Chevron wins arbitration over Ecuador

The ongoing battle between oil giant Chevron and the Ecuadorian government just got a whole lot messier.

On Tuesday an arbitration board ruled that Ecuador violated international law against Chevron. The tribunal located in The Hague concluded that the South American country “illegally delayed” commercial rulings between officials and Chevron-owned subsidiary Texaco. Though the oil company had sought a payment of $1.6 billion, the board ruled that Ecuador would instead have to pay $700 million.

Ecuadorian authorities said that they would appeal the ruling; the country’s Attorney General accused Chevron of employing “a well orchestrated strategy” designed to distract from the multibillion-dollar environmental damage suit. As Shelia McNulty wrote on the Financial Times website, however, the decision was a “major win” for Chevron:

The commercial arbitration is separate from - and secondary to - the arbitration Chevron has sought to resolve a $27bn claim by indigenous people who charge that Texaco (which Chevron bought in 2001) left an environmental disaster in its wake when it withdrew from the country. But it appears to support Chevron’s underlying claim, which is that the company is being unfairly treated by the court system generally…

Indeed, the $700m is unlikely to ever be paid. But for Chevron, the win is being able to feed off the symbolism.

Chevron and Ecuador have pulled all the stops in the ugly environmental case between them; last September the oil firm accused the then-presiding judge of bribery while Chevron was accused of using dirty tricks as part of their public relations offensive.

Image- Huffington Post
Online Sources- Reuters, FT.com, BusinessWeek, UPI, The Latin Americanist,