(Gold Reserve Inc., 30.Mar.2015) – Gold Reserve Inc. reported on developments in the proceedings instituted in the U.S. District Court for the District of Columbia to confirm the $740 million arbitral award dated 22.Sep.2014 rendered against the Bolivarian Republic of Venezuela. On 27.Mar.2015, the Court entered a default against Venezuela following its failure to file an appearance within the prescribed deadlines in the proceedings instituted by the company.
Legal History Leading up to the Default
On 6.Nov.2014, the company filed in the District Court for the District of Columbia a petition to confirm the Award that had been rendered by a tribunal constituted under the Additional Facility Rules of the International Center for the Settlement of Investment Disputes (ICSID) of the World Bank. Once the Award is confirmed, it will be enforceable in the U.S. as a judgment of the court.
The initial step for the proceeding was to serve Venezuela with the petition and other related documents.
Once served, Venezuela had 60 days to respond with any arguments it believes it has against the petition to confirm. Since the inception of these proceedings, Venezuela has been willfully avoiding service, refusing, among other things, to authorize its U.S. counsel to accept service.
As a result of that refusal to accept service, on 31.Dec.2014, the company initiated service in accordance with the statutory provision of the U.S. Code, and the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.
Receipt of the documents on 8.Jan.2015, was acknowledged by letter from the Venezuelan Foreign Ministry dated 6.Jan.2015, but only received by the company’s process server on 2.Mar.2015. In this letter, however, Venezuela contested the validity of the service, raising non-meritorious and irrelevant objections to service. Therefore, the company believes Venezuela was properly served on 8.Jan.2015.
As a result, and at the expiry of the 60-day period following the service of the documents, the company, on 26.Mar.2015 requested the Clerk of the District Court for the District of Columbia to enter default against Venezuela, on the basis that, as the letter from the Venezuelan Foreign Ministry clearly showed, the documents had been duly received by the proper recipient of the service process.
The Clerk agreed with the position of the company and entered default on 27.Mar.2015. The consequence of the default being entered against Venezuela in respect of appearance is that a default judgment may now be entered against Venezuela upon motion by the company.
After close of business on 27.Mar.2015, the same day that the default was entered, U.S. counsel appointed by Venezuela (the same counsel in the ICSID arbitration) entered an appearance for the purpose of opposing the entry of default and requesting that it be set aside. The company has responded to Venezuela’s opposition on 30.Mar.2015 and the matter will be decided by a judge in the near future.
The company remains firmly committed to the enforcement and collection of the Award, including interest and costs, in full, and will continue to vigorously pursue all available remedies. The Award, now amounting to approximately $750 million, continues to accrue interest at the rate of Libor plus 2% per annum.
“This is another example of Venezuela being dilatory in its actions regarding the payment of the Award. The company will continue to pursue the collection of our Award in a systematic and methodical way until Venezuela realizes that its needs to stop avoiding its international obligations and pay the Award, sooner rather than later,” said Gold Reserve President Doug Belanger. “The Company continues to have communications with designated representatives from the Venezuelan government.”
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