Paris Appeal Court Rules in Favor of Air Canada, Upholds $21 Million Claim Against Venezuela

The Paris Appeal Court has delivered a verdict favoring Air Canada in its prolonged legal battle with Venezuela over the withholding of approximately USD 21 million in airline ticket revenues. The judgment, issued on September 26, 2023, not only upholds the compensation awarded to Air Canada by the United Nations’ International Centre for Settlement of Investment Disputes (ICSID) on September 13, 2021, but also orders Venezuela to pay an additional EUR 100,000 euros (USD 106,000) in costs.

The dispute dates back to 2017 when Air Canada filed a case (ARB(AF)/17/1) with the ICSID, accusing Venezuela of failing to repatriate around USD 50 million in revenue from tickets sold between September 2012 and January 2014. The airline argued that Venezuela violated the bilateral investment treaty (BIT) between the two countries by not responding to requests for fund repatriation.

In response, Venezuela cited reasons including a lack of sufficient US dollar reserves, administrative shortcomings on the airline’s part, and the country’s sovereign prerogative to reject the requests. Despite efforts, including involvement from the International Air Transport Association (IATA), the dispute persisted.

The CADIVI (Comisión de Administración de Divisas) exchange control regime implemented by Venezuela in 2003 played a crucial role in the conflict. While Air Canada received approval for currency acquisition requests up to November 2012, Venezuela’s change in exchange rate policies in January 2014 led to the airline suspending operations to Caracas.

The ICSID ruling in 2021 ordered Venezuela to pay Air Canada USD 20,790,574 with interest dating back to May 26, 2014. With the recent decision from the Paris Appeal Court, Air Canada’s claim has been reinforced, highlighting the significance of international legal mechanisms in resolving disputes between nations and corporations. Stay tuned for further updates on this ongoing legal saga.