Chevron, Ecuador, and the USTR
Posted on September 18, 2012
Update: This post is now out-of date. Please refer to the correction.
As I have noted before, Chevron has been lobbying the US Trade Representative to conclude that Ecuador had made itself ineligible for trade preferences under the Andean Trade Preference Act by failing to comply with the orders of two arbitral tribunals in cases Chevron brought against Ecuador under the US/Ecuador bilateral investment treaty.
The USTR published a notice allowing for the submission of petitions “calling for the limitation, withdrawal or suspension of ATPA … benefits by presenting evidence that the eligibility criteria of the program are not being met.” Petitions were due by September 17. Chevron, to my surprise, apparently didn’t submit one, though it’s possible, I suppose, that Chevron has submitted a petition that simply hasn’t appeared on the online docket yet.
Suppose that Chevron hasn’t submitted a petition. Chevron, as I’ve seen while following the Lago Agrio case for the past year or more, doesn’t usually miss an opportunity to submit a brief. So what might be going on? I have no way to know, but one possibility that came to mind was the possibility of settlement talks between the government of Ecuador and Chevron. Could Chevron’s apparent forbearance be a sign that talks are happening behind the scenes?
Let’s speculate a little more. What good would it do Chevron to settle with Ecuador, when it’s the Lago Agrio plaintiffs that hold the multi-billion dollar judgment? Well, suppose Ecuador, contrary to its protestations that compliance is impossible, was able to comply with the BIT tribunal’s order and suspend the operation of the Lago Agrio judgment. It seems to me that if the judgment became inoperative under Ecuadoran law, there would be strong arguments against recognition and enforcement in other jurisdictions, though I can’t speak to the details of the law of the two relevant jurisdictions, Canada and Brazil. The Lago Agrio plaintiffs, at least at one time, feared this possibility—this was the motivation for their petition to the Inter-American Commission on Human Rights seeking precautionary measures against Ecuador.
My speculation about Chevron, Ecuador, and the USTR may be completely wrong, but the situation bears watching.