M.C.I. Power Group L.C. and New Turbine, Inc. v. Republic of Ecuador
ICSID · Investment (ICSID and treaty) · Ecuador · 31 Jul 2007
Why it matters
This case is significant for its detailed analysis of the temporal scope of BIT protections, particularly the non-retroactivity principle and the concept of continuing acts. It also clarifies the fair and equitable treatment standard as requiring a violation of customary international law, not just unfairness. The decision on costs, with each party bearing its own, reflects a common ICSID practice.
Summary
The case arose from disputes over two contracts between Ecuadorian state entity INECEL and companies related to the Claimants. The first contract (Seacoast) was signed in 1995 and terminated in 1996; the second (Ecuapower) was signed in 1997. The Claimants alleged that Ecuador violated the BIT through unfair treatment, discrimination, harassment, and expropriation. Ecuador objected to jurisdiction, arguing the BIT (effective May 11, 1997) could not apply to pre-BIT events. The Tribunal joined jurisdiction to the merits. On jurisdiction, it rejected Ecuador's main objection of non-retroactivity but found it had competence over post-BIT acts only. It also rejected subsidiary objections regarding the definition of investment and the fork-in-the-road clause. On the merits, the Tribunal examined each alleged breach: fair and equitable treatment (requiring a violation of customary international law), non-discrimination, full protection and security, and expropriation. It found that the Claimants failed to prove any violation. The revocation of Seacoast's permit was a lawful exercise of regulatory power, and the alleged harassment did not rise to the level of a BIT breach. The Tribunal dismissed all claims and ordered each party to bear its own costs and half of ICSID costs.
The detail
Parties: M.C.I. Power Group L.C. and New Turbine, Inc. v. Republic of Ecuador
Case number: ICSID Case No. ARB/03/6
Outcome: The Tribunal upheld its jurisdiction over post-BIT acts but rejected all claims on the merits, finding no violation of fair and equitable treatment, non-discrimination, or expropriation. Each party bears its own costs and half of ICSID costs.
Applicable law: Ecuador-United States Bilateral Investment Treaty (BIT) of August 27, 1993; ICSID Convention; Ecuadorian law
Issues in play: The main legal issue was the non-retroactivity of the BIT: whether pre-BIT acts could be considered continuing violations. The Tribunal held that the BIT does not apply retroactively, but it has jurisdiction over post-BIT acts. The fair and equitable treatment standard under customary international law was also central.
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