Colombia And Venezuela Agree A New Bilateral Investment Treaty, Venezuela's First Since Withdrawing From The ICSID Convention

• Author: Mr Christian Leathley, Daniela Paez and Lucila Marchini
• Law Firm: Herbert Smith Freehills
• Published date: 20 March 2023

On February 23, 2019, Venezuela broke diplomatic relations with Colombia and gave Colombian diplomats twenty-four hours to leave the country. Four years later, on February 3, 2023, Colombia and Venezuela signed an unprecedented bilateral investment treaty (BIT) that evidences the marked improvement in their relations since the election of President Gustavo Petro in June 2022. The BIT will come into force 60 days after both countries notify each other that they have completed the necessary domestic procedures.

Despite having 25 BITs in force, the Venezuelan Government has been bitterly critical of investment treaty protection over the course of the last decade, going so far as to denounce the ICSID Convention in 2012. Indeed, the new BIT with Colombia is the first BIT signed by Venezuela since 2008 (when it entered into BITs with Russia and Vietnam), and therefore the first since its withdrawal from the ICSID Convention.

Unlike Colombia, which has embraced free trade in recent decades (it is a founding member of the Pacific Alliance, for example), Venezuela has faced a barrage of sanctions and investment claims triggered by the controversial policies and expropriations introduced by former President Hugo Chavez and subsequent President Nicolas Maduro. Mindful of this experience, the new BIT appears...