Ecuador to pay $1 billion dollars in compensation to US oil company

03.11.2015 - Quito, Ecuador - Redacción Ecuador

This post is also available in: Spanish

Ecuador to pay $1 billion dollars in compensation to US oil company

Ecuador was today notified by the Annulment Committee of the International Centre for Settlement of Investment Disputes (ICSID) of the final decision regarding the request for annulment of an award decided in October 2012 in a case brought by a US oil company based on the Investment Protection Treaty.

The Annulment Committee concluded that the award is partially annulled. This decision has reduced the amount decided by the Court by 40% ($1,769,625,000) to $1,061,775,000. This final amount is in contrast to the amount of $3,370,000,000 originally claimed by the OXY oil company (Occidental Petroleum).

The State Procurator General, Diego García Carrión, together with the Ministry of Finance confirmed their intention to continue working with OXY in order to see how to reach a quick and amicable resolution, and they will shortly inform the people of Ecuador about the results.

The relationship between Ecuador and the oil company broke down in 2006, when the then Energy Minister, Iván Rodriguez declared the contract with OXY, who were operating in block 15 and the Eden Yuturi and Limoncocha oil fields under a a contract signed in 1999, to be terminated.

President Rafael Correa explained that the State terminated the contract due to the oil company’s contract breaches.

In October 2012 the Arbitration Court that heard the case gave a decision in favour of OXY, obliging the state to pay $1.8 billion dollars, a decision that was appealed by the Procurator General through a request for nullity, arguing that the Court had exceeded its jurisdiction.

This afternoon the President tweeted about the case. In his tweets he pointed out that an annulment of 40% of the original award had been achieved but he warned that despite this the country has been asked to pay just over $1 billion dollars.

Correa, also criticised that in the ruling the termination of the contract – for reasons of contract breach – was treated as an act of confiscation, something that the President described as an “attack on our sovereignty.”

The Head of State said that a new proposal has been made to the US oil company and that “we will continue negotiating the final award.”

Source: El Telegráfo

Categories: South America
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