Chevron Wins Round One Against Ecuador

by Julian Ku

This is just the first round of a potentially huge investor-state arbitration claim filed by Chevron against Ecuador. $700 million now, but up to $27 billion later. (For some background, see here and here about a federal court’s refusal to stay one of the arbitration proceedings.).

Chevron Corp (CVX.N) won a three-year-old arbitration fight against Ecuador over a commercial dispute as it battles the country separately over an environmental claim that may result in $27 billion in damages against the company.

An arbitration panel ruled on Tuesday that Ecuador’s courts violated international law by delaying rulings on commercial disputes between the U.S. oil company and Ecuador’s government, and awarded Chevron $700 million.

The arbitration panel partially resolved seven claims that Texaco, bought by Chevron in 2001, filed in Ecuador from 1991 to 1993, Chevron said. The panel found that the courts had breached a U.S.-Ecuador treaty by not ruling on the cases.

http://opiniojuris.org/2010/03/31/chevron-wins-round-one-against-ecuador/

4 Responses

  1. Chevron might manage to wrangle out of the Ecuador stuff – but I think they will have some real problems here in the USA – Chevron’s got pits here, too. I know this because I live on a large Texas Ranch where Texaco has operated since 1935 and Chevron is still operating. Here’s a movie I made about digging up one of these pits. http://www.ireport.com/docs/DOC-424893

  2. Judge Sand’s earlier opinion on the arbitrability of Chevron’s claims against the Republic of Ecuador got it right. See http://bit.ly/d97Nea for the opinion.  The key questions is whether Chevron secured a release from the government for third party claims, which it clearly did not.  The plaintiffs’ case in Lago Agrio should be allowed to proceed under Ecuadorian law.

  3. I’m not sure I agree, Mark.  The fact that Ecuador specifically passed an environmental law in 1999 to allow private individuals to sue Chevron, and also the defendants “contend(s) that this law in effect allows the plaintiffs in the Lago Agrio litigation to assert, as private attorneys general, claims that belonged to Ecuador but were released by the 1995 Settlement and 1998 Final Release” seems to indicate to me they should have immunity via their agreement.

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  1. […] the full text of the decision (all 265 pages) here. Some reaction on PIL blog Opinio Juris here. Some history on this monstrous multi-jurisdiction claim […]