Tribunal Finds Ecuador in Breach of its Obligations Under International Law and the Bilateral Investment Treaty with the United

  Tribunal Finds Ecuador in Breach of its Obligations Under International Law
  and the Bilateral Investment Treaty with the United States

 Permanent Court of Arbitration Panel to Determine Whether Chevron Should Be
    Compensated for Ecuador’s failure to Prevent Enforcement of Lago Agrio
                                   Judgment

Business Wire

SAN RAMON, Calif. -- February 8, 2013

An international arbitration tribunal issued an award yesterday finding that
the Republic of Ecuador has violated the Tribunal’s prior Interim Awards
authorized under international law and a treaty between the United States and
Ecuador by not preventing the attempted enforcement of a $19 billion judgment
against Chevron Corp. (NYSE: CVX). In prior rulings, the Tribunal put the
Republic on notice that if Chevron’s arbitration ultimately prevails, “any
loss arising from the enforcement of (the judgment) may be losses for which
the (Republic) would be responsible to (Chevron) under international law.”

Convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty
(the BIT) and administered by the Permanent Court of Arbitration at The Hague,
the Tribunal found Ecuador in breach of the Tribunal’s prior rulings and
ordered the Republic to explain why it should not be ordered to compensate
Chevron for all harm resulting from the plaintiffs’ attempts to enforce a
judgment resulting from an environmental trial against the company in Lago
Agrio, Ecuador.

Almost one year ago, the Tribunal issued a Second Interim Award ordering the
Republic of Ecuador—and all of its branches, including the judiciary—to take
all necessary actions to prevent enforcement and recognition of the Lago Agrio
judgment, both inside and outside of Ecuador. That award expanded upon a prior
award requiring Ecuador to “take all measures at its disposal to suspend or
cause to be suspended the enforcement or recognition within and without
Ecuador of any judgment.”

“The Tribunal’s decision confirms that the enforcement actions being pursued
against Chevron in Argentina, Brazil, and Canada fly in the face of
international law,” said Hewitt Pate, Chevron vice president and general
counsel. “Yet Ecuador has consistently aligned itself with American trial
lawyers who have used corrupt courts to advance an unprecedented fraud. It is
not too late for the Republic to reverse course, declare the Lago Agrio
judgment illegitimate, and address the real challenges facing its citizens.”

Despite the Tribunal’s Awards, the Republic of Ecuador has facilitated the
plaintiffs’ pursuit of enforcement in Argentina, Brazil, and Canada. These
actions are the result of Ecuador’s failure to meet its international law and
treaty obligations.

Chevron’s arbitration claim stems from the government of Ecuador’s
interference in the ongoing environmental lawsuit against the company in
Ecuador and its courts’ failure to administer justice in a trial that has been
marred by fraud. Additionally, Chevron maintains that the government of
Ecuador has failed to uphold prior settlement and release agreements that the
government of Ecuador entered into with Texaco Petroleum Company (now a
Chevron subsidiary) when the consortium between Texaco Petroleum and
Petroecuador was terminated.

In its ruling, the Tribunal found that “Neither disagreement with the
Tribunal’s orders and awards on interim measures nor constraints under
Ecuadorian law can excuse the failure of the (Republic), through any of its
branches or organs, to fulfil its obligations under international law imposed
by the Treaty, the UNCITRAL Rules and the Tribunal’s orders and awards
thereunder, particularly the First and Second Interim Awards on Interim
Measures.”

In August 2011, a different international arbitration tribunal convened under
the BIT awarded Chevron and Texaco Petroleum $96 million, plus interest, in a
claim against the Republic of Ecuador related to past oil operations. The
Tribunal found that Ecuador's courts violated the BIT and international law
through their decade-long delays in ruling on certain commercial disputes
between Texaco Petroleum and the Ecuadorian government. A court in the
Netherlands has upheld the award and Ecuador has filed a second appeal.

Chevron is one of the world’s leading integrated energy companies, with
subsidiaries that conduct business worldwide. The company is involved in
virtually every facet of the energy industry. Chevron explores for, produces
and transports crude oil and natural gas; refines, markets and distributes
transportation fuels and lubricants; manufactures and sells petrochemical
products; generates power and produces geothermal energy; provides energy
efficiency solutions; and develops the energy resources of the future,
including biofuels. Chevron is based in San Ramon, Calif. More information
about Chevron is available at www.chevron.com.

Contact:

Chevron Corp.
Kent Robertson, San Ramon, California, +1-925-790-3819
 
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