Caso Chevron

DC Circ. Won't Rehear $106M Chevron Award In Ecuador Row

Law360 - John Kennedy 29/09/2015

The D.C. Circuit won’t reconsider its ruling that Ecuador owes Chevron and Texaco a $106 million arbitration award stemming from a decades-old dispute alleging the country misappropriated Chevron’s crude oil, as the court denied Ecuador’s requests for both a panel and an en banc rehearing.

In brief, one-sentence orders, the court denied both petitions, which were filed on Sept. 3, almost a month after the court upheld the D.C. federal court’s decision in favor of the two energy companies, rejecting Ecuador’s claim that U.S. courts lack jurisdiction to decide the matter.

Representatives for Ecuador and Texaco Petroleum could not be reached for comment Monday. A representative of Chevron Corp. said the company was pleased with the decision.

Ecuador had claimed that the Foreign Sovereign Immunities Act, which generally provides immunity for foreign states from U.S. jurisdiction, and the New York Convention, one of the key instruments in international arbitration, prevented the U.S. from confirming the award. The country previously challenged the award in the Dutch court system, which upheld the award on every level.

The key to U.S. jurisdiction was a bilateral investment treaty that took effect in 1997. Under this treaty, Ecuador said American investors could arbitrate disputes involving investments that existed on or after the treaty’s effective date, the court said in its August decision.

Chevron followed proper procedures to request arbitration, the judges said at the time, adding that four courts have also considered and rejected Ecuador’s arguments, giving them no reason to conclude that so many others had ruled in error.

The disagreement dates back to 1973, when Chevron and Ecuador agreed that the company could use the country’s oil fields if it provided below market-rate oil to the government. As the deal’s 1992 expiration date approached, the parties were unable to agree to an extension and Chevron filed several breach of contract suits against Ecuador.

They agreed to end their relationship in 1995 but continue the lawsuits, and in 2006, Chevron began international arbitration, claiming Ecuador had violated the 1997 treaty by not resolving the suits in a timely fashion.

This kicked off the legal disputes leading up to the August decision.

The original award, handed down in 2011, was $96.4 million, but as of June 2014, including post-award interest, the total had increased to about $106 million.

Chief Judge Merrick B. Garland and Circuit Judges Sri Srinivasan and Robert L. Wilkins denied Ecuador’s petition for panel rehearing.

Garland, Srinivasan, Wilkins and Circuit Judges Karen LeCraft Henderson, Judith W. Rogers, David S. Tatel, Janice Rogers Brown, Thomas B. Griffith, Brett M. Kavanaugh, Patricia A. Millett and Cornelia T.L. Pillard denied Ecuador’s petition for en banc rehearing, though the court noted Henderson and Griffith didn’t participate in the matter.

Ecuador is represented by Mark N. Bravin, Eric M. Goldstein and Eric T. Werlinger of Winston & Strawn LLP.

Chevron and Texaco are represented by Jeffrey S. Bucholtz, Brian R. Callanan, James P. Sullivan, Brian A. White and Caline Mouawad of King & Spalding LLP.

The case is Chevron Corp., et al., v. The Republic of Ecuador, case number 13-7103, in the U.S. Court of Appeals for the D.C. Circuit.

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