Ecuador last week paid Chevron Corp. $112 million in an arbitration case dating back to the 1970s. The accord, while dealing with obscure contractual matters, could have ramifications for bigger court fights between the two fierce adversaries.
The government of Ecuadorian President Rafael Correa has taken an extremely hostile stance in other, pricier legal battles with the U.S. energy company. The natural question to ask is whether the payment signals a softening of the Ecuadorian position in the larger standoffs.
First, some background on a ridiculously convoluted legal scene: An international arbitration panel based in the Hague, Netherlands, awarded San Ramon, Calif.-based Chevron $96 million in 2011 in a case concerning a four-decade-old arrangement under which Texaco (later acquired by Chevron) developed oil fields in the Amazon. The deal allowed Ecuador to obtain oil at below-market rates. The tiny Latin American nation appealed its arbitration defeat but without success. With interest accumulating, the judgment increased to $112 million.