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On a late-summer day in August 2024, a decision landed that—though perhaps unnoticed by most outside of legal or financial circles—felt momentous. After nearly six years of arbitration, Smurfit Westrock, a paper and packaging giant with global operations, won an international legal battle against the Venezuelan government. The award? Just under half a billion dollars—US$468.7 million, plus costs and interest (ICSID Case No. ARB/18/49, 2024).
A big number. But behind it is a deeply layered story of state power, international law, economic desperation, and the enduring (if imperfect) promise of investor protection treaties. It’s also, more quietly, a reminder of how the law often functions not in grand pronouncements, but in slow, painstaking processes that outlive political cycles and even, occasionally, public memory.
Let’s unpack it.
A Takeover Without Warning
Back in August 2018, Venezuelan authorities entered and seized the local subsidiaries of Smurfit Kappa—the predecessor to what is now Smurfit Westrock. Paper mills, distribution facilities, equipment—taken over wholesale. No compensation. No legal justification. No time to prepare.
To be fair, nationalizations weren’t new in Venezuela. Under Chávez, and later Maduro, expropriations became a central part of the state’s economic playbook. Oil, electricity, agriculture, telecoms—entire industries were brought under state control. Sometimes, arguably, in the name of ideology. Other times, perhaps more simply, to plug the holes in a collapsing economy (Reuters, 2024).
But here’s the legal rub: Venezuela had signed dozens of bilateral investment treaties (BITs) promising protection for foreign investors—protection against expropriation, unfair treatment, and barriers to moving capital out of the country.
One such treaty was with the Netherlands. And Smurfit Holdings BV, being Dutch-incorporated, was covered.
The ICSID Journey Begins
After it became clear that Venezuelan courts offered no meaningful path forward—something many international observers would not contest—Smurfit filed for arbitration under the International Centre for Settlement of Investment Disputes (ICSID) in December 2018.
Then came the long, procedural journey: tribunal constitution, jurisdictional objections, written pleadings, hearings… the works.
Still, the central legal questions weren’t novel.
- Was there an unlawful expropriation? Yes. The tribunal found Venezuela’s seizure met the classic criteria: deprivation of assets, no due process, no compensation.
- Was Smurfit treated fairly? No. The measures were opaque and discriminatory—violating the standard of fair and equitable treatment.
- Were repatriation rights breached? Yes again. Venezuela restricted the transfer of dividends in violation of Article 5 of the Treaty (Smurfit Westrock, 2024).
On 28 August 2024, the award came down: US$468.7 million, plus $4.5 million in costs and interest from May 2024 until full payment.
Vindication? Perhaps. But as with many things in law, the story doesn’t end at the verdict.
Why Awards Don’t Always Equal Payment
Here’s a detail most people outside the field miss: winning an ICSID arbitration doesn’t mean you get paid. Not right away. And sometimes, not at all.
Venezuela, like several other respondent states, has a history of non-compliance with adverse arbitration awards. The reasons vary—economic collapse, political calculus, even ideology—but the bottom line remains: awards can sit unpaid for years.
So what now for Smurfit?
They’ll likely begin enforcement proceedings, targeting Venezuelan state assets held abroad—bank accounts, real estate, commercial contracts. But not just any asset qualifies. Under international law, only commercial-use assets not protected by sovereign immunity can be seized. And locating them is no small feat.
Enforcement actions must also take place in national courts—say, in the U.S., UK, or Europe. And those courts each apply different standards to recognition and execution. All of this means more litigation, more time, and—let’s be honest—more uncertainty.
And yet, the award stands. That alone puts legal and reputational pressure on Venezuela. The more outstanding claims it accrues, the more constrained it becomes—diplomatically, financially, and politically.
Why Treaties Still Matter
So what’s the broader point?
Despite their limitations, BITs and ICSID arbitration do work, at least in part. Smurfit’s award proves that treaty-based investor protections can be enforced—even against deeply distressed or uncooperative states.
But they work slowly. And imperfectly. And at times, unequally.
Critics rightly point out that these mechanisms overwhelmingly protect corporate interests, not workers or communities. Human consequences—lost jobs, disrupted livelihoods—are rarely addressed. And the focus is almost always on monetary compensation, not restoration or justice in the moral sense.
Still, in a world where domestic courts often fail foreign investors, international arbitration remains the most viable remedy. Not a perfect one. But one that exists.
Regional and Strategic Ripples
What happens in Venezuela doesn’t stay in Venezuela.
Across Latin America, this ruling will be noticed—by governments, investors, and legal scholars alike.
- For governments, it’s a reminder: treaty breaches carry costs, even years later.
- For investors, it’s encouragement: treaty protections can be real, and enforceable.
- For lawyers, it adds to the growing body of precedent around expropriation, fair treatment, and enforcement mechanics.
It may also spur treaty renegotiations. Some states are already rethinking their commitments, seeking more flexibility to regulate in the public interest. Others are exploring regional alternatives to ICSID. But for now, the system holds.
The Human Layer We Miss
Here’s something we rarely talk about in these cases: the people left behind.
When Smurfit’s operations were seized in 2018, workers lost jobs. Local suppliers lost contracts. Entire communities lost a decades-old employer.
Arbitration doesn’t address that.
And that’s the quiet failing of investor–state dispute settlement: it protects capital, not communities. Even the best-intentioned system can’t fully account for the social or environmental fallout.
There is, arguably, space for reform—treaties that incorporate human rights safeguards, or arbitration mechanisms that consider local impact. But these ideas remain mostly theoretical. For now.
So, What Comes Next?
The next chapter will likely unfold as follows:
- Smurfit pursues enforcement, seeking Venezuelan assets abroad that can be lawfully attached.
- Venezuela may challenge the award, filing an annulment request through ICSID—though such appeals rarely succeed on substantive grounds.
- Diplomatic engagement may begin, with the Netherlands or the EU pushing Venezuela toward a negotiated resolution.
- Other investors watch closely, weighing whether ICSID offers real protection in similar markets.
In short: more complexity, more delay—but also more pressure on Venezuela to resolve its arbitration liabilities.
A Case That Won’t Be the Last
In the end, Smurfit Westrock v. Venezuela isn’t just about paper mills or half-billion-dollar awards.
It’s about what happens when power is abused, when private actors seek redress beyond national borders, and when international law becomes the last resort in a system where everything else has failed.
Will Venezuela pay? Eventually—maybe.
Does the system work? Sometimes. Imperfectly. Slowly. But yes, arguably it does.
And perhaps that’s enough—for now.
References
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ICSID Case No. ARB/18/49: Smurfit Holdings BV v. Bolivarian Republic of Venezuela, Award, 28 August 2024. Available at
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Reuters (2024) ‘Smurfit awarded $469 million against Venezuela by arbitration tribunal’, Reuters, 29 August. Available at (Accessed: 30 August 2024).
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Smurfit Westrock (2024) ‘Smurfit Westrock announces ICSID award in dispute with Venezuela’, Press Release, 29 August. Available at (Accessed: 30 August 2024).
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The Irish Times (2024) ‘Smurfit awarded €423m over Venezuela’s 2018 seizure of assets’, Irish Times, 30 August. Available at (Accessed: 30 August 2024).