Association Agreements for Exploration at Risk of New Areas and the Production of Hydrocarbons under the Profit Sharing System in Eight of the New Areas, dated 26 June 1996.|
|Congressional Authorization||Congressional Authorization of the Framework of Conditions for the Exploration at Risk of New Areas and the Production of Hydrocarbons under the Shared Profits System, dated 17 July 1995|
|Conoco||CGP, COBV, CVCA, or Conoco Ltd.|
|Conoco Ltd.||ConocoPhillips Gulf of Paria Ltd.|
|ConocoPhillips||ConocoPhillips Company, Conoco Inc, and/or Phillips Petroleum Company.|
|Contractual Claims||The Non-Performance Claim, Surviving Obligations Claim, Particular Breaches Claim, its Overall Breach Claim, jointly|
|Control Committee||Entity composed of members appointed by both the Investors and CVP to approve certain decisions of national interest to the Venezuelan State as defined in the Corocoro AA and pursuant thereto|
|Corocoro AA or AA||Association Agreement between CVP and COBV, dated 10 July 1996|
|Corocoro CA or CA||Consortium Agreement between CVP and CVCA, AGIP, and OPIC, dated 16 May 2003|
|Corocoro Contracts||The Corocoro AA, the Corocoro Guarantee, and the Corocoro CA, jointly|
|Corocoro Discovery or Discovery||The oil discovery subsequent to drilling activities between September 1998 and April 1999 in a first exploratory well in block 9 (referred to as Corocoro-1X)|
|Corocoro Guarantee or Guarantee||Guarantee of Proper Performance between PDVSA and COBV, dated 10 July 1996|
|Corocoro Project or Project||Project underlying the Corocoro Contracts|
|CPF||Central Processing Facility|
|CVCA||Conoco Venezuela C.A.|
|CVP-Eni Conversion Contract||Contract for the conversion to an empresa mixta between CVP and Eni, 30 November 2007|
|CVP-Eni MoU||Memorandum of Understanding entered into by CVP and Eni for the creation of an empresa mixta, 26 June 2007|
|DA||Discriminatory Action(s) as defined at Section 1.01 of the Petrozuata AA and Article 14.1(b) of the Hamaca AA|
|Definitive Model AA||Definitive Model Association Agreement, dated December 1995|
|Enabling Law||Law Authorizing the President of the Republic to Issue Decrees with Rank, Value and Force of Law on the Matters Delegated Herein, Official Gazette No. 38,617, 1 February 2007|
|Eni||Eni Venezuela B.V. (formerly AGIP)|
|Force Majeure Clause||Clause 28 of the Corocoro AA|
|FSO||Floating Storage and Offloading Unit|
|GOPWA||Gulf of Paria West Area|
|Government or Venezuela||Bolivarian Republic of Venezuela|
|Hamaca AA||Association Agreement between Corpoguanipa, S.A., Arco Orinoco Development Inc., Phillips Petroleum Company Venezuela Ltd., and Texaco Orinoco Resources Company, dated 9 July 1997 (as amended)|
|Hamaca Guarantee||Guarantee Agreement between Petróleos de Venezuela, S.A., Arco Orinoco Development Inc., Phillips Petroleum Company Venezuela Ltd., and Texaco Orinoco Resources Company, dated 9 July 1997 (as amended)|
|ICC P&H Arbitration||ICC Case No. 20549/ASM/JPA (C-20550/ASM)|
|ICC P&H Arbitration, R-0 ([Exhibit number or submission reference])||Citation to the ICC P&H Arbitration documents, part of the present proceedings as per the Parties' agreement|
|ICC P&H Claimants||ConocoPhillips Petrozuata B.V. and Phillips Petroleum Company Venezuela Limited, collectively|
|ICC P&H Parties||The ICC P&H Claimants and the ICC P&H Respondents, jointly|
|ICC P&H Respondents||Petróleos de Venezuela, S.A., Corpoguanipa, S.A. and PDVSA Petróleo, S.A., collectively|
|ICC Rules||The ICC Rules of Arbitration of 1988|
|ICSID Arbitration or ICSID Case||ConocoPhillips Petrozuata B.V., ConocoPhillips Hamaca B.V., ConocoPhillips Gulf of Paria B.V. v Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/30|
|ICSID Award||ConocoPhillips Petrozuata B.V., ConocoPhillips Hamaca B.V. and ConocoPhillips Gulf of Paria B.V. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/30, Award, 8 March 2019|
|Investors||The private entities holding interest in the Project at any point in time, jointly. To wit, Conoco, Eni, OPIC, and Ineparia|
|IPF||Interim Processing Facility|
|Management Company or Agua Plana||Compañía Agua Plana, S.A., the company incorporated on 13 August 1996 to act as Management Company pursuant to the terms of the Corocoro AA.|
|Model AA||Model Association Agreement|
|Model AA Memorandum||Memorandum by PDVSA addressing the various comments raised by private companies with respect to the Model AA, dated 23 November 1995|
|Non-Performance Claim||The Claimant's claim according to which the Respondents ceased performing the Corocoro Contracts from 1 May 2007 onwards|
|OLAP||Organic Law of Administrative Procedures|
|OLCAJ||Organic Law of the Contentious-Administrative Jurisdiction|
|Operating Agreement||Contract concluded between CVP, Conoco, and Agua Plana designating Conoco as the Operator of the Project, dated 13 August 1996|
|Operator||Conoco in its capacity of Operator pursuant to both the Corocoro AA and the Operating Agreement|
|OPIC||OPIC Karimun Corporation|
|Overall Breach Claim||The Non-Performance Claim, the Surviving Obligations Claim, and the Particular Breaches Claim, jointly|
|P&H Contracts||The Petrozuata AA, Hamaca AA, Petrozuata Guaranty, and Hamaca Guarantee, jointly.|
|Paragraph 1||Paragraph 1 of Article 1 of the 2007 Nationalization Decree|
|Paragraph 2||Paragraph 2 of Article 1 of the 2007 Nationalization Decree|
|Particular Breach Claim||The Claimant's claim that the Respondents breached certain specific provisions of the Corocoro Contacts in relation to, inter alia, the repayment of the loan extended to CVP, the alleged replacement of the Project's management structure, and the conclusion of the CVP-Eni MoU and the CVP-Eni Conversion Contract|
|Petrozuata AA||Association Agreement between Maraven S.A. and Conoco Orinoco Inc., originally dated 10 November 1995, and modified on 18 June 1997|
|Petrozuata Guaranty||Guaranty and Indemnification Agreement between Conoco Orinoco Inc. and Petróleos de Venezuela, S.A., dated 10 November 1995|
|Respondent 1 or CVP||Corporación Venezolana de Petróleos, S.A.|
|Respondent 2 or PDVSA||Petróleos de Venezuela, S.A.|
|Transcript, p. [page number], ([Party, Witness or Expert making the quoted Statement])||Transcript of the Hearing|
|Transition Committee||The committee created on 5 March 2007 pursuant to Article 2 of the 2007 Nationalization Decree|
|VCC||Venezuelan Civil Code|
|VCoC||Venezuelan Commercial Code|
Constantine Partasides QC
THREE CROWNS LLP
New Fetter Place
8-10 New Fetter Lane
London EC4A 1AZ
THREE CROWNS LLP
2001 Pennsylvania Avenue, Suite 1100
Washington, D.C. 20006
D. Brian King
FRESHFIELDS BRUCKHAUS DERINGER US LLP
601 Lexington Avenue, 31st Floor New York, NY 10022 U.S.A.
Janet Langford Carrig, General Counsel
Laura M. Robertson, Deputy General Counsel, Litigation and Arbitration
Suzana Blades, Associate General Counsel, Commercial Litigation & Arbitration
Fernando Avila, Senior Counsel, E&P Americas
Alberto Ravell, Senior Legal Counsel
600 N. Diary Ashford, ML 1040
Houston, TX 77079
George Kahale, III
Benard V. Preziosi, Jr
CURTIS, MALLET-PREVOST, COLT & MOSLE LLP
101 Park Avenue
New York, NY, 10178
Dr. Laurent Lévy (the President of the Tribunal)
3-5, rue du Conseil-Général
P.O. Box 552
1211 Geneva 4
Tel.: +41 22 809 62 00
Prof. Laurent Aynès (arbitrator nominated by the Claimant)
DARROIS VILLEY MAILLOT BROCHIER
69 avenue Victor Hugo
Tel.: +33 145 02 1919
Prof. Andrea Giardina (arbitrator jointly nominated by the Respondents)
Via Arbia 40
Tel.: +39 06 94321773
3-5, rue du Conseil-Général
P.O. Box 552
1211 Geneva 4
Tel.: +41 22 809 62 00
i. First Condition :
The National Executive, exercising its legal powers, through the Ministry of Energy and Mines, shall determine the Geographical Areas described in Annex "B" (hereinafter the "Areas") to be granted to a subsidiary of Petróleos de Venezuela, S.A. (hereinafter the "Subsidiary") for the carrying out of exploration and exploitation activities of hydrocarbons fields, transportation via special routes, storage and marketing of the production obtained in the Areas, and all necessary works for the management of these activities, all in accordance with the provisions of the Organic Law that Reserves to the State the Industry and Trade of Hydrocarbons.
ii. Second Condition :
The Subsidiary shall conduct the bidding processes necessary for the selection of the private investment companies with which the Association Agreements shall be entered into for the carrying out of the activities described in the First Condition pursuant to Article 5 of the Organic Law that Reserves to the State the Industry and Trade of Hydrocarbons.
Based on the results of each bidding process, the Subsidiary shall enter into an Association Agreement (hereinafter the "Agreement") with the investment company or companies that succeed in the bidding process (hereinafter the "Investors").
The Investors may bid in all Areas in connection with the activities referred to in the First Condition, but they may only be selected, given the results of the bidding process conducted by the Subsidiary, to enter into an Agreement with a maximum number of five (5) Areas, depending on each investor's classification.
iii. Fourth Condition :
In each Agreement, before commencing the activities under the Agreement, the Parties shall form a committee (hereinafter the "Control Committee") to be composed of an equal number of members appointed by the Investors and the Subsidiaries, and to be presided over by a member appointed by the latter. For the validity of its deliberations and decisions, the presence and consent of the members appointed by the Subsidiary shall be required, with the President having a double vote to resolve ties.
The Parties shall submit fundamental decisions of national interest in connection with the execution of the Agreement to the approval of the Control Committee.
These decisions shall be described in the Agreement and shall include, among others, the approval of the exploration, evaluation and development plans, as well as any other modification to such plans, including the extension of the terms for exploration or exploitation, and the implementation of production reductions in compliance with international obligations of the Republic of Venezuela. For this purpose, the Control Committee shall be informed of all important matters in the life of the Association and all information regarding accounts and receivables shall be presented to the entities designated by the Control Committee in order to allow them to have oversight and audit such information.
iv. Seventeenth Condition :
The Agreement shall be governed by and interpreted under the laws of the Republic of Venezuela.
Matters falling within the power of the Control Committee shall not be subject to arbitration.
Arbitration, conducted in accordance with the procedural rules of the International Chamber of Commerce and in effect at the moment the Agreement is signed, shall be the method used for resolving disputes involving matters that do not fall within the power of the Control Committee and cannot be resolved through agreement of the Parties.
v. Nineteenth Condition:
The Agreement, as well as all activities and operations derived therefrom, shall in no case create liability on the part of the Republic of Venezuela nor diminish its sovereign rights, the exercise of which shall in no case give rise to claims by other States nor foreign powers, regardless of the nature or characteristics of such claims.
vi. Twenty-third Condition :
For the execution of each Agreement, the Subsidiary shall send its final form to the Ministry of Energy and Mines, with the purpose of submitting it, in a period of eight (8) consecutive days, to the consideration of the National Legislative Houses, so that they may proceed to its subsequent authorization, as a priority.
i. Recognized the need for the Model AA to "acknowledge the applicability" of Article 1160 of the Venezuelan Civil Code ("VCC") providing for "all contracts to be carried out in good faith", as well as of "international investment treaties to which Venezuela is a party". Regarding Article 1160 of the VCC, the Model AA Memorandum stated that its application would allow the AA parties "to demand a good faith renegotiation of the terms of the contract if as a result of an unforeseen change in circumstances there is a substantial adverse impact on the economic benefits intended to be provided to such party under the contract". With respect to international investment protection via treaties, the Model AA Memorandum clarified that such instruments would protect "investors from the relevant countries against adverse effects from discriminatory changes in Venezuelan law".22
ii. Stated that the Model AA would "be revised to make it clear that an act of the Venezuelan government that is not of general applicability will not be a defense to a claim against CVP for breach of contract if it fails to perform an obligation under the Association Agreement, even if its failure is attributable to the governmental act".23
i. Management Company : The Management Company was in charge of "direct[ing], coordinat[ing] and supervis[ing] the activities […] object of the [Corocoro AA]" while "ensuring an optimal level of commercial production" by "applying […] the standards established in applicable legislation and, to the extent consistent therewith, the technical and commercial criteria commonly employed by the international oil industry".35 To that effect, Agua Plana S.A. ("Management Company" or "Agua Plana") was incorporated in August 2016, with the Investors holding a 65% interest and CVP a 35% interest, and its Board of Directors being composed of three appointees representing the Investors and two representing CVP.36
ii. Control Committee : The Control Committee was responsible for "approv[ing]" certain "decisions of national interest to the Venezuelan State related to the performance of the [Corocoro AA]",37 and consisted of four principal members, half of which were appointed by the Investors and the remaining two (including the Chair) by CVP.38
iii. One or several Development Committees : A Development Committee (appointed by the Management Company's Board "at or prior" to the execution of any consortium agreement necessary following an oil discovery), was to "direct, coordinate, and supervise" the "commercial aspects of the activities" object "of the Corocoro AA" in respect of the discovery's development area.39
iv. Operator : The Operator was responsible for the "day-to-day activities in the exploration, development and operation" of the Project, under the supervision of the Management Company, and in compliance with the decisions of the Control Committee, the Management Company's Board, and each relevant Development Committee.40 Conoco was designated as Operator from the very outset through the conclusion of an operating agreement between CVP, Conoco, and Agua Plana ("Operating Agreement").41 As a result, Conoco was entitled "at all times" until its resignation or removal pursuant to the Operating Agreement, to "maintain" an interest in the Project of "at least 30%".42
The President of the Republic is authorized in Council of Ministers to issue Decrees with Rank, Effect and Force of Law, in accordance with the guidelines, purposes and framework of the matters delegated under this Law, in accordance with the last part of Article 203 and section 8 of Article 236 of the Constitution of the Bolivarian Republic of Venezuela, and therefore: […]
To issue norms allowing the State to assume directly or through wholly owned companies, the control of the activities performed by the associations operating in the Orinoco Oil Belt, including the upgraders and the associations for exploration at risk and shared profits, to regularize and adjust their activities within the legal framework that governs the national oil industry [(i.e. the 2001 Hydrocarbons Law)], through the contractual form of mixed enterprises or wholly-owned companies of the State.73
ARTICLE 4. The private sector companies that are currently parties to [association agreements], shall be granted a period of four (4) months as of the date of publication of this Decree-Law [i.e. until 26 June 2007], to agree on the terms and conditions of their possible participation in the new [empresas mixtas]. […]
ARTICLE 5. Once the term established in Article 4 of this Decree-Law has expired, and if no agreement has been reached on the incorporation and operation of the [empresas mixta s], the Republic, through [PDVSA] or any of its subsidiaries designated for that purpose, shall directly assume the activities carried out by the associations […] for the purpose of preserving their continuity, in light of their public utility and social interest character.78
i. On 1 May 2007, PDVSA assumed full operational control over the Corocoro Project;84 and
ii. On 26 June 2007 (given Conoco's and OPIC's inability to reach a consensus with PDVSA and CVP with respect to the migration of the Corocoro Project), Eni entered into a Memorandum of Understanding with CVP (namely, PDVSA Petróleo S.A.), providing for the formation of an empresa mixta upon the National Assembly's approval in order to assume the operations of the Corocoro Project ("CVP-Eni MoU").85 Further, in line with Article 5 of the 2007 Nationalization Decree, CVP and PDVSA henceforth "directly assume[d] the activities carried out" further to the Corocoro AA.86
ARTICLE 1. The [association agreements subject of the 2007 Nationalization Decree] shall be extinguished as of the date of publication in the Official Gazette of the Bolivarian Republic of Venezuela of the Decree that transfers the right to exercise primary activities to the [empresas mixtas] that have been incorporated in accordance to the established in such Law-Decree.
Likewise those agreements in which none of the private parties that were part in the corresponding associations have reached an agreement for the migration to [empresas mixtas] within the term established in Article 4 of the [2007 Nationalization Decree] will also be extinguished as of the moment of the publication of this Law in the Official Gazette of the Bolivarian Republic of Venezuela
ARTICLE 2. The interests, shares, and participations in the associations [subject of the 2007 Nationalization Decree], in the companies incorporated to develop the corresponding projects, and in the assets used for the development of the activities of such associations, including rights of property, contractual rights, and those of other nature, that corresponded to the companies of the private sector with which no agreement for the migration to mixed companies was reached until the term established in Article 4 of the [2007 Nationalization Decree] expired, are hereby transferred, based in the reversion principle, without requiring additional actions or instruments, to the new [empresas mixtas] constituted as result of the migration of the respective associations, except for the established in Article 3 of this Law.
ARTICLE 3. In the cases in which none of the companies that constituted the private part of the Association Agreement would have reached an agreement for the migration to [an empresa mixta] within the term established in Article 4 of the [2007 Nationalization Decree], the interests, shares, participations and rights, to which Article 2 of this Law makes reference shall remain property of the subsidiary of [PDVSA] that assumed the activities of the corresponding association until the National Executive determines the subsidiary that shall assume such activities definitively.87
i. First, the Claimant submits that the Respondents fully failed to perform the Corocoro Contracts from 1 May 2007 onwards. The Tribunal refers to this claim as the "Non-Performance Claim".95
ii. Second, the Claimant submits that the Respondents also committed so-called "positive breaches" of the Corocoro Contracts,96 which are divided into two main lines of argument:
a) First, the Claimant argues that the Respondents breached contractual obligations which, in the Claimant's view, were specifically designed to survive the termination of the Corocoro AA. In particular, the Claimant argues that by not performing the Corocoro Contracts and instead carrying on with the development the Corocoro Project through PetroSucre, the Respondents contravened the explicit mandate in the Corocoro AA, which vested upon the Claimant the continuous right (until expiration of the 39-year contractual term of the Corocoro AA) to develop and share the production and revenue of the Corocoro Discovery. The Tribunal refers to this claim as the "Surviving Obligations Claim".97
b) Second, the Claimant alleges that the Respondents failed to pay the loan which was extended to CVP for the acquisition of its 35% interest in the Corocoro Discovery, relieved the Claimant as Operator, unlawfully replaced the management structure governing the Corocoro Project, and executed the CVP-Eni MoU and the CVP-Eni Conversion Contract while the Corocoro Contracts were still in force, thereby disclaiming all of their obligations under the Corocoro Contracts. The Tribunal refers to these submissions, cumulatively, as the "Particular Breaches Claim".98
iii. Third, the Claimant submits that, contrary to the Tribunal's findings in ICC Case No. 20549/ASM/JPA (C-20550/ASM) ("ICC P&H Arbitration"), the Respondents in the present case cannot invoke or otherwise rely on the implementation or compliance with the 2007 Nationalization Decree to escape liability for the above breaches. Pursuant to the Tribunal's findings in the ICC P&H Arbitration, the Claimant no longer disputes that the 2007 Nationalization Decree is an extraneous and non-attributable governmental act to the Respondents.99 Therefore, any breach of the Corocoro Contracts caused by the 2007 Nationalization Decree in principle constitutes a causa extraña precluding the Respondents' liability under general Venezuelan contract law. However, the Claimant submits that, through Clause 28.1 of the Corocoro AA, the Respondents assumed the risk for any damages caused to the Investors by state acts "not of general applicability", such as the 2007 Nationalization Decree.100
Any dispute arising out of or concerning this Agreement regarding matters not within the competence of the Control Committee [(established in Clause IV of the AA)] shall be settled exclusively and finally by arbitration. The arbitration shall be conducted and finally settled by three (3) arbitrators (except as described below) in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce as in effect on the date of this Agreement (the "ICC Rules"), or such other rules as may be agreed by all of the Parties involved. If CVP is a party to the relevant dispute, CVP shall select an arbitrator and the other party or parties thereto shall collectively select an arbitrator in accordance with the ICC Rules. If CVP is not a party to the relevant dispute, and there are only two such parties, each such party shall select and arbitrator in accordance with the ICC Rules. In either such case, the arbitrators so nominated shall then agree within (30) days on a third arbitrator to serve as Chairman. Notwithstanding the foregoing, disputes submitted to arbitration pursuant to Clause 12.5, 22.9 or 23.4 [relating to the transfer or termination of "Block and Development Areas"] shall be resolved by a single arbitrator. All arbitration proceedings under this Agreement shall be conducted in New York City (United States of America). All arbitrators appointed pursuant to this Agreement shall have the powers of an amiable compositeur. Any decision or award of the tribunal (or the arbitrator) shall be final and binding upon the Parties. Judgment for execution of any award rendered by the arbitral tribunal (or the arbitrator) may be entered by any court of competent jurisdiction without review of the merits of such award. To the extent permitted by law, any rights to appeal from or to cause a review of any such award by any court or tribunal are hereby waived by the Parties.
Any dispute concerning the legal interpretation or construction of this Guarantee shall be settled exclusively and finally by arbitration. The arbitration shall be conducted in accordance with the ICC Rules. The Investors [i.e., Claimant] shall collectively select an arbitrator and the Guarantor [PDVSA] shall select an arbitrator in accordance with the ICC Rules. The arbitrators so nominated shall then agree within 30 days on a third arbitrator to serve as Chairman. The arbitration shall be conducted in New York City (United States of America). Notwithstanding the foregoing, in the event that a dispute involves both the Guarantor [PDVSA] and CVP, arbitration shall be conducted in accordance with Clause 25.2 of the [Association] Agreement, as a single proceeding, and Guarantor and CVP shall jointly have the rights of CVP under such Clause 25.2.
a) The mandatory rules of the law on international arbitration applicable at the place of the arbitration;
b) The ICC Rules of Arbitration of 1988 ("ICC Rules");
c) The ToR and the procedural rules issued by the Tribunal, as reflected in Procedural Order No. 1 ("PO1"), and any amendments thereof.
• For the Claimant: (i) Mr. Constantine Partasides, Ms. Lucy Martinez, and Mr. Luke Sobota, from Three Crowns; (ii) Mr. Elliot Friedman, from Freshfields Bruckhaus Deringer; and (iii) Mr. Alberto Ravell, from ConocoPhillips Company.
• For the Respondents: George Kahale, III, Benard V. Preziosi, Jr., Arianna Sánchez Galindo, Simon Batifort, and Irene Petrelli, from Curtis, Mallet-Prevost, Colt & Mosle.
• For Worldwide Reporting (providing the agreed transcript): Mr. David Kasdan, Mr. Randy Salzman, and Ms. Kate Peregoy.
i. For the Claimant:
• THREE CROWNS LLP
o Mr. Constantine Partasides QC
o Mr. Luke Sobota
o Mr. Benjamin Jones
o Mr. Mihir Chattopadhyay
o Ms. Kelly Renehan
• FRESHFIELDS BRUCKHAUS DERINGER
o Mr. Brian King
o Mr. Elliot Friedman
o Mr. Ricardo Chirios
o Mr. Sam Prevatt
o Mr. Lee Rovinescu
o Ms. Madeline Snider
o Mr. Cameron Russell
o Ms. Katerina Gross
o Ms. Yesica Crespo
o Ms. Cassia Cheung
• PARTY REPRESENTATIVES
o Ms. Laura Robertson
o Ms. Suzana Blades
o Mr. Alberto Ravell
o Mr. Fernando Avila
• TECHNICAL SUPPORT
o Mr. Jamie Johnson (FTI)
o Mr. James Haase (Immersion Legal)
ii. For the Respondents:
• CURTIS, MALLET-PREVOST, COLT & MOSLE
o Mr. George Kahale, III
o Mr. Benard V. Preziosi, Jr
o Ms. Arianna Sánchez
o Mr. Simon Batifort
o Ms. Irene Petrelli
o Ms. Matilde Flores
• PARTY REPRESENTATIVES
o Ms. Gabriela Villamizar
• TECHNICAL SUPPORT
o Mr. Dario Gatti (Quadrant Economics)
o Ms. Desiree Okunola (Quadrant Economics)
o Mr. Ivan Vazquez (Quadrant Economics)
i. For the Claimant:
• Mr. Patrick J.M. Wolfe, Chair of the Management Company's Board of Directors (2005-2007), Drilling and Production Manager (2005-2007), and one of the Claimant's representatives at the Transition Committee.
• Prof. Allan Brewer-Carías, the Claimant's Venezuelan law expert.
• Dr. Richard Strickland, the Claimant's technical expert in relation to issues concerning production volumes. In particular, he addresses the production forecasts proposed by the Respondents' expert Mr. Patiño.
• Dr. Manual A. Abdala, the Claimants' quantum valuation expert.
• Mr. Pablo D. López Zadicoff, the Claimants' quantum valuation expert.
ii. For the Respondents:
• Mr. Leonardo Marcano, member of CVP's Technical Subcommittee in charge of evaluating and reviewing technical documents regarding the Project's contracting and drilling activities (2004 - 2006), one of CVP's representatives in the Transition Committee (2007), PetroSucre's Director (January 2008 – June 2009), and PetroSucre's General Manager (July 2009 – August 2015).
• Mr. Sergio Salomón, Acting Manager of PetroSucre's Integrated Reservoir Studies.
• Mr. Rubén Figuera, first President of PetroSucre (January - December 2008), CVP's General Manager of Offshore Joint Ventures (March 2007 – November 2009), and Internal Director of CVP's Board of Directors (May 2014 – August 2017). He is also the Respondents' fact witness for oil production issues for the purposes of their quantum analysis.
• Prof. Luis Alberto García Montoya, the Respondents' Venezuelan law expert.
• Dr. Daniel Flores, the Respondents' quantum valuation expert.
• Mr. Jesús Rafael Patiño Murillo, the Respondents' expert on production volumes.
• at its session of 18 January 2018, to 31 October 2018 (the ICC Secretariat's letter of 26 January 2018);
• at its session of 18 October 2018, to 31 January 2019 (the ICC Secretariat's letter of 30 October 2018);
• at its session of 24 January 2019, to 31 May 2019 (the ICC Secretariat's letter of 31 January 2019);
• at its session of 16 May 2019, to 28 June 2019 (the ICC Secretariat's letter of 29 May 2019);
• at its session of 20 June 2019, to 31 July 2019 (the ICC Secretariat's letter of 28 June 2019); and
• at its session of 18 July 2019, to 30 August 2019 (the ICC Secretariat's communication of 23 July 2019).
(a) Declaring that CVP breached its contractual obligations and the duty of good faith, loyalty, and fair dealing owed to Claimant under the Association Agreement, Consortium Agreement, and Venezuelan law, and that CVP is liable fully to compensate Claimant accordingly;
(b) Declaring that PDVSA is liable under the Guarantee to indemnify Claimant for CVP's breaches of the Association Agreement and Consortium Agreement, and that PDVSA is liable fully to compensate Claimant accordingly;
(c) Declaring that PDVSA breached its contractual obligations and duty of good faith, loyalty, and fair dealing owed to Claimant under the Guarantee and Venezuelan law, and that PDVSA is liable fully to compensate Claimant accordingly;
(d) Declaring, in the alternative to (a)-(c) above, that Respondents' conduct constitutes an hecho ilícito under Venezuelan law, and that Respondents are liable fully to compensate Claimant accordingly;
(e) Declaring, in the alternative to (a)-(d) above, that Respondents have been unjustly enriched, and that Respondents are liable fully to compensate Claimant accordingly;
(f) Awarding damages, net of taxes, in an amount quantified at US$1,477 billion (as of 31 May 2018) (US$1,586 billion if updated to 31 December 2018), including pre-award compound interest;
(g) Awarding any other appropriate restitutionary compensation in an amount to be quantified;
(h) Awarding post-award compound interest at a rate of 13.94%, or as to be determined by the Tribunal, to run from the date of Award until the date of full and final payment;
(i) Requiring Respondents to bear the costs of the arbitration, including Claimant's legal and expert fees and costs, and Claimant's internal costs, together with interest on such fees and costs; and
(j) Granting such additional or other relief as may be justified in law or equity.
[…] the Willful Breach Claims comprise allegations of multiple breaches of the Respondents' obligations under the AAs and the Guarantees (and not merely the implementation of the 2007 Nationalization Decree) and are thus squarely arbitrable. Article 151 of the Venezuelan Constitution does not limit the arbitrability of claims like the one in the case at hand in any way.118
i. The arbitration agreement in Clause 25.2 of the Corocoro AA is "not as broad" as the ones in the P&H Contracts.121 Rather, Clause 25.2 limits the Tribunal's jurisdiction to "matters not within the competence of the Control Committee",122 which is responsible for "approv[ing]" certain "fundamental decisions of national interest to the Venezuelan State related to the performance of the [Corocoro AA]".123
ii. The Venezuelan Supreme Court declared the validity and constitutionality of the arbitration agreements set out in the Congressional Authorization (to be) incorporated in the Association Agreements for the exploration and exploitation of the New Areas. However, in doing so it also noted that:124 (i) the Association Agreements, including the Corocoro AA, would "be governed by and interpreted under the laws of the Republic of Venezuela";125 (ii) matters within the competence of the Control Committee would not be subject to arbitration;126 and (iii) it would be the Control Committee which would be "entitled to deal with fundamental decisions of national interest relating to the performance of the Agreement, from which it may be concluded that the matters ultimately dealt with by the Arbitral Tribunal would not be fundamental for the national interest".127
iii. The Bicameral Commission clarified that the incorporation of arbitration agreements into the Association Agreements for the New Areas should not "in any way, […] subjugat[e] the sovereign rights of the Republic of Venezuela to such dispute resolution Mechanism".128 It further stated that "[i]n no case [should] the exercise by the Republic of Venezuela of its inalienable and sovereign rights be submitted to arbitration […]".129
iv. The Ministry, PDVSA and CVP reported the following to Congress when seeking authorization to enter into the Corocoro AA pursuant to the Twenty-third Condition of the Congressional Authorization:130 "The matters under the Control Committee's discretionary powers are not subject to arbitration, and its decisions may only be reviewed by Venezuelan courts in order to determine whether the CVP representative took into account the national interest of the Venezuelan State when casting their vote. On the other hand, disputes over commercial matters that cannot be resolved by agreement between the parties, shall be subject to arbitration in accordance with the rules of the International Chamber of Commerce. This dual dispute resolution mechanism reflects Article 127 of the Constitution, which establishes the principle of jurisdictional immunity of the State, with an exception known as the "commercial exception". Under this exception, the State would not invoke jurisdictional immunity when conducting activities of a commercial nature, for which international commercial arbitration is the appropriate mechanism to resolve this type of disputes [sic]".131
The fundamental decisions of national interest to the Venezuelan State related to the performance of this Agreement shall be submitted for approval by the Control Committee. These decisions shall be the following :
(a) the approval of any material modification to the Minimum Work Program;
(b) the approval of the extension of the Exploration Period to include Phase II and of any extension of the Operation Period for any Development Area pursuant to Clause 21.2;
(c) the approval of any Evaluation Plan and any material modification thereto;
(d) the approval of any Development Plan and any material modification thereto;
(e) the approval of any unitization agreement for Discovery that extends across national boundaries that does not conform to the requirements of Clause 16.4 and submission of any Development Plan for such Discovery without unitization agreement or the portions thereof necessary to permit orderly development in each case in accordance with Clause 16.6;
(f) the approval of any plan for the implementation of any production curtailments required to permit compliance with Venezuelan international treaty obligations pursuant to Clause XVIII; and
(g) the resolution of any deadlock with respect to matter presented to the Management Company Board pursuant to Clause 5.5 that fails to receive Qualified Majority Vote.150
i. Like the Corocoro AA, the Fourth Condition is concerned with issues of fundamental national interest related to the "execution" (i.e. the implementation) of the Corocoro AA, while issues concerning the breach of the Corocoro Contracts do not fall within such category.
ii. The Fourth Condition does not refer to "fundamental decisions of national interest" in the abstract, but to those that require the "approval" of the Control Committee. What is relevant, therefore, is not whether the content of a particular decision is of fundamental national interest to Venezuela, but whether such decision was assigned to the competence of the Control Committee.
iii. A comparison between Clause 4.2 of the Corocoro AA and the Fourth Condition shows that the exhaustive list in Clause 4.2 of the Corocoro AA contains issues of national interest additional to those preliminarily identified in the Fourth Condition. Notably, the Fourth Condition itself mandated for "these [fundamental] decisions" to be "described" in the Corocoro AA. The term "among others" in the Fourth Condition was thus given effect by means of Clause 4.2 of the Corocoro AA. Indeed, the contemporaneous statements by the Respondents in November and December 1995 relied upon by the Claimant confirm that Clause 4.2 of the Corocoro AA specified all matters of national interest that would fall within the competence of the Control Committee.156
iv. The text of the Corocoro AA was subsequently approved by the Venezuelan Congress.157 Therefore, to the extent there are any inconsistencies between the Congressional Authorization and the Corocoro AA, it is reasonable to accept that the Corocoro AA controls.158
i. Regarding liability, the powers of amiable compositeur should lead the Tribunal to a "straightforward application" of the terms of the Corocoro Contracts. In doing so, the Tribunal should hold the Respondents liable for breach of contract (or in the alternative for the existence of an hecho ilícito or unjust enrichment).168
ii. Regarding quantum, the powers of amiable compositeur are "relevant" to determine the compensation that the Respondents should be required to pay to remedy the damages caused, "including interest".169
iii. Regarding both liability and quantum, the powers of amiable compositeur allow the Tribunal to construe "any possible doubt arising from the strict application of Venezuelan law" to be resolved in favor of the Claimant, as the non-breaching Party.170
i. First, the attempt to claim breach of contract or hecho ilícito or unjust enrichment so long after the alleged unlawful acts constitutes "disloyal delay under Venezuelan law, or breach of the very duty of good faith Claimant relies on";190 and
ii. Second, the Claimant's conduct demonstrates that it never believed that it had a claim for breach of contract, or hecho ilícito, or unjust enrichment against the Respondents.191
i. First, they note that what is relevant is not the Respondents' awareness of what they have done pursuant to the 2007 Nationalization Decree, as "obviously they were aware of their actions in complying" with said Decree. Rather, "[w]hat is relevant is awareness that Claimant thought that what Respondents had purportedly done in implementing [the 2007 Nationalization Decree] or doing anything else constituted some sort of breach of contract or hecho ilícito or unjust enrichment on the part of Respondents".194
ii. Second, the Respondents observe that the list of letters referred to by the Claimant concerns the "alleged breaches by the Government" and are "conspicuously silent when it came to breaches by Respondents".195 In this context, the Respondents refer to the finding in the ICC P&H Award that "complaining about these measures does not automatically indicate that there have also been contractual breaches, much less of the specific provisions that the Claimants ultimately came to rely on".196
i. There is no requirement in the Corocoro Contracts compelling the Claimant to notify to the Respondents its contractual claims,206 which would otherwise result in the Claimant forfeiting such claims. Indeed, nothing in the Corocoro Contracts defines a specific right or claim by the Claimant that is to be forfeited, or a specific conduct the absence of which would result in a forfeiture of the right or claim, or a time-period beginning with a specified start time before forfeiture of a right or claim can occur.
ii. The Claimant has brought all of its claims in this arbitration (both contractual and non-contractual) within the relevant statute of limitation period.
iii. The Claimant has not waived any of its rights in relation to the claims it now asserts, despite the fact that the underlying factual circumstances that serve as a basis for such claims occurred considerably prior to the initiation of these proceedings.
i. First, by "completely ceas[ing] to perform the Corocoro Contracts from 1 May 2007 onwards" (the "Non-Performance Claim").218
ii. Second, by "fail[ing] to perform" obligations that, in the Claimant's view, "survived the termination of the [AA]" (the "Surviving Obligations Claim").219
iii. Third, by "breach[ing] numerous specific provisions of the Corocoro Contracts, including by executing a substitute contract with Eni […] prior to the purported termination of the Corocoro AA in January 2008" (the "Particular Breaches Claim").220
i. Being an obligation of result, "performance is an end in itself".224
ii. "When parties enter into a contract, the least that is expected in terms of the result sought to be achieved, is that the contract will be performed per se; and failure to perform or obstructing performance would hinder the achievement of this result".225
iii. "[T]he total non-performance of a contract is a prima facie breach which raises a presumption of liability".226
iv. "[I]t is not disputed that the [P&H Contracts] were not performed on and from the date of the Expropriation on 1 May 2007. Thus, it follows that as from the Expropriation on 1 May 2007, the Respondents have arguably breached their obligation to perform the [P&H Contracts] under Venezuelan law".227
i. Clause 21.5 of the Corocoro AA:
Upon the termination of this Agreement all rights and obligations of the Parties hereunder shall terminate except for the following rights and obligations which shall survive such termination :
(a) Claims of Party against another Party for damages arising out of acts or omissions of the other Party relating to such other Party's obligations under this Agreement;
(c) The provisions of Clauses […] 8.6, […], ,  (excluding Clause 20.9), , , , , , , and  […].231
ii. Clause 10.6 of the Corocoro AA:
Each Consortium and the related Consortium Agreement shall terminate upon the expiration of the Operation Period for the relevant Development Area or upon the earlier termination of this Agreement with respect to such Development Area in respect of all Participating Investors pursuant to Clause XXII except the obligations of the Parties that survive the termination of this Agreement in accordance with Clause 21.5 which shall also survive the termination of such Consortium and the related Consortium Agreement.232
iii. Section VIII of the Corocoro CA:
This Consortium Agreement, shall terminat[e] at the conclusion of the Operating Period for the Development Area or sooner, on the date on which the Partnership Agreement for the Development Area and all Participating Investors terminates, pursuant to Article XXII of the Partnership Agreement. Upon termination of the Consortium Agreement, all rights and obligations of the Parties under such shall also be terminated, with the exception of said rights and obligations specified in Article 21.5 of the Partnership Agreement.233
i. Clause 8.6 of the Corocoro AA:
Following the submission of a Development Plan to the Control Committee, except as otherwise provided in Clause 5.8, the applicable Discovery may only be developed by mutual agreement of CVP and the Investors, or the relevant Participating Investors, for a period equal to the later of:
(a) ten (10) years from the date of initial submission, and
(b) the end of the Evaluation Period for the Evaluation Area in which such Discovery is located or the Operation Period for the Development Area in which such Discovery is located, as the case may be.238
ii. Clause 19.2 of the Corocoro AA:
Except as provided in Clause 19.3, title to all Production shall vest on pro rata basis among the members of the relevant Consortium in proportion to their respective Participations in the relevant Discovery at the wellhead or other point of extraction. Except as provided in Clause 19.4 each Consortium member shall take its pro rata share of the Production from each Discovery in the related Development Area, corresponding to its Participation in such Discovery, at the Delivery Point specified in the applicable Development Plan.239
iii. Clause 20 of the Corocoro AA:
20.1 The financial relationship among the Parties under this Agreement shall be based upon profit sharing. In particular, the members of each Consortium with Participations in any Discovery or the relevant Investors in the case of Early Production shall be required to pay a profitability bonus for each calendar quarter equal to the relevant PEG Amount for such calendar quarter, to CVP for transfer to the Venezuelan State in accordance with the Conditions as provided in this Clause XX. Profit shares allocable to the Consortium members, or the Investors, shall take the form of Production and Joint Revenues allocated in accordance with Clause XIX and this Clause XX.240
20.5 All Joint Revenues realized in any month shall be allocated among Discoveries in accordance with the Accounting Procedures. As set forth in the Accounting Procedures, such Joint Revenues shall be taken into account in determining the PEG Amounts. All Joint Revenues from a Discovery not allocated to CVP as part of the PEG Amount shall be allocated among the relevant Consortium members in accordance with their respective Participations in such Discovery. If such Discovery is not yet subject to Development Plan, such distribution will be made among the Investors or the relevant Participating Investors in proportions that they agree among themselves.241
i. held that the 2007 Nationalization Decree was a governmental act "external and not attributable to the [ICC P&H Respondents]", which "consequently preclude[d] their liability for the non-performance" of the [P&H Contracts];280 and
ii. determined that, in any event, the ICC P&H Claimants had failed to establish causation between their losses and the ICC P&H Respondents' purported actions.281
Failure of Party to fulfill any obligation incurred under this Agreement shall be excused and shall not be considered default hereunder during the time and to the extent that such non-compliance is caused by an Event of Force Majeure, except that if the Event of Force Majeure is an act of the Venezuelan State that is not of general applicability, such Event of Force Majeure shall not preclude an action for damages against CVP for the nonperformance of the relevant obligation.283
i. First, unlike Conoco, Eni agreed to "migrate to the new mixed company structure" pursuant to the terms of the 2007 Nationalization Decree (i.e. by 26 June 2007). Thus, "everything CVP did", namely, the execution of the CVP-Eni MoU and the CVP-Eni Conversion Contract, was in implementation of, and in strict compliance with, [the 2007 Nationalization Decree]".327 CVP had no choice but to comply with the 2007 Nationalization Decree and conclude those agreements with Eni.
ii. Second, Claimant's "contemporaneous letters" (dating from 12 April to 4 July 2007), leave "no doubt" as to its "understanding" of both the "nationalization process" and all that the Respondents' actions to that effect were required by the 2007 Nationalization Decree.328 This must include the execution of the CVP-Eni MoU and the CVP-Eni Conversion Contract.
iii. Third, the 2007 Law on Effects of Migration,329 on which the Claimant now incorrectly relies in an attempt to argue that the Corocoro AA was only extinguished on 16 January 2008,330 is in any event irrelevant. On the one hand, Conoco's pleadings in both the ICC P&H Arbitration and the ICSID Arbitration denote Conoco's "clear understanding" that its interests in Venezuela were "nationalized", "expropriated", "confiscated", or "complete[ly]" and "final[ly] tak[en]" as of 26 June 2007; not 16 January 2008.331 On the other hand, as "Conoco has repeatedly recognized in all documents before this Tribunal", the Law on Effects of Migration simply "confirmed" the expropriation that had already taken place by means of the 2007 Nationalization Decree.332 Its purpose was to "complete" the migration process by "put[ting] an end" to a "provisional regime", whereby the companies that had agreed to migrate by 26 June 2007 (such as Eni) could "continue conducting petroleum operations using the [AA] mechanism […].333 As such, the 2007 Law on Effects of Migration purported "to allow time for an orderly migration until the issuance of the decrees transferring the rights to exercise primary activities to the [new] mixed companies",334 namely, the 2008 Transfer Decree.335
iv. Fourth, "since it is undisputed that there was no production at Corocoro during 2007", the Claimant suffered no damage from any action prior to the 2008 Transfer Decree. At the most, the Claimant was "deprived" of having to "pay its share of any cash calls", which could hardly be considered damage.336
Without limiting the generality of Clause 25.1 [stating that the governing law is Venezuelan law,] the Parties hereby acknowledge the applicability of Article 1160 of the Venezuelan Civil Code to this Agreement and that accordingly all obligations hereunder shall be performed in good faith and in accordance with equity, custom and law. The Parties also acknowledge the applicability of any international treaties relating to the mutual protection of foreign investment to which Venezuela and any country of which an Investor is national may now be or hereafter become parties.349
i. First, since the ICC P&H Arbitration, there has been no disagreement between the Parties and their experts that causation (i.e. the cause-and-effect relation between an alleged breach, as the cause, and the resulting damage, as the effect) is one of the constituent elements of civil liability under Venezuelan law.371
ii. Second, the Tribunal in the ICC P&H Arbitration established that the standard of causation under Venezuelan law is that of "adequate causation".372 It subsequently held that the adequate, direct or immediate cause of the ICC P&H Claimants' loss was not the purported actions by the ICC P&H Respondents, but rather the nationalization of ICC P&H Claimants' interests in the P&H Contracts by the Venezuelan Government.373
iii. Third, despite the disagreement between ICC P&H Parties as to the applicable standard to the element of causation, in light of the ICC P&H Award, the Claimant now recognizes that the "test under Venezuelan law is that of 'adequate causation'".374 However, the Claimant incorrectly assumes that the Respondents' actions are the adequate cause of the Claimant's damage in the present case.375 The foregoing ignores that, as "in the [ICC P&H Arbitration], the adequate cause of Claimant's loss here is the nationalization" by Venezuela of its interests in the Corocoro Project.376
i. First, that the 2007 Nationalization Decree is an act "not of general applicability" in accordance with Clause 28.1 of the Corocoro AA and that, therefore, the Respondents may not avoid liability in the present case for any non-performance or positive breach of the Corocoro Contracts on the basis that they were acting (or not) in compliance with such Decree (and its subsequent implementation).
ii. Second, that the claimed breaches of the Corocoro Contracts are not the result of the 2007 Nationalization Decree, but instead attributable directly to the actions of CVP or PDVSA.
Failure of Party to fulfill any obligation incurred under this Agreement shall be excused and shall not be considered default hereunder during the time and to the extent that such non-compliance is caused by an Event of Force Majeure, except that if the Event of Force Majeure is an act of the Venezuelan State that is not of general applicability, such Event of Force Majeure shall not preclude an action for damages against CVP for the nonperformance of the relevant obligation.404
i. Is Clause 28.1 a risk-allocation clause?
ii. If so, was Clause 28.1 designed and intended to apply to a risk (i.e. an uncertain future event) that renders performance of the obligations in the Corocoro Contracts impossible or otherwise precludes the continuation of the Corocoro Project, such as the 2007 Nationalization Decree?
iii. If so, is the 2007 Nationalization Decree an act "not of general applicability" falling under the purview of Clause 28.1?
28.1 Failure of Party to fulfill any obligation incurred under this Agreement shall be excused and shall not be considered default hereunder during the time and to the extent that such non-compliance is caused by an Event of ForceMajeure, except that if the Event of Force Majeure is an act of the Venezuelan State that is not of general applicability, such Event of Force Majeure shall not preclude an action for damages against CVP for the nonperformance of the relevant obligation.
28.2 For the purposes of this Agreement, an "Event of Force Majeure" shall mean any event or circumstance, other than lack of finances, beyond the reasonable control of and unforeseeable by the Party obligated to perform the relevant obligation, or which, if foreseeable, could not be avoided in whole or in part by the exercise of due diligence, including but not limited to strikes, boycotts, stoppages, lockouts and other labor or employment difficulties, fires, earthquakes, tremor, landslides, avalanches, floods, hurricanes, tornadoes, storms, other natural phenomena or calamities, explosions, epidemics, wars (declared or undeclared), hostilities, guerrilla activities, terrorist acts, riots, insurrections, civil disturbance, acts of sabotage, blockades, embargoes, or acts of state or any governmental body.
28.3 If any Party cannot comply with any obligation stipulated herein because of an Event of Force Majeure, such Party shall notify the other Parties in writing as promptly as possible giving the reason for non-compliance, particulars of the Event of Force Majeure and the obligation or condition affected. Except as provided in Clause 28.1, any obligation of a Party shall be temporarily suspended during the period in which such Party is unable to perform by reason of an Event of Force Majeure, but only to the extent of such inability to perform. The obligations of the Parties to perform as provided by this Agreement through facilities not affected by the Event of Force Majeure shall continue. The Party affected by the Event of Force Majeure shall promptly notify the other Parties as soon as such event has been removed and no longer prevents it from complying with its obligation, and shall thereafter resume compliance with the Agreement.
28.4 The Party which has given notice of an Event of Force Majeure shall endeavour to mitigate the effects of such Event of Force Majeure on the performance of its obligations. Where an Event of Force Majeure continues for more than sixty (60) days, the Parties shall meet to review the situation and its implications for operations and to discuss the appropriate course of action in the circumstances.
28.5 Subject to the thirty-nine year limit on the term of the Agreement specified in Clause 21.1, if an Event of Force Majeure occurs that substantially impedes exploration, evaluation, development or exploitation activities, the relevant Exploration Period, the Evaluation Period or the Operation Period will be extended by an amount of time equal to the period during which such event is in effect. In each case, such extension will be only with respect to any affected Blocks or Development Areas. If either Phase of the Exploration Period is extended pursuant to this Clause 28.5, CVP shall not be entitled to draw on any letter of credit, guarantee or financial undertaking delivered by an Investor pursuant to Clause 6.9 until the end of such Phase as extended hereby, but only if such Investor provides a replacement of or amendment to such letter of credit, guarantee or financial undertaking, in form and substance satisfactory to CVP, ensuring that CVP's rights at the end of the extended Phase will be the same as the rights it would have enjoyed at the end of the original Phase had no such extension occurred.
28.6 The Investors, or the relevant Participating Investors, may at their option, by notice to CVP, suspend either Phase of the Exploration Period, any Evaluation Period or any Operation Period if:
(a) operations in all or any portion of the Area (or the relevant Evaluation Area or Development Area) are substantially impeded for a period of at least sixty (60) days due to the absence of a permit required under Venezuelan law for such operations; and
(b) the Investors, or such Participating Investors, have taken and are continuing to take reasonable measures to obtain such permit in accordance with relevant laws and regulations (including without limitation submitting all documents and information to relevant governmental authorities that are reasonably capable of submission at the relevant time).
During the suspension, all operations in the (in the case of an Exploration Period), the relevant Evaluation (in the case of an Evaluation Period) or the relevant Development Area (in the case of an Operation Period) must be discontinued, except that activities necessary or useful to obtain the relevant permit may continue. Any such suspension will be lifted either (i) at the option of the Investors, or the relevant Participating Investors, or (ii) if the Investors fail to continue to take reasonable measures to obtain the relevant permit, at CVP' s request. The relevant time period will recommence upon the lifting of the suspension . Time lapsed during the suspension will not count against the relevant time-period. The suspension will not under any circumstances extend the overall 39-year limit on the duration of the Agreement.
As I was trying to make clear, we firmly believe that [Clause] 28.1 is irrelevant, that this Contract was expropriated, the Contract rights were expropriated and transferred. The Investor has no further rights in the Contract, and 28.1 is irrelevant. [Clause 28.1] might be relevant during the course of performance of the Contract if the Government were to say, for example, Conoco, this month you should reduce your production by 50 percent because I want to comply with an OPEC cut or something, and I would rather take it from you rather than from this company or pro rata across all. I target you. That, in my view, is what this clause was really about. It has nothing to do with a nationalization.440
i. On the one hand, Clauses 28.5 and 28.6 indicate that, while the parties envisaged a mechanism to account for "Events of Force Majeure" that could "substantially impede" the Project's exploration, evaluation or production activities, they remained silent on events that could entirely preclude such activities altogether, in all present and conceivable future Blocks or Areas of any kind.
ii. On the other hand, by providing for an extension of time or a suspension of the relevant exploration, evaluation or production "Period", Clauses 28.5 and 28.6 suggest that the Force Majeure Clause is "confined in its application to events which are capable of resolution within that particular time-frame".451 Accordingly, "an event which renders further performance 'unthinkable'", as would be the case of an outright expropriation, "may therefore not fall within its scope".452
Upon the termination of this Agreement all rights and obligations of the Parties hereunder shall terminate except for the following rights and obligations which shall survive such termination :
(a) Claims of Party against another Party for damages arising out of acts or omissions of the other Party relating to such other Party's obligations under this Agreement; […]
(c) The provisions of Clauses 7.9, 8.6, 8. 7, XIX, XX (excluding Clause 20.9), XXI, XXII, XXIII, XXIV, XXV, XXVI and ".458