Does Ecuador Deserve Condemnation for Ignoring Arbitral Tribunal Orders and Treaty Obligations?
Neither the arbitral tribunal’s order demanding Ecuador act to stop enforcement of the $18 Billion judgment against Chevron, nor Ecuador’s continued brazen refusal to follow the order is really much a surprise. The Chevron-Ecuador Death Cage Match continues unabated and has gotten so out of control that almost nothing shocks me about this case anymore. A former Ecuadorian judge swearing in US federal court that he was paid thousands of dollars by US plaintiffs attorneys to ghostwrite the underlying case against Chevron is just another weird detail in an already sordid story.
The theory of the interim award is interesting. Ecuador has a duty to preserve the status quo while the arbitral tribunal reviews the merits of Chevron’s claims against Ecuador. But the plaintiffs in the Lago Agrio case are not parties to the arbitration and are free to continue to pursue enforcement. I suppose the argument is Ecuador is facilitating the overseas enforcement actions by not suspending the domestic Ecuadorian litigation. That does seem a problem, although what exactly could Ecuador do? Pass new legislation ordering its courts to stop the domestic litigation?
I may be missing something, I am not sure this award does Chevron much good. It simply puts a little more leverage on Ecuador to do something to stop the enforcement actions against Chevron, or face responsibility for costs incurred by Chevron from the enforcement actions. Fair enough, but if Ecuador feels the tribunal will ultimately rule for them anyway on the merits, then this award doesn’t really add a whole lot of pressure, nor does it give Chevron much additional leverage in foreign courts like Argentina or Canada where enforcement actions are proceeding. The US litigation attempting to show fraud is more likely to bear fruit than this award in stopping those actions.
In other words, it is rational for Ecuador to drag its feet on obeying the arbitral tribunal’s various interim awards. The only basis for condemning Ecuador is simple: it is flagrantly and openly violating its solemn treaty obligations. But should it be condemned on those grounds alone? Neither rational choice nor realist scholars would do so. But what about the rest of you?