Lago Agrio: The Remedy

This is the third post about the new arbitral award in the Chevron/Ecuador case. The first post addressed the tribunal’s finding that the Lago Agrio judgment was ghostwritten. The second addressed the issue of estoppel as it related to the question whether Chevron had an investment in Ecuador so as to implicate the bilateral investment treaty between the United States and Ecuador. Today I am going to take a look at some of the remedies the tribunal ordered. I am planning a fourth and final post about the release Texaco obtained from the Ecuadoran government at the time it did its remediation. In case anyone is wondering, I don’t really plan to write about the merits of the claims under the investment treaty at all, since it’s not really my thing. Jarrod Hepburn at Investment Arbitration Reporter and Diane Desierto at EJIL Talk! have interesting takes.

The award includes many remedies. I want to focus on the requirement that Ecuador “take immediate steps” to “remove the status of enforceability” from the Lago Agrio judgment. I’ve previously noted the view that the Ecuadoran government may not be able to do what the award requires it to do for domestic constitutional reasons (as the United States found in the Medellín case), though that inability is not significant from the perspective of international law. But suppose Ecuador could suspend the operation of the judgment. What then? If we were talking about an arbitral award, then we would face the issue of “delocalization”—an arbitral award that is said to have vitality independent of the law of the place of the arbitration. But it seems to me that a national court judgment cannot be treated in this way, even if an arbitral award (controversially) can. So if the Ecuadoran government does effectively suspend the judgment, it seems to me that other states would likely give that action effect, rather than saying that the judgment nevertheless retained its vitality.

I also want to note the requirement that Ecuador, on Chevron’s request, notify foreign courts of the award. I expect, for example, that Chevron might make such a request with regard to Canada. The clever thing about this form of relief is that Ecuador cannot say that separation of powers doctrine prohibits its from carrying out the tribunal’s orders. But what effect will the Canadian court give to such a notice? That remains to be seen. I imagine there would be arguments about whether the judgment was indeed suspended under Ecuadoran law, and I can’t predict how that argument would come out.

Interestingly, the operative part of the award also declared (as the tribunal had previously found) that the Lago Agrio plaintiffs had pleaded individual claims for relief rather than only so-called “diffuse” claims, and that those claims were not within the scope of the release Texaco obtained from the Ecuadoran state. But the tribunal also concluded Lago Agrio court had in fact decided only diffuse claims. This leaves open the question whether the Lago Agrio plaintiffs still have an opportunity to litigate their individual claims in Ecuador. The answer to that question is unclear, at least to me.

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