Rusoro Mining awarded $1.2bn in damages over Venezuela lawsuit

23 August 2016 (Last Updated August 23rd, 2016 18:30)

Rusoro Mining has been awarded more than $1.2bn in damages after an arbitration tribunal for the additional facility rules of the World Bank's International Centre for the Settlement of Investment Disputes (ICSID) ruled that Venezuela had unlawfully seized the company's gold mine.

Rusoro Mining has been awarded more than $1.2bn in damages after an arbitration tribunal for the additional facility rules of the World Bank's International Centre for the Settlement of Investment Disputes (ICSID) ruled that Venezuela had unlawfully seized the company's gold mine.

In 2011, Venezuela took over Rusoro’s gold assets investments in the country as part of a nationalisation of the gold industry.

On 17 July 2012, Rusoro filed its request for arbitration before ICSID under the Canada-Venezuela Bilateral Investment Treaty (BIT).

"The tribunal ruled that Venezuela breached its obligations under the BIT by taking Rusoro’s investments unlawfully without paying compensation." 

The tribunal upheld Rusoro's claims in its award, ruling that Venezuela breached its obligations under the BIT by expropriating the mining company's investments unlawfully without paying compensation and also by imposing restrictions on gold exports. 

Due to these breaches, Venezuela was ordered by the tribunal to pay $967.77m as of 16 September 2011, the date of the expropriation.

The payment included interest accrued between that date and the actual payment, calculated at a rate per annum equal to $-Libor for one year deposits, in addition to a margin of 4% to be compounded annually.

Furthermore, Venezuela was ordered to contribute $3.3m towards Rusoro's costs in the arbitration.

Rusoro Mining president and CEO Andre Agapov said: "On behalf of Rusoro's board of directors, its management and employees, and all of its stakeholders, we are pleased that the Tribunal has recognised Venezuela's breaches of Rusoro's rights in connection with its investments in the Venezuelan mining sector.

“The company looks forward to collecting on the award on behalf of all of its stakeholders."

Rusoro secured financing from Calunius Capital since it started the arbitration.