Global paper producer Smurfit Westrock has been awarded a $469 million (€423 million) arbitration ruling against Venezuela by the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), the company and the tribunal said.
The decision grants the Dublin-based company compensation for the 2018 seizure of its assets in Venezuela of more than $468.7 million, legal costs of $4.5 million and interest until the date of payment, Smurfit said in a statement.
“We are pleased with the award of the ... tribunal. It validates our assertion that our Venezuelan business was unlawfully expropriated in 2018,” company chief executive Tony Smurfit said. “While the award cannot compensate us for the full loss in relation to our operations in Venezuela, including the significant impact it had on our people and the wider community there, we will now pursue the full value of this award from the Venezuelan government.”
Smurfit’s spokespeople did not immediately reply to a request for further information. Venezuela’s foreign affairs ministry did not immediately reply to a request for comment.
Venezuela has lost numerous international arbitration cases following late president Hugo Chávez’s nationalisation wave. The South American country is facing $21 billion in claims for past expropriations and debt defaults in a US court case now under way.
[ Smurfit Kappa earnings fall ahead of €23bn WestRock mergerOpens in new window ]
Smurfit’s investments in Venezuela were protected by a treaty between the Netherlands and Venezuela.
“The tribunal dismissed Venezuela’s objections to its jurisdiction, and held that Venezuela breached the treaty’s protection against unlawful expropriation, the treaty’s protection against unfair and inequitable treatment and arbitrary and discriminatory measures, and the treaty obligation to guarantee the repatriation of dividends without undue restriction or delay,” the company added.
The ICSID rendered its decision on Wednesday, according to its webpage. The case was first introduced in 2018, and the tribunal was constituted in 2019 to discuss the case.
The Venezuelan government effectively seized Smurfit Kappa’s operations in August 2018. At that time, the company said it “was no longer responsible for the use of its installations, machinery and equipment, its employees’ safety, that of its surrounding communities, any environmental impact, or the quality of the paper and packaging manufactured in the operations.”
Smurfit’s Venezuelan operation had been in place for more than 60 years at that time. Ultimately it divested its operations there, taking a writedown of about €60 million as a result. That equated to less than 1 per cent of the firm’s earnings before interest, tax, depreciation and amortisation at that time.
In July 2024, WestRock and Smurfit Kappa merged to become Smurfit Westrock, a global producer of sustainable packaging. Smurfit Westrock operates in 40 countries.
Smurfit Westrock shares rose 0.6 per cent in early trading in New York. The company has a market capitalisation of about $24 billion.
- Sign up for push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Listen to our Inside Politics podcast for the best political chat and analysis
