Case of the Day: Republic of Ecuador v. Chevron Corp.

The case of the day is Republic of Ecuador v. Chevron Corp. (Hoge Raad 2014). The Dutch Supreme Court affirmed the BIT arbitral award against Ecuador, which arose out of Chevron’s claim that it had suffered damages on account of undue delay in the settlement of lawsuits TexPet (of which Chevron was a shareholder) had brought against Ecuador in the early 1990s. I haven’t seen a real English translation of the decision, but the main point seems to be that it was for the arbitrators to determine the scope of the term “investment” as used in the treaty, which according to the court was exceptionally broad. While this arbitration doesn’t directly relate to the Lago Agrio litigation, the gist of the decision is no doubt welcome news to Chevron.

More than a year ago, I noted that the Lago Agrio court, on the Lago Agrio plaintiffs’ motion, had ordered the Ecuadoran government to pay the $96 million to the LAPs rather than to Chevron in the event the award was ultimately upheld. This is what, in Massachusetts, we would call a “reach and apply” remedy—an equitable decree requiring a third person to pay money that he owes to a judgment debtor to the judgment creditor instead. “Dirty tricks!” I hear you say. Maybe, but as I noted in the prior post:

Now, before you complain that this seems like some sort of trick, it’s worth remembering that Chevron has tried essentially the same tactic, twice, when it tried to attach Donziger’s interest in the Lago Agrio judgment.

I am looking into the status of the 2013 Ecuadoran decision on this point to see whether we really can expect the Ecuadoran government to pay millions of dollars to the LAPs. It seems to me the government faces a dilemma, since it may be that its domestic law requires one thing while its bilateral trade relations with the United States hinge to some extent on its willingness to satisfy international arbitral awards once they are final, as this one seems now to be.

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.

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