## Facts

- Chevron Corporation and Texaco Petroleum Company (TexPet), U.S. investors, brought arbitration against the Republic of Ecuador under the 1993 U.S.–Ecuador bilateral investment treaty (BIT) pursuant to the UNCITRAL Arbitration Rules.
- TexPet had participated in a petroleum consortium in Ecuador; environmental impacts and related remediation agreements in the 1990s led to settlement and “release” documents involving TexPet, PetroEcuador, and Ecuadorian state entities.
- Separate private plaintiffs pursued the Lago Agrio environmental litigation in Ecuadorian courts against Chevron/TexPet, resulting in a multi-billion-dollar judgment in 2011–2012.
- The claimants alleged that Ecuador’s conduct—including actions of its courts and other organs in connection with the Lago Agrio litigation and the releases—breached BIT protections, including fair and equitable treatment/denial of justice and related obligations.
- Ecuador raised jurisdictional and admissibility objections, including fork-in-the-road, waiver, estoppel, challenges to the treaty character of the dispute, ripeness/exhaustion for denial-of-justice claims, and concerns about third-party rights tied to the Lago Agrio plaintiffs and judgment.

## Issues

1. What standard applies at the jurisdictional stage, and whether the claimants pleaded a prima facie case that could constitute BIT breaches if proven.
2. Whether prior litigation, settlements, and releases barred the arbitration through fork-in-the-road, waiver, or estoppel.
3. Whether denial-of-justice and similar claims tied to the Lago Agrio proceedings were inadmissible for lack of exhaustion/ripeness.
4. Whether the existence of non-party Lago Agrio plaintiffs and a domestic judgment defeated jurisdiction or rendered the claims inadmissible.

## Decision

- The tribunal affirmed jurisdiction over the principal BIT claims and found them admissible in the main.
- The tribunal applied a prima facie approach: it assessed whether the alleged facts, if established, could amount to treaty breaches, without finally determining disputed facts at the jurisdictional phase.
- The tribunal rejected fork-in-the-road objections, applying a “triple identity” test and finding the domestic proceedings and the treaty arbitration lacked identity of parties, object, and cause of action.
- The tribunal declined to bar the claims on waiver or estoppel at this stage, concluding those defenses were intertwined with merits questions, including interpretation and effect of the releases and related instruments.
- The tribunal did not dismiss denial-of-justice claims wholesale as unripe; it held that some allegations were sufficiently crystallized to proceed, while others could depend on later developments in domestic proceedings.
- The tribunal held that third-party interests and the existence of a domestic judgment did not eliminate jurisdiction; potential constraints arising from third-party rights were treated primarily as remedial considerations between the arbitration parties.

## Legal Principles

- At the jurisdictional stage in investor–state arbitration, a tribunal may apply a prima facie standard and ask whether pleaded facts, if proven, are capable of constituting treaty violations.
- A BIT tribunal’s jurisdiction can be engaged by allegations of wrongful sovereign conduct (including judicial conduct), even where the underlying controversy arose in private litigation under domestic law.
- Fork-in-the-road clauses are commonly assessed under a triple-identity framework (same parties, same object, same cause of action); prior domestic litigation does not bar treaty claims absent that identity.
- Waiver and estoppel defenses may be deferred where their application turns on merits-level determinations, including interpretation of settlement and release instruments and the factual record.
- Denial-of-justice claims generally implicate exhaustion/ripeness principles, but admissibility may be assessed claim-by-claim based on procedural posture and whether alleged violations are complete.
- The presence of non-party beneficiaries of a domestic judgment does not, by itself, defeat treaty jurisdiction; it may limit or shape available remedies between the arbitration parties.

## Conclusion

The tribunal allowed the arbitration to proceed by finding that the claimants pleaded tenable treaty claims and by rejecting Ecuador’s principal jurisdictional and admissibility objections, while reserving merits-dependent defenses and remedial complications—especially those tied to releases, ongoing domestic processes, and third-party interests—for later phases.


Chevron Corp. & Texaco Petroleum Co. v. Republic of Ecuador, PCA Case No. 2009-23 (Feb. 27, 2012)