Latin American Herald Tribune, Caracas
ICSID : Ecuador Unlawfully Seized U.S. Firm’s Oil Investments
23 December 2012
WASHINGTON – The World Bank’s International Center for the Settlement of Investment Disputes has handed down a ruling against the Ecuadorian government, finding that it “unlawfully expropriated” U.S. firm Burlington Resources’ investments in two oil blocks.
The arbitration body said in a 183-page document, dated Dec. 14 and posted to the ICSID’s Web site on Friday, that Ecuador violated a bilateral investment treaty when it seized the Houston-based firm’s investments in blocks 7 and 21 in the Amazon region.
It said arbitration proceedings will continue to determine the amount the government must pay the company in compensation.
“Although the ruling is an essential step in the process, the tribunal has not issued a decision on damages,” said Daren Beaudo, a company spokesman.
The Ecuadorian Embassy in Washington said it had no comment on the ruling for the moment.
Burlington filed for arbitration against Ecuador with the ICSID in 2008 to challenge a law requiring companies to pay the state 50 percent of their windfall profits stemming from high oil prices on international markets.
The U.S. firm said the law constituted a violation of the principle of legal certainty and it halted production at blocks 7 and 21, which it jointly controlled with French company Perenco.
Ecuador argued before the ICSID that it did not expropriate Burlington’s investments but rather enforced that company’s payment obligations and intervened in the blocks after that firm unilaterally opted to suspend operations.