On
October 5th, 2012, a split ICSID tribunal determined that the Republic of
Ecuador had breached the US-Ecuador bilateral investment treaty (“BIT”), and
awarded damages of US$1.77 billion (US$2.3 billion with interest applied),
reportedly the largest award ever to have been issued by an ICSID tribunal.
This award addresses issues in international investment law, such as the principle of
proportionality and the assessment of damages.
The ICSID Tribunal, composed of Mr. L. Yves Fortier (President), Mr. David Williams, and Professor Brigitte Stern, unanimously found that Occidental violated national law and breached the participation contract by transferring rights under a farmout agreement to a foreign investor, AEC, without the authorization of the Ecuadorian government. However, the tribunal found that the reaction of Ecuador through the unilateral termination of the contract was disproportionate to Occidental's breach, thus finding that Ecuador not only violated Ecuadorian law and customary international law, but also that Ecuador failed to accord a fair and equitable treatment standard and that the administrative sanction was a measure that "tantamount to expropriation" under the the BIT. …
Source:
The ICSID Tribunal, composed of Mr. L. Yves Fortier (President), Mr. David Williams, and Professor Brigitte Stern, unanimously found that Occidental violated national law and breached the participation contract by transferring rights under a farmout agreement to a foreign investor, AEC, without the authorization of the Ecuadorian government. However, the tribunal found that the reaction of Ecuador through the unilateral termination of the contract was disproportionate to Occidental's breach, thus finding that Ecuador not only violated Ecuadorian law and customary international law, but also that Ecuador failed to accord a fair and equitable treatment standard and that the administrative sanction was a measure that "tantamount to expropriation" under the the BIT. …
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