## Facts

- Chevron Corporation and Texaco Petroleum Company invested in and operated petroleum concessions in Ecuador under 1970s concession contracts.
- In 1991, Chevron filed seven breach-of-contract suits in Ecuadorian courts, alleging Ecuador took excess discounted crude and underpaid; the cases remained unresolved for many years.
- A 1993 bilateral investment treaty (BIT) between the United States and Ecuador provided protections to U.S. investors and authorized arbitration under the UNCITRAL Arbitration Rules.
- In 2006, Chevron commenced UNCITRAL arbitration, alleging Ecuador’s prolonged court delays violated BIT obligations to provide effective means to assert claims and fair and equitable treatment.
- A tribunal seated in The Hague determined it had jurisdiction, found Ecuador liable for undue delay amounting to a treaty breach, and issued a 2011 damages award to Chevron.
- Ecuador sought annulment in Dutch courts; the Hague District Court rejected annulment.
- Chevron petitioned the U.S. District Court for the District of Columbia to confirm the award under the Federal Arbitration Act provisions implementing the New York Convention.
- Ecuador opposed confirmation, asserting sovereign immunity under the FSIA, New York Convention defenses (including excess of scope and public policy), and sought a stay pending further Dutch proceedings.

## Issues

1. Whether the FSIA’s arbitration exception supplied subject-matter jurisdiction over Ecuador in an action to confirm a BIT-based award governed by the New York Convention.
2. Whether enforcement should be refused under New York Convention Article V(1)(c) because the tribunal allegedly lacked jurisdiction or exceeded the scope of the submission.
3. Whether enforcement should be refused under New York Convention Article V(2)(b) as contrary to U.S. public policy.
4. Whether confirmation should be stayed pending Ecuador’s set-aside efforts in the Netherlands.

## Decision

- The court held it had subject-matter jurisdiction under the FSIA arbitration exception because the action sought confirmation of an award made pursuant to an arbitration agreement governed by the New York Convention.
- The court confirmed the arbitral award and rejected Ecuador’s Article V defenses.
- The court denied Ecuador’s request for a stay, finding further delay unwarranted given the Convention’s enforcement framework and the Dutch court’s refusal to annul the award.

## Legal Principles

- FSIA arbitration exception applies when an action is brought to confirm an award made pursuant to an agreement to arbitrate governed by a treaty such as the New York Convention; a BIT may operate as a standing offer to arbitrate that is accepted by the investor’s notice of arbitration.
- Incorporation of UNCITRAL Arbitration Rules constitutes clear delegation of arbitrability questions to the tribunal, warranting substantial judicial deference to the tribunal’s jurisdictional determinations at the confirmation stage.
- New York Convention Article V(1)(c) does not bar enforcement where the tribunal’s award remains within the matters submitted (e.g., treaty-based denial-of-justice claims) even if underlying contract disputes exist in domestic courts.
- New York Convention Article V(2)(b) public-policy defense is narrow and applies only when enforcement would violate fundamental U.S. notions of morality and justice; enforcing a damages award for treaty breaches does not meet that standard.
- A stay pending foreign set-aside proceedings is discretionary; courts consider the posture and prospects of annulment proceedings and the Convention’s preference for prompt enforcement.

## Conclusion

The court confirmed Chevron’s investor–state arbitral award against Ecuador, holding that the BIT and New York Convention triggered the FSIA arbitration exception, the tribunal acted within its delegated authority, the Convention defenses were not met, and no stay was justified.


Chevron Corp. v. Republic of Ecuador, 949 F. Supp. 2d 57 (D.D.C. 2013)