Chevron Corporation and Texaco Petroleum Corporation v. The Republic of Ecuador

Case summary

At a glance

Parties: Chevron Corporation and Texaco Petroleum Company (TexPet) (both USA) v. the Republic of Ecuador
Case no.: PCA Case No. 2009-23
Forum and rules: UNCITRAL Arbitration Rules 1976, administered by the PCA; seat The Hague, the Netherlands
Treaty: United States–Ecuador BIT, signed 27 August 1993, in force 11 May 1997
Tribunal: V.V. Veeder (President until 2018); Albert Jan van den Berg (President in the 2021 and later awards); Horacio A. Grigera Naón; Vaughan Lowe
Sector: Oil and gas; environmental litigation; judicial conduct
Outcome: Ecuador was held liable for denial of justice and for breach of the umbrella clause over the Lago Agrio Judgment, and was ordered to remove that judgment's enforceability and to pay compensation for legal fees. Grigera Naón dissented in part.
Amount: Claimed: USD 793,879,967.74 in legal fees and expenses, plus USD 85,315,652 (trademark embargo), USD 13,000,000 (Argentine embargo), moral damages and interest. Awarded (as corrected on 5 February 2026): USD 175,720,152.45 plus interest. Costs reserved.

The dispute

From 1964 to 1992 TexPet operated an oil consortium in Ecuador's Oriente region. In 1995 it signed a Settlement Agreement with Ecuador and PetroEcuador, followed by a Final Release in 1998, under which the State released TexPet and other "Releasees" from environmental claims. In 2003 Ecuadorian residents (the Lago Agrio Plaintiffs) sued Chevron, which had become TexPet's indirect parent in 2001. On 14 February 2011 Judge Nicolás Zambrano issued a judgment of about USD 19 billion against Chevron; the Cassation Court later reduced it to about USD 9 billion. Chevron and TexPet claimed under the BIT that the litigation and judgment breached the settlement releases, the umbrella clause, fair and equitable treatment and the "effective means" clause, and amounted to a denial of justice. Ecuador objected to jurisdiction and admissibility, denied that the releases covered third-party claims, and denied any fraud or denial of justice.

Key holdings

Interim measures. Ecuador, through all its branches, was ordered to suspend enforcement and recognition of the Lago Agrio judgments inside and outside Ecuador. The Claimants had to post USD 50,000,000 with the PCA as security for Ecuador's possible losses from complying. Second Interim Award, ¶¶ 3–4
Jurisdiction upheld. All objections to TexPet's claims were rejected, as were the objections to Chevron's claims based on its indirect investment. Objections about Chevron's direct investment and an 'investment agreement' were joined to the merits. The fork-in-the-road clause did not apply because the Claimants had not themselves submitted the dispute to the Ecuadorian courts. Third Interim Award, ¶¶ 4.78–4.89, 4.95–4.96, 5.2–5.4
Ecuador breached the First and Second Interim Awards by making the Lago Agrio Judgment final and enforceable by 3 August 2012. It was ordered to show cause why it should not compensate Chevron. Fourth Interim Award, ¶ 79 and Part IV
Both Chevron and TexPet are Releasees under the 1995 Settlement Agreement and the 1998 Final Release. The releases bar 'diffuse' claims under Article 19-2 of the Constitution, whether brought by Ecuador or by individuals not claiming personal harm. They do not bar individual claims for personal harm. In Track 1B the Tribunal decided, without making an award, that the Lago Agrio Complaint included individual claims and so was not wholly barred at its inception. First Partial Award ¶ 112; Decision on Track 1B ¶ 186
Material parts of the Lago Agrio Judgment were corruptly ghostwritten for Judge Zambrano by representatives of the plaintiffs, in return for a promised bribe. By issuing and maintaining that judgment, Ecuador committed a denial of justice under Article II(3)(a) and customary international law. The judgment decided only diffuse claims, so Ecuador also breached its obligations to the Releasees under Article II(3)(c). Ecuador was ordered to remove the judgment's enforceability, to prevent its enforcement, and to make full reparation. Second Partial Award, ¶¶ 10.4–10.13
Threshold rulings for Track III. Any 'but-for' offset is limited to the claims actually pleaded by the 48 named Lago Agrio Plaintiffs and to the actual litigation record. Ecuador was not barred from arguing that the Claimants failed to mitigate their damages. Partial Award on Threshold Issues, ¶ 188
Ecuador must pay Chevron its legal fees and expenses in nine categories, including the Lago Agrio, enforcement, RICO (by majority), Section 1782 and Gibraltar proceedings. Pre-award interest runs at the 1-year US Treasury bill rate, compounded annually; post-award interest at that rate plus 2%. Ecuador was also declared in breach of the Track II orders. A later correction, decided by majority, reduced the total to USD 175,720,152.45. Fourth Partial Award ¶ 2938; Decision on Correction ¶ 44

Procedural history

23 September 2009The Claimants filed their Notice of Arbitration under the BIT.
10 March 2010The US District Court for the Southern District of New York (Judge Sand) denied Ecuador's motion to stay the arbitration.
25 January and 16 February 2012First and Second Interim Awards on Interim Measures: Ecuador was ordered to suspend enforcement of the Lago Agrio Judgment.
27 February 2012Third Interim Award on Jurisdiction and Admissibility: jurisdiction upheld, with some objections joined to the merits.
7 February 2013Fourth Interim Award: Ecuador was declared in breach of the interim awards.
17 September 2013First Partial Award on Track I, on the 1995 Settlement Agreement releases.
12 March 2015Decision on Track 1B (not an award), with a note of dissent by Grigera Naón.
30 August 2018Second Partial Award on Track II: denial of justice and umbrella clause breach found. A request for interpretation was decided on 6 November 2018.
20 January 2016 – 28 June 2022Dutch courts rejected Ecuador's applications to set aside the interim awards and the First Partial Award (District Court 2016, Court of Appeal 2017, Supreme Court 12 April 2019), and its application against the Track II orders (District Court 16 September 2020, Court of Appeal 28 June 2022).
17 November 2025Fourth Partial Award on Track III on compensation, with a partial dissent by Grigera Naón on the RICO claim. Corrected by a decision of 5 February 2026.

Tribunal, counsel and experts

Decided by: Horacio A. Grigera Naón Co-arbitrator
Vaughan Lowe Co-arbitrator
V.V. Veeder President
Albert Jan van den Berg President (President of the Tribunal in the Track III Partial Award (2021) and later decisions)
Experts: Jan Paulsson (claimant) · David D. Caron (claimant) · Philippe Grandjean (claimant)