Republic of Ecuador v. Chevron Corp.
2011 U.S. App. LEXIS 5351
| 2d Cir. | 2011Background
- Long-running environmental litigation: Ecuadorian citizens sue TexPet in SDNY for decades of oil-related devastation in Ecuador's Oriente.
- Texaco moved for forum non conveniens dismissal; district court dismissed in 2001.
- Plaintiffs refiled in Lago Agrio, Ecuador; litigation there continues.
- Chevron and TexPet later invoked BIT arbitration against Ecuador under the US-Ecuador BIT; seek broad relief related to Lago Agrio proceedings.
- Plaintiffs and Ecuador sought to stay BIT arbitration in district court; district court declined to stay.
- Second Circuit concluded BIT arbitration can proceed alongside Lago Agrio and affirmed the district court’s ruling not to stay
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BIT arbitration may be stayed under FAA/New York Convention | Ecuador/Pls argue stay is necessary to enforce previous promises | Chevron argues no stay power and arbitration should proceed | Stay not required; arbitration can proceed concurrently |
| Arbitrability of Ecuador's waiver and estoppel defenses | Waiver/estoppel undermine the arbitration agreement | Arbitration panel should decide threshold arbitrability | Threshold issues delegated to arbitrator; panel decides arbitrability first |
| Equitable and judicial estoppel and collateral estoppel claims | Texaco's prior positions create estoppel against arbitration | Chevron acted consistently with prior promises; estoppel not warranted | Estoppel defenses not grounds to stay; issues resolved in arbitration or Ecuadorian proceedings as applicable |
Key Cases Cited
- Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (Supreme Court, 1983) (federal policy favoring arbitration)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (Supreme Court, 2002) (gateway matters generally for courts unless clearly delegated to arbitrator)
- Contec Corp. v. Remote Solution Co., 398 F.3d 205 (2d Cir. 2005) (evidence of intent to delegate arbitrability to arbitrator via contract terms)
- Bell v. Cendant Corp., 293 F.3d 563 (2d Cir. 2002) (supports delegation of arbitrability to arbitrator when clearly evidenced)
- Mulvaney Mech., Inc. v. Sheet Metal Workers Int'l Ass'n, Local 38, 351 F.3d 43 (2d Cir. 2003) (waiver/equitable defenses typically decided by arbitrator)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (Supreme Court, 1985) (federal policy favoring arbitration in international disputes)
- Smith/Enron Cogeneration Ltd. v. Smith Cogeneration Int'l, Inc., 200 F.3d 88 (2d Cir. 1999) (broad FAA/New York Convention framework)
- Motorola Credit Corp. v. Uzan, 388 F.3d 39 (2d Cir. 2004) (New York Convention interpretation supporting arbitration framework)
- Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir. 2002) (recounted procedural history and forum non conveniens context (cited background))