## Facts

- Rusoro Mining Limited (Rusoro), a Canadian company, acquired contractual rights and interests to conduct gold exploration and mining in Venezuela through Venezuelan subsidiaries holding mining concessions and related agreements.
- Between 2006 and 2008, Venezuela adopted measures that restricted gold exploration and affected the operating environment for private gold-mining activities.
- In 2009 and 2010, Venezuela introduced additional measures affecting the sector, including foreign-exchange and gold-marketing rules that limited how proceeds could be handled and how gold could be sold or exported.
- In 2011, Venezuela nationalized the gold-mining industry by decree and began implementing steps to take control of private gold-mining assets and operations.
- Rusoro alleged that Venezuela’s measures culminated in the unlawful taking of its investment and violated protections in the Canada–Venezuela BIT, including treaty rules on expropriation and performance requirements.
- Rusoro commenced arbitration in 2012 under the ICSID Additional Facility Rules, seeking several billion dollars in compensation.
- Venezuela raised jurisdictional objections and later asserted counterclaims against Rusoro connected to alleged breaches of Venezuelan law and investment-related obligations.
- The tribunal addressed jurisdictional objections and then proceeded to decide liability and damages, issuing its final award on August 22, 2016.

## Issues

1. Whether the tribunal had jurisdiction under the Canada–Venezuela BIT and the ICSID Additional Facility Rules over Rusoro’s claims and Venezuela’s objections.
2. Whether Venezuela’s 2011 nationalization measures constituted a direct expropriation of Rusoro’s protected investment under the BIT.
3. Whether Venezuela’s pre-nationalization foreign-exchange and gold-marketing measures imposed treaty-prohibited performance requirements.
4. Whether Venezuela breached other BIT standards alleged by Rusoro (including fair and equitable treatment, full protection and security, national treatment, and transfer-related protections).
5. What valuation date and methodology should be used to quantify compensation, and how to treat the impact of earlier regulatory measures and commodity-price changes.
6. Whether the tribunal could hear Venezuela’s counterclaims and, if so, whether they were proven.

## Decision

- The tribunal upheld jurisdiction over Rusoro’s treaty claims under the BIT and the ICSID Additional Facility framework.
- The tribunal held that Venezuela’s 2011 nationalization of the gold-mining industry resulted in a direct expropriation of Rusoro’s investment.
- The tribunal found Venezuela in breach of the BIT’s performance-requirements obligations based on aspects of the gold-marketing and foreign-exchange regime that constrained how Rusoro could sell gold and manage proceeds.
- The tribunal rejected Rusoro’s remaining treaty claims, including claims framed under fair and equitable treatment and other alleged treaty standards.
- The tribunal dismissed Venezuela’s counterclaims.
- On damages, the tribunal awarded Rusoro USD 967.8 million plus interest, an amount substantially below what Rusoro claimed.

## Legal Principles

- A state measure that nationalizes an industry and removes an investor’s ownership or control over protected assets can constitute direct expropriation under an investment treaty.
- Even where a taking is connected to public policy objectives, treaty compliance depends on satisfying the treaty’s conditions for lawful expropriation, including compensation.
- Regulatory controls that effectively require an investor to sell output through specified channels or on specified terms can breach a treaty’s limits on performance requirements.
- A tribunal may treat earlier regulatory measures as part of the factual and valuation background while still identifying a later decree or act as the decisive expropriatory event.
- Compensation for expropriation is commonly assessed by valuing the investment as of the expropriation date, using the evidentiary record and reasoned adjustments where warranted.
- Counterclaims in investor–state arbitration require a jurisdictional basis and proof; where those elements are not established, counterclaims are dismissed.

## Conclusion

In Rusoro Mining Limited v. Bolivarian Republic of Venezuela, the ICSID Additional Facility tribunal held that Venezuela’s 2011 nationalization of the gold-mining industry directly expropriated Rusoro’s protected investment and that elements of Venezuela’s gold-marketing and foreign-exchange regime violated the BIT’s performance-requirements rules; the tribunal rejected Rusoro’s other treaty claims, dismissed Venezuela’s counterclaims, and awarded Rusoro USD 967.8 million plus interest.


Rusoro Mining Limited v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/12/5 (August 22, 2016)