The tribunal, administered by the Permanent Court of Arbitration in The Hague, found that Ecuador’s courts violated international law through their delays in ruling on certain commercial disputes between Texaco Petroleum Company and the Ecuadorian government.
The ruling is distinct from arbitral claims Chevron and Texaco Petroleum filed against Ecuador in 2009 in connection with the Lago Agrio litigation. In its decision, the tribunal found that Ecuador had violated the United States-Ecuador Bilateral Investment Treaty by failing to provide effective means of asserting claims and enforcing rights.
As a result, the tribunal awarded Chevron and Texaco Petroleum approximately $700m in principal damages and interest as of December 22, 2006, pending further proceedings to determine applicable taxes, compound interest, and costs.
Hewitt Pate, vice president and general counsel of Chevron, said: “This ruling demonstrates that the government of Ecuador is not above the law. We have maintained for some time that Ecuador’s courts are failing to administer justice when it comes to Chevron and its affiliates, and an international tribunal has now agreed.”
The arbitral award partially resolves seven commercial claims that Texaco Petroleum Company, now a Chevron subsidiary, filed in Ecuador between 1991 and 1993. Ecuadorian courts continually delayed and refused to rule on Texaco Petroleum’s cases, which has been found to constitute a breach of Ecuador’s treaty with the US.
Chevron and Texaco Petroleum Company had filed the arbitration in December 2006 under the Rules of the United Nations Commission on International Trade Law (UNCITRAL).
