Denunciation of the ICSID Convention
On January 24, 2012, Venezuela notified the World Bank of its decision to denounce the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention or Washington Convention).  Venezuela’s denunciation became effective on July 25, 2012. 
The ICSID Convention is a multilateral treaty sponsored by the World Bank. It entered into force on October 14, 1966, and has now been ratified by more than 147 States.  The World Bank conceived the ICSID Convention as a mechanism designed to promote private international investment by reducing non-commercial risk.  The Convention established an independent arbitration system and created the International Centre for the Settlement of Investment Disputes (ICSID), an institution based in Washington, DC that administers conciliation and arbitration proceedings. ICSID jurisdiction only extends to “legal disputes” between Contracting States (e.g., the host State or any constituent subdivision or agency designated by that State) and nationals of other Contracting States (e.g., private investors).  However, participation in the Convention alone does not carry an obligation or even an expectation to arbitrate disputes.  The ICSID Convention mandates that consent to the dispute being submitted to ICSID arbitration must be given in writing.  While the parties can provide their consent to ICSID arbitration in the form of an agreement or contractual provision, in most cases host States provide consent through multilateral or bilateral investment treaties (BITs). Some States, however, choose to provide consent through internal legislative acts (e.g., investment laws). In any case, consent to ICSID arbitration is not binding until it has been accepted by an investor. 
Impact on ongoing arbitrations
According to ICSID’s website, 28 investment claims are currently pending against Venezuela. The cases are set forth in the footnotes below. 
Venezuela’s decision to denounce the ICSID Convention will have no impact on these cases. Pursuant to Article 72 of the ICSID Convention, notices of denunciation “shall not affect the rights or obligations under this Convention of that State or of any of its constituent subdivisions or agencies or of any national of that State arising out of consent to the jurisdiction of the Centre given by one of them before such notice was received by the depositary.”  In other words, Venezuela’s denunciation affects neither its consent to ICSID jurisdiction given before January 24, 2012 (e.g., the consent expressed though existing bilateral investment treaties), nor the effects of such consent (e.g., the proceedings initiated under such prior consent).
Impact on new investments
The greatest impact of the denunciation of the ICSID Convention will be on new investments. Although the more than 20 BITs currently in force between Venezuela and other States provide for alternative (e.g., non-ICSID) dispute resolution mechanisms (e.g., arbitration pursuant to ICSID’s Additional Facility Rules or UNCITRAL arbitration),  foreign investors may still interpret that Venezuela has decided to exit the global system for protection of investments. These fears were recently bolstered by President Chavez’s statements indicating that Venezuela would not comply with future ICSID awards. 
Referring to this announcement, James K. Glassman indicated that “Chavez’s threat is only display of contempt for what can properly be called the “prosperity infrastructure.” One of the great gifts of Western civilization, this is the framework of international law and global trade rules, enforcement of the sanctity of contracts, and the power to ensure that the world’s oceans and air routes are open to commerce. While the infrastructure was developed mainly by the United States and Britain, its positive externalities extend around the globe. Everyone gains.” 
By exiting ICSID, Venezuela cast a shadow on foreign investment suggesting that standard, internationally accepted commercial and legal rules, are irrelevant for Venezuela. In recent years, the Venezuelan government expropriated/nationalized all types of assets and companies including among others, major international oil companies like ExxonMobil and ConocoPhilips, international cement companies like Cemex and Holcim, iron smelting companies like SIDOR, glass container manufacturer Owens Illinois, mining companies like Gold Reserve, agrarian land owner Vestey, hotel group Hilton, as well as banks, food processing companies, petrochemical plants, and real estate properties. Some of these investors had the opportunity to file ICSID arbitrations against Venezuela seeking compensation for the takings, but others were forced to take a loss.
In the future, it will be difficult for Venezuela to regain the confidence of foreign investors regarding its respect for rule of law. A combination of clear rules and policies, and the European economic crisis are driving important foreign investments to other Latin American countries such as Brazil, Colombia, Panama, and Peru. This trend increases the economic and social development gap between Venezuela and the rest of the southern continent. It is unfortunate that a country filled with coveted natural resources, a unique geographical location and qualified human resources may not receive necessary foreign investment to develop and strengthen its economy.