Permanent Court of Arbitration Panel to Determine Whether Chevron
Should Be Compensated for Ecuador’s failure to Prevent Enforcement of
Lago Agrio Judgment
SAN RAMON, Calif.--(BUSINESS WIRE)--Feb. 8, 2013--
An international arbitration tribunal issued an award
yesterday finding that the Republic of Ecuador has violated the
Tribunal’s prior Interim Awards authorized under international law and a
treaty between the United States and Ecuador by not preventing the
attempted enforcement of a $19 billion judgment against Chevron Corp.
(NYSE: CVX). In prior
rulings, the Tribunal put the Republic on notice that if Chevron’s
arbitration ultimately prevails, “any loss arising from the enforcement
of (the judgment) may be losses for which the (Republic) would be
responsible to (Chevron) under international law.”
Convened under the authority of the U.S.-Ecuador Bilateral Investment
Treaty (the BIT) and administered by the Permanent Court of Arbitration
at The Hague, the Tribunal found Ecuador in breach of the Tribunal’s
prior rulings and ordered the Republic to explain why it should not be
ordered to compensate Chevron for all harm resulting from the
plaintiffs’ attempts to enforce a judgment resulting from an
environmental trial against the company in Lago Agrio, Ecuador.
Almost one year ago, the Tribunal issued a Second
Interim Award ordering the Republic of Ecuador—and all of its
branches, including the judiciary—to take all necessary actions to
prevent enforcement and recognition of the Lago Agrio judgment, both
inside and outside of Ecuador. That award expanded upon a prior award
requiring Ecuador to “take all measures at its disposal to suspend or
cause to be suspended the enforcement or recognition within and without
Ecuador of any judgment.”
“The Tribunal’s decision confirms that the enforcement actions being
pursued against Chevron in Argentina, Brazil, and Canada fly in the face
of international law,” said Hewitt Pate, Chevron vice president and
general counsel. “Yet Ecuador has consistently aligned itself with
American trial lawyers who have used corrupt courts to advance an
unprecedented fraud. It is not too late for the Republic to reverse
course, declare the Lago Agrio judgment illegitimate, and address the
real challenges facing its citizens.”
Despite the Tribunal’s Awards, the Republic of Ecuador has facilitated
the plaintiffs’ pursuit of enforcement in Argentina, Brazil, and Canada.
These actions are the result of Ecuador’s failure to meet its
international law and treaty obligations.
Chevron’s arbitration
claim stems from the government of Ecuador’s interference in the
ongoing environmental lawsuit against the company in Ecuador and its
courts’ failure to administer justice in a trial that has been marred by fraud.
Additionally, Chevron maintains that the government of Ecuador has
failed to uphold prior settlement and release agreements that the
government of Ecuador entered into with Texaco Petroleum Company (now a
Chevron subsidiary) when the consortium between Texaco Petroleum and
Petroecuador was terminated.
In its ruling, the Tribunal found that “Neither disagreement with the
Tribunal’s orders and awards on interim measures nor constraints under
Ecuadorian law can excuse the failure of the (Republic), through any of
its branches or organs, to fulfil its obligations under international
law imposed by the Treaty, the UNCITRAL Rules and the Tribunal’s orders
and awards thereunder, particularly the First and Second Interim Awards
on Interim Measures.”
In August 2011, a different international arbitration tribunal convened
under the BIT awarded
Chevron and Texaco Petroleum $96 million, plus interest, in a claim
against the Republic of Ecuador related to past oil operations. The
Tribunal found that Ecuador's courts violated the BIT and international
law through their decade-long delays in ruling on certain commercial
disputes between Texaco Petroleum and the Ecuadorian government. A court
in the Netherlands has upheld the award and Ecuador has filed a second
appeal.
Chevron is one of the world’s leading integrated energy companies, with
subsidiaries that conduct business worldwide. The company is involved in
virtually every facet of the energy industry. Chevron explores for,
produces and transports crude oil and natural gas; refines, markets and
distributes transportation fuels and lubricants; manufactures and sells
petrochemical products; generates power and produces geothermal energy;
provides energy efficiency solutions; and develops the energy resources
of the future, including biofuels. Chevron is based in San Ramon, Calif.
More information about Chevron is available at www.chevron.com.
Source: Chevron Corp.
Chevron Corp.
Kent Robertson, San Ramon, California, +1-925-790-3819
