Smurfit Westrock, a provider of paper-based packaging solutions, has been awarded more than $473m in compensation by the International Centre for Settlement of Investment Disputes (ICSID).
The decision, dated 28 August 2024, responds to claims made by Smurfit Holdings BV, a subsidiary of Smurfit Westrock, against the Venezuelan government for the expropriation of its business operations.
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The arbitral tribunal, under the World Bank’s ICSID, ruled in favour of Smurfit, ordering Venezuela to pay $468.7m in damages, $4.5m in legal costs, and interest from 31 May 2024 until the payment date.
This award stems from a dispute filed in December 2018, following the Venezuelan government’s occupation and subsequent deconsolidation of Smurfit Kappa Group‘s Venezuelan operations in August 2018.
By a majority decision, the tribunal dismissed Venezuela’s jurisdictional objections and found that Venezuela had violated several protections under the investment treaty with the Netherlands.
These included protections against unlawful expropriation, unfair treatment, and restrictions on dividend repatriation.
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By GlobalDataThe breaches came in response to Venezuela’s seizure of Smurfit’s Venezuelan subsidiaries’ landholdings and the country’s failure to release VAT refunds to Smurfit’s subsidiaries.
The tribunal concluded that the 2018 seizure of Smurfit’s Venezuelan subsidiaries was an expropriation that did not serve the public interest and lacked due process.
Smurfit Westrock CEO Tony Smurfit said: “We are pleased with the award of the ICSID tribunal. It validates our assertion that our Venezuelan business was unlawfully expropriated in 2018.
“While the award cannot compensate us for the full loss in relation to our operations in Venezuela, including the significant impact it had on our people and the wider community there, we will now pursue the full value of this award from the Venezuelan government.”
Last month, Smurfit Westrock selected ISN’s global online contractor and supplier management platform to support its facets of contractor management and compliance.
