Holcim goes to court over Venezuelan nationalisation

By Chris Sleight23 March 2009

Venezuelan president Hugo Chavez

Venezuelan president Hugo Chavez

Holcim has launched international arbitration proceedings against Venezuela, following the forced nationalisation of the country's cement industry last summer. The company says the Venezuelan Government terminated negotiations following nationalisation and has not paid it any compensation.

In April last year, Venezuelan president Hugo Chavez announced plans to nationalise the country's cement industry. The presidential decree came into force on 18 June, affecting Cemex and Lafarge as well as Holcim. As the nationalisation deadline approached, Holcim signed a Memorandum of Understanding with the Government, under which it would receive a reported US$ 552 million for 85% of the shares in Holcim Venezuela.

However, Holcim says the Venezuelan government broke-off negations on a final agreement in October last year, and has not communicated with the company since. No final agreement was signed, and Holcim says it has not received any compensation for its expropriated assets.

In its filing with the International Centre for the Settlement of Investment Disputes (ICISID) in Washington, US, Holcim contends that Venezuela has breached its obligations under a 1993 agreement between itself and the Swiss Confederation on the Reciprocal Promotion and Protection of Investments. Under the treaty it is required to pay compensation at fair market value for the assets it expropriated.

Holcim also says the fair value of its former Holcim Venezuela subsidiary is substantially greater than the amount agreed in last August's Memorandum of Understanding.

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