IBM World Trade Corporation v. República del Ecuador
ICSID · Investment (ICSID and treaty) · Ecuador · 22 Jul 2004
Why it matters
This case is notable as an early ICSID arbitration against Ecuador under the US-Ecuador BIT. It demonstrates the possibility of settlement in investment treaty disputes and the tribunal's role in formalizing a settlement by consent award. The case also highlights the use of ICSID for contract-based investment claims.
Summary
IBM World Trade Corporation, a US company, initiated ICSID arbitration against Ecuador under the US-Ecuador BIT, claiming that Ecuador failed to pay amounts due under contracts for computer equipment and services provided by IBM's Ecuadorian subsidiary. The contracts dated back to 1983 and included leases, software licenses, and a concession agreement for customs IT systems. After Ecuador objected to jurisdiction, the tribunal issued a decision on December 22, 2003, rejecting Ecuador's jurisdictional challenge. Subsequently, the parties reached a settlement in May 2004, under which Ecuador paid US$3,500,000 to IBM, and IBM waived further claims for interest, costs, and fees. The settlement was incorporated into a consent award on July 22, 2004, terminating the proceedings. The award does not address the merits of the dispute.
The detail
Parties: IBM World Trade Corporation v. República del Ecuador
Case number: ICSID Case No. ARB/02/10
Outcome: The parties settled; the tribunal incorporated the settlement agreement into an award, ordering termination of the proceedings. Ecuador paid US$3,500,000 to IBM.
Quantum: US$3,500,000
Applicable law: Treaty between the United States of America and the Republic of Ecuador concerning the Encouragement and Reciprocal Protection of Investment (BIT); ICSID Convention; ICSID Arbitration Rules
Issues in play: The case involved the interpretation of the BIT's protections for investments, specifically whether non-payment under contracts constituted a violation of the treaty. The tribunal had to decide jurisdiction under the BIT and the ICSID Convention.
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