Air Canada Sues Venezuela Over $20.8 Million Award

Air Canada (AC, Montréal Trudeau) has filed a lawsuit in a U.S. court against the Bolivarian Republic of Venezuela to enforce a USD 20.8 million arbitral award granted by the International Centre for the Settlement of Investment Disputes (ICSID). The airline seeks a judgment from the U.S. District Court for the District of Columbia to compel Venezuela to honor the award, which addresses funds the state failed to convert from bolivars to U.S. dollars for repatriation. The ICSID’s ruling, originally issued on September 13, 2021, and corrected on October 27, 2021, includes interest on the debt from May 26, 2014, until judgment, plus more than USD 4.8 million in legal costs.

Venezuela has 60 days from the date of summons to respond or face a default judgment. The ICSID found that Venezuela violated the free transfer of fund protection under the Canada-Venezuela Bilateral Investment Treaty (BIT) by failing to process Air Canada’s repatriation requests.

The dispute dates back to July 2004, when Air Canada started flights between Toronto Pearson and Caracas Simón Bolivar. The airline submitted 91 currency acquisition requests (AADs) through Mercantil Banco to Venezuela’s currency exchange commission, CADIVI, totaling USD 91 million by November 2012. An additional 15 requests for USD 50 million were submitted between September 2013 and January 2014.

On January 22, 2014, CADIVI altered the exchange rate for foreign airlines to VEF 11 bolivars per USD. Subsequently, Air Canada suspended its Caracas flights on March 17, 2014, citing civil unrest and difficulties with fund repatriation. Although Venezuela later announced it would allow revenue repatriation, this did not materialize. Air Canada formally registered a dispute with Venezuela in June 2016, leading to ICSID arbitration in Paris. In September 2021, the ICSID tribunal ruled in favor of Air Canada, a decision upheld by the Paris Court of Appeal in September 2023. Venezuela has appealed, citing its sovereign right to regulate foreign exchange and its broader economic challenges.

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com