Autopista Concesionada de Venezuela, C.A. v Venezuela

Year of the award: 2003
Forum: ICSID
Applicable law: Concession agreement, Venezuelan law, international law

Arbitrators:
Prof Gabrielle Kaufmann-Kohler - President
Dr Karl-Heinz Boeckstiegel
Dr Bernardo M. Cremades

Executive summary

Aucoven, a Venezuelan company owned by a US corporation, had entered into a Concession Agreement with Venezuela for the construction and general maintenance of one of the country's main highway systems. The project was to be financed primarily through an increase in relevant tolls. After a series of violent public protests, Venezuela refused to increase tolls and Aucoven was forced to abandon the project. The latter subsequently filed its request for arbitration under Clause 64 of the Concession Agreement. Even though Aucoven had not yet carried out the majority of works contemplated in the Concession Agreement, it alleged that Venezuela had breached a number of contractual provisions and thus claimed compensation for out-of-pocket expenses, lost profits and interest.

The Tribunal found that Venezuela had indeed breached the Concession Agreement, and thus had to reimburse Aucoven for a substantial part of its out-of-pocket expenses (approximately US$ 12 million). Concerning lost profits, the Tribunal decided that the amount of lost profits could not be established to a sufficient degree of certainty as the main purpose of the Agreement had not been realized. Hence, no lost profits were awarded. Given that the illegal act constituted a 'simple breach of contract', the Tribunal chose to award simple (as opposed to compound) interest on the amount of compensated out-of-pocket expenses.