ICSID orders Ecuador to pay $380 million to U.S. oil exploration company over investment treaty violations
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Disputing Blog | 16 February 2017

ICSID orders Ecuador to pay $380 million to U.S. oil exploration company over investment treaty violations

by Beth Graham

An International Centre for Settlement of Investment Disputes (“ICSID”) arbitration tribunal has ordered the Republic of Ecuador to pay a ConocoPhillips’ wholly-owned subsidiary nearly $380 million related to Ecuador’s breach of a bilateral investment treaty (“BIT”) with the United States. In Burlington Resources Inc., et al. v. Republic of Ecuador, No. ARB/08/5 (ICSID, February 7, 2017), Burlington sought arbitration before the ICSID over two production-sharing contracts related to oil exploration and extraction the company entered into with Ecuador. According to Burlington, Ecuador unlawfully expropriated the company’s investment under the terms of the BIT. In 2012, an ICSID arbitral tribunal found Ecuador liable for the expropriation.

Following the ICSID’s finding on liability, Ecuador successfully sought to disqualify a member of the arbitration tribunal. Despite this, the ICSID denied the Republic of Ecuador’s request for reconsideration on the issue of liability. Last week, a modified ICSID tribunal issued a $380 million award in favor of Burlington. In a separate decision, however, the arbitration tribunal ordered Burlington to pay Ecuador $42 million in response to the Republic’s counterclaim over the negative environmental impacts that resulted from Burlington’s actions while performing its oil exploration activities in the nation.

A copy of each decision in this case is available on the ICSID Website.

source: Disputing Blog