The Diplomat
Venezuela has been ordered to pay $1.647 billion (about €1.5 billion) for the expropriation of Spanish company Agroisleña, carried out by the Chavista regime in 2010.
The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) issued an arbitration award on the 23rd, condemning Venezuela to pay 1.629 billion dollars to Grupo Agroinsumos Iberoamericanos in compensation for having breached the Reciprocal Investment Promotion and Protection Agreement signed between Venezuela and Spain, by expropriating its investments in the Venezuelan companies Agroisleña C.A., Insecticidas Internacionales C.A., Proyefa C.A. and Venezolana de Riego C.A.
To that amount, interest will be added on the compensation awarded at the Libor rate applicable to six-month deposits denominated in US dollars plus 4 percentage points, compounded annually from 4 October 2010 until the date on which Venezuela has paid in full.
In addition, the arbitration sentences the Venezuelan State to pay 1,108,819.24 dollars for the costs of the proceedings and 16,308,725.30 dollars for the expenses incurred by Grupo Agroinsumos Iberoamericanos in the defence of its rights.
In total, Venezuela will have to pay the Spanish group at least the equivalent of 1.5 billion euros as a result of the decision taken by the government of Hugo Chávez in October 2010 to expropriate Agroisleña, a company founded fifty years earlier by the Canary Islands businessman Enrique Fraga in the state of Trujillo, in western Venezuela.
Chávez surprised the owners of Agroisleña, which owned eight silos and 60 branches, employed 1,800 workers and produced 70 per cent of crop inputs. The decision, which affected 18,000 producers, was announced by the then Venezuelan president with the phrase: “Come to me, I have flowers”, adding Agroisleña to the hundreds of farms he had previously expropriated. Chavez accused the Spanish company of profiteering in seed and fertiliser.
The Spanish authorities tried to intercede for Chavez to reverse his decision, but to no avail, so in 2016 the company turned to ICSID for the arbitration that has now been announced.
The award ratifies that the mission of the Ibero-American Agroinsumos Group is to contribute to the development of agricultural production in the countries in which it operates, offering comprehensive support to farmers, through the timely and sufficient supply of inputs, agricultural machinery and equipment, the reception and storage of harvests, technical assistance and the incorporation of new technologies.
