Crystallex International Corporation v. Bolivarian Republic of Venezuela
244 F. Supp. 3d 100
D.D.C.2017Background
- Crystallex, a Canadian mining company, obtained rights under a 2002 Mine Operating Contract (MOC) to develop Las Cristinas in Venezuela but never received a required environmental permit after meeting prerequisites and posting a bond.
- Venezuelan authorities later announced state control of Las Cristinas and CVG rescinded the MOC; Crystallex filed a BIT arbitration (Canada–Venezuela BIT) alleging fair-and-equitable-treatment violations and expropriation.
- An ICSID Additional Facility tribunal (three arbitrators) found treaty jurisdiction, concluded Venezuela breached the BIT (fair-and-equitable treatment and expropriation), and awarded Crystallex $1.202 billion (averaging stock-market and market-multiples valuations).
- Crystallex petitioned U.S. district court in D.C. to confirm the award under the New York Convention (FAA); Venezuela moved to vacate. The court had FSIA jurisdiction under the §1605(a)(6) arbitration exception.
- Venezuela challenged arbitrability, argued the tribunal exceeded its powers (addressing contract claims and using improper valuation methods), invoked public policy, and alleged manifest disregard of law. The district court rejected these challenges and confirmed the award; motion for pre-judgment bond denied as moot.
Issues
| Issue | Crystallex's Argument | Venezuela's Argument | Held |
|---|---|---|---|
| Jurisdiction under FSIA/New York Convention | Confirm award; BIT + award + Convention satisfy §1605(a)(6) | Court lacks jurisdiction or tribunal exceeded consent | Court has jurisdiction under §1605(a)(6); BIT, award, and Convention met requirements — jurisdiction proper |
| Standard of review / arbitrability | Deferential review where parties clearly and unmistakably assigned arbitrability to tribunal via ICSID/UNCITRAL/Additional Facility rules | Arbitrability is for courts; seek de novo review | Tribunal had clear-and-unmistakable assignment of arbitrability; deferential review applies |
| Whether tribunal exceeded authority by treating contract matters as treaty claims | Treaty claims valid; MOC facts used only to show BIT breaches; tribunal stayed within treaty scope | Claims were purely contractual and thus outside BIT arbitration | Tribunal reasonably found acts were sovereign and could breach BIT; tribunal did not exceed scope; confirmation affirmed |
| Valuation methods / damages (stock-market & market-multiples) | Full reparation principle allows valuation "but for" wrongful acts; stock-market and market-multiples methods were reasonable | Tribunal misapplied valuation dates, relied on improper assumptions, and awarded speculative damages | Under deferential review, tribunal’s choice of full reparation and methods was within authority; no vacatur warranted |
| Public policy defense (Article V(2)(b)) | Enforcement does not offend U.S. fundamental policy; award only requires compensation | Confirmation would frustrate sovereign environmental regulation policy | Public policy ground is narrow; Venezuela failed to show award violates basic notions of justice; confirmation allowed |
| Manifest disregard of law | N/A (respondent bears showing) | Tribunal knowingly ignored applicable, explicit law | Claim failed: petitioner did not show tribunal knowingly ignored a well-defined, applicable legal rule |
Key Cases Cited
- Chevron Corp. v. Ecuador, 795 F.3d 200 (D.C. Cir.) (FSIA §1605(a)(6) and New York Convention confirmation standards)
- BG Group PLC v. Republic of Argentina, 134 S. Ct. 1198 (Sup. Ct.) (presumptive standards for arbitrability review and party allocation)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (Sup. Ct.) (clear-and-unmistakable delegation to arbitrator governs arbitrability deference)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (Sup. Ct.) (arbitral awards may be vacated only in very narrow circumstances; courts not to review for legal/factual error)
- Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (Sup. Ct.) (FAA’s exclusive vacatur/modify grounds and limits on judicial review)
- TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928 (D.C. Cir.) (Article V of New York Convention supplies narrow, exclusive grounds to refuse confirmation)