Junefield Gold Investments Limited v. The Republic of Ecuador

At a glance

Parties

Junefield Gold Investments Limited (China) v. the Republic of Ecuador

Case no.

PCA Case No. 2023-35

Forum and rules

UNCITRAL Arbitration Rules (2010), administered by the PCA; seat Amsterdam

Treaty

China–Ecuador BIT, signed 21 March 1994 (in force 1 July 1997, terminated 19 May 2018)

Tribunal

Sofia Martins (Presiding Arbitrator), Ignacio Suárez Anzorena, Philippe Sands (dissenting in part)

Sector

Gold and silver mining

Outcome

Partial Award on Jurisdiction (2 June 2025): by majority, jurisdiction upheld over all aspects of the expropriation claim; unanimously, no jurisdiction over the FET and protection and security claims, whether under Article 9.3 or through the MFN clause.

Amount

Costs claimed for the jurisdictional phase: USD 1,636,114.54 (Claimant) and USD 1,240,052.20 (Respondent). Arbitration costs of the phase fixed at USD 382,126.55, shared equally; each side bears its own legal costs.

The dispute

Junefield, a Chinese company, invested through Ecuagoldmining in a gold and silver mining project in the Province of Azuay, Ecuador, covering the Canoas, San Luis A2 and Miguir concessions. In May 2018 individuals broke into the project facilities. Ecuadorian courts then ordered the suspension of exploitation for lack of prior consultation with indigenous communities: the first-instance judgment of the Civil Judge of Cuenca of 5 June 2018 was confirmed by the Court of Appeal of Azuay on 3 August 2018. From October 2019 occupiers controlled the access roads. Junefield claimed expropriation (Article 4), breach of fair and equitable treatment and of protection and security (Article 3.1), and compensation. Ecuador objected that Article 9.3 of the Treaty limits arbitration to the amount of compensation for an expropriation already proclaimed by the State, and that the MFN clause cannot widen that consent.

Key holdings

1. The Tribunal applies the ordinary rules of treaty interpretation in Articles 31–33 of the VCLT. Consent to arbitration is read neither restrictively nor liberally, and no heightened standard of proof applies. The Claimant bears the burden of proving jurisdiction. ¶¶ 96–107
2. By majority, a "dispute involving the amount of compensation for expropriation" includes, but is not limited to, the amount of compensation. The Tribunal may therefore decide whether an expropriation occurred and gives rise to liability, and no prior declaration of expropriation by local courts or authorities is required. The majority relied on the inclusive meaning of "involving", on the fork-in-the-road clause (which lets the investor choose courts or arbitration at the same moment), and on Article 4, which makes no provision for prior review by local courts. ¶¶ 221, 230–242, 262, 267
3. Unanimously, jurisdiction under Article 9.3 is limited to expropriation and does not extend to the FET or protection and security claims. Otherwise an investor could add a frivolous expropriation claim to bring any Treaty breach to arbitration. ¶¶ 263–267
4. The MFN clause in Article 3.2 cannot be used to import the wider arbitration clause of the Ecuador–Peru BIT. Article 3.2 covers only the FET and protection of Article 3.1, which do not include an absolute right to arbitration, and the specific limit in Article 9.3 prevails. ¶¶ 281–298
5. Both sides prevailed in part. Each bears its own costs of legal representation, and they share equally the arbitration costs of this phase, fixed at USD 382,126.55. ¶¶ 307–312
6. Philippe Sands dissented on the expropriation point. In his view Article 9.3 gives jurisdiction only over the amount of compensation, not over other elements of an expropriation claim. He relied on the neutral meaning of "involving" across the three language versions, on China's first-generation BIT policy, on the triple identity test for the fork-in-the-road clause, and on the link with Article 4's definition of compensation. Dissenting Opinion, ¶¶ 4–22

Procedural history

1. 4 October 2022Junefield files its Request for Arbitration under Article 9 of the Treaty.
2. 9 December 2022Ecuador files its response. The Claimant appoints Ignacio Suárez Anzorena and the Respondent appoints Philippe Sands.
3. 16 August 2023The ICSID Secretary-General appoints Sofia Martins as presiding arbitrator, using a ballot procedure.
4. 10 October 2023Terms of Appointment and Procedural Order No. 1 are issued. The PCA acts as registry and the seat is Amsterdam.
5. 25 January 2024Procedural Order No. 2 grants Ecuador's request to bifurcate the proceedings on its Article 9 objection.
6. 11–12 December 2024Hearing on jurisdiction at the Peace Palace, The Hague.
7. 2 June 2025Partial Award on Jurisdiction: jurisdiction over the expropriation claim only. Philippe Sands dissents.

Tribunal, counsel and experts

Decided by

• Sofia Martins President — appointed by the institution (appointed by the ICSID Secretary-General)
• C. Ignacio Suarez Anzorena Co-arbitrator — appointed by the claimant
• Philippe Sands Co-arbitrator — appointed by the respondent (dissented on jurisdiction over the expropriation claim)

For the claimant

Mayer Brown · Johnson Stokes & Master · Robalino Law

For the respondent

Procuraduría General del Estado · Squire Patton Boggs

Experts

Edgar Neira (claimant) · Robert Kolb (claimant) · Luis González García (respondent) · Santiago Velázquez (respondent)

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Keywords

• China–Ecuador BIT
• amount of compensation for expropriation
• scope of consent
• Article 9.3
• involving
• fork in the road
• indirect expropriation
• most-favoured-nation clause
• MFN and dispute resolution
• fair and equitable treatment
• full protection and security
• gold mining
• Azuay
• Ecuagoldmining
• prior consultation indigenous communities
• Beijing Shougang v. Mongolia
• Sanum v. Laos
• dissenting opinion

Summary generated with AI from the published documents — refer to the award for the authoritative text.