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Tuesday, March 18, 2008

Exxon loses court decision, Center for Economic and Policy Research.

A British court ruled against Exxon Mobil in its dispute with Venezuela's state-owned oil company PDVSA today, tossing out a $12 billion asset freeze Exxon Mobil had requested. Exxon Mobil claimed it had sought the injunction to ensure that funds would be available should it win its dispute with Venezuela over compensation for its stake in a project in the Orinoco basin.

Judge Paul Walker summarized the ruling by saying Exxon Mobil failed to show that there was an urgent case for freezing PDVSA's assets, and said he would explain his reasons in full on Thursday. Exxon Mobil, which also pushed asset freezes in courts in the U.S. and the Netherlands, has said it will not appeal the ruling. The court also ordered Exxon Mobil to pay PDVSA $765,300 to cover legal costs within 21 days and lawyers for PDVSA announced plans to seek damages related to the freeze from Exxon Mobil.

"This ruling makes sense, since there is a case pending before the World Bank's arbitration court (ICSID), so there is no reason for a national court to resort to injunctive relief until the arbitration is complete," Mark Weisbrot, Co-Director of the Center for Economic and Policy Research, said. "The purpose of injunctive relief is to prevent irreparable harm to the plaintiff. There is no evidence that PDVSA would refuse to pay Exxon just compensation for its assets in Venezuela."

Weisbrot also said, "Exxon's legal actions therefore appear to be more of a political strategy of harassment to strengthen its bargaining position, which the London high court rejected."

Mark Weisbrot is the author of numerous papers and articles on Venezuela and Latin America available at, including "The Venezuelan Economy in the Chavez Years" and "Latin America: The End of An Era" and he frequently appears in the media to discuss economic and political changes in the region.
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