Processing Magazine

Chevron Wins Arbitration Claim Against the Government of Ecuador

March 31, 2010

Business Wire reports that an international arbitration tribunal has ruled in favor of Chevron in a claim against Ecuador related to past oil operations by Chevron’s subsidiary, Texaco Petroleum Company. 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. Today’s 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 Company approximately US$700 million in principal damages and interest as of December 22, 2006, pending further proceedings to determine applicable taxes, compound interest and costs. 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 United States.