The 31 legal processes that Ecuador has faced in international courts, in the last 13 years have generated a negative balance. According to information from the Attorney General’s Office (PGE), Ecuador has paid USD 2 313.1 million for awards issued by arbitral tribunals, which have been contrary to the country.
This figure, according to the PGE, is equivalent to 17% of the total amount demanded, which amounted to USD 13 340.5 million. In contrast, Ecuador has received in its favor, in the same period, just USD 47.5 million.
Among the cases that represented millionaire losses are, for example, Oxy, Ecuador TLC and others. In the case of Ecuador TLC and others, a court ruled that the State 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 reversion of goods and over oil uprising. But, after an 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.
Ecuador TLC and others operated in the oil block 18 and the Palo Azul unified field until November 2010. Another case that involved Ecuador incurring unforeseen expenses was Oxy. In 2016, the ICSID resolved that Ecuador should pay this oil company USD 980 million, after it canceled its contract with this private company unilaterally and in advance.
The expiration occurred, 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. The previous government defended the expiration on noting that the usufruct of the entire block left important profits for the Treasury, despite the payment made to Oxy by the arbitration.
For René Ortiz, former Minister of Energy and former general secretary of OPEC, these legal proceedings and others that have been resolved against Ecuador could have been avoided if both parties reached an agreement before a final ruling was issued.
In Ortiz’s opinion, in this type of case, it is preferable to arrive at a “bad agreement than a judgment”, because the litigation affects the credibility of the State before the investors. In total, between 2005 and 2018, Ecuador has obtained partially favorable results in nine cases, favorable solutions in 11 processes, the Attorney General’s Office reported.
Currently, however, the State has 36 legal proceedings in international courts and 27 arbitration notices. Given this situation, the State Attorney, Íñigo Salvador, mentioned that he will seek to reach a friendly solution, because “from experience, arbitrations do not give good results in some cases.” (I)