A British judge ruled against Exxon Mobil Corp. on Tuesday, tossing out an order to freeze $12 billion in assets belonging to Venezuela's state oil company in a case that stemmed from the nationalization of a project last year.
Judge Paul Walker noted that such freezing orders are rare and occur in cases where there is "usually compelling evidence of serious international fraud."
"In the present case there is no suggestion whatever of fraud on the part of (Petroleos de Venezuela SA) or any entity or person associated with it," Walker said in a summary of conclusions released by the court.
During the court case, Walker also signaled that he agreed with PDVSA's argument that the case didn't fall under British jurisdiction since it isn't a British company and has no assets, businesses or bank accounts there.
"Today we have a firm decision 100 percent in our favor," Oil Minister Rafael Ramirez told state television. "We've defeated Exxon Mobil."
Irving, Texas-based Exxon Mobil had decided to go to international arbitration with PDVSA last year, after Venezuelan President Hugo Chavez nationalized a heavy oil project in the Orinoco River basin.
The company subsequently secured court orders in Britain, among other countries, to freeze PDVSA's international assets, saying it needed to ensure that it would get paid for the loss of the project and future revenues if an international court ruled in its favor.
Exxon Mobil spokesman Alan Jeffers said the company has no plans to appeal the ruling and that the judge based his decision on jurisdictional issues.
"The important thing, from our perspective, is the court did not question the merits of our underlying claim," he said.
Exxon Mobil didn't question Venezuela's right to expropriate, Jeffers said. But he said it signed a contract with PDVSA in the 1990s that specifically said the Venezuelan company would compensate Exxon Mobil for such moves.
"We have a contractual commitment from PDVSA to compensate us in the event of that, and we're seeking that PDVSA honor the terms of that agreement," Jeffers said.
Jeffers said Exxon Mobil was trying to prevent PDVSA from disposing of assets that might be used to settle future claims. Court rulings in the Netherlands and New York to seize Venezuelan assets in exchange for nationalized oil fields remain in place, he said.
But he said Exxon Mobil was still willing to try to negotiate a solution with Venezuela.
Venezuela, meanwhile, is now considering suing Exxon Mobil, Ramirez said. "Exxon Mobil is going to have to answer now for the damage that has been caused to our company, to our country," he said.
Ramirez said Exxon Mobil has been "very arrogant," while other companies including Chevron Corp., Total SA, BP PLC and StatoilHydro ASA have negotiated deals to continue as minority partners in the nationalized projects.
"Exxon is isolated in its abusive position," Ramirez said.