28 July 2017, Sweetcrude, Lagos — The Appeals Court of The Hague, has ruled in favor of Chevron Corp., upholding a 2016 trial court decision that rejected an attempt by the Republic of Ecuador to nullify, or set aside, several arbitral awards rendered against Ecuador by an international arbitration tribunal that is hearing the company’s claims related to the fraudulent lawsuit against Chevron.
The tribunal, convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty (BIT) and administered by the Permanent Court of Arbitration in the Netherlands, issued a number of awards and orders in favour of Chevron since 2009. The Republic of Ecuador argued before a Dutch trial court that the tribunal lacked jurisdiction to hear Chevron’s claims and that its awards violated public policy, and therefore the awards ought to be “set aside.” In January 2016, the Court found that “none of the grounds for setting aside the arbitral awards put forward by Ecuador hit their mark,” ultimately stating that “the claims will be denied.” In support of its findings, the court issued an opinion affirming the tribunal’s assessment of its own jurisdiction under the text of the BIT and observed that the tribunal had a valid basis to issue interim relief in the company’s favour. The July 18 decision by the appeals court upholds that decision.
In response to the appeals court decision, Chevron issued the following statement:
“This decision rightly affirms that the tribunal has jurisdiction to adjudicate these matters and ensures that Ecuador will be held accountable for violations of its international commitments. We look forward to the tribunal’s final award on the merits, which should hold Ecuador responsible for its deliberate breach of its obligations under the settlement and release, to which it agreed after Texaco completed its share of environmental remediation, and for the multiple frauds committed against Chevron throughout the Lago Agrio case.”
Background on the Arbitration
Chevron filed an international arbitration claim against the government of Ecuador on September 23, 2009, and later amended its claim on March 20, 2012, asserting denial of justice and other violations of Ecuador’s obligations under the United States-Ecuador Bilateral Investment Treaty, investment agreements, and international law. This includes Ecuador’s breach of the environmental settlement agreement with Chevron’s subsidiary, TexPet. Until 1992, TexPet participated as a minority member of a consortium that explored for and produced oil under contracts with Ecuador and Ecuador’s government-owned oil company, Petroecuador. Through the arbitration, Chevron seeks to hold Ecuador accountable for the breach of the settlement agreement and the denial of justice that occurred through the Lago Agrio court’s actions during litigation against Chevron in Ecuador and the issuance of the fraudulent $9.5 billion judgment. In April 2015, the tribunal held a hearing on Ecuador’s multiple violations of the bilateral investment treaty. It has yet to issue its final award.
Background on the Arbitral Awards
The Tribunal has issued a number of awards and orders in favour of Chevron between 2009 and 2014:
Order on Interim Measures – Feb. 9, 2011
The Tribunal orders the Republic to “take all necessary measures at its disposal to suspend or cause to be suspended the enforcement or recognition” of a judgment against Chevron in the Lago Agrio case.
First Interim Award on Interim Measures – Jan. 25, 2012
The Tribunal orders the Republic 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 against [Chevron] in the Lago Agrio case.” It also orders the Republic to keep the Tribunal informed: “of all measures [it] has taken for the implementation of this Interim Award.”
Second Interim Award on Interim Measures – Feb. 16, 2012
The Tribunal again orders the Republic to “take all measures necessary to suspend or cause to be suspended the enforcement and recognition” of the Lago Agrio judgment, clarifying that its order applies to Ecuador’s “judicial, legislative or executive branches.”
Third Interim Award on Jurisdiction and Admissibility – Feb. 27, 2012
The Tribunal finds that the 1995 settlement agreement and 1998 release are extensions of Texpet’s 1973 investment agreement in Ecuador, so the claims are therefore admissible under the provisions of the Bilateral Investment Treaty between the U.S. and Ecuador. It also determines that it has jurisdiction to hear claims of both Texpet and Chevron, as its parent, and dismisses all of the Republic’s objections to the arbitration on the basis of “jurisdiction and admissibility.”
Fourth Interim Award on Interim Measures – Feb. 7, 2013
The Tribunal finds the Republic in breach of earlier awards (first and second interim awards) and states that it violated international law by finalizing and failing to prevent enforcement of the Lago Agrio judgment.
Partial Award on Track 1a – Sept. 17, 2013
The Tribunal finds that the 1995 settlement agreement and 1998 release are valid releases for all collective claims against both Texpet and Chevron.