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Legal Environment / Analysis / Promotion and Protection Investment Agreements

Promotion and investment protection agreements

Legal Environment

Venezuela counts with important international instruments, such as Bilateral Promotion and Protection of Investments Conventions which are framed in international economic relations such as social and economic development media.

The essential purpose pursued by Venezuela through the signature of these Agreements is to increment the investments and the amount of foreign capital flows to its territory. Additionally, favoring investments entails job creation and technological transfer and development. This purpose relies on the fact that a Bilateral Treaty, with clear rules and necessary execution intended to protect foreigner investor, reducing the risks that he/she may face.

Currently, in Venezuela are in forced 25 Bilateral Agreements of Promotion an Protection of Investments with the following countries: Germany, Argentina, Barbados, Belgium-Luxemburg, Belarus, Chile, Canada, Costa Rica, Cuba, Denmark, Ecuador, Spain, France Great Britain, Lithuania, Iran, Paraguay, Peru, Portugal, Czech Republic, Switzerland, Sweden Uruguay, Vietnam y Russia. In the case of Brazil, it was signed an Agreement of this kind in 1995 and published on Local Official Gazette in 1997, however, this agreement has not been ratified yet by Brazil. With The Netherlands, Venezuela maintained a Bilateral Investment Agreement in force since 1993 until 2008, pursuant of a communication of ending made by Venezuela on April 21st, 2008. However, and in accordance with the dispositions of this agreement with The Netherlands, the investments duly made during that term for additional period of 15 years culminating in 2023.


These conventions stablish the incrementing will of mutual benefit economic cooperation, the intent of creating and maintaining favorable conditions for the investments that come from one of the parties made in the other party´s territory and the express recognition the promoting and protecting need of such investments.


Include precise explanations about fundamental terms of regulation of matter objective. Hence, it meets definitions of investment terms, investors and territory. The first two have particular interest:


  • Investment. It adopts a wide criterion about what it should be understood as investment, when clarifies that includes all kinds of goods and, particularly, although not exclusively the property of goods, movable and immovable, other real rights, any kind of participation in companies, rights to pay cash or any other provision of economic content, intellectual property rights, concessions and other rights given in accordance with Public Right. This ennumeration is merely illustrative and not exhaustive.
  • In general terms, the agreements consider as investors to: natural persons who in accordance with the legislation of contracting party are considered as nationals of the same, legal persons constituded in accordance with the legislation of the contracting party. In this case, the legislation is indifferent under which the legal person was constituded.  En términos generales, los Acuerdos consideran como inversionistas a: las personas naturales que de acuerdo con la legislación de la Parte contratante son consideradas como nacionales de la misma, las personas jurídicas constituidas de conformidad con la legislación de la Parte Contratante; las personas what matters is that its control will be on the persons´ hands already mentioned on the previous points.

Area of application

These agreements apply on the investments made before and after its entry into force. However, in all stablish not applying when disputes or claims arrive, whose causes have arisen previously into force.

Promotion and admission 

The agreements stablish mutual commitment of promoting and admitting investments from nationals of the counterpart and cooperate in the materialization of the same. There is an exhaustive note that admission of the investments will be made in compliance to the Laws and rules of the host country.

Protection and Treatment of the Investments:

  • Fair and equal treatment. These agreements warranty a fair and equal treatment to the investments from the investors of the other party. The norm covers a range legal international principles, no discrimination among them.
  • Most favorable Nation Treatment. The parties submit to the Most Favorable Nation regime, in which it is agreed a non-less favorable that the one given to the investments of its own national or third states investors. Obviously, there is no legal obligation of extending such treatment in relation to the privileges that the parties agree with third states by virtue of their participation in a customs union or any other mechanism of economic integration. This is natural, by virtue under vocation of differentiation in relation with the rest of the countries have the mechanisms of economic integration. There is not obligation either in the lead of the contracting parties to extend to the investors of their counterpart the privileges granted in the light of an international agreement on taxation.

Transferencia al exterior de pagos relacionados con una inversión

Las disposiciones sobre transferencias monetarias que figuran en estos Tratados Bilaterales tienen especsuial importancia tanto para el inversionista como para el país receptor de la inversión. Se establece el derecho del inversionista a transferir al exterior, sin demora alguna, en moneda de libre convertibilidad, los pagos relacionados con una inversión, como capital, dividendos, utilidades, regalías y amortizaciones de préstamos. El Estado receptor de la inversión debe respetar el beneficio económico, traducido en ganancias concretas y amplias, aspirado por el inversionista.

Estos Convenios exigen que el inversionista acate la legislación y reglamentaciones del país receptor de la inversión, sin que esto obstaculice el ejercicio del derecho de libertad de remisión.


These agreements offer legal security in relation with the protection of investors’ property. Expropriations are only allowed by reasons of public utility, non-discriminatory, in compliance with the law and which lead to an effective and adequate compensation.

The compensation will be equal to the market value of the expropriated investment immediately before the implementation of the expropriation or when it becomes public knowledge of the imminent expropriation. In any of the cases, the compensation shall include interests to a normal commercial rate which will be paid with no delay, being effectively realizable and transferable free.

It respects the Venezuelan constitutional rules referring to the expropriation of any kinds of good which choose the social functional criteria of the property.

Compensation for losses

The parties commit to grant the investors of one of the contracting parties a non-less favorable treatment than the given to its nationals or any Third State investors, when as consequences of war, armed conflict, revolution, state of national emergency, insurrection or public unrest, suffered losses compared with their losses.


When one of the contracting party or legal public or private entity duly authorized by that contracting party, compensate to an investor of its country, under a warranty to cover non-commercial risks regarding with its investments in the territory of the other party, this party shall recognize the subrogation of the other party, or law entity concerned, in all the rights that correspond to the investor.

Controversies solution between an investor and the receiving contracting party of the investment

In general terms, the mechanisms of solving the differences in which the investors can turn in are very similar, which evidences why everyone, in any way or another refers to the International Center for the Settlement of Disputes Relating of Investment (CIADI). However, there are certain differences among them. For example, Promotion and Protection Investment Agreements signed with Chile, Argentina, Ecuador and Portugal, after trying an amicable solution and not achieve it, it left to the investor´s choice the subjugation of the controversy to national jurisdiction or arbitration mechanism, in which the majority of the cases is CIADI. However, there is a possibility to appeal to other arbitration mechanisms such as Ad-hoc under the UNCITRAL rules, the complementary mechanism for Administration of Conciliation Procedures, Arbitration and Fact-Finding by CIADI Secretary or any other international arbitration centers such as Stockholm Commerce Chamber, London Arbitration Chamber, among others. In certain cases this possibility is an option and in others is and extra alternative, that means, the impossibility to go to a mechanism, it will apply other.

Respecting Venezuela, it is noticeable that denounced the Washington Convention or The CIADI Convention on January 24th, 2012, concreting its leaving on July 25th, 2012 which implies that the foreigner investors can go to CIADI, but only through a Complementary Mechanism of CIADI which is responsible of setting the controversies when the receiver State of the investment is not part of this Center.

The Arbitration Award will limit to determine if the respective contracting party has violated the Agreement; if such breach has caused damage to the investor; and, if it is such case shall fix the amount of the compensation that the State shall pay to the investor for the damage caused.

The Arbitration Award shall be final and binding for the parties involved on the controversy. This is important because it ensures to the investors the recognition that each State Party of the respective Agreement shall give the Arbitration Award that solve a controversy. Therefore, it shall release the investor of the problems that may have the administration of justice.

Solution of Controversies between the Contracting Parties

It will solve, if possible via diplomatic channel. On the contrary, the differences will be submitted to a Arbitration Tribunal.