The Ecuadorian State will have to face a millionaire payment to the Perenco oil company after a ruling issued by a committee constituted under the auspices of the International Center for Settlement of Investment Disputes of the World Bank (ICSID Committee).
On May 28, this instance rejected Ecuador’s attempts to annul an award that benefits the oil company Perenco. The decision has already been notified to the State.
The Ecuadorian State and the oil company had a long legal dispute since Law 42 was imposed, which increased the State’s utility in Perenco’s participation contracts in Blocks 7 and 21.
This change was generated in 2007 when the State’s participation in oil surpluses was increased from 50% to 99%.
Perenco had accused Ecuador of violating the Bilateral Investment Treaty signed with France.
The ruling determined that Executive Decree No. 662, of October 4, 2007, violated Public International Law to the detriment of the Perenco oil company.
Following the last decision at the end of May this year, Perenco considered that “it has obtained a substantial and definitive victory in its long dispute against the Republic of Ecuador.”
In September 2019, Perenco obtained a final award that vindicated its rights by awarding it compensation for its main claims plus post-award interest and almost 80% of its costs.
The oil company claims that Ecuador promised to pay the award to Perenco within 60 days of the ICSID committee’s decision.
“Perenco hopes that Ecuador will comply with the solemn commitments that its Minister of Economy and Finance and its Attorney General assumed before the ICSID Annulment Committee to pay the award unconditionally, voluntarily and in full, within a period of 60 days”, said Mark W. Friedman, Co-Chair of the International Dispute Resolution Group at Debevoise & Plimpton and lead counsel for Perenco.