Worley International Services v. Ecuador
PCA · Investment (ICSID and treaty) · Ecuador · 22 Dec 2023
Why it matters
This award is significant for its detailed analysis of corruption allegations in investment arbitration, including the standard of proof and the consequences of corruption on treaty protections. It also addresses the allocation of costs in a case where the claimant's claims were dismissed, reinforcing the 'costs follow the event' principle under the UNCITRAL Rules.
Summary
Worley International Services Inc., a US company, brought an investment treaty claim against Ecuador under the US-Ecuador BIT, alleging that Ecuador violated its obligations through non-payment under four oil and gas infrastructure contracts, a harassment campaign by the Comptroller General, and threatened tax liabilities. Ecuador raised jurisdictional objections and argued that the claims were inadmissible due to corruption by Worley's subcontractor, Tecnazul. The Tribunal, after a hearing on jurisdiction, merits, and quantum, dismissed all of Worley's claims. It found that Worley had failed to prove that Ecuador's actions amounted to expropriation or unfair treatment, and that the corruption allegations, while serious, did not need to be fully adjudicated because the claims failed on other grounds. The Tribunal ordered Worley to bear the costs of arbitration and reimburse Ecuador US$6,048,471.01 in legal fees and expenses.
The detail
Parties: Worley International Services v. Ecuador
Case number: PCA Case No. 2019-15
Outcome: All of Claimant's claims dismissed; Claimant ordered to pay Respondent US$6,048,471.01 in costs.
Quantum: 0
Applicable law: Treaty between the United States of America and the Republic of Ecuador concerning the Encouragement and Reciprocal Protection of Investment (1993); UNCITRAL Arbitration Rules (1976)
Issues in play: The case involved allegations of corruption by Claimant's subcontractor, raising issues of treaty protection for investments tainted by corruption, and the standard of proof for corruption allegations.
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