The move came as a surprise to Dutch officials, but it reflects growing anger in Caracas at the capacious terms of the treaty, which allows US multinationals to set up Dutch subsidiaries, which then enjoy all the legal protections of the Netherlands-Venezuela agreement.

Both Exxon-Mobil and Conoco-Philips have invoked the Dutch treaty in their battles with Venezuela over the nationalisation of key oilfields. By virtue of being able to fly the Dutch flag, the two US energy giants managed to drag Venezuela to binding arbitration at the World Bank. (The US and Venezuela have never signed their own bilateral investment protection treaty.)

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While Venezuela’s plan will not derail the lawsuits with Exxon and Conoco, it could mean that future investments into the country will not enjoy similar legal protections.

Dutch investors – not to mention the Dutch subsidiaries of foreign multinationals – might need to pursue lawsuits against the government in the Venezuelan courts (unless foreign investors find some other international treaty under which to shelter).

For years there has been growing interest on the part of foreign investors in the Netherlands’ extensive network of investment protection treaties with the developing world. If you scratch the surface of many high-profile investor-state lawsuits, there is a Dutch connection.

For instance, US engineering giant Bechtel successfully sought cover under a Dutch treaty with Bolivia, when a controversial water services contract was cancelled in the face of citizen protests.

Indeed, an arbitral ruling in the Bechtel case expressly endorsed the view that the Dutch treaty operated like a ‘portal’ through which investments from a range of countries might be channeled, en route to some other final destination.

By dint of ‘travelling’ through a Dutch port, such investments could enjoy the benefits of Dutch corporate citizenship, including a right to pursue lawsuits in international arbitration, rather than Bolivian courts.

The same type of corporate structuring has been used by Telecom Italia in its own bid to sue Bolivia over the recent nationalisation of Bolivian telephone company Entel.

But with everyone flying the Dutch flag these days, some governments are starting to take a dim view of the Netherlands’ treaties.

Indeed, as far back as 2003, the Czech finance ministry called for its own government to withdraw from an investment protection pact with the Netherlands. This came on the heels of a dispute with US businessman Ronald Lauder, whose Dutch-incorporated broadcasting enterprise successfully sued for $350m after losing control of a Czech television station.

To date, however, the Czech government has not followed through on such threats, even as a growing string of foreign investors are using Dutch corporate vehicles to benefit from the Netherlands-Czech treaty.

So far, only Venezuela has moved to tear up an investment treaty with the Netherlands. But other governments are surely watching closely, eager to see what repercussions, if any, follow such a decision.

Luke Eric Peterson is the editor of Investment Arbitration Reporter www.iareporter.com , a legal news, analysis and intelligence service.