Two Wins For Chevron

Oil barrels in EcuadorAfter some significant defeats, Chevron had a significant victory this week. The arbitral tribunal hearing Chevron’s claim against Ecuador under the US/Ecuador bilateral investment treaty again ordered Ecuador to “take all measures necessary to suspend or cause to be suspended the enforcement and recognition within and without Ecuador of the judgments” the Ecuadoran courts issued against Chevron. The tribunal specifically ordered Ecuador to act “by its judicial, legislative or executive branches.” And in particular, it ordered Ecuador not to make any certification that would cause the judgment to be enforceable against Chevron. However, the tribunal held that Chevron is liable “for any costs or losses which the Respondent may suffer in performing its legal obligations under this Second Interim Award” and ordered Chevron to deposit $50 million as security for that liability.

The reference to the certification necessary to make the Ecuadoran judgment enforceable is interesting. I believe it refers to a requirement that Ecuador’s courts must certify a judgment, but Ecuador’s executive may take the position that it cannot order the judiciary to act or not to act with respect to the certification.

The Ecuadoran plaintiffs’ latest press release presses an argument they have made before, namely, that the tribunal’s award is illegitimate because it requires Ecuador to violate its own constitution. As I noted in my dialogue with Karen Hinton, the Ecuadoran’s PR representative, I don’t understand how this can be a good argument. Ecuador’s international obligations are what they are, and Ecuador is internationally responsible for the actions of its judiciary as well as the actions of its executive. Julian Ku makes a similar point at Opinio Juris, as does Roger Alford in the comments there. Interestingly, I’ve heard the Ecuadorans’ representatives cite the Medellín case as justification for their position, but isn’t Medellín a clear example of a country (the US, in that case) violating its international obligations notwithstanding its executive’s and (federal) judiciary’s inability, under its internal law, to compel the state courts to obey international law?

In another win for Chevron, Judge Kaplan has lifted the stay on the RICO litigation against Steven Donziger and the Ecuadoran plaintiffs. So we can expect to see renewed action in his court.

How will the Ecuadorans seek to regain the momentum they so recently seemed to have? Perhaps they will begin recognition and enforcement proceedings in some jurisdiction where Chevron has assets?

Photo credit: Julien Gomba (license)

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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