Chevron Corporation and Texaco Petroleum Company v. Republic of Ecuador (I)
PCA · Investment (ICSID and treaty) · Ecuador · 1 Dec 2008
Why it matters
This interim award is significant because it established that a tribunal may have jurisdiction over claims of denial of justice based on continuing or composite acts that began before the BIT entered into force but continued afterwards. It clarified the temporal scope of BIT protections, particularly regarding judicial delays and biased decisions, and set a precedent for how tribunals assess jurisdiction over pre-existing disputes and acts.
Summary
Chevron and Texaco (Claimants) initiated arbitration against Ecuador under the US-Ecuador BIT, alleging that Ecuador denied justice in seven breach-of-contract lawsuits filed by TexPet in Ecuadorian courts between 1991 and 1993. The lawsuits claimed over US$553 million in damages for Ecuador's alleged overstatement of domestic oil consumption and unauthorized export of TexPet's oil. TexPet argued that the Ecuadorian courts egregiously delayed decisions for over a decade, and after the arbitration was filed, some cases were dismissed in a biased and manifestly unjust manner. Ecuador objected to jurisdiction on several grounds, including that the claims were barred by res judicata, waiver, and the BIT's temporal limitations. The Tribunal, in this interim award, rejected all jurisdictional objections. It found that the Claimants had an 'investment' under the BIT, that the dispute existed at the time of the BIT's entry into force, and that the alleged denial of justice could constitute a continuing or composite act within its jurisdiction. The Tribunal deferred costs and scheduled further proceedings on the merits.
The detail
Parties: Chevron Corporation and Texaco Petroleum Company v. Republic of Ecuador (I)
Case number: PCA Case No. 2007-02
Outcome: The Tribunal denied Ecuador's jurisdictional objections and affirmed jurisdiction over the claims.
Applicable law: Treaty Between the United States of America and the Republic of Ecuador Concerning the Encouragement and Reciprocal Protection of Investment (BIT); UNCITRAL Arbitration Rules; Vienna Convention on the Law of Treaties; ILC Draft Articles on State Responsibility
Issues in play: The case involved the collision between Ecuador's obligation to provide fair and equitable treatment and effective means of asserting claims under the BIT, and its sovereign right to regulate its judiciary. The key issue was whether pre-BIT acts could be considered as part of a continuing or composite denial of justice.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.