Barbadian Tax Treaty plays role in Caracas firm’s nationalisation fight

A Barbados-based holding company led by executives of Empresas Polar has filed an international arbitration claim against President Hugo Chavez’s government over its nationalization of a fertilizer project, documents show.

{FILE IMAGE: Venezuelan Embassy, Hastings, Ch. Ch. Barbados} A 1999 double taxation convention signed between Barbados and Venezuela has been drawn into play in a nationalisation dispute between well known Venezuelan food and beermaker Empresas Polar and the Venezuelan government.

According to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), the Barbados-based “Gambrinus, Corp” registered a claim against Venezuela on December 2 in relation to a “fertilizer enterprise.”

While the ICSID provided no further details, reports coming out of Venezuela are that the dispute was over fertilizer-maker Fertinitro, which Chavez nationalized in 2010, and in which Polar had a 10 percent stake.

Under the convention signed between Barbados and Venezuela, there is provision for dispute resolution through arbitration, which is meant to protect companies against unfair treatmentand to resolve disputes with governments without having to resort to litigation in local courts.

The move may set a precedent for Venezuelan companies seeking access to international courts to settle disputes with the socialist government that otherwise would be litigated by local judges, who critics say are controlled by Chavez.

The case is highly delicate as Chavez has repeatedly threatened to nationalize Polar, the South American nation’s largest private employer. Its products range from beer to corn flour and reach nearly all of Venezuela’s 29 million people.

Arbitration claims by Venezuelan companies could become more frequent if Chavez begins a more widescale expropriation of local businesses after five years of taking over assets of many of Venezuela’s top foreign firms.

Chavez, who says his widespread nationalizations have redressed decades of inequality and unscrupulous business practices, has lambasted the World Bank tribunal as an instrument of colonial domination. {COURTESY Caribbean 360}

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