A lot of U.S. companies are taking a fresh look at Venezuela. Recent reporting has described a major political shake-up, including Maduro’s removal from day-to-day power, but the details and durability of any transition are still uncertain. At the same time, U.S. sanctions and licensing posture is moving, and banks and counterparties will adjust at their own pace.

If you are a U.S. company considering a joint venture (JV) with a Venezuela counterparty, your main risk is not just whether you can win a dispute on the merits. The real risks are (i) loss of control over cash and information, (ii) sanctions and banking friction, and (iii) the inability to enforce and collect outside Venezuela if the relationship breaks.

This article lays out a practical framework for structuring Venezuela JVs so the deal is harder to derail and a dispute is actually collectible.

The blunt truth about arbitration clauses

An international arbitration clause is not a magic shield. It is a way to get an arbitral award. If you cannot control cash, reach assets outside Venezuela, and move money legally through the financial system, you can “win” and still lose.

The three-layer protection model

(i) Structure: where the JV’s cash and valuable rights sit.

(ii) Contract: governance, information rights, payment mechanics, security, and exits.

(iii) Enforcement: where you can enforce an award and collect (meaning, where the counterparty has attachable assets).

You want all three layers working together. If any layer is weak, the JV becomes a faith-based exercise.

Start with the map: money and assets

Before you argue about governing law or arbitration rules, answer these questions:

(i) Where do customer payments land?

(ii) Who controls the bank accounts (and what approvals are required for transfers)?

(iii) Where are the assets that matter (inventory, receivables, shares, equipment, IP)?

(iv) If there is a dispute, what can you attach that is not trapped inside Venezuela?

If your answer is “everything is local,” you are choosing local leverage and local enforcement realities. Most U.S. companies do better when the JV includes at least one of the following: (a) an offshore holding structure, (b) controlled revenue flows through a neutral jurisdiction, and/or (c) a security package that can be exercised outside Venezuela.

Governing law is not the seat of arbitration

(i) Governing law is the substantive law that interprets the contract (for example, New York law or English law).

(ii) The seat of arbitration is the legal home of the arbitration (procedural law, court supervision, set-aside actions, interim relief).

If the seat is Venezuela, you often recreate the home-court risk you were trying to avoid. Pick a seat with courts that support arbitration and interim measures. Then pick governing law you trust.

Drafting an arbitration clause that is usable in real life

Do not freestyle this clause. Use a real institution and make the clause specific. At a minimum, lock down:

(i) Institution and rules (ICC, LCIA, SIAC, ICDR/AAA, etc.).

(ii) Seat of arbitration.

(iii) Number of arbitrators (often three for meaningful JV disputes).

(iv) Language, and what happens if documents are bilingual (including which version controls).

(v) Interim relief (emergency arbitrator and the ability to seek court interim measures).

(vi) Consolidation and joinder if the JV uses multiple agreements and parties.

(vii) Notice and service mechanics that work in practice.

(viii) Confidentiality and protective order authority (especially where trade secrets or pricing is involved).

In a volatile environment, interim relief matters more than usual. If money can disappear quickly, you want the ability to freeze or preserve assets and compel short-term compliance while the case is pending.

Make the award collectible: build enforcement into the deal

International arbitration is attractive because awards can often be recognized and enforced across many jurisdictions. But collection still depends on reachable assets. Build at least one of these into the JV from day one:

(i) Offshore guarantee: a parent or affiliate outside Venezuela guarantees performance.

(ii) Pledge of shares: the Venezuela partner pledges its equity in the offshore JV entity, with clear foreclosure mechanics outside Venezuela.

(iii) Receivables assignment: predictable revenue is assigned into a controlled account with a waterfall.

(iv) Escrow and milestone payments tied to objective deliverables.

(v) Commercial credit support where feasible (for example, a standby letter of credit).

This is extremely important. Arbitration is the backstop. Security and reachable assets are the leverage.

Contract terms that matter more than the arbitration clause

Most JV blowups happen because one party controls information and cash. Strong JVs build controls that create leverage early:

(i) Governance and reserved matters: major decisions require unanimous consent (new debt, major capex, related-party transactions, changes to banking, vendor changes).

(ii) Bank controls: dual-signature thresholds and hard limits on unilateral transfers.

(iii) Information rights: monthly reporting that includes bank statements, A/R aging, vendor lists, and related-party disclosures.

(iv) Audit rights: third-party audit triggers, with an automatic remedy if reporting fails (pause distributions, pause milestone payments, or step-in rights).

(v) Deadlock and exits: escalation, cooling-off period, then arbitration, plus call/put or buyout mechanics tied to objective valuation rules.

(vi) Anti-corruption: FCPA-style covenants, training, audit rights, termination rights, and indemnities.

Sanctions, banking friction, and change-in-law provisions

Arbitration does not override sanctions. Even a perfectly drafted contract can become unperformable if U.S. sanctions rules or bank risk tolerance shifts. Your JV should address this directly:

(i) Ongoing sanctions screening and beneficial ownership certifications.

(ii) Payment-channel language that defines permitted channels and a workable fallback path if a bank refuses the transaction.

(iii) Change-in-law / sanctions snapback provisions with a clean wind-down: what happens to inventory, receivables, equipment, IP, and who bears which costs.

(iv) Termination rights tied to sanctions breaches, misrepresentations, and anti-corruption violations.

Pre-sign checklist

Before you sign, you should be able to answer these questions without guessing:

(i) Where do funds flow, and who controls signatory authority?

(ii) What assets exist outside Venezuela that can be attached if things go sideways?

(iii) What security do we have today, not after a dispute?

(iv) What is the seat, institution, and mechanism for interim relief?

(v) If sanctions or banking conditions shift tomorrow, do we have a clean wind-down and exit path?

 

This article is for general informational purposes only and does not constitute legal advice. Venezuela-related transactions can implicate U.S. sanctions, export controls, anti-corruption laws, and other regimes. Any specific deal should be reviewed on its facts.