Lago Agrio: The New Arbitral Award

Okay, so here’s the deal. Yesterday, the Wall Street Journal reported that the tribunal hearing the investment treaty dispute between Chevron and Ecuador “issued a partial award in favor of Chevron Corp. and found the U.S. oil company isn’t liable for collective environmental damage claims in Ecuador.” Relying on the article, I put up a quick post noting that the tribunal had issued a new award determining that Chevron was “not liable.” Now, I could hide behind my qualifiers—I wrote that I hadn’t seen the award and that it wasn’t clear to me what “not liable” meant—but the fact is I should have waited to read the award, because upon reading it, it became clear that my quick post was too simplistic. Now that we’ve had a chance to see the award, here’s the situation as far as I can tell.

The tribunal decided, first, that although Chevron itself was not a party to the release that Ecuador had granted to TexPet, under Ecuadoran law Chevron was among the parties released. But the tribunal also made it clear that Ecuador did not have the power to release the claims that the Lago Agrio plaintiffs, as individuals, had against Chevron:

As worded, the release does not extend to any claims made by third persons in respect of their own individual rights separate from the Respondent under Ecuadorian or other laws.

However—and this is the key clarification—the tribunal left open the question whether the claims the Lago Agrio plaintiffs had asserted were individual claims or claims based on “collective” or “diffuse” rights under Ecuadoran law. If the claims are individual claims, then presumably the tribunal will ultimately decide that the release doesn’t bar them. But according to the WSJ article, the LAPs have always characterized their claims as collective claims. If the claims are collective claims, then things will get interesting.

I do think that Chevron will be looking for opportunities to preclude the LAPs in New York from making arguments contrary to the tribunal’s findings or conclusions.

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.

5 thoughts on “Lago Agrio: The New Arbitral Award

  1. This is from Professor Cassel’s Reply of April 10, 2012, Defrauding Chevron in Ecuador:

    In 2003 plaintiffs’ Legal Team sued Chevron (but not the State oil company) in Ecuador. Unlike the New York litigation, their Ecuador suit does not assert or prove individual claims of harm, but only collective claims to environmental redress.

    1. Thanks, L. Conrad. I think that’s precisely what will turn out to be the next point of dispute: were the claims purely collective? I think there is a fair amount of internal evidence (internal to the Ecuadoran judgment, I mean) that supports Chevron’s view on this, but we haven’t yet heard the position of the LAPs in light of the new partial award. So I think we should stay tuned.

  2. Yesterday, in a Notice of Relevant Authority filing, Chevron put the partial arbitration award before the court. Doc 1444, 11-cv-691 (S.D.N.Y.)

  3. The Ecuadorean litigation was commenced under Environmental Protection Act of 1999. It becomes a matter of Ecuadorean statutory interpretation as it applies to the wording of the BIT partial award.

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