The Resolution of the National Assembly extending the statute of limitation of the Venezuelan debt
Source: 2015 National Assembly
On a Resolution approved on August 8, 2023, the 2015 National Assembly decided to extend the statute of limitations (SOL) or prescription, until December 31, 2028, regarding the Republic´s bonds. Also, the Resolution suggested that decentralized bodies, such as PDVSA, adopt a similar decision.
In general terms, bonds issued by the Republic and PDVSA that are subject to the New York Law have a SOL of six years. Within that lapse, bondholders can file claims regarding any contractual breach. Otherwise, they will lose the right to exercise legal remedies.
Venezuela began defaulting on the bonds in October 2017, which means that starting in October 2023, bondholders will gradually face the consequences of losing the right to exercise legal remedies regarding each contractual infringement. As I explain elsewhere, there are two ways two avoid that consequences: (i) exercising legal remedies or (ii) signing a tolling agreement or any other legal document by the issuer, extending the prescription clause.
Maduro has attempted to alter the statute of limitations. Yet, he does not serve as the legal representative of the Venezuelan Government in the U.S. Following the dissolution of the Interim Presidency, uncertainties arise regarding the legal authority of the 2015 National Assembly to stand for the Venezuelan Executive legally.
In any case, the Resolution seems to be just one step in the legal actions needed to effectively extend the statute of limitation, following the U.S. and the Venezuelan Public Law formalities.
Regarding PDVSA, it is necessary for a binding decision by the body that legally represents the Venezuelan national oil company in the U.S., a representation that since 2019 has been exerted by the ad-hoc board of PDVSA.
The situation of the 2015 National Assembly is more complicated due to the uncertainty about the legal representation of the Venezuelan Executive as the issuer of the Republic´s bonds.
In any case, the problems regarding the SOL are not solved yet. A proper implementation is needed, considering the interaction between the N.Y. Law, the recognition of the Government of Venezuela in the U.S., and the Venezuelan Public Law.