The Dutch high court on Friday upheld an appellate court judgment rejecting Ecuador’s attempt to escape a $106 million arbitration award against it in its fight with Chevron Corp., finding the country’s investment treaty with the U.S. prevents it from disputing the judgment.
The country’s Supreme Court ruled in favor of Chevron and its affiliates, Texaco Petroleum Co., and upheld the result of arbitration proceedings in The Hague stemming from Chevron’s oil extraction and exploitation concession agreement in the country, which Ecuador allegedly breached. Ecuador had argued in return that Chevron polluted the area.
After the arbitration proceedings led to judgment against Ecuador, which totaled $106 million with post-award interest, the country filed suit in Dutch courts to have the decision overturned. Both the district and appellate court dismissed Ecuador’s suit before the Supreme Court affirmed the dismissal Friday.
The courts agreed with Chevron that because of Ecuador’s 1997 U.S.-Ecuador Bilateral Investment Treaty with the U.S., the arbitration did not breach Ecuador’s sovereignty.
“The court of appeal was free to decide that the legal claims lodged by Chevron that were pending when the BIT entered force in 1997 should be regarded as ‘investments’ in the particular sense accorded to that term by the contracting parties, even though this term is not usually taken to encompass such claims,” the Supreme Court order said, according to an English statement by court that accompanied the opinion.
The commercial cases were filed by Texaco — which merged with Chevron in 2001 — in Ecuadorean courts in the early 1990s alleging that Ecuador took a portion of the crude oil supplied at below-market price from Texaco and sold it on the international market.
The Ecuadorean courts refused to hear the claims, so Chevron brought the suit to international arbitration in 2006. The tribunal issued its order in 2011, holding Ecuador liable and finding the delays were unreasonable and violated the bilateral investment treaty.
Chevron said in a statement that it was pleased with the Dutch court’s decision.
“This decision marks the end of the republic’s efforts to set aside the award, which a U.S. federal court in Washington, D.C., also has separately confirmed in the form of a judgment enforceable in the United States,” Chevron said.
In June 2013, a D.C. federal judge confirmed the arbitration award. Ecuador’s appeal to the D.C. Circuit remains pending.
An international tribunal at The Hague also ruled in September 2013 that settlement agreements signed by Texaco in the 1990s released the company from liability for the Amazon pollution claims at the heart of a $19 billion Ecuadorean judgment the company is fighting on multiple fronts.
And before that in February 2013, the tribunal, overseen by the Permanent Court of Arbitration at The Hague, determined that Ecuador has breached its obligations under U.S. treaties and international law to prevent the enforcement of the award.