PCA-#34877-V1-20100330 CT-E Partial Award on the Merits

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N AN

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RBITRATION UNDER THE

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REATY

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ETWEENTHE

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NITED

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TATES OF

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MERICA AND THE

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EPUBLIC OF

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CUADOR

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ONCERNING THE

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NCOURAGEMENT AND

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ECIPROCAL

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ROTECTIONOF

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NVESTMENT AND THE

UNCITRAL

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RBITRATION

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ULES

Partial Award on the Merits

March 30, 2010

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LAIMANTS

:

Chevron Corporation (USA) andTexaco Petroleum Company (USA)

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LAIMANTS

’

COUNSEL

:

R. Doak BishopEdward G. KehoeWade M. CoriellRoberto Aguirre-LuziMargrete StevensIsabel Fernández de la CuestaDavid H. WeissKing & Spalding LLPAlejandro Ponce-MartínezQuevedo & Ponce

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ESPONDENT

:

The Republic of Ecuador

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ESPONDENT

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S COUNSEL

:

Bruno D. LeurentEric W. BloomMark ClodfelterRicardo UgarteTomás LeonardC. MacNeil MitchellWinston & Strawn LLPDiego García CarriónProcurador General del Estado

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RBITRAL

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RIBUNAL

:

Prof. Karl-Heinz Böckstiegel, ChairmanThe Honorable Charles N. BrowerProf. Albert Jan van den Berg

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ECRETARY TO THE

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RIBUNAL

:

Brooks Daly (PCA)Assisted by Martin Doe (PCA)

UNCITRAL Chevron-Texaco v. Ecuador Partial Award on the Merits

2

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ABLE OF

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ONTENTS

A. The Parties.........................................................................................................10B. The Tribunal......................................................................................................13C. Short Identification of the Case........................................................................14C.I. The Jurisdictional Phase................................................................................141. The Jurisdictional Issues...........................................................................142. Arguments by the Respondent..................................................................153. Arguments by the Claimants.....................................................................184. The Tribunal’s Interim Award on Jurisdiction.........................................19C.II. The Merits Phase...........................................................................................201. The Issues on the Merits...........................................................................202. The Claimants’ Perspective.......................................................................213. The Respondent’s Perspective..................................................................25D. Procedural History............................................................................................27E. The Principal Relevant Legal Provisions..........................................................59E.I. The BIT.........................................................................................................59E.II. The VCLT.....................................................................................................63F. Relief Sought.....................................................................................................64F.I. Relief Sought by the Claimants.....................................................................64F.II. Relief Sought by the Respondent..................................................................67G. Factual Background..........................................................................................68H. Considerations of the Tribunal..........................................................................82H.I. Preliminary Considerations...........................................................................821. Applicable Law.........................................................................................822. Treaty Interpretation and Relevance of Decisions of other Tribunals......83H.II. Breach of the BIT – Liability........................................................................851. Denial of Justice under Customary International Law for Undue Delay..85a) Arguments by the Claimants.................................................................85b) Arguments by the Respondent..............................................................912. Denial of Justice under Customary International Law for ManifestlyUnjust Decisions.......................................................................................97

UNCITRAL Chevron-Texaco v. Ecuador Partial Award on the Merits

3a) Arguments by the Claimants.................................................................97b) Arguments by the Respondent............................................................1013. Violation of Specific BIT Standards of Protection.................................105a) Arguments by the Claimants...............................................................105i) Effective means of asserting claims and enforcing rights(Article II(7))............................................................................................105ii) Fair and equitable treatment (Article II(3)(a)).................................106iii) Full protection and security (Article II(3)(a))..............................108iv) Arbitrary or discriminatory measures (Article II(3)(b))...............109b) Arguments by the Respondent............................................................110i) Effective means of asserting claims and enforcing rights(Article II(7))............................................................................................113ii) Fair and equitable treatment (Article II(3)(a)).................................114iii) Full protection and security (Article II(3)(a))..............................116iv) Arbitrary or discriminatory measures (Article II(3)(b))...............1174. Breach of the Investment Agreements....................................................119a) Arguments by the Claimants...............................................................119b) Arguments by the Respondent............................................................1205. The Tribunal............................................................................................121H.III. Exhaustion of Local Remedies...................................................................1341. Arguments by the Claimants...................................................................1342. Arguments by the Respondent................................................................1443. The Tribunal............................................................................................156H.IV. Abuse of Rights and Estoppel...................................................................1611. Arguments by the Claimants...................................................................1612. Arguments by the Respondent................................................................1623. The Tribunal............................................................................................167H.V. The Claimants’ Loss – Measure of Damages.............................................1701. Arguments by the Claimants...................................................................1702. Arguments by the Respondent................................................................1733. The Tribunal............................................................................................178