Federal Judge ratifies freeze of PDVSA assets

February 14, 2008

A Federal Judge in Manhattan ratified the freeze of over US$ 300 million ordered by a lower Court in the Sourthern District of New York in late December.

PDVSA’s “dream team” of lawyers tried to argue that the measure should be suspended because there was no ruling against PDVSA by the arbitration panel and the only requirement for PDVSA was to subject the case to arbitration. They argued that if PDVSA were to lose, it would abide by the decision and it made no sense to assume that ExxonMobil would receive no compensation.

Of course, the lawyers arguments contradicted most of the statements made by PDVSA and Venezulan Government officials this week who have been trying to argue the case publicly, threatening to cut off oil exports to the US if any of PDVSA’s property is frozen (will they announce it tomorrow?), arguing they will not pay if they lose in arbitration because tis is a sovereign issue and this is all a part of an economic boycott by the US Government. (I am sure the judge did not like this part). Moreover, PDVSA did not wait long to announce that it was stopping exports to Exxon, which while only a boast, given that contracts will be respected, is an announcement that had no place at this time given that it was Venezuela that expropriated ExxonMobil’s share of the heavy crude Cerro Negro plant without compensation. Thus, the Venezuelan authorities did not help their cause and the judge did not buy the arguments by the great team of PDVSA lawyers who have to carry the weight of Chavez and Ramirez around in their legal arguments.

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