China’s Lawfare Strategy in Venezuela: Arbitration Threats, US Backfoot and the UNCLOS Paradox

China Venezuala lawfare

In one of the most consequential geopolitical flashpoints of early 2026, China has signalled its intention to pursue legal recourse through international arbitration if contracts it made with the Venezuelan government — particularly under President Nicolás Maduro — are terminated or undermined due to unfolding events in Venezuela. This development is not merely about contracts; it represents a new chapter in how major powers wield lawfare — the strategic use of legal mechanisms for geopolitical advantage — and raises profound questions about the durability of international law in an era of great-power competition.

Setting the Stage: Venezuela’s Strategic Crisis

The current crisis began with a major escalation in Venezuela’s political instability, culminating in the United States’ military action that resulted in the capture and removal of President Nicolás Maduro and his wife from power, according to multiple reports and official statements.

Beijing responded with harsh condemnation of the U.S. action, calling it a violation of international law and Venezuela’s sovereignty and urging Washington to refrain from “toppling the government of Venezuela” and to respect the UN Charter’s core principles of sovereignty and peaceful dispute resolution. 

China’s engagement with Venezuela over the past two decades has been extensive. From the early 2000s onwards, Beijing provided tens of billions of dollars in loans and credit to Caracas — a lifeline for the Venezuelan economy — in exchange for oil and strategic cooperation.  Recent figures suggest this relationship has involved over $100 billion in financial commitments, making Venezuela one of China’s most significant overseas commitments in Latin America.

For China, therefore, what happens in Venezuela is not a peripheral geopolitical concern — it goes straight to the heart of its energy security, strategic investment footprint, and global influence ambitions.

China’s Legal Push: Lawfare as Strategic Posture

Unlike direct military or economic retaliation, China’s response to the evolving situation has also taken a legal dimension. Beijing has indicated that its interests in Venezuela — including contracts, investments, and cooperation agreements — are protected under international law and that it expects these protections to be respected regardless of who governs Caracas.  Reports highlight statements from Chinese officials asserting that China remains “committed to cooperation” and believes its interests will be protected “by law,” implicitly signalling preparedness to invoke dispute-resolution mechanisms if necessary.

This posture is best understood as lawfare – the use of legal instruments and forums not merely to resolve disputes but to project power, constrain opponents, and shape outcomes in China’s favour. International arbitration — whether under bilateral treaties, investment protection agreements, or multilateral frameworks like the ICSID (International Centre for Settlement of Investment Disputes) or UNCITRAL clauses — is increasingly becoming part and parcel of China’s strategic toolkit.

One compelling illustration of this shift is the bilateral legal architecture China has developed with partner states. In late 2024, China and Venezuela reportedly ratified a bilateral investment treaty (BIT) that includes investor-state dispute settlement provisions such as arbitration under agreed frameworks.

Under such treaties, if Venezuela’s contractual obligations are repudiated, terminated, or otherwise unlawfully interfered with — including under political transitions — Chinese investors and the Chinese state can resort to arbitration tribunals to claim compensation, seek enforcement of rights, or obtain declarations of breach. This is a powerful lever: it can tie the hands of successor authorities, raise the political and economic cost of unilateral measures, and compel third parties to think twice about interfering with China’s contractual sphere of interest.

In practical terms, this means:

• Chinese state and private investors can trigger arbitration if their investments are unjustly expropriated or if contractual performance is disrupted.

• Beijing can frame such legal action as part of international law enforcement, gaining political cover and moral high ground.

• Arbitration awards, enforceable under instruments like the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, can be used to pressure foreign governments and even third-party jurisdictions to freeze assets, restrict operations, or negotiate settlements.

  
  

Although specifics of any arbitration filings have not yet been publicly disclosed, the strategic intent is clear: China wants to ensure that its financial and commercial commitments are not erased by a change in political reality.

Lawfare at the Intersection of Power: Why Arbitration Matters Geopolitically

Why does arbitration — often dismissed as dry or technical — matter so much in this context?

First, international arbitration provides a non-violent mechanism to challenge acts that a state perceives as unlawful. China’s threat of legal action avoids direct military confrontation but still signals resolve and seriousness. It sets up a scenario where the United States, or any successor Venezuelan authority influenced by Washington, must think twice about terminating or repudiating Chinese contracts — because doing so could lead to multi-billion-dollar liabilities and international embarrassment.

Second, invoking arbitration can place the United States on the defensive, especially if Beijing is successful in portraying its claims as being grounded not in great-power self-interest but in the rule of law and contractual sanctity. In geopolitical posturing before global audiences — including in forums like the United Nations — China can frame itself as a defender of international legal norms, in stark contrast to what it would depict as U.S. recklessness.

Third, successful arbitration outcomes — if they occur — create legal precedents and enforcement pathways that Beijing can exploit in future disputes. This is especially relevant in contexts ranging from Belt and Road project disputes to resource-rich states caught between competing power interests.

This trend is part of a broader shift. China has been steadily expanding its legal infrastructure for managing transnational disputes, including the establishment of bodies like the China International Commercial Court (CICC), alongside its robust participation in international commercial arbitration forums.

China and UNCLOS: A Useful Parallel in Legal Selectivity

If there is a broader strategic logic to China’s emergent lawfare posture, it also helps explain how Beijing has approached international law selectively in other arenas — most notably in the South China Sea disputes.

In 2016, a tribunal constituted under UNCLOS ruled in favour of the Philippines against China’s expansive “nine-dash line” claims. China refused to participate, dismissed the ruling, and has since continued to assert control over disputed waters.

This episode reveals an important fact: China does not reject international law per se; it rejects outcomes that run counter to its interests. When legal rulings suit its geopolitical needs, China acknowledges and even deploys them; when they do not, Beijing develops alternative legal rationales or forums where it has greater influence. Whether in the South China Sea or in potential investment arbitrations, China is not abandoning law — it is strategically engaging with it.

This dual approach serves multiple purposes:

• It reinforces China’s narrative as a law-abiding power committed to the international order — even while critics point to its non-participation in rulings it dislikes.

• It establishes legal instruments as tools of statecraft, not just neutral dispute mechanisms.

• It creates a legal infrastructure that China can assertively use when engaging with weaker states whose judicial and enforcement environments are more malleable.

  
  

Contract Sanctity vs. Sovereignty in Flux

A key tension at the heart of this unfolding drama is between contractual sanctity and shifting political legitimacy.

On one hand, international law offers robust protections for contracts and foreign investment. Treaties, BITs, and commercial conventions are designed to reassure investors and reduce risk, facilitating cross-border economic flows.

On the other, when regimes fall — particularly by force, revolution, or foreign intervention — the legal basis for enforcing those contracts becomes more complex. New authorities may challenge the validity of predecessor agreements as illegitimate, coerced, or contrary to national interest.

In Venezuela’s case, the dramatic interruption of Maduro’s rule — whether one views it as a liberation, coup, or intervention — will inevitably raise questions about who has the legal capacity to bind the Venezuelan state to past obligations. China’s implicit threat of arbitration seeks to tip that question in its favour: it aims to embed those contracts within enforceable international frameworks so that successor Venezuelan leaderships would find it costly or embarrassing to repudiate them.

This dynamic is already troubling Western firms and legal observers. As one American law firm alert noted, U.S. actions in Venezuela have raised serious concerns among Chinese investors about the enforceability of contracts and the broader legal framework.

Another dimension is sovereign immunity: while foreign states generally enjoy wide protection from being sued in domestic courts, many investment treaties explicitly waive certain aspects of immunity for arbitration purposes, precisely to give investors confidence that they can be heard on a level playing field.  If China uses these instruments effectively, it could bypass traditional sovereign immunity protections that have shielded many regimes from legal liability in foreign jurisdictions.

Implications: A New Legal Front in Great-Power Rivalry

China’s move toward legal countermeasures in Venezuela reflects a larger shift in global power relations. We are witnessing the legalization of geopolitical competition — where treaties, arbitration forums, and judicial instruments are becoming arenas of strategic contestation alongside the UN Security Council, economic sanctions, and diplomatic campaigns.

For the United States, this poses a dilemma. Military and political dominance does not automatically translate into legal legitimacy or contractual sanctity. Indeed, Washington’s actions in Venezuela — condemned by China as a violation of international law — have already fractured perceptions of U.S. adherence to sovereign norms, giving Beijing an opportunity to leverage these legal narratives to its advantage.

For smaller states, too, this trend presents both opportunities and risks. On the one hand, arbitration frameworks can protect them from exploitative practices by powerful partners; on the other, they can bind them to long-term obligations that limit sovereignty.

Finally, for international law itself, the moment represents both a stress test and an evolution. Law is being used not just to adjudicate disputes but to shape power relations and strategic outcomes — a reality that traditional legal theorists once regarded as remote but is now very real.

Conclusion: Lawfare, Legitimacy, and the Future of International Order

China’s threat of legal action over Venezuela contracts is more than a procedural threat — it is a strategic statement about how Beijing intends to protect its interests in an increasingly contested world. By preparing to leverage international arbitration, China is signalling that law — not force — can be an instrument of power when wielded astutely.

At the same time, China’s selective engagement with international law — embracing it when advantageous and dismissing unfavourable rulings — underscores a nuanced approach: one that seeks to blend legal legitimacy with geopolitical ambition.

In a world where great powers are no longer willing to accept legal outcomes that constrain their strategic designs, lawfare will become as important as any military doctrine or economic sanction. And as the Venezuela crisis unfolds, the international community will be watching not just the battlefield, but the arbitration forums where the next phase of this geopolitical contest may very well play out.

If you’d like, I can also draft a linked policy brief version tailored for publication platforms like Strategic Vanguard or a tweet thread summarising the key legal-geopolitical points for social media engagement.

Citation:

🇨🇳 China’s Response to U.S. Actions in Venezuela

1. China’s diplomatic pushback and framing of the United States as acting outside international law — China publicly condemned the U.S. capture of Venezuelan President Nicolás Maduro as an overreach, accusing Washington of acting like a “world judge” and violating international law.

2. China’s demand for respect of sovereignty and cessation of what it views as illegal intervention — Beijing called for the release of Maduro and criticized U.S. intervention as a breach of international law and Venezuela’s sovereignty.

3. China’s official Foreign Ministry statement — China’s Foreign Ministry expressed “grave concern” over the U.S. action, arguing it violated the UN Charter’s basic norms and calling for dialogue and negotiation instead of coercion.

4. Chinese stance on economic and trade cooperation being protected by international law — China’s Ministry of Commerce stated that economic and trade cooperation with Venezuela is “protected by international law” and that no external party has the right to interfere with such sovereign agreements.

5. China’s characterization of U.S. military action as “unilateral, illegal and bullying” at the United Nations — A Chinese envoy at a UN Security Council meeting condemned the U.S. action as violating core principles like sovereign equality and peaceful dispute settlement.

   
   

⚖️ Investment Arbitration and Lawfare Context

6. Investment treaty arbitration options under the China–Venezuela BIT — The bilateral investment treaty between China and Venezuela provides multiple forums — including possible international arbitration under UNCITRAL — for resolving investor–state disputes.

🌊 UNCLOS & China’s Selective Compliance

7. South China Sea arbitration (UNCLOS) ruling and China’s rejection of it — In The Republic of the Philippines v. People’s Republic of China, an arbitral tribunal under UNCLOS ruled that China’s historic rights claims within the “nine-dash line” had no lawful effect, but China refused to participate and rejected the award.

📌 Supplementary Context (for Background Use)

8. China’s framing of U.S. actions against Venezuela as a violation of international law — Independent reporting also notes China accusing the U.S. of unilateral moves “undermining international order” in Venezuela.