Talk about making the victim pay…
On December 11, as the Trump administration was escalating its military campaign against Venezuela by trying to impose a total siege on the country’s oil and gas sector, the US oilfield services company Halliburton quietly filed a suit against Venezuela at the World Bank’s international arbitration court, ICSID.
Long-standing readers are well-versed on investor-state dispute settlements (ISDS), a topic we’ve covered in depth over the past decade or so. As Yves pointed out in a recent post on Russia’s decision to use ISDS to go after the EU’s attempts to permanently confiscate Russian assets, the judgments made in these dispute settlements overwhelmingly benefit investors:
These treaties, designed to override the laws and regulations of states in order to give protected status to investors, make a mockery of national sovereignity. ISDS disputes draw on a small community of arbitrators, many of whom were involved in drafting ISDS treaty provisions, with hearing held in secret and typically not appealable. The rising (and correct) perception that the rules were gutting labor rights and environmental protection was instrumental to stopping their reach being extended further in the US. But it seems no existing ISDS provisions have been unwound.
What makes this case particularly pernicious is that a large part of the losses and foregone profits Halliburton is seeking to claw back stems from Washington’s economic sanctions on Venezuela. What’s more, the case was filed at the World Bank’s International Centre for Settlement of Investment Disputes, to which Venezuela has not even been party since 2012.
The move serves as a reminder of just how difficult it is for nation states to extricate themselves from the ISDS commitments established in many bilateral trade treaties, despite the clear threat they pose to national sovereignty. Latin America has been one of the most important sources of income for (mostly Western) corporations seeking legal damages against national governments, as well as their highly paid arbitration lawyers.
There is currently very little information available on the ISDS case filed by Halliburton. The following is an excerpt of a firewalled article published by the Global Arbitration Review that was translated into Spanish and posted by the Madrid-based legal firm Bullard Falla Excurra on its LinkedIn page (translated back into English by yours truly, emphasis also my own):
On December 11, 2025, Halliburton filed a claim against Venezuela with the International Centre for Settlement of Investment Disputes (ICSID) under the Barbados-Venezuela Bilateral Investment Treaty. The case will be processed under the Additional Facility Rules, given that Venezuela withdrew from the ICSID Convention in 2012. The dispute stems from Halliburton’s gradual withdrawal from the Venezuelan market between 2016 and 2020, after reporting losses of approximately US$199 million. These losses were attributed to the devaluation of the Venezuelan bolívar and the deteriorating economic and political conditions in Venezuela, which affected its ability to meet payments to its clients, including PDVSA, the state-owned oil company. Halliburton also notes that changes in the Venezuelan government’s exchange rate and US sanctions further complicated the viability of its operations in the country. Halliburton, which had operated in Venezuela since 1940, was forced to cease operations in 2020 [by US sanctions], although it maintained local assets and equipment in the country.
The arbitration is in its initial phase. Details regarding the specific claims and the exact amount claimed have not yet been disclosed. This case is one of seven pending ICSID arbitrations against Venezuela.
Halliburton was one of a number of US oil services companies that was forced to cease all operations in Venezuela in April, 2020 — not due to rules set by the Venezuelan authorities but rather to the first Trump administration’s ratcheting sanctions on the country.
Just over a year earlier, the US — and dozens of other countries — had recognised Juan Guaidó as Venezuela’s interim president. The next step was to make Venezuela’s economy scream as loud as possible.
As part of that mission, the US Office of Foreign Assets Control (OFAC) prohibited US companies from any activity related to the drilling, refining, purchase, sale or transportation of Venezuelan crude oil. Companies were also forbidden from participating in the design, construction or installation of oil wells.
So, Halliburton, like all other US oilfield services companies, ceased its operations in Venezuela, packed up what it could and laid off its 400 local workers by email. The company indicated that any “assets” left behind would be “expropriated” by Venezuelan authorities.
A New Global Low?
Now, Halliburton is trying to hold Venezuela’s government responsible for any losses or foregone future profits incurred partly, or even largely, as a result of the US government’s actions. In so doing, it threatens to set a new global low — that of corporations seeking damages for lost business resulting from US sanctions, not from the US itself but from the sanctioned countries themselves.
The US’ sanctions against Venezuela, first launched in 2005, have already exacted a deadly toll on Venezuela’s economy, as Jeffrey Sachs and Mark Weisbrot documented in their 2019 CEPR study, “Economic Sanctions as Collective Punishment: The Case of Venezuela“:
The sanctions reduced the public’s caloric intake, increased disease and mortality (for both adults and infants), and displaced millions of Venezuelans who fled the country as a result of the worsening economic depression and hyperinflation. They exacerbated Venezuela’s economic crisis and made it nearly impossible to stabilize the economy, contributing further to excess deaths. All of these impacts disproportionately harmed the poorest and most vulnerable Venezuelans.
Even more severe and destructive than the broad economic sanctions of August 2017 were the sanctions imposed by executive order on January 28, 2019 and subsequent executive orders this year; and the recognition of a parallel government, which as shown below, created a whole new set of financial and trade sanctions that are even more constricting than the executive orders themselves.
We find that the sanctions have inflicted, and increasingly inflict, very serious harm to human life and health, including an estimated more than 40,000 deaths from 2017 to 2018; and that these sanctions would fit the definition of collective punishment of the civilian population as described in both the Geneva and Hague international conventions, to which the US is a signatory. They are also illegal under international law and treaties that the US has signed, and would appear to violate US law as well.
Sachs and Weisbrot’s study was published in 2019. After that, the economic noose was further tightened under Trump 1.0, only to be loosened briefly by a Biden administration desperate to offset the surging global energy prices sparked by the war in Ukraine and the collective West’s subsequent endless rounds of sanctions on Russian energy.
Trump then reimposed the restrictions, and then some, in May:
Venezuela has, however, found ways to adapt to the economic asphyxiation, as Michelle Ellner points out for Venezuela Analysis:
Oil has moved through alternative markets; communities have developed survival strategies; people have endured shortages and hardship with creativity and resilience.
Indeed, in part thanks to the Biden administration’s loosening of sanctions in 2023, Venezuela is now the fastest growing economy in South America, albeit from an extremely low base and with a triple-figure inflation rate:
It is precisely this endurance that the Trump administration is trying to break, notes Ellner:
Rather than launching a military invasion that would provoke public backlash and congressional scrutiny, Trump is doubling down on something more insidious: total economic asphyxiation. By tightening restrictions on Venezuelan oil exports, its primary source of revenue, Trump’s administration is deliberately pushing the country toward a full-scale humanitarian collapse.
In recent months, U.S. actions in the Caribbean Sea, including the harassment and interdiction of oil tankers linked to Venezuela, signal a shift from financial pressure to illegal maritime force. These operations have increasingly targeted Venezuela’s ability to move its own resources through international waters. Oil tankers have been delayed, seized, threatened with secondary sanctions, or forced to reroute under coercion. The objective is strangulation.
This is illegal under international law.
So, of course, would be bombing oil-rich Venezuela and oil-rich Nigeria on Christmas Eve and Christmas Day respectively…
Nick Corbishley 