The Ecuadorian State faces 36 legal proceedings against it in foreign courts. Among these is the Chevron 3 case, which in a partial award that was heard last Friday (September 7, 2018), was resolved in favor of this private firm. Although an amount has not yet been established.
The Attorney General of the State (PGE) informed that the stage to determine the amount of compensation that should be paid to this international oil company will begin in 90 days.
However, the entity analyzes the actions it will take with respect to the partial award issued by the arbitral tribunal of The Hague. In this ruling, it was decided that Ecuador is responsible for denying justice. For this reason, he ordered the State, among others, to compensate the oil company and annul the opinion of the Lago Agrio Court of February 2011, which was obtained -according to the award- fraudulently.
The Lago Agrio Court determined that Chevron -which operated as Texaco in Ecuador between 1964 and 1992- had to pay USD 9,500 million to compensate the inhabitants of the Amazon for the damages caused. The inhabitants of the Amazon, who sued Chevron (Texaco) in 2003 for environmental contamination, are scheduled today, Monday September 10, 2018, at 11:30 to present their position on the award issued by the international court.
Apart from this case, in international courts Ecuador has other active processes that are in litigation. These represent, in total, a claimed value of USD 13 741 million, according to information delivered over the weekend by the Attorney General to this Journal.
For Fausto Ortiz, ex-Minister of Finance, these amounts are contingent on the State. Once the processes are complied with and there is a firm ruling, mechanisms must be found to face these potential expenses. The cases that are aired in international courts correspond to legal actions presented by private firms in the hydrocarbon, electric, commercial and cultural heritage sectors.
There are also controversies related to mining, banking, construction, telecommunications, intellectual property and others, the PGE reports in its Management Report. In addition, 27 arbitration notifications have been submitted.
In the oil sector, the processes that have attracted the most attention are Oxy, Burlington, Perenco, Ecuador TLC and others. The last two, for example, have meant millionaire losses for the Ecuadorian State. The case of Ecuador TLC and others was resolved in favor of the claimants in January 2018, because, according to the court, the State failed to comply with the amending contracts signed with this firm by not following the agreed procedure for its liquidation.
This firm operated in the oil block 18 and the Palo Azul unified field until November 2010. For this, it was resolved that Ecuador pay the private firm USD 515.7 million. Of these, USD 644 313 had to be discounted in favor of the State because there was incomplete property reversal and over-lifting of oil. But after the agreement reached between both parties, in March, USD 507.7 million was set as payment value.
And as a result of the agreement, the Ecuadorian State withheld USD 189 million to cancel the tax obligations that the company had pending in Ecuador. This amount also includes the value of the profits derived from the tax processes.
Finally, the balance of the amount of the agreement was canceled by Ecuador in three installments, until May 30 of this year. And so ended a controversy that dated back to 2010. Another case that involved Ecuador incurring unforeseen expenses was Oxy.
In 2016, the ICSID decided that Ecuador should pay this oil company USD 980 million, after it canceled the contract it had with this private company in 2006. The expiration took place, according to Ecuador, because the oil company sold without authorization 40% of the shares it held in block 15 and the unified fields Edén Yuturi and Limoncocha, to the Canadian Encana, in August 2000. (I)