Tribunal Endorses Dr. Abdala’s Damages Testimony in ICC Case

A Compass Lexecon team led by Manuel A. Abdala as expert and managed by Santiago Dellepiane provided testimony before an ICC Tribunal which awarded ConocoPhillips a US$66.9 million award against Petróleos de Venezuela, S.A (PDVSA). The conflict involved a shareholders’ dispute over the parties’ former Petrozuata joint venture, a heavy crude oil production and upgrade facility located in Venezuela’s Orinoco belt. The breach occurred as a result of PDVSA’s failure to compensate Conoco for production curtailments imposed by OPEC, affecting Petrozuata’s output during late 2006 and early 2007. The Tribunal fully endorsed Abdala’s valuation methodology, awarding damages as recommended, plus 10.55% compound interest until payment. Most notably, the Tribunal found that Abdala’s use of Petrozuata’s 10.55% cost of equity computed under the CAPM as the appropriate interest rate to update damages was a sound exercise. The logic endorsed on this point was that Claimant, as a provider of funds to Petrozuata, would have received a return commensurate to its opportunity cost of capital in the absence of the contractual breach, and that otherwise, the principle of full compensation would not be satisfied. Other Compass Lexecon members in this team involved Pablo Lopez Zadicoff, Carla Chavich, Mark Sheiness and Andres Casserly. Claimants were represented by Freshfields Bruckhaus Deringer and Norton Rose, and the arbitration took place in New York under ICC rules.