1 00:00:11,400 --> 00:00:16,160 Speaker 1: Welcome back to Drilled Season five l Lucha Longla. When 2 00:00:16,160 --> 00:00:19,720 Speaker 1: we left off, Chevron was strategizing some new ways to 3 00:00:19,760 --> 00:00:23,240 Speaker 1: deal with the case in Ecuador. In September two thousand 4 00:00:23,239 --> 00:00:27,640 Speaker 1: and nine, the company filed another international arbitration complaint against 5 00:00:27,680 --> 00:00:31,880 Speaker 1: the government of Ecuador. This time, the Lago Agriolle case 6 00:00:32,000 --> 00:00:36,320 Speaker 1: was named directly. Chevron claimed that by virtue of letting 7 00:00:36,320 --> 00:00:39,760 Speaker 1: the case continue in its courts, Ecuador was violating its 8 00:00:39,840 --> 00:00:44,640 Speaker 1: bilateral investment treaty with the United States. Specifically, it argued 9 00:00:44,680 --> 00:00:48,599 Speaker 1: that the case violated various contracts between Texaco and the government, 10 00:00:48,840 --> 00:00:51,720 Speaker 1: like that nineteen ninety eight contract that we keep hearing 11 00:00:51,760 --> 00:00:55,880 Speaker 1: about where the government signed off on Texaco's remediation work. 12 00:00:56,640 --> 00:00:59,920 Speaker 1: That complaint and the tribunals response has gone on to 13 00:01:00,160 --> 00:01:02,960 Speaker 1: become a major part of Chevron's story about this case. 14 00:01:03,280 --> 00:01:05,480 Speaker 1: So we're going to do something a little different today 15 00:01:05,800 --> 00:01:10,640 Speaker 1: and do a bit of an explainer about international investment arbitration. 16 00:01:11,800 --> 00:01:16,160 Speaker 1: Don't go this stuff sounds so boring, but I swear 17 00:01:16,200 --> 00:01:20,840 Speaker 1: it's really really interesting and beyond that is just important 18 00:01:20,840 --> 00:01:23,440 Speaker 1: to know, especially if you care about environmental issues or 19 00:01:23,520 --> 00:01:27,360 Speaker 1: climate change. In broad strokes, this system gives companies a 20 00:01:27,400 --> 00:01:31,000 Speaker 1: certain amount of legal cover that they claim enables them 21 00:01:31,040 --> 00:01:34,920 Speaker 1: to confidently invest in foreign countries. There are currently more 22 00:01:34,959 --> 00:01:38,800 Speaker 1: than twenty six hundred preferential trade agreements. Those can be 23 00:01:38,840 --> 00:01:42,760 Speaker 1: free trade agreements, bilateral investment treaties, all kinds of different things. 24 00:01:43,520 --> 00:01:47,760 Speaker 1: Most of them provide access to the investment arbitration system. 25 00:01:48,360 --> 00:01:52,440 Speaker 1: Here's how it works when a so called investor state 26 00:01:52,680 --> 00:01:56,440 Speaker 1: dispute arises. When a company wants to take government to 27 00:01:56,480 --> 00:02:01,440 Speaker 1: task for something, companies can file formal complaints with international tribunals. 28 00:02:02,040 --> 00:02:04,640 Speaker 1: There are a handful of these tribunals in the world, 29 00:02:05,000 --> 00:02:08,360 Speaker 1: and a few different sets of guidelines for how they work. 30 00:02:09,040 --> 00:02:12,320 Speaker 1: Important to note here companies can choose which tribunal to 31 00:02:12,360 --> 00:02:16,560 Speaker 1: file with and which guidelines will govern the dispute. The 32 00:02:16,639 --> 00:02:21,760 Speaker 1: tribunals pull together arbitral panels, generally consisting of three international 33 00:02:21,800 --> 00:02:25,280 Speaker 1: law experts. These people are not judges, and the company 34 00:02:25,280 --> 00:02:28,760 Speaker 1: that's complaining gets to pick one of them. The panels 35 00:02:28,760 --> 00:02:31,720 Speaker 1: hear arguments and then decide whether the state in question 36 00:02:31,800 --> 00:02:35,320 Speaker 1: has breached either a trade agreement or its own laws, and, 37 00:02:35,600 --> 00:02:39,799 Speaker 1: if so, the monetary value of that breach. In some cases, 38 00:02:40,120 --> 00:02:43,919 Speaker 1: the proceedings and relevant documents are made public, but in others, 39 00:02:44,120 --> 00:02:47,520 Speaker 1: as in the Chevron Aquador case, they're kept completely secret. 40 00:02:47,720 --> 00:02:50,480 Speaker 1: This system has been getting used more and more by 41 00:02:50,520 --> 00:02:54,520 Speaker 1: companies that want to punish countries for passing environmental regulation. 42 00:02:55,200 --> 00:02:57,960 Speaker 1: Just this month, a report from the International Institute for 43 00:02:58,080 --> 00:03:01,720 Speaker 1: Environment and Development highlight how these investment treaties and the 44 00:03:01,840 --> 00:03:05,760 Speaker 1: arbitration system might make climate action that much harder around 45 00:03:05,760 --> 00:03:08,400 Speaker 1: the globe. Just think about it. Most of the world's 46 00:03:08,400 --> 00:03:11,560 Speaker 1: coal plants and drilling sites are in countries that have 47 00:03:11,680 --> 00:03:14,440 Speaker 1: signed on to agreements like these, which would enable fossil 48 00:03:14,440 --> 00:03:19,119 Speaker 1: fuel companies to file complaints against governments whose emissions regulations 49 00:03:19,200 --> 00:03:24,079 Speaker 1: interfere with their profits. Because so much of arbitral proceedings. 50 00:03:23,560 --> 00:03:26,280 Speaker 2: Are kept secret, it wouldn't be a huge surprise if 51 00:03:26,280 --> 00:03:29,200 Speaker 2: you've never heard of this, let alone how it works, 52 00:03:29,360 --> 00:03:32,480 Speaker 2: or how much influenced the system has on global politics. 53 00:03:33,080 --> 00:03:35,880 Speaker 2: So we called up Marcos Oriana, the expert we heard 54 00:03:35,880 --> 00:03:39,640 Speaker 2: from last week, to guide us through the details. That 55 00:03:39,720 --> 00:03:42,600 Speaker 2: conversation coming up right after this quick break. 56 00:04:00,200 --> 00:04:02,160 Speaker 3: I'd love to have you start with sort of a 57 00:04:02,280 --> 00:04:06,880 Speaker 3: general kind of what is international arbitration and how is 58 00:04:06,920 --> 00:04:11,000 Speaker 3: it used by American companies sure. 59 00:04:10,840 --> 00:04:14,920 Speaker 4: Sure At its core, international investment arbitration is a system 60 00:04:15,000 --> 00:04:19,960 Speaker 4: that allows corporations to sue states for damages before panels 61 00:04:19,960 --> 00:04:26,480 Speaker 4: of arbitraders. These days, most arbitration cases are brought under 62 00:04:27,200 --> 00:04:34,400 Speaker 4: international treaties on investment protection. These instruments typically grant corporations 63 00:04:34,560 --> 00:04:39,040 Speaker 4: the right to claim compensation in cases where the government 64 00:04:39,080 --> 00:04:43,279 Speaker 4: takes a measure that breaches the standards of protection in 65 00:04:43,400 --> 00:04:48,200 Speaker 4: the treaty and that results in economic laws for the investor. 66 00:04:50,040 --> 00:04:55,080 Speaker 4: Arbitual tribunals are typically composed by three panelists. One of 67 00:04:55,120 --> 00:05:00,760 Speaker 4: the panelists is pointed by the corporation and the claimant 68 00:05:01,800 --> 00:05:07,000 Speaker 4: the in theory, as the World Bank and capital exporting 69 00:05:07,080 --> 00:05:15,599 Speaker 4: countries often argue international investment arbitration helps foster economic development 70 00:05:15,800 --> 00:05:20,200 Speaker 4: in developing countries, and they it does so by building 71 00:05:20,320 --> 00:05:24,640 Speaker 4: confidence in foreign investors. It's argued that it is a 72 00:05:24,680 --> 00:05:29,279 Speaker 4: tool to build confidence because foreign investors may be more 73 00:05:29,320 --> 00:05:33,680 Speaker 4: inclined to do business in countries that may be unstable 74 00:05:33,880 --> 00:05:38,640 Speaker 4: or risky if they have legal security in case something 75 00:05:38,760 --> 00:05:43,520 Speaker 4: goes wrong. It is argued that these international financial flows 76 00:05:43,920 --> 00:05:49,240 Speaker 4: capital investments does contribute to development because otherwise these countries 77 00:05:49,279 --> 00:05:54,640 Speaker 4: would not receive this capital and would not benefit from 78 00:05:55,200 --> 00:05:59,320 Speaker 4: the concessions the works, the infrastructure, or the business form 79 00:05:59,360 --> 00:05:59,960 Speaker 4: foreign investor. 80 00:06:00,880 --> 00:06:01,640 Speaker 5: That's the theory. 81 00:06:02,320 --> 00:06:07,719 Speaker 4: In practice, however, corporations are using the arbitration system to 82 00:06:07,880 --> 00:06:12,360 Speaker 4: discipline governments for their own interests, and this is often 83 00:06:12,400 --> 00:06:16,160 Speaker 4: done at the expense of the public interest. How does 84 00:06:16,200 --> 00:06:18,560 Speaker 4: it work or how does this happen? 85 00:06:19,200 --> 00:06:19,360 Speaker 6: Well? 86 00:06:19,400 --> 00:06:24,400 Speaker 4: In the arbitrations, corporations often argue that their expectations for 87 00:06:24,600 --> 00:06:29,560 Speaker 4: profit have been frustrated, that they have been frustrated by 88 00:06:29,600 --> 00:06:33,600 Speaker 4: the government that adopts a law or a decision or regulation, 89 00:06:34,360 --> 00:06:38,479 Speaker 4: and they corporations demand to be compensated for the profits 90 00:06:38,600 --> 00:06:40,120 Speaker 4: they expected to make. 91 00:06:41,480 --> 00:06:43,240 Speaker 5: Since arbitral awards. 92 00:06:43,000 --> 00:06:47,280 Speaker 4: Can run up to tens or hundreds of millions of dollars, 93 00:06:47,440 --> 00:06:52,320 Speaker 4: and since even the legal fees involved the council and 94 00:06:52,400 --> 00:06:55,800 Speaker 4: the costs of the arbitration it can run into the 95 00:06:55,920 --> 00:06:59,479 Speaker 4: millions of dollars, this puts a lot of pressure on 96 00:06:59,600 --> 00:07:05,200 Speaker 4: government officials to pass, to adopt, or even maintain public 97 00:07:05,240 --> 00:07:11,520 Speaker 4: interest measures. Let's recall that many of the respondents states 98 00:07:11,560 --> 00:07:13,160 Speaker 4: in these cases. 99 00:07:13,280 --> 00:07:14,520 Speaker 5: They have limited budgets. 100 00:07:14,560 --> 00:07:17,960 Speaker 4: There might be small developing countries that are that are 101 00:07:18,000 --> 00:07:23,360 Speaker 4: facing a set of priorities, competing priorities, and they have 102 00:07:23,440 --> 00:07:30,400 Speaker 4: to struggle to satisfy health and education, and times, food 103 00:07:30,520 --> 00:07:35,520 Speaker 4: and water and environmental protection, and so talking about tens 104 00:07:35,920 --> 00:07:40,120 Speaker 4: of millions of dollars of costs can really put a 105 00:07:40,240 --> 00:07:46,400 Speaker 4: dent into the budget of a state. So those are 106 00:07:46,480 --> 00:07:51,200 Speaker 4: the basic contours. The international investment arbitration can be described 107 00:07:51,760 --> 00:07:56,120 Speaker 4: as a private system of adjudication that decides on the 108 00:07:56,160 --> 00:08:01,760 Speaker 4: propriety of governmental measures, but it lacks the safeguards for 109 00:08:01,880 --> 00:08:08,960 Speaker 4: accountability and transparency that characterized constitutional democracies governed by the 110 00:08:09,040 --> 00:08:12,960 Speaker 4: rule of law. If we look back in time. In 111 00:08:13,000 --> 00:08:19,480 Speaker 4: its origins, international investment arbitration came to replace colonial systems, 112 00:08:20,000 --> 00:08:26,040 Speaker 4: colonial systems of extraction of domination when the former colonies 113 00:08:26,120 --> 00:08:32,080 Speaker 4: acquired independence in the advent of decolonization, largely after the 114 00:08:32,200 --> 00:08:35,680 Speaker 4: Second World War and the advent of the United Nations. 115 00:08:36,320 --> 00:08:40,679 Speaker 4: The former imperial powers needed a legal system to protect 116 00:08:40,720 --> 00:08:46,280 Speaker 4: the economic interests of their corporations, and international investment arbitration 117 00:08:46,640 --> 00:08:51,839 Speaker 4: offered such an alternative. Today, in this current day of age, 118 00:08:51,960 --> 00:08:58,480 Speaker 4: many in civil societies see the arbitration regime as yet 119 00:08:58,480 --> 00:09:03,319 Speaker 4: another tool of corporate globalization. And this is because when 120 00:09:03,360 --> 00:09:07,520 Speaker 4: governments regulate in the public interest, they become the targets 121 00:09:07,520 --> 00:09:12,520 Speaker 4: of corporations that utilize the arbitration system to challenge those 122 00:09:12,600 --> 00:09:19,559 Speaker 4: acts of authority. I would comment that this is particularly 123 00:09:19,640 --> 00:09:24,679 Speaker 4: problematic in the age of climate change, because governments must 124 00:09:24,720 --> 00:09:30,520 Speaker 4: reduce the emissions of greenhouse gases to face the climate emergency, 125 00:09:30,679 --> 00:09:36,240 Speaker 4: the existential risks that flow from climate change, and of 126 00:09:36,280 --> 00:09:40,000 Speaker 4: course this change in direction affects the expectations and the 127 00:09:40,040 --> 00:09:42,880 Speaker 4: interests of the oil and gas of the oil and 128 00:09:42,880 --> 00:09:47,560 Speaker 4: gas industry. One last thing at comment on is is 129 00:09:47,600 --> 00:09:54,440 Speaker 4: the tension that in practice arises between international investment arbitration 130 00:09:55,120 --> 00:09:59,280 Speaker 4: and international human rights. And this is because international law 131 00:09:59,640 --> 00:10:03,400 Speaker 4: has to recognize how a clean and healthy environment is 132 00:10:03,480 --> 00:10:09,720 Speaker 4: indispensable for the enjoyment of human rights. The investment arbitration system, however, 133 00:10:10,040 --> 00:10:14,280 Speaker 4: puts an obstacle to the abilities of governments to take 134 00:10:14,400 --> 00:10:20,040 Speaker 4: measures to transition to towards sustainable development and to secure 135 00:10:20,160 --> 00:10:24,280 Speaker 4: respect and protection of the fundamental right to live in 136 00:10:24,320 --> 00:10:25,240 Speaker 4: a healthy environment. 137 00:10:26,000 --> 00:10:28,680 Speaker 3: I'd love to have you maybe give an example of 138 00:10:28,760 --> 00:10:31,560 Speaker 3: how you know how a company might use this to, 139 00:10:32,600 --> 00:10:37,600 Speaker 3: for example, take a country to court over an environmental 140 00:10:37,679 --> 00:10:41,000 Speaker 3: law that they don't like. I don't know if you 141 00:10:41,040 --> 00:10:44,280 Speaker 3: have like a good case example that you could share. 142 00:10:45,040 --> 00:10:50,160 Speaker 4: Yeah, there are many examples of a state's passing environmental 143 00:10:50,240 --> 00:10:54,800 Speaker 4: laws and then being taken to court by by corporations 144 00:10:54,800 --> 00:11:00,640 Speaker 4: that are dissatisfied by those laws. One ext sample comes 145 00:11:00,640 --> 00:11:06,440 Speaker 4: to mind concerns hazardous wastes in Mexico, so called the 146 00:11:06,480 --> 00:11:12,520 Speaker 4: tech med case exemplifies the issues that arise in these arbitrations. 147 00:11:13,080 --> 00:11:18,040 Speaker 4: And in that case, the hazardous waste confinement was located 148 00:11:18,760 --> 00:11:24,440 Speaker 4: in the downtown rmo Ceo in Mexico, and the government 149 00:11:25,280 --> 00:11:31,080 Speaker 4: was concerned and the people around the confinement were concerned. 150 00:11:30,440 --> 00:11:33,360 Speaker 5: That the trucks. 151 00:11:34,320 --> 00:11:37,720 Speaker 4: Going day and night in and out of the confinement 152 00:11:37,760 --> 00:11:41,599 Speaker 4: with these hazard is wastes were posing a risk to 153 00:11:42,520 --> 00:11:46,000 Speaker 4: the environment and to the health of the population. The 154 00:11:46,160 --> 00:11:51,360 Speaker 4: company in question began to enlarge the confinement without having 155 00:11:51,600 --> 00:11:57,480 Speaker 4: the necessary permits, and as a result, it was it 156 00:11:57,559 --> 00:12:02,160 Speaker 4: was fined it was There were proceedings by the administrative 157 00:12:03,080 --> 00:12:09,080 Speaker 4: agencies in Mexico and and the government began to study 158 00:12:09,120 --> 00:12:13,719 Speaker 4: the possibility of moving this confinement outside of the of 159 00:12:13,760 --> 00:12:19,439 Speaker 4: the of downtown area. Laws were passed that required that 160 00:12:19,800 --> 00:12:27,880 Speaker 4: hazardous waste confinement be located from urban centers and the company. However, 161 00:12:28,000 --> 00:12:32,120 Speaker 4: the negotiations with the company did not progress very far. Eventually, 162 00:12:32,200 --> 00:12:37,160 Speaker 4: the government decided that it would not renew the concession 163 00:12:37,240 --> 00:12:41,800 Speaker 4: for the operation of the hazardous waste confinement, and at 164 00:12:41,840 --> 00:12:46,360 Speaker 4: that time the company took the government to court to 165 00:12:46,559 --> 00:12:55,240 Speaker 4: the arbitral system, and that's when the arbitrators replace the 166 00:12:55,360 --> 00:13:01,079 Speaker 4: role of domestic courts and begin to apply loosely defined 167 00:13:01,520 --> 00:13:07,120 Speaker 4: treaty standards. They eventually considered that the corporation had an 168 00:13:07,200 --> 00:13:10,240 Speaker 4: expectation to make a profit out of its investment it 169 00:13:10,280 --> 00:13:13,800 Speaker 4: was a Spanish corporation, but that that profit had been 170 00:13:13,840 --> 00:13:17,640 Speaker 4: frustrated by the measures that had been taken by the 171 00:13:17,679 --> 00:13:22,880 Speaker 4: government to protect the people around the confinement. So also 172 00:13:22,920 --> 00:13:28,240 Speaker 4: comment that in that specific case, the community mobilized. They 173 00:13:28,280 --> 00:13:34,280 Speaker 4: began to protest the trucks against the illegal expansion and 174 00:13:34,320 --> 00:13:38,160 Speaker 4: so forth, and so the government was also giving expression 175 00:13:38,720 --> 00:13:43,280 Speaker 4: to the concerns and the interests of the people that 176 00:13:43,960 --> 00:13:49,520 Speaker 4: were mobilizing. The tribunal, however, considered that those protests could 177 00:13:49,520 --> 00:13:53,240 Speaker 4: not be foreseen and that they were they did not 178 00:13:53,840 --> 00:13:58,400 Speaker 4: have a scientific basis. There was no evidence that hazardous 179 00:13:58,400 --> 00:14:03,439 Speaker 4: waste had indeed compromised the health of the population and 180 00:14:03,800 --> 00:14:08,080 Speaker 4: so doing. Then they declared that Mexico was liable to 181 00:14:08,160 --> 00:14:11,280 Speaker 4: pay the company millions of dollars for the measures it 182 00:14:11,400 --> 00:14:15,840 Speaker 4: had taken. So this again goes to show how in 183 00:14:15,880 --> 00:14:20,000 Speaker 4: a domestic court, the balancing of the public health, the 184 00:14:20,080 --> 00:14:24,560 Speaker 4: environmental issues, the human rights issues would have received a 185 00:14:24,640 --> 00:14:29,920 Speaker 4: different light than the unidirectional character of the arbitration that 186 00:14:30,160 --> 00:14:34,960 Speaker 4: focuses on the corporation and whether the government's measure has 187 00:14:35,640 --> 00:14:37,600 Speaker 4: frustrated its expectations. 188 00:14:37,960 --> 00:14:41,760 Speaker 3: Okay, so I know that you are not involved in 189 00:14:41,800 --> 00:14:45,040 Speaker 3: this Chevron, Ecuador case, but as someone who knows this 190 00:14:45,120 --> 00:14:48,720 Speaker 3: system well and has seen lots of different types of cases, 191 00:14:48,960 --> 00:14:52,080 Speaker 3: I'm curious just when and if it popped up on 192 00:14:52,120 --> 00:14:56,280 Speaker 3: your radar as an international arbitration kind of expert, and 193 00:14:56,720 --> 00:15:01,040 Speaker 3: what your thoughts are on that case in particular, and 194 00:15:01,120 --> 00:15:02,640 Speaker 3: how it kind of played out. 195 00:15:03,040 --> 00:15:06,320 Speaker 4: This is a massive case. It's a massive case. The 196 00:15:07,400 --> 00:15:14,440 Speaker 4: arbitration is just one of the forums where this case 197 00:15:14,480 --> 00:15:19,600 Speaker 4: has been litigated. The arbitration itself spans thousands of pages, 198 00:15:20,360 --> 00:15:25,520 Speaker 4: numerous awards and procedural decisions. Prior to the arbitration, there 199 00:15:25,520 --> 00:15:29,480 Speaker 4: had been litigation in federal court in New York for 200 00:15:29,600 --> 00:15:33,320 Speaker 4: nine years. There was also litigation in Lago Agree in 201 00:15:33,600 --> 00:15:40,280 Speaker 4: Ecuadorian trial litigation, appellate court litigation, Supreme court litigation in Ecuador. 202 00:15:40,680 --> 00:15:45,120 Speaker 4: The Ecuadorian Constitutional Court was also seized. There has been 203 00:15:45,160 --> 00:15:50,960 Speaker 4: litigation in Argentina, Brazil, Canada, the Netherlands. The International Criminal 204 00:15:51,040 --> 00:15:55,680 Speaker 4: Court received a letter as well, and they're still ongoing 205 00:15:55,720 --> 00:16:00,360 Speaker 4: litigation by Chevron against the Plaintiff's Council in the United States. 206 00:16:00,360 --> 00:16:05,280 Speaker 4: So that's perhaps one first observation about how broad and 207 00:16:05,400 --> 00:16:09,240 Speaker 4: how complex the massive and it goes to show how 208 00:16:09,280 --> 00:16:13,600 Speaker 4: difficult it is to hold a big oil company accountable 209 00:16:13,800 --> 00:16:17,840 Speaker 4: for environmental harm. Chevron has spent hundreds of millions of 210 00:16:17,840 --> 00:16:20,680 Speaker 4: dollars in legal fees. Those moneys could have been used 211 00:16:20,680 --> 00:16:24,520 Speaker 4: to prevent environmental harm or to clean up the pollution. 212 00:16:25,040 --> 00:16:28,200 Speaker 4: How does it compare to other cases, Well, one thing 213 00:16:28,240 --> 00:16:35,360 Speaker 4: I would notice that the arbitral system is opaque. It is 214 00:16:35,520 --> 00:16:39,080 Speaker 4: known for its lack of transparency. This is a big 215 00:16:39,160 --> 00:16:44,280 Speaker 4: problem because the arbitrations, as we were discussing, they involve 216 00:16:44,360 --> 00:16:49,680 Speaker 4: the public interest, They involve the scrutiny of public law measures, 217 00:16:49,880 --> 00:16:53,880 Speaker 4: and so they should be heard under the safeguards of transparency. 218 00:16:53,920 --> 00:16:58,480 Speaker 4: And accountability that characterize due process and the rule of law. 219 00:16:59,000 --> 00:17:05,159 Speaker 4: But these arbitrations often are conducted behind closed doors, without 220 00:17:05,280 --> 00:17:10,919 Speaker 4: the public having access to the proceedings. That being said, however, 221 00:17:11,320 --> 00:17:17,440 Speaker 4: in some cases, high profile cases involving environmental protection measures, 222 00:17:17,920 --> 00:17:22,359 Speaker 4: the arbitrations have opened up and they have allowed for 223 00:17:22,480 --> 00:17:26,960 Speaker 4: public hearings and they have allowed for the public to 224 00:17:27,080 --> 00:17:31,600 Speaker 4: present so called amicus courier briefs. This is the Latin 225 00:17:31,720 --> 00:17:36,280 Speaker 4: term for a written brief that presents a perspective that 226 00:17:36,359 --> 00:17:39,520 Speaker 4: may not have been developed by the disputing parties and 227 00:17:39,560 --> 00:17:42,960 Speaker 4: that is helpful for the tribunal to receive. 228 00:17:44,000 --> 00:17:44,680 Speaker 5: In this case. 229 00:17:44,720 --> 00:17:48,959 Speaker 4: However, in the Chevron, Ecuador case, hearings were held behind 230 00:17:49,000 --> 00:17:52,480 Speaker 4: closed doors. Civil society was not allowed to intervene as 231 00:17:52,520 --> 00:17:56,880 Speaker 4: sami ki, and from that angle, the outcome in favor 232 00:17:57,200 --> 00:18:01,600 Speaker 4: of Chevron is not surprising. But all that said, however, 233 00:18:01,800 --> 00:18:07,399 Speaker 4: the outcome is surprising in some aspects. And one of 234 00:18:07,440 --> 00:18:11,240 Speaker 4: the aspects that I think is has to some degree 235 00:18:11,320 --> 00:18:15,360 Speaker 4: startled a number of observers is the far reaching. 236 00:18:15,760 --> 00:18:19,400 Speaker 5: Character of the awards, and this. 237 00:18:19,359 --> 00:18:24,040 Speaker 4: Is because the the arbitration system is often sold to 238 00:18:24,400 --> 00:18:29,919 Speaker 4: policy makers and to the public as one of simple 239 00:18:30,000 --> 00:18:33,960 Speaker 4: compensation for laws. The bottom line, it is argued, is 240 00:18:34,040 --> 00:18:39,119 Speaker 4: that if a foreign investor suffers economic harm because of 241 00:18:39,440 --> 00:18:43,440 Speaker 4: something that the government did, then it should be compensated. 242 00:18:43,560 --> 00:18:47,800 Speaker 4: And the example of the caricature even that's often presented 243 00:18:47,920 --> 00:18:53,440 Speaker 4: is a corporation owns a mind that is expropriated by 244 00:18:53,480 --> 00:18:57,840 Speaker 4: a military junta that gives the property to the to 245 00:18:57,920 --> 00:18:59,760 Speaker 4: the nephew. 246 00:18:59,480 --> 00:19:00,960 Speaker 5: Of the general and power. 247 00:19:01,440 --> 00:19:06,000 Speaker 4: Then of course the company should receive compensation. But that's 248 00:19:06,240 --> 00:19:09,520 Speaker 4: not what's going on. That's not what went on in 249 00:19:09,560 --> 00:19:13,720 Speaker 4: this case, and not generally what's going on in the field. 250 00:19:14,359 --> 00:19:18,199 Speaker 4: In this case, the panel, the arbitual panel, crafted a 251 00:19:18,320 --> 00:19:21,919 Speaker 4: range of remedies that go well beyond the issue of 252 00:19:22,000 --> 00:19:29,560 Speaker 4: compensation for laws. Directed Ecuador to preclude enforcement of the 253 00:19:29,680 --> 00:19:35,520 Speaker 4: judgment of its national courts. So preclude enforcement that shows 254 00:19:35,680 --> 00:19:41,280 Speaker 4: how deep this system penetrates the sovereignty of the state. 255 00:19:42,320 --> 00:19:46,679 Speaker 4: The panel also declared that Ecuador would be liable to 256 00:19:46,920 --> 00:19:51,800 Speaker 4: Chevron for any recovery that the plaintiffs in the Lago 257 00:19:51,840 --> 00:19:57,800 Speaker 4: Agrio litigation managed to obtain. So, in other words, if 258 00:19:59,720 --> 00:20:03,679 Speaker 4: if the Lago Agrio plaintiffs are able to enforce the 259 00:20:03,840 --> 00:20:08,439 Speaker 4: judgment rendered by the Ecuadorian courts. In some jurisdiction around 260 00:20:08,480 --> 00:20:13,600 Speaker 4: the world where they can find Chevron's assets, Ecuador would 261 00:20:13,680 --> 00:20:19,240 Speaker 4: be liable to Chevron for any recovery that the plaintiffs make. 262 00:20:19,920 --> 00:20:20,240 Speaker 3: Wow. 263 00:20:20,600 --> 00:20:24,800 Speaker 4: Yeah, it is not just an award that typically that 264 00:20:24,880 --> 00:20:27,439 Speaker 4: the state has adopted Measure X. 265 00:20:27,560 --> 00:20:29,080 Speaker 5: This measure has caused. 266 00:20:29,400 --> 00:20:35,280 Speaker 4: Why harm and we order the tribunal orders the state 267 00:20:35,400 --> 00:20:39,440 Speaker 4: to pay fifty million dollars to the company. That's not 268 00:20:39,640 --> 00:20:44,159 Speaker 4: what's what's happening here. So one of the things that 269 00:20:44,200 --> 00:20:49,000 Speaker 4: this shows is that international investment arbitration is not just 270 00:20:49,080 --> 00:20:55,160 Speaker 4: about money. It is foremost about governance, Who takes decisions 271 00:20:55,480 --> 00:21:00,360 Speaker 4: and for whom, who benefits from those decisions. That sense, 272 00:21:00,359 --> 00:21:04,720 Speaker 4: it is a system that removes the scrutiny of governmental 273 00:21:04,800 --> 00:21:08,159 Speaker 4: measures from courts of law and places it in the 274 00:21:08,200 --> 00:21:12,560 Speaker 4: hands of three arbitrators. In this specific case, one of 275 00:21:12,600 --> 00:21:17,240 Speaker 4: the arbitrators often sits in arbitral panels because he is 276 00:21:17,280 --> 00:21:22,080 Speaker 4: appointed by corporations. Let's recall that typically there are three 277 00:21:22,200 --> 00:21:26,840 Speaker 4: arbitrators and the corporation the foreign investor, gets to appoint 278 00:21:27,080 --> 00:21:29,840 Speaker 4: one of the arbitrators. So in that sense, it was 279 00:21:29,880 --> 00:21:34,560 Speaker 4: no surprise that this person would favor Chevron's interests. 280 00:21:34,840 --> 00:21:37,200 Speaker 5: The other two arbitrators. 281 00:21:36,640 --> 00:21:40,600 Speaker 4: One a commercial lawyer who recently passed away and so 282 00:21:40,760 --> 00:21:44,919 Speaker 4: may he rest in peace, and the other an international 283 00:21:45,119 --> 00:21:48,920 Speaker 4: law professor. So I think it's fair that we can ask, 284 00:21:49,600 --> 00:21:55,280 Speaker 4: can we expect two white males sitting thousands of miles 285 00:21:55,320 --> 00:22:00,240 Speaker 4: away from the lands polluted by Texaco to appreciate the 286 00:22:00,320 --> 00:22:05,000 Speaker 4: significance for the indigenous peoples that lived in those territories 287 00:22:05,560 --> 00:22:09,880 Speaker 4: of the environmental destruction that Texaco cost in the nineteen 288 00:22:10,000 --> 00:22:13,720 Speaker 4: seventies in Ecuador. I think that their decision shows that 289 00:22:13,840 --> 00:22:17,080 Speaker 4: they did not. They did not so appreciate the significance 290 00:22:18,359 --> 00:22:22,480 Speaker 4: that the arbitrator simply focused on Chevron and its narrative 291 00:22:22,880 --> 00:22:27,040 Speaker 4: in disregard of the environmental and human rights calamity caused 292 00:22:27,040 --> 00:22:31,080 Speaker 4: by Texaco, and to be fair Texaco and Petro Ecuador, 293 00:22:31,400 --> 00:22:35,960 Speaker 4: I think that the disregard for this calamity shows the 294 00:22:36,080 --> 00:22:41,080 Speaker 4: unidirectional character of the investment arbitration regime, a regime that 295 00:22:41,200 --> 00:22:46,440 Speaker 4: focuses on the corporation's interests and its narrative and does 296 00:22:46,520 --> 00:22:52,040 Speaker 4: not regard the environment and human rights. Perhaps I could 297 00:22:52,359 --> 00:22:54,840 Speaker 4: elaborate on an example to illustrate this point. 298 00:22:55,240 --> 00:22:57,000 Speaker 3: Yeah, that would be great, And then I do want 299 00:22:57,040 --> 00:22:59,520 Speaker 3: to have you talk about, you know, just how this 300 00:23:00,160 --> 00:23:05,200 Speaker 3: undermines the Ecuadorian constitution and the right to a healthy environment, 301 00:23:05,280 --> 00:23:09,440 Speaker 3: and I mean, like just in general undermines country's sovereignty. 302 00:23:09,520 --> 00:23:11,400 Speaker 3: I mean, you've kind of made that point a few 303 00:23:11,400 --> 00:23:14,399 Speaker 3: different ways already, but I'm curious for your thoughts on 304 00:23:15,080 --> 00:23:18,000 Speaker 3: the Ecuadorian constitution in particular. 305 00:23:18,320 --> 00:23:22,280 Speaker 4: That is exactly one of the issues that the arbitral 306 00:23:22,400 --> 00:23:28,000 Speaker 4: Tribunal addressed. Now, in a democracy, one would expect, by 307 00:23:28,080 --> 00:23:33,960 Speaker 4: design a constitutional question to be addressed by a constitutional court. 308 00:23:34,600 --> 00:23:39,440 Speaker 4: But in this instance, there was an issue concerning contract 309 00:23:39,920 --> 00:23:44,240 Speaker 4: between Texaco and the Ministry of Minds and Representation of 310 00:23:44,280 --> 00:23:48,719 Speaker 4: the Government that raised this issue and the arbitration. So 311 00:23:48,800 --> 00:23:52,240 Speaker 4: perhaps to step back, I think this is a good example. 312 00:23:52,280 --> 00:23:56,240 Speaker 4: In one of their words, the arbitrators set out to 313 00:23:56,320 --> 00:23:59,399 Speaker 4: interpret the right to a healthy environment in the in 314 00:23:59,480 --> 00:24:05,960 Speaker 4: Ecuador's constitution. Chevron argued that it had been released from 315 00:24:06,080 --> 00:24:09,639 Speaker 4: liability for collective claims under the right to a healthy 316 00:24:09,720 --> 00:24:14,280 Speaker 4: environment by virtue of a release contract that had been 317 00:24:14,800 --> 00:24:19,280 Speaker 4: concluded between Ecuador and Texaco. Texaco would carry out some 318 00:24:19,440 --> 00:24:24,040 Speaker 4: remediation work in exchange of release for liability from the 319 00:24:24,080 --> 00:24:28,720 Speaker 4: state and Petro Ecuador. But the scope of work in 320 00:24:28,760 --> 00:24:35,160 Speaker 4: this contract was limited. This left sources areas of contamination unremedied. 321 00:24:35,680 --> 00:24:40,680 Speaker 4: There's evidence that indicates serious shortcomings in the remediation efforts 322 00:24:40,720 --> 00:24:44,959 Speaker 4: that were actually carried out. Despite all this, in nineteen 323 00:24:45,040 --> 00:24:49,760 Speaker 4: ninety eight, Ecuador approved Texaco's works and released it from 324 00:24:49,840 --> 00:24:55,320 Speaker 4: liability related to contamination from the oil operations. So this 325 00:24:55,480 --> 00:25:00,560 Speaker 4: is the contract and the release that Chevron argued was 326 00:25:00,600 --> 00:25:04,679 Speaker 4: an issue in this case and precluded the exercise of 327 00:25:04,800 --> 00:25:11,960 Speaker 4: jurisdiction by Ecuadorian courts of claims concerning the collective dimensions 328 00:25:12,000 --> 00:25:14,399 Speaker 4: of the right to a healthy environment, and so it 329 00:25:14,520 --> 00:25:20,480 Speaker 4: asked the Arbitral Tribunal to declare so and declare that Ecuador, 330 00:25:20,600 --> 00:25:24,959 Speaker 4: by allowing its courts to exercise jurisdiction, was violating the 331 00:25:25,000 --> 00:25:29,760 Speaker 4: contract and the bilateral investment treaty between the United States. 332 00:25:30,640 --> 00:25:31,240 Speaker 5: Ecuador. 333 00:25:31,680 --> 00:25:37,280 Speaker 4: The tribunal approached this and despite the pollution was not 334 00:25:37,440 --> 00:25:42,000 Speaker 4: cleaned up. Despite that environmental problems were not resolved, the 335 00:25:42,160 --> 00:25:46,440 Speaker 4: tribunal concluded that the contract between Ecuador and Texaco meant 336 00:25:46,800 --> 00:25:50,280 Speaker 4: that Chevron could not be sued on the basis of 337 00:25:50,359 --> 00:25:53,200 Speaker 4: the collective dimensions of the right to a healthy environment 338 00:25:53,280 --> 00:25:58,800 Speaker 4: in the Ecuadorian Constitution. The tribunal considered that the government 339 00:25:59,080 --> 00:26:04,160 Speaker 4: could dispose and did in fact dispose of this constitutional 340 00:26:04,280 --> 00:26:10,760 Speaker 4: right by a contract. Now, I would comment that the 341 00:26:10,800 --> 00:26:16,280 Speaker 4: tribunal's decision is not compatible. It doesn't comfort with international 342 00:26:16,760 --> 00:26:19,679 Speaker 4: human rights law, or with constitutional law for that matter. 343 00:26:20,359 --> 00:26:26,080 Speaker 4: This is a largely a commercial frame looking at contract 344 00:26:26,160 --> 00:26:32,320 Speaker 4: law to approach what are public law issues of constitutional 345 00:26:32,400 --> 00:26:38,840 Speaker 4: human rights theory. A state cannot contract human rights away. 346 00:26:39,359 --> 00:26:44,040 Speaker 4: Human rights are inalienable. They belong to humans, They belong 347 00:26:44,160 --> 00:26:48,679 Speaker 4: to the people. The state cannot approgate human rights, least 348 00:26:48,720 --> 00:26:52,520 Speaker 4: of all by contract. The notion that a country and 349 00:26:52,560 --> 00:26:56,359 Speaker 4: a corporation can, in a contract deprive the people of 350 00:26:56,400 --> 00:26:59,960 Speaker 4: a state from a basic human right can only be 351 00:27:00,160 --> 00:27:05,000 Speaker 4: understood by reference to the arbitration as a system for 352 00:27:05,119 --> 00:27:09,600 Speaker 4: advancing corporate interests at the expense of the rights of peoples. 353 00:27:10,480 --> 00:27:11,280 Speaker 3: Yeah wow. 354 00:27:11,960 --> 00:27:19,679 Speaker 4: A footnote to that analysis is that in the litigation 355 00:27:20,000 --> 00:27:26,919 Speaker 4: in Ecuador, after Chevron was unsuccessful before the Supreme Court, 356 00:27:27,160 --> 00:27:33,520 Speaker 4: it seized the Constitutional Court, the Ecuadorian Constitutional Court, arguing 357 00:27:33,680 --> 00:27:38,120 Speaker 4: a denial of due process and other constitutionally protected rights 358 00:27:38,240 --> 00:27:41,879 Speaker 4: and it was complaining about the exercise of jurisdiction by 359 00:27:41,960 --> 00:27:48,239 Speaker 4: Ecuadorian courts. But the Constitutional Court plainly concluded that in 360 00:27:48,280 --> 00:27:52,560 Speaker 4: a contract, the government cannot dispose of rights it does 361 00:27:52,640 --> 00:27:53,120 Speaker 4: not have. 362 00:27:54,119 --> 00:27:57,840 Speaker 5: The right to a healthy environment is a right of all. 363 00:27:57,720 --> 00:28:02,520 Speaker 4: Persons subject to ecuador jurisdiction, the court recent and the 364 00:28:02,560 --> 00:28:07,199 Speaker 4: government cannot contract it away. What are some of the 365 00:28:07,240 --> 00:28:12,000 Speaker 4: implications of this. One could comment that it was expedient, 366 00:28:12,080 --> 00:28:16,320 Speaker 4: perhaps too for the tribunal to interpret the right to 367 00:28:16,400 --> 00:28:20,080 Speaker 4: a healthy environment in Ecuador's constitution in a manner that 368 00:28:21,280 --> 00:28:27,320 Speaker 4: shielded Chevron from liability, that released it from any claims. Otherwise, 369 00:28:27,600 --> 00:28:30,399 Speaker 4: the tribunal may have had to look at the environmental 370 00:28:30,400 --> 00:28:35,919 Speaker 4: realities in Ecuador, the lack of remediation, the contamination, the 371 00:28:36,040 --> 00:28:40,560 Speaker 4: ongoing contamination, the fact that dirt was moved from pits, 372 00:28:40,640 --> 00:28:44,360 Speaker 4: that certain pits that had been covered up are still leaking, 373 00:28:44,600 --> 00:28:50,000 Speaker 4: that communities, many communities are still without adequate food, without 374 00:28:50,080 --> 00:28:56,440 Speaker 4: adequate water, and so forth. That is something that Chevron 375 00:28:56,720 --> 00:29:00,720 Speaker 4: has worked very hard to avoid in this case. And 376 00:29:00,760 --> 00:29:03,400 Speaker 4: I would say that Chevan has largely succeeded. It has 377 00:29:03,520 --> 00:29:09,320 Speaker 4: largely succeeded in making this case story about the plaintiff's lawyers, 378 00:29:09,720 --> 00:29:14,240 Speaker 4: about Stephen Donziger. But I think it's important not to 379 00:29:14,320 --> 00:29:18,200 Speaker 4: forget what this case is really about. If we recall 380 00:29:18,320 --> 00:29:23,040 Speaker 4: the indigenous peoples in the Amazon, the Warani, the Kofan 381 00:29:23,200 --> 00:29:27,200 Speaker 4: other indigenous peoples, they lived in a pristine rainforest environment 382 00:29:27,720 --> 00:29:31,920 Speaker 4: prior to the arrival of Texaco and the oil boom 383 00:29:32,440 --> 00:29:36,480 Speaker 4: in Ecuador in the nineteen sixties and early nineteen seventies. 384 00:29:37,800 --> 00:29:43,160 Speaker 4: The extraction of oil by tex and Petro Ecuador was 385 00:29:43,280 --> 00:29:47,160 Speaker 4: without regard to the protection of the environment. It was 386 00:29:47,240 --> 00:29:51,280 Speaker 4: without regard to the rights of affected indigenous peoples. First 387 00:29:51,320 --> 00:29:54,040 Speaker 4: operated by Texaco as I mentioned, and then taken over 388 00:29:54,120 --> 00:29:59,960 Speaker 4: by Petrocador, oil operations severely impacted indigenous people's traditional land. 389 00:30:01,280 --> 00:30:06,920 Speaker 4: The oil boom in Ecuador has imposed loss of life, health, territory, 390 00:30:07,080 --> 00:30:13,320 Speaker 4: and culture. Indigenous peoples have not received reparation for the 391 00:30:13,400 --> 00:30:18,520 Speaker 4: violation of their rights. The arbitraal Trade you know, concluded 392 00:30:18,760 --> 00:30:22,040 Speaker 4: this was beyond their mandate and therefore it was not 393 00:30:22,360 --> 00:30:26,280 Speaker 4: their problem. It is not surprising. This is not surprising 394 00:30:26,920 --> 00:30:33,200 Speaker 4: as international investment arbitration focuses on whether the government has 395 00:30:33,240 --> 00:30:36,560 Speaker 4: wronged the corporation, but not on the environmental damage that 396 00:30:36,680 --> 00:30:40,920 Speaker 4: may have been caused by that corporation. This imbalance is 397 00:30:40,960 --> 00:30:48,480 Speaker 4: creating deficiencies in the international legal system, and this award 398 00:30:48,800 --> 00:30:51,080 Speaker 4: is an example of that. 399 00:30:51,840 --> 00:30:54,560 Speaker 3: Can you explain sort of what happens in a case 400 00:30:54,600 --> 00:31:00,000 Speaker 3: like this where the international arbitration panel is basically saying, 401 00:31:00,560 --> 00:31:04,880 Speaker 3: you know, Ecuador, your courts got it wrong? 402 00:31:05,680 --> 00:31:06,520 Speaker 5: Like who? 403 00:31:06,560 --> 00:31:09,240 Speaker 3: I mean, I guess, like who? And and there's like 404 00:31:09,320 --> 00:31:14,400 Speaker 3: ongoing other you know, legal proceedings happening. What's sort of 405 00:31:14,400 --> 00:31:17,480 Speaker 3: the hierarchy there? How do those how do those things 406 00:31:17,560 --> 00:31:22,400 Speaker 3: kind of intersect the the domestic court system? I guess 407 00:31:22,400 --> 00:31:25,280 Speaker 3: in this case both an Ecuador and the US and 408 00:31:25,880 --> 00:31:27,960 Speaker 3: this international panel. 409 00:31:28,680 --> 00:31:28,960 Speaker 5: Yeah. 410 00:31:29,000 --> 00:31:36,480 Speaker 4: Traditionally an international law, before a claim can be presented 411 00:31:36,560 --> 00:31:41,320 Speaker 4: by a non state actor to to an international tribunal, 412 00:31:42,000 --> 00:31:45,080 Speaker 4: there needs to be exhaustion of domestic remedies. This is 413 00:31:45,120 --> 00:31:49,880 Speaker 4: a term of art that means that a person or 414 00:31:49,880 --> 00:31:53,840 Speaker 4: a corporation that feels that it has been wronged in 415 00:31:53,920 --> 00:31:56,480 Speaker 4: order to present a claim first must go to national 416 00:31:56,520 --> 00:32:01,600 Speaker 4: courts and and give the state the opportunity to resolve 417 00:32:01,880 --> 00:32:09,480 Speaker 4: problems before being confronted to an international claim. In investment arbitration, however, 418 00:32:10,040 --> 00:32:14,360 Speaker 4: there is no requirement, at least not explicitly or typically. 419 00:32:14,600 --> 00:32:18,640 Speaker 4: There so many bilateral investment treaties, thousands of them, but 420 00:32:18,760 --> 00:32:24,760 Speaker 4: typically they don't establish an exhaustion of domestic remedies requirement. 421 00:32:25,440 --> 00:32:30,040 Speaker 4: What many of these treaties do establish is a choice 422 00:32:30,080 --> 00:32:36,960 Speaker 4: whereby the investor must choose whether to go the route 423 00:32:37,000 --> 00:32:42,000 Speaker 4: of national courts or go the route of an investment arbitration, 424 00:32:42,960 --> 00:32:47,520 Speaker 4: and investors usually choose they elect the investment arbitration route 425 00:32:47,560 --> 00:32:51,640 Speaker 4: because they're as mentioned earlier, they get to appoint one 426 00:32:51,680 --> 00:32:55,040 Speaker 4: of the typically three arbitrators, and they get to choose 427 00:32:55,560 --> 00:33:00,000 Speaker 4: which arbitral rules will govern the arbitration, which is also 428 00:33:00,080 --> 00:33:04,280 Speaker 4: so relevant for the conduct of proceedings and the enforcement 429 00:33:04,400 --> 00:33:08,760 Speaker 4: of any award. So that's a particularity in the field 430 00:33:08,920 --> 00:33:14,200 Speaker 4: where corporations are able to do some forum shopping to 431 00:33:14,440 --> 00:33:19,480 Speaker 4: advance claims in whichever forum in whichever way suits their 432 00:33:19,520 --> 00:33:24,840 Speaker 4: interests best. So wherein corporations are well endowed with resources 433 00:33:24,880 --> 00:33:29,240 Speaker 4: and have the ability to hire scores of lawyers, they 434 00:33:29,320 --> 00:33:34,280 Speaker 4: can really drown plaintiffs in litigation that is expensive in 435 00:33:34,440 --> 00:33:37,520 Speaker 4: various forums. Perhaps an example can illustrate it. A few 436 00:33:37,560 --> 00:33:41,560 Speaker 4: years ago Bechtel acquired a water concession in one of 437 00:33:41,560 --> 00:33:45,360 Speaker 4: the poorest countries in Latin America, Bolivia, in the city 438 00:33:45,440 --> 00:33:50,240 Speaker 4: of Cochabamba, and soon after taking over the water concession, 439 00:33:50,840 --> 00:33:57,760 Speaker 4: it raised prices exponentially. It even began collecting water fees 440 00:33:58,320 --> 00:34:03,840 Speaker 4: from water taking from wealth that had been constructed by 441 00:34:03,920 --> 00:34:09,120 Speaker 4: communities so the concession. It was expected that Bechtel would 442 00:34:09,520 --> 00:34:15,560 Speaker 4: invest capital to increase coverage and secure access to water, 443 00:34:15,719 --> 00:34:20,960 Speaker 4: but instead it began collecting a very high feast for water, 444 00:34:21,040 --> 00:34:25,799 Speaker 4: and so there were water revolts, so called the Cochabamba. 445 00:34:25,960 --> 00:34:30,880 Speaker 4: The community mobilized and eventually the government decided that it 446 00:34:30,920 --> 00:34:34,480 Speaker 4: had to take back the utility. And at that time 447 00:34:34,760 --> 00:34:41,640 Speaker 4: Bechtel brought an arbitral lawsuit against Bolivia, but not as 448 00:34:41,680 --> 00:34:47,080 Speaker 4: a US corporation. It was under a Dutch Bolivia by 449 00:34:47,120 --> 00:34:49,920 Speaker 4: latter investment treaty, so it claimed that it was a 450 00:34:50,000 --> 00:34:54,560 Speaker 4: company from the Netherlands and on that basis it could 451 00:34:54,600 --> 00:34:55,400 Speaker 4: sue Bolivia. 452 00:34:56,160 --> 00:34:57,560 Speaker 5: The tribunal sided. 453 00:34:57,320 --> 00:35:01,160 Speaker 4: With Bechtel and allowed the case to proceed. So how 454 00:35:01,160 --> 00:35:05,840 Speaker 4: common are these parallel legal proceedings? How common is form shopping? 455 00:35:05,960 --> 00:35:07,480 Speaker 5: Quite common? Unfortunately? 456 00:35:07,920 --> 00:35:11,960 Speaker 3: Okay, And then I know that there are various kind 457 00:35:12,000 --> 00:35:16,080 Speaker 3: of guidelines that govern these proceedings. Can you just talk 458 00:35:16,120 --> 00:35:18,200 Speaker 3: a little bit about that like that, I don't expect 459 00:35:18,239 --> 00:35:21,440 Speaker 3: you to run down you know the specifics of all 460 00:35:21,440 --> 00:35:24,240 Speaker 3: the different batches of rules. But how is it decided 461 00:35:24,320 --> 00:35:27,839 Speaker 3: sort of which set of guidelines a tribunal is going 462 00:35:27,920 --> 00:35:31,080 Speaker 3: to go with? And then what happens with the verdict 463 00:35:31,200 --> 00:35:33,759 Speaker 3: in one of these arbitration cases? How you know? Is 464 00:35:33,800 --> 00:35:35,319 Speaker 3: there an appeal process? 465 00:35:35,800 --> 00:35:36,439 Speaker 5: Right? Right? 466 00:35:36,520 --> 00:35:41,800 Speaker 4: So if we compare the process with domestic courts. In 467 00:35:41,880 --> 00:35:46,560 Speaker 4: domestic courts, there's well civil procedure or criminal procedure. There 468 00:35:46,600 --> 00:35:49,680 Speaker 4: are laws that govern the process and they provide all 469 00:35:49,760 --> 00:35:54,520 Speaker 4: kinds of safeguards. The analogy in the arbitration system are 470 00:35:54,600 --> 00:36:00,239 Speaker 4: the arbitual rules. Those arbitual rules are the rules that 471 00:36:00,320 --> 00:36:05,160 Speaker 4: govern the process, who gets to speak when, what are 472 00:36:05,239 --> 00:36:07,680 Speaker 4: the authorities of the arbitrators? 473 00:36:08,520 --> 00:36:10,279 Speaker 5: And they also govern what. 474 00:36:10,360 --> 00:36:14,920 Speaker 4: Happens at the end the decision, the award, enforcement, and 475 00:36:15,400 --> 00:36:21,680 Speaker 4: so forth. An underlying theme and international arbitraration is the 476 00:36:23,239 --> 00:36:28,080 Speaker 4: quest for finality. It is understood that the contending parties 477 00:36:28,160 --> 00:36:32,120 Speaker 4: want to settle their dispute and it is expected that 478 00:36:32,200 --> 00:36:36,319 Speaker 4: the award will be final, and so there's there's no 479 00:36:36,400 --> 00:36:42,640 Speaker 4: appeal to investment decisions. Again, the arbitral rules will govern 480 00:36:42,719 --> 00:36:49,880 Speaker 4: the specifics. For example, under the the Chevron Ecuador case, 481 00:36:50,440 --> 00:36:54,360 Speaker 4: this was heard under the rules of the UN Commissioned 482 00:36:54,400 --> 00:36:58,080 Speaker 4: International Trade Law. This is these are rules that have 483 00:36:58,200 --> 00:37:03,040 Speaker 4: been designed for commercialsputes, not for the kind of denial 484 00:37:03,120 --> 00:37:07,719 Speaker 4: of justice which are public disputes, public law disputes, and 485 00:37:07,760 --> 00:37:12,160 Speaker 4: so the issues of secrecy in commercial disputes may be 486 00:37:12,239 --> 00:37:15,200 Speaker 4: warranted in those frames, but when it comes to public 487 00:37:15,280 --> 00:37:21,920 Speaker 4: law they are wholly inadequate. The uncetrulled rules. They rely 488 00:37:22,200 --> 00:37:25,280 Speaker 4: on the New York Convention. There's a New York Convention 489 00:37:25,440 --> 00:37:29,680 Speaker 4: for the Enforcement, for the recognition and enforcement of arbitraal awards, 490 00:37:30,520 --> 00:37:36,000 Speaker 4: and that convention gives some authority to national courts in 491 00:37:36,120 --> 00:37:40,000 Speaker 4: terms of recognition and enforcement. But at the same time 492 00:37:40,280 --> 00:37:45,440 Speaker 4: that authority is very limited, and courts they are. They 493 00:37:45,560 --> 00:37:50,239 Speaker 4: usually they give deference to the awards because of the 494 00:37:50,320 --> 00:37:55,480 Speaker 4: need for finality. They can set aside, they can strike 495 00:37:55,600 --> 00:37:58,920 Speaker 4: down an award if there has been corruption, if if 496 00:37:58,960 --> 00:38:03,000 Speaker 4: there's a clear violation of public policy. But for the 497 00:38:03,040 --> 00:38:07,879 Speaker 4: most national courts are quite reluctant to set aside or 498 00:38:08,360 --> 00:38:14,200 Speaker 4: strike downwards so that those are the procedural rules that 499 00:38:14,600 --> 00:38:17,960 Speaker 4: were applied in this case. There are other sets of 500 00:38:18,040 --> 00:38:23,880 Speaker 4: rules by the Paris International Chambers or or the World 501 00:38:23,960 --> 00:38:29,880 Speaker 4: Bank's Investment Facility. Those rules, for example, the World Banks, 502 00:38:30,360 --> 00:38:36,200 Speaker 4: they exclude it's totally self contained. It's they exclude the 503 00:38:36,280 --> 00:38:40,920 Speaker 4: role of national courts. They provide for procedures for annuwnment 504 00:38:41,320 --> 00:38:44,800 Speaker 4: in case again that a party has not been heard, 505 00:38:44,920 --> 00:38:49,400 Speaker 4: or there has been corruption or so forth. But those 506 00:38:49,440 --> 00:38:53,000 Speaker 4: procedures for a moment, they don't review the merits. They 507 00:38:53,280 --> 00:38:56,160 Speaker 4: don't get into whether the decision is right or wrong, 508 00:38:56,239 --> 00:39:00,240 Speaker 4: whether the law has been properly applied. They get into 509 00:39:00,480 --> 00:39:05,359 Speaker 4: other other causes or other situations that may affect the 510 00:39:05,400 --> 00:39:11,440 Speaker 4: integrity of the process, but not the quality of the decision. 511 00:39:12,920 --> 00:39:15,520 Speaker 5: So at the end of the day, when. 512 00:39:15,520 --> 00:39:20,960 Speaker 4: The when the investor receives a favorable award under the 513 00:39:21,000 --> 00:39:25,440 Speaker 4: New York Convention, all states that are parties to that 514 00:39:25,600 --> 00:39:31,799 Speaker 4: convention are required to honor that award. And that that 515 00:39:32,000 --> 00:39:38,840 Speaker 4: means that that the in practice that the Chevron Ecuador 516 00:39:39,560 --> 00:39:51,680 Speaker 4: Arbitral Award directing Ecuador two make to try to avoid 517 00:39:51,920 --> 00:39:56,640 Speaker 4: enforcement of the decisions in of its national courts that 518 00:39:56,760 --> 00:40:00,400 Speaker 4: may have an influence in any country part to the 519 00:40:00,400 --> 00:40:03,840 Speaker 4: New York Convention, any jurisdiction where the plaintiffs are trying 520 00:40:03,960 --> 00:40:08,600 Speaker 4: to enforce that judgment, so it may be at the 521 00:40:08,719 --> 00:40:12,520 Speaker 4: end very hard for the for the plaintiffs to to 522 00:40:12,640 --> 00:40:15,240 Speaker 4: collect damages on that decision. 523 00:40:15,880 --> 00:40:19,400 Speaker 6: This is something that seems to me like a corporation 524 00:40:19,640 --> 00:40:23,440 Speaker 6: may not go after a European country or the US, 525 00:40:23,600 --> 00:40:27,279 Speaker 6: but they're going after developing countries and countries in the 526 00:40:27,320 --> 00:40:30,800 Speaker 6: global South, you know, countries with largely indigenous or brown 527 00:40:30,880 --> 00:40:35,400 Speaker 6: or black populations. But yet it's so it's it really 528 00:40:35,480 --> 00:40:38,400 Speaker 6: is another form of colonialism. 529 00:40:38,840 --> 00:40:41,839 Speaker 4: There's much much to be said about about that. 530 00:40:42,600 --> 00:40:43,400 Speaker 5: In theory, the. 531 00:40:45,000 --> 00:40:49,800 Speaker 4: Instruments are bilateral. There are some regional instruments as well, 532 00:40:50,400 --> 00:40:58,040 Speaker 4: and so they allow for corporations from either country to 533 00:40:58,160 --> 00:41:01,560 Speaker 4: sue the other country. And so, for example, in the 534 00:41:01,640 --> 00:41:04,880 Speaker 4: United States Randa by latter Investment treaty, we have not 535 00:41:05,040 --> 00:41:09,200 Speaker 4: seen any random corporation suing the United States. But we 536 00:41:09,320 --> 00:41:13,919 Speaker 4: have seen Canadian corporations under the terms of the North 537 00:41:13,920 --> 00:41:18,280 Speaker 4: American Free Trade Agreement suing the United States. They actually 538 00:41:18,360 --> 00:41:24,239 Speaker 4: have not been successful. In terms of European countries, there 539 00:41:24,320 --> 00:41:30,239 Speaker 4: are disputes between European states. Germany has been sued by 540 00:41:30,280 --> 00:41:36,520 Speaker 4: Swedish corporations, for example, for facing out coal and nuclear 541 00:41:36,640 --> 00:41:42,840 Speaker 4: energy and so forth, so their energy matrix button fall cases. 542 00:41:44,040 --> 00:41:49,440 Speaker 4: Spain has been sued for certain benefits that it was 543 00:41:49,520 --> 00:41:53,600 Speaker 4: no longer able to maintain after its economic crisis, benefits 544 00:41:53,640 --> 00:42:00,759 Speaker 4: that had underlined the solar energy industry. So there are 545 00:42:00,920 --> 00:42:08,080 Speaker 4: cases where there have been disputes between industrialized states or 546 00:42:08,400 --> 00:42:14,640 Speaker 4: cases brought against industrialized cases states. I think what this 547 00:42:14,760 --> 00:42:18,480 Speaker 4: goes to show is that there is some element of 548 00:42:18,560 --> 00:42:23,200 Speaker 4: colonialism and north south politics. But it's also, as I 549 00:42:23,320 --> 00:42:28,120 Speaker 4: was saying earlier, many observers see here a corporate globalization 550 00:42:29,000 --> 00:42:33,280 Speaker 4: where it doesn't matter if the state is rich. 551 00:42:33,400 --> 00:42:35,400 Speaker 5: Or poor, or north or south. 552 00:42:35,600 --> 00:42:39,560 Speaker 4: What matters is for the system is whether the state 553 00:42:39,640 --> 00:42:44,239 Speaker 4: is taking measures that may affect the expected profits of 554 00:42:44,280 --> 00:42:47,360 Speaker 4: a corporation. If it does so, it becomes the possible 555 00:42:47,480 --> 00:42:49,640 Speaker 4: target of arbitraal claims. 556 00:43:24,280 --> 00:43:28,800 Speaker 7: Drilled is an original production of the Critical Frequency podcast Network. 557 00:43:29,400 --> 00:43:33,440 Speaker 7: It's created and reported by me Amy Westerveldt. My co 558 00:43:33,560 --> 00:43:37,680 Speaker 7: reporter on this season is Karen Savage. Our editor is 559 00:43:37,760 --> 00:43:43,160 Speaker 7: Julia Ritchie. The show's editorial consultant is Rika Murphy. Mixing 560 00:43:43,320 --> 00:43:48,080 Speaker 7: and mastering by Mark Bush. Original score by b Beeman. 561 00:43:48,480 --> 00:43:53,400 Speaker 7: Special thanks to Larissa Ikeda, Trevor Gowen, and Emily Gertz. 562 00:43:54,000 --> 00:43:57,760 Speaker 7: Our fact checker is wu dan Yan. Our First Amendment 563 00:43:57,800 --> 00:44:01,560 Speaker 7: attorney is James Wheaton with the First Amendment Project. Our 564 00:44:01,680 --> 00:44:05,320 Speaker 7: artwork for this season was created by the talented Matt Fleming. 565 00:44:05,760 --> 00:44:10,280 Speaker 7: If you are a Patreon subscriber, thank you. Your money 566 00:44:10,440 --> 00:44:13,520 Speaker 7: is helping to make this season. As a special thank you, 567 00:44:13,600 --> 00:44:16,480 Speaker 7: we will be putting bonus content in the Patreon feed 568 00:44:16,600 --> 00:44:20,400 Speaker 7: and also releasing episodes early there. If you're not a 569 00:44:20,440 --> 00:44:22,719 Speaker 7: member and you want to support our work, please check 570 00:44:22,800 --> 00:44:26,879 Speaker 7: out Patreon dot com slash drilled. That's it for this time. 571 00:44:27,000 --> 00:44:45,840 Speaker 7: Thanks for listening, and we'll see you next week.