By Tom Hals
WILMINGTON, Del., Dec 21 (Reuters) - Mining company Crystallex International Corp said on Thursday Venezuela failed to honor a settlement and urged a federal judge to allow it to seize control of U.S. refiner Citgo Petroleum Corp, which is owned by the country's state oil company.
Canada-based Crystallex won a 2016 international arbitration award of $1.2 billion against Venezuela, which has refused to pay.
The company had been trying to collect by seizing shares of Citgo's U.S. parent company, which is owned by Venezuelan state oil company PDVSA.
Last month Crystallex said it settled with cash-strapped Venezuela, but the company's lawyer said that deal fell through.
"They said they'd make a payment to us and didn't," Robert Weigel, a lawyer for Crystallex, told the court Thursday.
Crystallex's lawyers told U.S. Judge Leonard Stark in Wilmington, Delaware, they had an "avalanche of evidence" that proved PDVSA and Venezuela were one and the same, including official PDVSA tweets with the hashtag #PDVSAesVenezuela, Spanish for "PDVSA is Venezuela."
As a result, they were seeking to attach, or seize, PDVSA's shares in PDV Holding Inc, Citgo's Delaware-incorporated parent.
If Crystallex succeeds, the case could open the way for more than a dozen companies to pursue Citgo to collect on arbitration claims over assets that were nationalized under Venezuela's late socialist leader Hugo Chavez.
PDVSA's lawyer argued on Thursday that Crystallex could not pursue the state oil company's assets because PDVSA was not a party to the arbitration.
Stark seemed concerned that Venezuela or PDVSA could try to sell the PDV Holding stock before he ruled. He also wondered if a ruling for Crystallex would put PDVSA on the hook for all Venezuelan debts and whether discovery was needed to determine Caracas' day-to-day control of the company.
Stark did not say when he might rule.
Venezuela's President Nicolas Maduro said in November he wanted to restructure all foreign debt, which includes some $60 billion in outstanding sovereign and PDVSA bonds.
Legal experts said Houston-based Citgo might be pursued by creditors if the country broadly defaults on its debts, but seizing it could prove difficult. agreed last month to pay Crystallex $25 million by Nov. 30, according to documents on the website of the Canadian monitor for Crystallex's Ontario insolvency proceeding.
Venezuela agreed to pay another $15 million by Dec. 31 and about $400 million by the end of 2020, according to the monitor's documents. Venezuela agreed to additional payments that were not disclosed.