Chevron Awarded $96 Million in Arbitration Claim Against the Government of Ecuador

An international arbitration tribunal has awarded Chevron Corporation
and Texaco Petroleum Company $96 million in a claim against Ecuador
related to past oil operations by Texaco Petroleum, which is now a
Chevron subsidiary. The tribunal, administered by the Permanent Court of
Arbitration in The Hague, found that Ecuador′s courts violated
international law through their significant delays in ruling on certain
commercial disputes between Texaco Petroleum and the Ecuadorian
government. The final award also takes into account taxes, compound
interest, and costs associated with the preliminary award announced in
March 2010.

Chevron and Texaco Petroleum filed the international arbitration case in
December 2006 under the Rules of the United Nations Commission on
International Trade Law (UNCITRAL). The Permanent Court of Arbitration
is an intergovernmental organization with over one hundred member
countries established by international convention in 1899 to facilitate
arbitration and other forms of dispute resolution. The United States
acceded to the Court′s founding convention in 1900 and Ecuador acceded
in 1907.

The decision by the arbitration tribunal resolves seven commercial
claims that Texaco Petroleum filed in Ecuador between 1991 and 1993.
Ecuadorian courts continually delayed and refused to rule on the seven
cases, which the tribunal determined was a violation of Ecuador′s
obligation under its Bilateral Investment Treaty with the United States
to provide effective means for U.S. investors in Ecuador to assert
claims and enforce their rights.

'This ruling confirms that Ecuador can be held accountable for its
obligations under international law,? said Hewitt Pate, Chevron vice
president and general counsel. 'Since Ecuador′s politicized court system
has failed to provide impartial tribunals and due process, Chevron has
had to seek international remedies. Chevron will continue to pursue
enforcement of the agreements entered into by Ecuador and its
state-owned oil company, Petroecuador, when they were members of a
producing consortium with Texaco Petroleum.?

The Treaty arbitration tribunal is not alone in highlighting the
Ecuadorian courts′ failure to provide justice. In April 2011, the United
States Department of State released its human rights report for Ecuador
which states, 'The media reported on the susceptibility of the judiciary
to bribes for favorable decisions and resolution of legal cases and on
judges parceling out cases to outside lawyers, who wrote the judicial
sentences and sent them back to the presiding judge for signature.?
Likewise, the World Bank′s latest Worldwide Governance Indicators ranked
Ecuador below the 10th percentile of all countries surveyed with respect
to the rule of law, placing it behind North Korea.

Recent events in Ecuador demonstrate the continuing deterioration and
political subjugation of the justice system there:

• 
  After a leading Ecuadorian newspaper, El Universo, ran an
  opinion column critical of President Rafael Correa, an Ecuadorian
  judge?at Correa′s insistence?sentenced three newspaper executives and
  the columnist to jail for three years and fined the newspaper $40
  million.
  
• 
  According to The Economist, 'It took Juan Paredes, replacing
  the intended judge who was on holiday, less than two days to read
  through the case′s 5,000-page file? and issue the ruling. President
  Correa personally attended the hearing, 'accompanied by a small crowd
  of supporters that pelted the defendants and their lawyers with eggs
  and bottles outside the courthouse. The media were barred from
  attending.? International observers, including Human Rights Watch,
  called the ruling 'a major setback for free speech in Ecuador.?
  
• 
  President Correa′s Legal Secretary, Alexis Mera, issued an official
  proclamation, 'by order of the Constitutional President of the
  Republic,? requiring Ecuadorian Government ministries to immediately
  file suits for damages holding any judge who enjoins Government
  projects personally liable if their injunctions are subsequently
  overturned by a higher court.
  

Chevron is one of the world′s leading integrated energy companies, with
subsidiaries that conduct business worldwide. The company is involved in
virtually every facet of the energy industry. Chevron explores for,
produces and transports crude oil and natural gas; refines, markets and
distributes transportation fuels and lubricants; manufactures and sells
petrochemical products; generates power and produces geothermal energy;
provides energy efficiency solutions; and develops the energy resources
of the future, including biofuels. Chevron is based in San Ramon, Calif.
More information about Chevron is available at www.chevron.com.

Chevron Corporation

Kent Robertson, 925-790-3819