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Arbitral Tribunal Renders Partial Award in the Proceeding Filed by Chevron Against the Ecuadorian State

Quito (PRWEB) September 19, 2013

On Tuesday September 17, 2013, the Arbitration Tribunal hearing the matter brought by Chevron Corporation and Texaco Petroleum Company against the Ecuadorian State issued a partial award in which it decided certain issues related to Chevron-Texaco’s claim that the Republic allegedly breached the Settlement Agreement signed in 1995, in relation with third-party environmental claims against Chevron.

In its decision, the Tribunal –constituted under the UNCITRAL Rules– agreed with the Ecuadorian legal defense in finding that the aforementioned Settlement Agreement did not preclude the Lago Agrio plaintiffs from asserting claims “in respect of their own individual rights”. According to the Tribunal, the Agreement refers to claims that Ecuador might raise in the exercise of their own rights and not to claims by third parties acting independently from the state in the exercise of their individual rights.

The Tribunal, however, found that the 1995 Settlement Agreement barred third parties from asserting “diffuse” or “collective” claims, as these would have been the subject of the release conferred by the Government at the time.
In this regard, the Tribunal expressly declined to address at this time the question whether the claim of the Lago Agrio plaintiffs sought the vindication of their individual rights or diffuse rights, or both.

Although the Tribunal concluded that Chevron is a "releasee" under the Agreement referred above, it rejected oil company’s argument that the Agreement contained an implicit "hold harmless" clause or indemnity provision that, according to the transnational company, required the Ecuadorian State be held liable for any costs to incurred or any judgment rendered against Chevron.

In this partial award, the Tribunal expressly declined to rule on the alleged breach of the Release Agreement. In relation to this award, the Attorney General of Ecuador, Diego Garcia Carrion, rejected Chevron’s press release, issued earlier today, titled “International Arbitration Tribunal Finds Chevron Not Liable For Environmental Claims In Ecuador”, since far from what was asserted by the company, the Tribunal made no such finding whatsoever.

According to Dr. Garcia, contrary to the transnational’s press statement, the Tribunal did not consider, let alone decide, Chevron’s allegation that the Ecuadorian judgment is fraudulent and likewise did not find, as Chevron’s Vice-President is quoted as saying, “that the fraudulent claims against Chevron should not have been brought in the first place.”

With the issuance of the Partial Award, the Tribunal brings to a close the first of at least two substantive phases of the arbitration.

The second phase refers to the accusation made by Chevron-Texaco in a press release issued on September 18, on an alleged denial of justice committed by the Ecuadorian State against the company, by having allowed the continuation of the Lago Agrio proceeding, which under the companies' view is fraudulent. Within this second phase, the Tribunal has scheduled a hearing that is to commence in January 2014.

The Attorney General clarified that the defense team of the State reserves all rights with respect to the Tribunal's decisions, particularly for acting without jurisdiction and enforcing a Bilateral Investment Treaty entered into force long after the investor voluntarily left the country.

Case Background

On September 23, 2009, Chevron and Texaco Petroleum filed a claim in arbitration against the Ecuadorian State regarding an alleged breach of the BIT, which seeks to hold the Ecuadorian State liable for any consequences arising out from the Lago Agrio proceeding, brought by indigenous plaintiffs against Chevron for its operations in the Ecuadorian Amazon region.

In this arbitral claim, Claimants accuse Ecuador of an alleged denial of justice by allowing the Lago Agrio proceeding to proceed, and further allege that the Republic is in breach of other international obligations to afford them fair and equitable treatment, effective means of redress, nondiscriminatory treatment and full protection and security.

Procuraduría General del Estado (Ecuador)
Telephone: (02) 2 559 308

PCA Case No. 2009-23

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Source: PRWeb
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