Perenco v. Ecuador: A Reading of the Decision on Liability and the Determination of Compensation

Abstract

Perenco v. Ecuador (CIADI ARB/08/6) is one of the most representative cases of international investment arbitration in the Ecuadorian context, as it dealt with contractual, regulatory, and environmental issues of great legal and social importance. The dispute arose from the implementation of legal reforms concerning the participation regime for oil contracts. Perenco, which had participation contracts with the State, initiated arbitration proceedings alleging violations of contractual clauses and of the BIT between Ecuador and France, while the State lodged a counterclaim for environmental damage. The final award in this dispute constituted a significant precedent in relation to the State’s regulatory policy, compliance with BITs, and the use of counterclaims as mechanisms for environmental justice. 

Keywords: Investment arbitration, sovereignty, oil contracts, fair and equitable treatment, environmental counterclaim