Ecuador’s government said that it will pay a $374 million judgement to Perenco, a French oil firm after the nation failed to get an arbitral verdict against it overturned. Perenco had sued the Ecuadorian government in 2008 over a new rule enacted by then-president Rafael Correa at a time when oil prices were skyrocketing.
The statute set aside up to 99% of gross revenue from petroleum sales beyond a particular threshold for state coffers.
Perenco alleged that the legislation violated Ecuador’s international commitments under theFrance-Ecuador Bilateral Investment Treaty, which requires both nations to safeguard foreign residents’ assets.
An arbitral panel under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) sided with Perenco in 2019 and ordered the Ecuadorian government to pay the firm more than $450 million in damages for the harm caused by the law’s passage.
Ecuador had filed an appeal with the ICSID’s Annulment Committee, which denied Ecuador’s request to totally annul the verdict, instead of reducing the damages granted from $450 million to roughly $412 million.
Ecuador’s Solicitor General’s office stated in a statement that the annulment committee’s decision was final and that it would not challenge the judgement.
The Ecuadorian government also indicated that it will restart discussions with Perenco in order to achieve an agreement on payment terms.
The present case is identical to Ecuador’s settlement with Conoco Phillips, a US oil corporation that was granted $380 million by another ICSID arbitration panel.