Chevron Corporation v. The Republic of Ecuador
417 App. D.C. 463
| D.C. Cir. | 2015Background
- Chevron and Ecuador signed a 1973 oil development deal under which Chevron supplied oil to Ecuador below market; the agreement was to expire in 1992 but extensions were unresolved.
- By 1995 the parties signed a settlement terminating all rights and obligations but allowing pending lawsuits to continue.
- In 1993 Ecuador and the U.S. signed the BIT; the BIT offered a standing right to arbitrate investment disputes, with investment defined broadly.
- Chevron commenced international arbitration in The Hague in 2006 alleging Ecuador delayed resolving its lawsuits in violation of the BIT; the tribunal ruled against Ecuador on most breach claims and awarded Chevron about $96 million.
- Ecuador challenged the award in the Dutch courts; Chevron then sought confirmation of the arbitral award in the District Court for the District of Columbia under the New York Convention, incorporated into the FAA.
- The District Court granted jurisdiction under 28 U.S.C. § 1605(a)(6) and, after deferential review of arbitrability, confirmed the award; Ecuador appealed, and the D.C. Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FSIA provides jurisdiction to confirm an arbitral award governed by a treaty | Chevron contends jurisdiction exists if a non-frivolous claim asserts an arbitration agreement. | Ecuador argues FSIA requires de novo arbitrability review and lack of true agreement. | Chevron met threshold showing; jurisdiction affirmed. |
| Whether the BIT and Chevron’s arbitration notice constitute a valid arbitration agreement | Chevron argues BIT and notice together form an arbitration agreement. | Ecuador challenges validity of the agreement between BIT/notice. | BIT and notice constitute an arbitration agreement; arbitrability delegated to the tribunal. |
| Whether arbitrability should be reviewed de novo or deferred to the arbitrator | Chevron relies on contract-like view and BG Group to sustain arbitral delegation. | Ecuador urges de novo review of arbitrability under FSIA. | Arbitrability delegated to arbitrator; Supreme Court BG Group followed; no de novo review required. |
| Whether confirming the award contravenes NY Convention public-policy grounds | Chevron argues enforcement aligns with NY Convention and US policy favoring arbitral dispute resolution. | Ecuador claims public-policy/public-sovreign concerns bar enforcement. | Public policy not violated; NY Convention grounds satisfied; confirmation proper. |
Key Cases Cited
- BG Group PLC v. Republic of Argentina, 134 S. Ct. 1198 (2014) (arbitrability delegated to arbitrators under UNCITRAL rules)
- Republic of Argentina v. BG Group PLC, 665 F.3d 1363 (D.C. Cir. 2012) (treaty arbitrability treated as contract-like; court declines de novo review)
- Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724 (D.C. Cir. 2012) (NY Convention enforcement grounds limited by public policy)
- Chabad of U.S. v. Russian Fed’n, 528 F.3d 934 (D.C. Cir. 2008) (existence of arbitration agreement is factual predicate; burden on sovereign)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (strong federal policy favoring arbitral dispute resolution)
- Chabad of U.S. v. Russian Fed’n, 528 F.3d 934 (D.C. Cir. 2008) (see above)
- Oracle America, Inc. v. Myriad Group A.G., 724 F.3d 1069 (9th Cir. 2013) (incorporation of UNCITRAL rules signals arbitrability by tribunal)
- Schneider v. Kingdom of Thailand, 688 F.3d 68 (2d Cir. 2012) (arbitrability questions under BIT/UNCITRAL rules)
- Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480 (1983) (FSIA exceptions are sole bases for jurisdiction)
- Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (1989) (FSIA arbitration exception governs jurisdiction)
