Chevron, Ecuador, and the USTR

Update: This post is now out-of date.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.

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 2d ed. 2016), 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.

4 thoughts on “Chevron, Ecuador, and the USTR

  1. “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.”

    With respect to Canada, the underlying Ecuadorean judgment would no longer be final and conclusive, insofar as it would no longer be res judicata in Ecuador. Hence, it would no longer be recognizable or enforceable in common law Canada. This comports with the converse situation that a Canadian court will not enforce a foreign judgment that is inconsistent with a prior judgment of the forum.

    However, under Canadian conflict of laws, the doctrine of res judicata does not apply to foreign judgments, such that the cause of action is not considered to have merged in the foreign judgment. Subject to limitation periods (which would have prescribed a long time ago in the Lago Agrio case), it remains theoretically possible for a foreign plaintiff to sue again on the original cause of action, should the foreign judgment no longer be enforceable by the forum. One wrinkle is your phrasing “suspend the operation of the Lago Agrio judgment.” In my view, the Lago Agrio judgment would have to be vacated, rather than merely, suspended, since it theoretically could be enforced or executed upon, in futuro.

    Antonin I. Pribetic

    1. Thanks, Antonin, for the helpful comment. The word “suspend” isn’t my word—it comes from the interim award in Chevron Corp. v. Republic of Ecuador, PCA Case No. 2009-23, one of the investment treaty arbitrations pending between Chevron and Ecuador. The reason the tribunal used the word “suspended” was that it was merely granting preliminary relief, not making a final decision on the merits.

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