MARIANNA PÁRRAGA
EL UNIVERSAL

A legal battle US oil major Exxon Mobil and Venezuela's state oil firm Pdvsa fought in the England High Court ended on Tuesday, when Paul Walker, the judge hearing the case, decided to overturn "immediately" an injunction freezing up to US 12 billion in  Pdvsa's oil assets worldwide -an order that was issued late in January.

Within 48 hours, Exxon Mobil is supposed to forward letters to all of the institutions it had asked to freeze Pdvsa's assets and advise them on the judicial decision. Further, the US corporation has an additional 48 hours to advise any institutions or customers Pdvsa may deem necessary.

Finally, Walker's decision asked Pdvsa to file an estimate of the court costs incurred. Meanwhile, Walker ordered Exxon Mobil to pay USD 767,000 in legal fees of Pdvsa immediately. The US oil company had made an escrow deposit with the court, amounting to USD 1 million.

On Tuesday, Minister of Energy and Petroleum and CEO of Pdvsa Rafael Ramírez said the England High Court's decision revoked the freezing injunction implemented both in the United Kingdom and the Netherlands and Netherlands Antilles.

However, the ruling does not unfreeze USD 315 million in a New York bank that were frozen by the Manhattan District Court. Such assets are likely to remain frozen as long as a pending arbitration is not settled.

"This ruling is 100 percent in favor of Pdvsa, and it is a lesson both for Exxon Mobil and the multinationals. Venezuela said it disagreed with the arbitration, but it never intended to disregard the arbitration. Exxon just kicked the table, but the court put Exxon in its place."

The allegations
Exxon Mobil's spokesperson Alan Jeffers told Efe that the British court "did not question the merits underlying the Mobil Cerro Negro lawsuit." However, the summary of the ruling -which is to be published in full next Thursday- showed that Walker believed Pdvsa's allegations that it was willing to pay compensation for the expropriation of Cerro Negro project.

Further, Walker conceded that his upholding of the so-called Mareva Injunction was disproportionate, considering that Pdvsa's recorded assets at the end of 2006 amounted to USD 56 billion. "I have no information about any freezing injunction that has ever been issued against any company holding such assets."
 
The Mareva Injunction is an extraordinary court order which freezes assets so that a defendant to an action cannot dissipate their assets from beyond the jurisdiction of a court so as to frustrate a judgment. In general, a freezing injunction is issued only after the court has heard the parties involved, but in this case the order was issued under "an extraordinary procedure" pursuant to the civil proceedings regulations.

Usually freezing injunctions do not hit assets worldwide, like in this case. Walker originally made his decision based on the presumption of "international fraud," but Exxon's allegations could not support such arguments. "In this case, there are no signals of international fraud by Pdvsa," the judge said.

Lastly, the judge acknowledged the Venezuelan government's willingness to pay compensation to the corporations that refused to enter into joint ventures with Pdvsa as part of Venezuela's nationalization drive.

Future actions
Just like he suggested some weeks ago, Ramírez said they reserved the right to file the relevant legal actions against Exxon, seeking compensation for damages resulting from the ban to dispose of Pdvsa's assets outside Venezuela.

Besides damages and court costs incurred by Pdvsa, the conglomerate is filing an action with Venezuelan courts to demand Exxon to pay for a number of crude oil barrels drilled from Cerro Negro that were not reported to the Venezuelan government.

Ramírez would make a final statement about a likely out-of-court settlement with Exxon in connection with its stake in Cerro Negro and La Ceiba. He highlighted Pdvsa was willing to face the arbitrations under way. But he clarified that the Venezuelan State "does not want a company like Exxon Mobil in the country."
Translated by Maryflor Suárez R.