Chevron Strikes Back Against Ecuador

by Julian Ku

I’ve only been vaguely aware of the ongoing battle between Chevron and Ecuador.  Ecuador courts are currently entertaining an enormous lawsuit against Chevron, but Chevron has really taken the offensive by releasing videos suggesting that the Ecuadorian judge has been accepting bribes.  And in its latest salvo, Chevron has filed an investor-state claim under the United States- Ecuador Bilateral Investment Treaty (I think it is 1993 but the WSJ says there is a 1997 one).  In any event, it is a novel claim since it seeks to flip all liability for damages back to the government of Ecuador, and even seeks moral damages.

This could be a tremendous case, given its unusual facts. Offhand, it actually resembles Loewen, which challenged a domestic court proceeding (in the United States) as an effective expropriation and unfair and inequitable treatment.  It seems like a good move by Chevron, in any event, since it keeps Ecuador on the defensive.

http://opiniojuris.org/2009/09/25/chevron-strikes-back-against-ecuador/

3 Responses

  1. Luke Peterson offers a detailed analysis of Chevron’s request for arbitration here: http://kluwerarbitrationblog.com/

  2. Thanks for the link Roger. Perhaps the most interesting thing about the Chevron claim (as well as another massive arbitration recently threatened by Cemex against the USA) is that, contrary to the Loewen case, the claimants are not even waiting for domestic legal proceedings to be resolved. Rather, the claimants are going to international arbitration in a proactive attempt to get indemnification against any unfavourable results in lower courts. As someone who makes his living tracking and reporting on these cases, this seems like a relatively brave new world to me.

    Also, on the date of the US-Ecuador BIT, the confusion arises because the treaty was signed in 1993, but ratified in 1997.

    Luke Eric Peterson, Editor
    InvestmentArbitrationReporter.com

  3. I’m not sure how willing Chevron is going to be to settle.  They’ve got what appears to be a pretty good case, coupled with not a whole lot of gain by reentering Ecuador.

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