Declaraciones del Procurador al

1. Ecuador Pushes Back Against
Chevron's Drive To Suspend
Trade Preferences
Posted: October 2, 2012
Ecuador's attorney general last week strongly rejected claims by
Chevron that the country has failed to comply with an interim ruling
by an investor-state arbitration tribunal and that the U.S. should
therefore suspend unilateral trade preferences it currently extends to
Ecuador under the Andean Trade Preferences Act (ATPA).
In a Sept. 28 interview with Inside U.S. Trade, Diego Garcia Carrion
said he met with Obama administration officials last week to convey
the message that Ecuador has complied with all of its international
obligations, including arbitral awards issued under the U.S.-Ecuador
bilateral investment treaty (BIT).
The conflict between Chevron and Ecuador stems from a court ruling
in Ecuador last year that sided with indigenous plaintiffs and faulted
Chevron for $18.2 billion in environmental damage caused by
Texaco, a company it later acquired.
But a tribunal convened under the U.S.-Ecuador BIT earlier this year
made an interim decision in which it instructed the government of
Ecuador -- whether by its judicial, legislative or executive branches -
- to hold off on enforcing the multi-billion dollar judgment against
Chevron until related BIT proceedings conclude. Chevron argues
that Ecuador has not complied with this interim BIT decision, and
that the company therefore still faces the massive penalty.
Garcia, however, made the case last week to Obama administration
officials that Ecuadorean law prevents the government from
interfering in domestic court proceedings, and that it therefore
cannot force the court to comply with the BIT tribunal's interim
award. He said the government had done everything legally within its
power by notifying the judge in the case of the interim award.

2. “This decision rests with the judge, and any action by the attorney
general or … any government official in trying to ensure the
international [BIT] tribunal's decision is carried out … would be an
interference in the administration of justice in Ecuador,” Garcia
maintained.
In a Sept. 17 submission to the Office of the U.S. Trade
Representative, the Ecuadorean government said that after the court
was briefed on the implications of the BIT tribunal's interim award, it
"noted a conflict in the State's respective international law
obligations."
To settle this conflict, the court then interpreted Ecuadoran law and
determined that Ecuador's obligations under human rights
conventions "prevail over other international obligations," such as
those contained in the BIT. For this reason, the court found it should
not halt domestic proceedings in order take the BIT tribunal's
decision into account, according to the submission filed by
Ecuadorean Ambassador Nathalie Cely.
Garcia said he held meetings last week with officials from the
State Department, Commerce Department and the Office of the
U.S. Trade Representative, as well as on Capitol Hill.
Those discussions were aimed at rebutting “the message that
Chevron has been carrying to the U.S. government and Congress, to
the American public opinion … that Ecuador is not in compliance
with its international obligations, and acts outside the commitments
made in bilateral treaties with the United States,” Garcia said.
Asked how U.S. officials responded to his arguments, Garcia said
there was no response per se because it was not his intention to
obtain a decision by U.S. authorities. “It was simply the search for a
space in which the position of Ecuador could be heard,” he said.
“It's not my job to obtain these decisions.”
Garcia stressed that as attorney general, he does not get involved in
the trade or diplomatic aspect of bilateral relations.

3. Chevron and U.S. business groups such as the Emergency
Committee on American Trade (ECAT) last month submitted their
own comments to USTR requesting the withdrawal or suspension of
Ecuador's trade benefits under ATPA, which was amended by the
Andean Trade Promotion and Drug Eradication Act. They argue that,
by failing to enforce the tribunal's interim award in the Chevron
arbitration, Ecuador has failed to meet one of ATPA's eligibility
criteria.
Specifically, the ATPA states that the president shall not designate
any country as a beneficiary country “if such country fails to act in
good faith in recognizing as binding or in enforcing arbitral awards in
favor of United States citizens” or a company that is 50 percent or
more owned by U.S. citizens.
Identical language exists as one of the eligibility criteria for the
Generalized System of Preferences (GSP) program. President
Obama earlier this year suspended Argentina's trade preferences
under that program because it has failed to pay two awards owed to
U.S. companies in investor-state disputes (Inside U.S. Trade, March
30).
Asked during the interview whether that move was worrisome to the
Ecuadorean government, Garcia drew a clear distinction between
the behavior of Ecuador and Argentina, noting that Ecuador has
complied with arbitral awards that have been handed down against
it.
“There shouldn't be any worry or confusion about the actions of our
country with the actions of other countries that have shown openly
their decision not to comply with certain arbitral awards,” he said.
“That is not the case of Ecuador.”
A Sept. 27 statement from the Embassy of Ecuador echoed the
attorney general's remarks, noting that the country has always
complied with “unfavorable judgments” in investor-state suits,
including in two cases involving Occidental Petroleum and Duke
Energy.

4. The comments submitted by stakeholders to USTR last month
are part of an annual review of countries' ATPA eligibility.
Ecuador is the only country now benefiting from ATPA, as Peru and
Colombia graduated from the program after their bilateral FTAs with
the U.S. went into effect and Bolivia's participation was suspended
in 2008. The program is set to expire on July 31, 2013.
USTR's regulations require it to publish the results of a preliminary
review of the petitions in the Federal Register on or about Dec. 1,
after which it must accept a new round of public comments and hold
a hearing on any proposed action. The agency would then prepare a
recommendation to the president, who would make a decision in
February or March, according to the regulations.
In their comments, ECAT, the National Association of Manufacturers,
National Foreign Trade Council, and U.S. Council for International
Business all argued that Ecuador had failed to meet the ATPA
eligibility criterion relating to enforcement of arbitral awards. ECAT
also said Ecuador had failed to meet other ATPA eligibility criteria
relating to expropriation of property and nullification of contracts
with a U.S. company, but did not provide details.
In its 13-page comment, Chevron said its petition for withdrawal of
Ecuador's ATPA benefits should be treated as an urgent matter
warranting “immediate review” due to “exceptional circumstances.”
It argued that any delay in acting on the petition would cause the
withdrawal of suspension of Ecuador's trade preferences to be
ineffective, if the court judgment against Chevron in Ecuador is
enforced before that time.
The oil company also laid out detailed arguments as to how Ecuador
had failed to comply with the first and second interim awards of the
arbitration tribunal, handed down on Jan. 25 and Feb. 16,
respectively. The second interim award directed Ecuador “to take all
measures necessary to suspend or cause to be suspended the
enforcement and recognition within and without Ecuador” of the
$18.2 billion judgment in the environmental case. Chevron stressed
that these awards are binding on the entire government of Ecuador,
including the courts.

5. Specifically, Chevron argued that Ecuador had “multiple
opportunities” to take action consistent under the second interim
award, but failed to take any of them. It provided an illustrative list of
actions that Ecuador could have taken, including the issuance of an
opinion by the executive branch or courts that the judgment is
suspended, or that the judgment is not enforceable under
Ecuadorean law pending the outcome of the BIT arbitration.
At the same time Ecuador failed to take any action to suspend the
judgment, its courts have taken several affirmative steps to promote
the judgment's enforceability, Chevron said. For instance, on Aug. 3
a provincial court issued an “execution order,” which is the
document definitively causing the judgment to become enforceable
as a matter of Ecuadorean law.
Finally, Chevron argued that Ecuadorean executive branch officials
have actively encouraged the plaintiffs in the environmental suit to
seek enforcement of the judgment, noting that President Rafael
Correa himself referred to the arbitration proceeding a “monstrosity.”
“Such statements are a blatant interference with the judicial process,
which in this case, amounts to a breach of Ecuador's obligation to
recognize and enforce the arbitral tribunal's interim award,” the
company said.
In her Sept. 17 submission to USTR, Cely made two main
arguments: that Ecuador participation in ATPA is in the national
security and economic interest of the U.S., and that the country
meets the ATPA eligibility criterion relating to arbitral awards.
Like the attorney general, she reiterated that the Ecuadorean
government was unable to intervene in the lawsuit, and that the
decision of how to respond to the interim awards was left to the
judge in the case. “Because the government of Ecuador has no
power to order the courts to interfere in private-party litigation any
more than the Government of the United States can order its courts
to do so, the precise effect of the interim award was left to the
courts,” she wrote.