The case at the World Bank’s International Centre for Settlement of Investment Disputes is one of many arising from nationalizations during late President Hugo Chavez’s 1999-2013 rule of the South American OPEC member country.
“We were confident all along that our position was correct and are very pleased that the annulment committee agreed,” Venezuela’s lawyer George Kahale said.
A reduction to the overall $1.6 billion award would be welcome news to President Nicolas Maduro’s cash-strapped government as it faces heavy foreign debt repayments amid a deep economic recession that has led to widespread shortages.
The ICSID ruling, dated Thursday, said “portions of the award” were annulled but did not give a breakdown of figures.
A spokesman for the U.S.-based oil company, Todd Spitler, did not confirm financial details, but said: “Exxon Mobil will continue to evaluate its legal rights and determine next steps.”
Venezuela had challenged the 2014 award with various arguments, including that a previous decision from Paris-based International Chamber of Commerce to award Exxon $908 million should be deducted from the ICSID award.
Chavez, the firebrand socialist leader whose rule was cut short by death from cancer, nationalized a range of oil ventures, including the Cerro Negro heavy crude project and a smaller project called La Ceiba, both operated by Exxon.
Despite its appeal of the World Bank court’s initial ruling in the Exxon case, Venezuela’s government had hailed that as a success because the company had been seeking compensation of up to $10 billion.
Chavez led a wave of takeovers that also encompassed the electricity, telecoms, metal and agricultural sectors. Many companies deemed the takeovers unlawful, and Venezuela faces more than 20 international arbitration cases.
Supporters of Chavez’s nationalizations say he was right to take back control of Venezuela’s commodities riches to channel the profits into social programs at home rather than profits for multinational companies.