Ecuador v. Chevron Corp., et al.

Case Updates

The Second Circuit affirmed the district court’s decision not to enjoin the arbitration proceeding initiated by Chevron against Ecuador pursuant to the US-Ecuador Bilateral Investment Treaty. The court did not address the principal argument in NCLC’s amicus brief – that a federal court has no authority under the FAA to enjoin an arbitration under a BIT treaty – but it did agree that in executing the BIT treaty, Ecuador agreed to arbitrate disputes with U.S. investors, and Ecuador’s estoppel and waiver defenses could be raised in the arbitration.

NCLC urged the Second Circuit to deny Ecuador’s request to stay arbitration with Chevron over a dispute arising under the two nations’ Bilateral Investment Treaty (BIT). The case arises out of a dispute over whether an Ecuador court or an international arbitration panel should decide whether Chevron is obligated to pay as much as $27 billion to clean up alleged environmental damage to the Amazon rainforest. In its brief, NCLC argued that access to binding arbitration is one of the most fundamental protections provided by the BIT, because it gives United States investors the assurance of a fair and impartial tribunal to adjudicate any investment disputes that may arise with the foreign state under the treaty. International arbitration is particularly important in countries where local judiciaries are at times slow, ineffective, or even corrupt. NCLC also argued that the Federal Arbitration Act gives federal courts the authority to enforce international arbitration agreements. However, the Act does not, as the plaintiffs have claimed, give federal courts the authority to enjoin international arbitration.