Centre of dispute: Cerro Negro
ExxonMobil makes its case
ExxonMobil told the High Court in London today it should uphold an injunction freezing PDVSA assets worth about $12 million as a New York court does not have the jurisdiction to impose such an order.
The US supermajor wants to prevent the state-owned Venezuelan giant, which nationalised ExxonMobil's Cerro Negro development in the Orinoco heavy oil belt on 1 May last year, from accessing the assets before a US arbitration panel rules on the case.
Another application for a similar injunction is pending in Manhattan federal court.
Courts in the UK, Netherlands and Netherlands Antilles have issued injunctions freezing PDVSA assets in their jurisdictions as part of the fight between the supermajor and Caracas over Cerro Negro.
Gordon Pollock QC told the High Court last week that ExxonMobil's tactics amounted to "forum-shopping", adding that the claims should be heard in a country more closely connected to the dispute, such as the US.
However, Catherine Otton-Goulder QC told the court today: "There is no power in any court in New York that can issue a worldwide freezing order. The courts don't have the power to grant a freezing order prior to judgement.''
While New York courts are empowered to freeze specified assets, such as a house or a bank account, Otton-Goulder argued, they cannot put a block on "unascertained assets".
In cases where a foreign court lacks the power a UK court possesses, the British court can grant an order assisting the foreign court in certain circumstances, such as international fraud cases, Otton-Goulder added.
She told the court the dispute stemmed from a 1997 agreement between Mobil and PDVSA to form a joint venture to explore for heavy crude in the Orinoco oil belt.
Exxon, which later acquired Mobil, claimed PDVSA agreed to indemnify Mobil if it later expropriated Mobil's interests.
US District Judge Deborah Batts in New York said ExxonMobil was likely to prevail in the arbitration, extending a US injunction freezing as much as $315 million that would have been transferred to PDVSA in a bond buyback deal on 13 February.
PDVSA has filed a motion in Manhattan federal court seeking to have the order rescinded or narrowed.
The UK injunction obtained by ExxonMobil listed PDVSA holdings in refineries in Dundee, Scotland, and Ellesmere Port, England, and bank accounts related to those businesses, according to a court filing in the US case.
A date for the arbitration hearing has not yet been set.