Lawyers for PDVSA argued on Thursday that the court had no right to impose the freeze because the assets under dispute, the parties and the arbitration that Exxon has applied for were not in or connected with Britain.

Leftist President Hugo Chavez told foreign oil companies last year to cede a majority stake in oil projects or leave the country. Most agreed and accepted bids for stakes in their projects from PDVSA that analysts said were below market value. Exxon opted to pull out rather than concede and has applied for international arbitration to win damages.

Pending the outcome, America's largest company convinced courts in Britain, the United States and the Netherlands to freeze Venezuelan assets to ensure funds for compensation.

Acting for PDVSA, lawyer Gordon Pollock told the court, "It is not the role or function of the English courts to offer worldwide freezing orders" to anyone who asked for them.

Pollock said the English court had stretched beyond its jurisdiction in this instance given such asset freezes were normally only awarded in cases involving "egregious fraud".

"This is not a fraud case ... it is a contractual dispute." In Caracas, Venezuela's Oil Minister Rafael Ramirez said Venezuela made three basic arguments against the ruling.

First, the asset freeze was outside the arbitration process, which PDVSA was following in good faith. Second, PDVSA is a state company and therefore should be immune from such freezes, he said.

Finally, he said such freezes were used against companies in financial difficulties, which was not the case for PDVSA -- a company industry analysts believe can easily pay Exxon compensation for its seized assets.