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PCA CASE NO. 2009-23

IN THE MATTER OF AN ARBITRATION BEFORE A TRIBUNAL CONSTITUTED
IN ACCORDANCE WITH THE TREATY BETWEEN THE UNITED STATES OF
AMERICA AND THE REPUBLIC OF ECUADOR CONCERNING THE
ENCOURAGEMENT AND RECIPROCAL PROTECTION OF INVESTMENTS,
SIGNED 27 AUGUST 1993 (THE “TREATY”) AND THE UNCITRAL ARBITRATION
RULES 1976

BETWEEN:

1. CHEVRON CORPORATION (U.S.A.)
2. TEXACO PETROLEUM COMPANY (U.S.A.)

The Claimants

- and -

THE REPUBLIC OF ECUADOR

The Respondent

FOURTH PARTIAL AWARD ON TRACK III

17 November 2025

The Arbitration Tribunal:
Dr Horacio A. Grigera Naón
Professor Vaughan Lowe KC
Professor Albert Jan van den Berg (President)

Secretary to the Tribunal: Martin Doe
Assistant Secretary to the Tribunal: José Luis Aragón Cardiel

This page is intentionally left blank

EXECUTIVE SUMMARY OF THE FOURTH PARTIAL AWARD ON TRACK III*

This Award sets out the Tribunal's findings and decisions on matters falling under the scope of Track III of the present Arbitration (see paragraphs 94 and 95 below).

Track II

Track III follows Track II of the Arbitration. By its Second Partial Award on Track II, dated 30 August 2018 (the Track II Award), the Tribunal ruled that the Respondent had committed multiple violations of the Treaty between the United States of America and the Republic of Ecuador concerning the Encouragement and Reciprocal Protection of Investment of 27 August 1993 (the Treaty) and international law, including (i) a violation of Article II(3)(a) of the Treaty and customary international law for denial of justice; (ii) a violation of Article II(3)(c) of the Treaty (Umbrella Clause); and (iii) a violation of the Tribunal's First Interim Award on Interim Measures dated 25 January 2012 and Second Interim Award on Interim Measures dated 16 February 2012.

All three violations stem, at their core, from the so-called Lago Agrio Judgment of 14 February 2011, which was issued in the Lago Agrio Litigation initiated by Ángel Piaguaje and others (the Lago Agrio Plaintiffs) against Chevron Corporation (Chevron) before Superior Court of Justice of Nueva Loja in Ecuador (the Lago Agrio Court). As found by the Tribunal, the Lago Agrio Judgment was not written by Judge Nicolás Zambrano of the Lago Agrio Court, but was rather 'ghostwritten' by certain representatives of the Lago Agrio Plaintiffs in corrupt collusion with Judge Zambrano. The Lago Agrio Judgment was later affirmed by the Lago Agrio Appellate Court, the National (Cassation) Court of Justice of Ecuador, and the Constitutional Court of Ecuador. The original Lago Agrio Judgment required Chevron to pay approximately USD 19 billion in damages, which were later reduced to approximately USD 9 billion by the Cassation Court.

In its Track II Award, the Tribunal ordered reparation for the Respondent's internationally wrongful acts in the form of several declarations and orders specifically targeted at wiping out the consequences of the recognition and enforcement of the unremedied Lago Agrio Judgment. Chief among them are the Tribunal's orders that the Respondent (i) take immediate steps, of its own choosing, to remove the status of enforceability from the unremedied Lago Agrio Judgment; and (ii) subject to further order by the Tribunal in Track III, make full reparation in the form of compensation for any injuries caused to the Claimants by the unremedied Lago Agrio Judgment.

Track III

In Track III, the Claimants seek compensation for the Respondent's internationally wrongful acts. In particular, they request (i) USD 793,879,967.74 across 13 separate categories of damages related to legal fees and expenses allegedly incurred as a result of the Respondent's Treaty breaches; (ii) USD 85,315,652 for the alleged embargo of certain trademarks and other intellectual property assets owned by three of Chevron's subsidiaries in Ecuador; (iii) USD 13,000,000 in damages for the losses allegedly suffered by one of Chevron's subsidiaries as a result of the embargo of certain assets in Argentina in aid of the enforcement of the Lago Agrio Judgment; (iv) moral damages; and (v) pre- and post-award interest.

In addition, the Claimants request that the Tribunal (i) order the Respondent to indemnify them for any further damages resulting from pending or future enforcement actions of the Lago Agrio Judgment; and (ii) order further injunctive relief in view of the Respondent's purported failure to comply with the Track II Award.

* This Executive Summary does not form part of the Tribunal's reasons or decisions in this Fourth Partial Award on Track III.

[Page ii]

General Matters and Legal Standards

Section VII of this Award sets out the Tribunal's analysis on general matters and legal standards cutting across the Claimants' damages claims.

As more fully set out therein, the Tribunal finds, consistently with its determinations in the Track II Award, that any measure of full reparation implemented in Track III must be targeted specifically at wiping out the injuries caused by the recognition and enforcement of the uncorrected Lago Agrio Judgment. On this basis, the Tribunal finds that any injury caused by the recognition and enforcement of the Lago Agrio Judgment (e.g. through attachment, arrest, interim injunction or execution) amounts to a form of direct damage under international law, while any legal fees and expenses incurred to mitigate such injury amount to incidental damages. The Tribunal also makes determinations regarding (i) the requirements that must be met for the compensation of each type of damage (proximate causation for direct damages, and causation and reasonableness for incidental damages); (ii) the corresponding cut-off dates for compensation in this case (1 March 2012 for direct damages, and 14 February 2011 for incidental damages); and (iii) the amount by which the damages award must be reduced to account for the legal fees and expenses the Claimants would have incurred in any event in a Treaty-compliant but-for scenario.

Under this heading, the Tribunal also rules that (i) Chevron, as a matter of principle, is entitled to claim compensation in this Arbitration in its own right for the injuries caused to certain of its international subsidiaries by the recognition and enforcement of the Lago Agrio Judgment; (ii) the Claimants did not breach their duty to mitigate by failing to pursue certain local remedies in Ecuador; (iii) under certain conditions, the Claimants are entitled to recover as damages in this Arbitration attorneys' fees awarded or settled in related domestic proceedings; and (iv) the Tribunal's damages award shall not be reduced on account on certain “tax savings" purportedly obtained by the Claimants when taking a tax deduction for the legal fees they claim as damages in this Arbitration.

Taking into account the preceding determinations, the Tribunal establishes a four-step methodology for the assessment of the Claimants' damages claims for legal fees and expenses based on the damages models provided by the Parties, taking into account the voluminous pool of information underlying such claims.

Damages Categories concerning Legal Fees and Expenses

The Claimants' damages claims comprise 13 damages categories relating to legal fees and expenses. 10 of those categories relate to distinct proceedings outside the present Arbitration: the Lago Agrio Litigation; proceedings relating to the recognition and enforcement of the Lago Agrio Judgment in Ecuador, Argentina, Brazil, and Canada; discovery proceedings in the United States of America under Section 1782 of Title 28 of the U.S. Code; proceedings in the United States of America under the RICO Act brought against, inter alia, certain of the Lago Agrio Plaintiffs' representatives; proceedings against non-party funders of the Lago Agrio Litigation in Gibraltar; criminal proceedings against certain Chevron employees in Ecuador; and proceedings before Dutch courts concerning applications for the annulment of awards issued in this Arbitration. The three remaining categories comprise costs of planning against potential enforcement in other jurisdictions, general defence costs, and treaty-arbitration costs incurred by non-counsel of record.

[Page iii]

Applying its methodology for the assessment of incidental damages in this Arbitration to each of these damages categories, the Tribunal determines that the Claimants are entitled to a total of USD 180,402,691.43 in compensation, plus (i) pre-award interest calculated at the 1-year U.S. Treasury bill rate (amounting to USD 40,404,250.51 as of 15 October 2025); and (ii) post-award interest at the rate of 1-year U.S. Treasury bill + 2%. The Tribunal's decision regarding the amount of compensation awarded to the Claimants in connection with the RICO Litigation is subject to a separate dissenting opinion from co-arbitrator Dr. Horacio A. Grigera Naón.

Other Damages Categories

In respect of the damages categories “Embargo Losses in Argentina” and “Intellectual Property Losses in Ecuador", the Tribunal finds that while the Claimants have established that they suffered a compensable injury, they have failed to establish the extent of the corresponding loss. Accordingly, the Tribunal rejects the Claimants' claims in respect of these categories. The Tribunal likewise rejects the Claimants' claim for moral damages.

Indemnification

The Tribunal finds that the Claimants have not established the necessary predicates for the granting of an indemnity order, or other remedies akin to an indemnification.

Injunctive Relief

The Tribunal grants the Claimants' requests for injunctive relief in part. In particular, it declares that, by failing to remove the status of enforceability from the Lago Agrio Judgment through steps of its own choosing, the Respondent has failed to meet its obligations under paragraphs 10.13(i), (ii), (vi), and (vii) of the Track II Award and, accordingly, orders the Respondent to take immediate steps to meet these obligations.

Track IV of the Arbitration

By its Procedural Order No. 84, the Tribunal determined that issues related to the allocation and assessment of costs and expenses within the meaning of Articles 38-40 of the UNCITRAL Arbitration Rules as claimed by the Parties would be dealt with in Track IV of the Arbitration, following Track III.

Accordingly, following the issuance of this Award, the Arbitration now proceeds to Track IV.

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[Page i]

ABBREVIATED TABLE OF CONTENTS

I. THE ARBITRATION................................................................................................................ 1

II. TRACK III OF THE ARBITRATION ........................................................................................ 6

III. BACKGROUND TO THE TRACK III AWARD ...................................................................... 24

IV. THE PARTIES' REQUESTS FOR RELIEF IN TRACK III....................................................... 36

V. OVERVIEW OF THE CLAIMANTS' CLAIMS IN TRACK III ................................................. 68

VI. THE PARTIES' POSITIONS ON GENERAL MATTERS AND LEGAL STANDARDS ...... 76

VII. THE TRIBUNAL'S ANALYSIS ON GENERAL MATTERS AND LEGAL STANDARDS152

VIII. DAMAGES CATEGORIES CONCERNING LEGAL FEES AND EXPENSES ....................... 262

IX. OTHER DAMAGES CATEGORIES......................................................................................... 881

Χ. INTEREST .............................................................................................................................. 988

XI. INDEMNIFICATION.............................................................................................................. 1030

XII. INJUNCTIVE RELIEF ............................................................................................................ 1044

XIII. RELIEF ................................................................................................................................... 1056

XIV. THE OPERATIVE PART ........................................................................................................ 1078

[Page ii]

DETAILED TABLE OF CONTENTS

I. THE ARBITRATION................................................................................................................ 1

II. TRACK III OF THE ARBITRATION ........................................................................................ 6

III. BACKGROUND TO THE TRACK III AWARD...................................................................... 24

A. Factual Background........................................................................................................ 24

B. Key Rulings in the Tribunal's Prior Awards and Decisions ........................................ 29

C. Scope of Track III.......................................................................................................... 34

IV. THE PARTIES' REQUESTS FOR RELIEF IN TRACK III....................................................... 36

A. The Claimants' Requests for Relief .............................................................................. 36

B. The Respondent's Requests for Relief.......................................................................... 57

V. OVERVIEW OF THE CLAIMANTS' CLAIMS IN TRACK III ................................................. 68

A. General Matters and Legal Standards........................................................................... 68

B. Specific Damages Categories ....................................................................................... 69

C. Indemnification ............................................................................................................. 74

D. Injunctive Relief............................................................................................................ 75

VI. THE PARTIES' POSITIONS ON GENERAL MATTERS AND LEGAL STANDARDS ............................................................................................................................ 76

A. Legal Principles on Compensation................................................................................ 76

1. General Damages Principles .................................................................................... 76

(a) The Claimants' Position ................................................................................... 76

(b) The Respondent's Position .............................................................................. 81

2. Legal Fees and Expenses as Damages .................................................................... 85

(a) The Claimants' Position ................................................................................... 85

(a) The Respondent's Position .............................................................................. 87

3. Date of Breach.......................................................................................................... 90

(a) Denial of Justice and Umbrella Clause............................................................. 91

(b) First and Second Interim Awards .................................................................... 98

4. But-For Scenario ...................................................................................................... 99

(a) The Respondent's Position ............................................................................ 100

(b) The Claimants' Position ................................................................................. 107

B. Non-Compliance with Interim Awards ........................................................................ 111

1. Non-Compliance .................................................................................................... 112

(a) The Claimants' Position ................................................................................. 112

[Page iii]

(b) The Respondent's Position ............................................................................ 113

2. The Respondent's Request for Reconsideration of the First, Second and Fourth Interim Awards........................................................................................................... 115

(a) The Respondent's Position ............................................................................ 115

(b) The Claimants' Position ................................................................................. 116

C. International Subsidiaries ............................................................................................ 117

1. The Claimants' Position .......................................................................................... 117

2. The Respondent's Position...................................................................................... 118

D. Failure to Mitigate........................................................................................................ 120

1. Introduction ............................................................................................................ 120

(a) The Respondent's Position ............................................................................ 120

(b) The Claimants' Position ................................................................................. 121

2. Recusal of Judge Zambrano .................................................................................... 122

(a) The Respondent's Position ............................................................................ 122

(b) The Claimants' Position ................................................................................. 123

3. Posting of a Bond.................................................................................................... 124

(a) The Respondent's Position ............................................................................ 124

(b) The Claimants' Position ................................................................................. 125

4. Collusion Prosecution Act....................................................................................... 125

(a) The Respondent's Position ............................................................................ 125

(b) The Claimants' Position ................................................................................. 126

5. RICO Litigation ...................................................................................................... 126

(a) The Respondent's Position ............................................................................ 126

(b) The Claimants' Position ................................................................................. 127

E. Fees Allegedly Incurred in Other Proceedings............................................................. 127

1. The Claimants' Position .......................................................................................... 127

(a) Introduction ................................................................................................... 127

(b) RICO Litigation............................................................................................. 128

(c) Enforcement Proceedings.............................................................................. 129

(d) Gibraltar Proceedings .................................................................................... 129

(e) Section 1782 Proceedings.............................................................................. 130

(f) Dutch Set-Aside Proceedings ........................................................................ 130

2. The Respondent's Position...................................................................................... 131

(a) Introduction ................................................................................................... 131

(b) RICO Litigation............................................................................................. 132

(c) Enforcement Proceedings.............................................................................. 133

(d) Gibraltar Proceedings .................................................................................... 134

[Page iv]

(e) Section 1782 Proceedings.............................................................................. 135

(f) Dutch Set-Aside Proceedings ........................................................................ 135

F. Tax Implications.......................................................................................................... 136

1. The Respondent's Position...................................................................................... 136

2. The Claimants' Position .......................................................................................... 137

G. Evidence of Legal Fees and Expenses........................................................................ 138

1. Introduction ............................................................................................................ 138

2. The Claimants' Position .......................................................................................... 144

3. The Respondent's Position...................................................................................... 148

VII. THE TRIBUNAL'S ANALYSIS ON GENERAL MATTERS AND LEGAL STANDARDS .......................................................................................................................... 152

A. Causation .................................................................................................................... 152

1. Introduction ............................................................................................................ 152

2. Track II Findings..................................................................................................... 155

3. Direct and Incidental Damages ............................................................................... 158

(a) Introduction ................................................................................................... 158

(b) Direct Damages ............................................................................................. 160

(c) Incidental Damages ........................................................................................ 162

4. Date of Injury .......................................................................................................... 168

(a) Introduction ................................................................................................... 168

(b) Date of injury for direct damages................................................................... 171

(c) Date of injury for incidental damages ............................................................ 173

5. But-for Scenario ...................................................................................................... 181

6. Conclusions on Causation ...................................................................................... 187

B. Non-Compliance with Interim Awards ........................................................................ 187

1. Introduction ............................................................................................................ 187

2. The Tribunal's Analysis........................................................................................... 191

3. Conclusions on Non-Compliance with Interim Awards ......................................... 194

C. International Subsidiaries ............................................................................................ 194

1. Introduction ............................................................................................................ 194

2. Good Faith............................................................................................................... 195

3. Conclusions on International Subsidiaries .............................................................. 207

D. Failure to Mitigate ...................................................................................................... 207

1. Introduction ............................................................................................................ 207

2. Posting of a Bond.................................................................................................... 214

3. Collusion Prosecution Act (CPA) ........................................................................... 217

4. Conclusion on Failure to Mitigate........................................................................... 220

[Page v]

E. Fees Allegedly Incurred in Other Proceedings............................................................. 220

1. Introduction............................................................................................................. 220

2. Costs Collected in Other Proceedings..................................................................... 223

3. Costs Awarded but not Collected in Other Proceedings .......................................... 223

4. Costs In Addition to Those Awarded or Collected in Other Proceedings................ 225

5. Costs Settled in Other Proceedings .......................................................................... 226

6. Conclusion on Fees Recovered in Other Proceedings.............................................. 228

F. Tax Implications.......................................................................................................... 229

G. Evidence of Legal Fees and Expenses........................................................................ 233

1. Introduction ............................................................................................................ 233

2. Evidence of Litigation Costs ................................................................................... 234

3. The Parties' Proposed Methodologies...................................................................... 238

4. The Parties' Damages and Interest Models............................................................... 242

5. The Tribunal's Methodology ................................................................................... 243

(a) First Step: Analysis of Incidental Damages "Categories" ............................... 246

(b) Second Step: Analysis of Incidental Damages "Components" ...................... 249

(c) Third Step: Analysis of Cross-Cutting "Elements"......................................... 258

(d) Fourth Step: Determination of Amount of Compensation based on the Parties' Damages Models ............................................................................................. 261

VIII. DAMAGES CATEGORIES CONCERNING LEGAL FEES AND EXPENSES....................... 262

A. Lago Agrio Litigation.................................................................................................. 264

1. The Claimants' Position .......................................................................................... 264

(a) Description of the Proceedings....................................................................... 264

(b) Costs Incurred................................................................................................. 265

(c) Request for Full Reparation of Direct Damages.............................................. 266

(d) Request for Full Reparation of Incidental Damages....................................... 269

2. The Respondent's Position...................................................................................... 270

(a) The Ecuador Legal Team ............................................................................... 271

(b) US Law Firms................................................................................................. 274

(c) Additional Ecuadorian and Foreign Firms ..................................................... 278

(d) Experts and Vendors....................................................................................... 279

3. The Tribunal's Analysis .......................................................................................... 280

(a) Introduction ................................................................................................... 280

(b) First Step: Analysis of Incidental Damages "Category" ................................. 289

(c) Second Step: Analysis of Incidental Damages “Components" ...................... 293

4. Conclusion on Lago Agrio Litigation ..................................................................... 321

B. Ecuador Enforcement Proceedings............................................................................. 325

[Page vi]

1. The Claimants' Position .......................................................................................... 325

2. The Respondent's Position...................................................................................... 326

3. The Tribunal's Analysis .......................................................................................... 329

(a) Introduction ................................................................................................... 329

(b) First Step: Analysis of Incidental Damages “Category” ................................. 331

(c) Second Step: Analysis of Incidental Damages “Components" ...................... 332

4. Conclusion on Ecuador Enforcement Proceedings ................................................. 337

C. Argentina Enforcement Proceedings........................................................................... 338

1. The Claimants' Position .......................................................................................... 338

2. The Respondent's Position...................................................................................... 340

3. The Tribunal's Analysis........................................................................................... 343

(a) Introduction ................................................................................................... 343

(b) First Step: Analysis of Incidental Damages "Category" ................................. 345

(c) Second Step: Analysis of Incidental Damages “Components" ...................... 348

4. Conclusion on Argentina Enforcement Proceedings............................................... 366

D. Brazil Recognition Proceedings ................................................................................. 369

1. The Claimants' Position .......................................................................................... 369

2. The Respondent's Position...................................................................................... 372

3. The Tribunal's Analysis .......................................................................................... 377

(a) Introduction ................................................................................................... 377

(b) First Step: Analysis of Incidental Damages "Category" ................................. 379

(c) Second Step: Analysis of Incidental Damages “Components" ...................... 381

4. Conclusion on Brazil Recognition Proceedings...................................................... 402

E. Canada Enforcement Proceedings.............................................................................. 404

1. The Claimants' Position.......................................................................................... 404

2. The Respondent's Position...................................................................................... 405

3. The Tribunal's Analysis........................................................................................... 408

(a) Introduction ................................................................................................... 408

(b) First Step: Analysis of Incidental Damages “Category" ................................. 410

(c) Second Step: Analysis of Incidental Damages “Components" ...................... 413

4. Conclusion on Canada Enforcement Proceedings................................................... 424

F. Costs of Planning against Potential Enforcement in Other Jurisdictions ................... 426

1. The Claimants' Position .......................................................................................... 426

2. The Respondent's Position...................................................................................... 428

3. The Tribunal's Analysis .......................................................................................... 430

(a) Introduction ................................................................................................... 430

(b) First Step: Analysis of Incidental Damages "Category" ................................. 431

(c) Second Step: Analysis of Incidental Damages “Components" ...................... 442

[Page vii]

4. Conclusion on Costs of Planning Against Potential Enforcement in Other Jurisdictions............................................................................................................... 457

G. RICO Litigation.......................................................................................................... 459

1. The Claimants' Position .......................................................................................... 460

(a) Description of the Proceedings....................................................................... 460

(b) Costs Incurred................................................................................................. 462

(c) Request for Full Reparation of Direct Damages.............................................. 464

(d) Request for Full Reparation of Incidental Damages....................................... 466

2. The Respondent's Position...................................................................................... 470

(a) Unforeseeable and Unintended Consequences................................................ 470

(b) Unreasonableness of the Fees......................................................................... 471

3. The Tribunal's Analysis........................................................................................... 480

(a) Introduction ................................................................................................... 480

(b) Background of RICO...................................................................................... 481

(c) Summary of the RICO Litigation ................................................................... 483

(d) Analysis ......................................................................................................... 515

4. Conclusion on RICO Litigation .............................................................................. 606

H. Section 1782 Proceedings .......................................................................................... 609

1. The Claimants' Position .......................................................................................... 609

(a) Description of the Proceedings....................................................................... 609

(b) Costs Incurred................................................................................................. 610

(c) Request for Full Reparation............................................................................ 611

2. The Respondent's Position...................................................................................... 614

(a) Section 1782 Actions Initiated by Chevron..................................................... 615

(b) Section 1782 Actions Initiated by Ecuador and the LAPs .............................. 617

(c) Further Non-compensable Activities .............................................................. 618

3. The Tribunal's Analysis .......................................................................................... 620

(a) Introduction ................................................................................................... 620

(b) First Step: Analysis of Incidental Damages “Category".................................. 621

(c) Second Step: Analysis of Incidental Damages “Components" ...................... 645

4. Conclusion on Section 1782 Proceedings ............................................................... 702

I. Gibraltar Proceedings ................................................................................................ 705

1. The Claimants' Position .......................................................................................... 705

2. The Respondent's Position...................................................................................... 708

3. The Tribunal's Analysis........................................................................................... 711

(a) Introduction ................................................................................................... 711

(b) First Step: Analysis of Incidental Damages "Category" ................................. 712

(c) Second Step: Analysis of Incidental Damages "Components" ...................... 726

[Page viii]

4. Conclusion on Gibraltar Proceedings...................................................................... 739

J. General Defence ......................................................................................................... 741

1. The Claimants' Position .......................................................................................... 741

2. The Respondent's Position...................................................................................... 745

3. The Tribunal's Analysis........................................................................................... 749

K. Criminal Proceedings ................................................................................................. 756

1. The Claimants' Position .......................................................................................... 756

(a) Description of the Proceedings....................................................................... 756

(b) Costs Incurred................................................................................................. 757

(c) Request for Full Reparation............................................................................ 757

2. The Respondent's Position...................................................................................... 758

3. The Tribunal's Analysis........................................................................................... 760

L. Dutch Set-Aside Proceedings .................................................................................... 764

1. The Claimants' Position .......................................................................................... 764

2. The Respondent's Position...................................................................................... 766

3. The Tribunal's Analysis .......................................................................................... 769

M. Treaty Arbitration Costs Incurred by Non-Counsel of Record ................................... 774

1. The Claimants' Position .......................................................................................... 774

2. The Respondent's Position...................................................................................... 775

3. The Tribunal's Analysis........................................................................................... 777

N. Cross-Cutting Elements.............................................................................................. 781

1. Introduction ............................................................................................................ 781

2. Elements requiring an individualized analysis........................................................ 786

(a) Whether the Claimants have proved that they paid the legal fees and expenses for which they claim compensation in this Arbitration......................................... 786

(b) Whether date range limitations for the compensation of incidental damages should be based on the date on which the underlying services were performed, the date of issuance of the corresponding invoice, or the date of payment....................... 793

(c) King & Spalding/Three Crowns Amounts Claimed as Damages..................... 797

(d) Cash Calls....................................................................................................... 799

3. Trunko Elements ..................................................................................................... 818

(a) Mr Trunko's Expert Evidence ......................................................................... 819

(b) Mr McGrath's Expert Evidence ..................................................................... 821

(c) The Tribunal's Approach ............................................................................... 824

4. Conclusion on Cross-Cutting Elements .................................................................. 849

O. Global Conclusions on the Claimants' Damages Claims Concerning Legal Fees and Expenses...................................................................................................................... 851

1. The Tribunal's Earlier Determinations on the Claimants' Damages Claims concerning Legal Fees and Expenses....................................................................... 852

[Page ix]

2. The Parties' Damages Models.................................................................................. 863

(a) General Matters .............................................................................................. 864

(b) Specific Categories ........................................................................................ 864

(c) Components................................................................................................... 866

(d) Vendors ......................................................................................................... 868

(e) Elements ........................................................................................................ 871

3. Conclusion............................................................................................................... 872

IX. OTHER DAMAGES CATEGORIES ..................................................................................... 881

A. Embargo Losses in Argentina .................................................................................... 882

1. The Claimants' Position .......................................................................................... 882

2. The Respondent's Position...................................................................................... 885

3. The Tribunal's Analysis .......................................................................................... 888

B. Intellectual Property Losses in Ecuador..................................................................... 899

1. The Claimants' Position .......................................................................................... 899

2. The Respondent's Position...................................................................................... 905

3. The Tribunal's Analysis .......................................................................................... 912

(a) Introduction ................................................................................................... 912

(b) Characterisation of the alleged damage.......................................................... 929

(c) Did the intellectual property owned by Chevron's IP Subsidiaries in Ecuador lose any value following the issuance of the Attachment Order?........................... 931

(d) Did the Attachment Order cause the 43 Trademarks and/or the Technical Information to lose any value? ....................................................................... 943

(e) Valuation ........................................................................................................ 962

C. Moral Damages .......................................................................................................... 978

1. The Claimants' Position .......................................................................................... 978

2. The Respondent's Position...................................................................................... 981

3. The Tribunal's Analysis........................................................................................... 984

X. INTEREST .............................................................................................................................. 988

A. The Claimants' Position .............................................................................................. 988

B. The Respondent's Position ......................................................................................... 993

C. The Tribunal's Analysis .............................................................................................. 997

1. Legal Principles....................................................................................................... 997

(a) Applicable Legal Standard ............................................................................. 998

(b) Function of Interest....................................................................................... 1000

2. Period .................................................................................................................... 1007

3. Simple or Compound Interest ................................................................................ 1008

4. Pre-Award Interest Rate ......................................................................................... 1011

[Page x]

(a) Ecuador's Cost of Debt ................................................................................. 1012

(b) Chevron's WACC ......................................................................................... 1014

(c) Benchmark Rates.......................................................................................... 1019

5. Post-Award Interest Rate ....................................................................................... 1025

6. Tax implications..................................................................................................... 1027

D. Conclusion on Interest .............................................................................................. 1029

XI. INDEMNIFICATION ............................................................................................................ 1030

A. The Claimants' Position ............................................................................................ 1030

B. The Respondent's Position ....................................................................................... 1033

C. The Tribunal's Analysis ............................................................................................ 1035

XII. INJUNCTIVE RELIEF .......................................................................................................... 1044

A. The Claimants' Position ............................................................................................ 1044

B. The Respondent's Position ....................................................................................... 1046

C. The Tribunal's Analysis ............................................................................................ 1047

XIII. RELIEF.................................................................................................................................. 1056

A. Introduction .............................................................................................................. 1056

B. The Claimants' Requests for Relief .......................................................................... 1056

C. The Respondent's Requests for Relief...................................................................... 1064

1. Requests for Relief in Track 1 Counter-Memorial dated 3 July 2012 ................. 1065

2. Requests for Relief in Track 1 Rejoinder Memorial dated 26 October 2012........ 1066

3. Requests in Track 1 Supplementary Counter-Memorial dated 31 March 2014 .... 1067

4. Requests in Track II Counter Memorial on the Merits dated 18 February 2013........ 1067

5. Requests in Track II Rejoinder on the Merits dated 16 December 2013 ............... 1068

6. Requests in Track II Supplemental Counter-Memorial dated 7 November 2014 ... 1070

7. Requests in Track II Supplemental Rejoinder on the Merits dated 17 March 2015 .. 1071

8. Requests in Submission on Costs dated 28 November 2018 ................................ 1072

9. Requests in Counter-Memorial on Damages dated 28 February 2020.................. 1073

10.Requests in Response to the Claimants' Request for a Partial Award dated 19 May 2020......................................................................................................................... 1073

11.Requests in Second Submission on the Claimants' Request for a Partial Award dated 15 January 2021 .................................................................................................... 1075

12.Requests in Rejoinder on Damages dated 28 May 2022 ...................................... 1076

13.Request in Respondent's Cash Call Application dated 2 September 2022 ........... 1077

XIV. THE OPERATIVE PART........................................................................................................ 1078

A. Declarations and Orders as to Compensation........................................................... 1078

[Page xi]

B. Declarations and Orders as to Injunctive Relief........................................................ 1079

C. Legal and Arbitration Costs ...................................................................................... 1080

D. Miscellaneous............................................................................................................ 1080

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[Page xii]

ABBREVIATIONS

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[Page xiv]

[Page xv]

[Page xvi]

[Page xvii]

[Page xviii]

[Page xix]

[Page xx]

[Page xxi]

[Page xxii]

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[Page xxv]

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I. THE ARBITRATION

1. The First Claimant: The First Claimant is Chevron Corporation, a legal person organised under the laws of the United States of America, with its principal place of business at 6001 Bollinger Canyon Road, San Ramon, California 94583, United States of America (“Chevron").
2. The Second Claimant: The Second Claimant is Texaco Petroleum Company, also a legal person organised under the laws of the United States of America, with its principal place of business at 6001 Bollinger Canyon Road, San Ramon, California 94583 United States of America ("TexPet”).
3. Until 2001, TexPet was a wholly-owned indirect subsidiary of Texaco Inc., a legal person organised under the laws of the United States of America (“Texaco”); and thereafter, as from 2001, TexPet became and remains a wholly-owned indirect subsidiary of Chevron.
4. The Claimants' Legal Representatives: During Track III of the Arbitration, the Claimants were represented by: R. Hewitt Pate Esq (General Counsel of the First Claimant); David Moyer Esq (Deputy General Counsel for Corporate Capability of the First Claimant), Andres R. Romero-Delmastro Esq (Chief Counsel, Strategic Issues and International Litigation of the First Claimant), and Heleina Formoso Esq (Senior Counsel, Strategic Issues and International Litigation of the First Claimant); R. Doak Bishop Esq, Tracie Renfroe Esq, Craig Miles Esq, Wade M. Coriell Esq, David H. Weiss Esq (until June 2023), Carol Wood Esq (until December 2020), Daniela Bravo Esq, and Sophia Sepulveda Harms Esq (all of King & Spalding LLP, Houston, Texas, USA); Elizabeth Silbert Esq, Brian A. White Esq (until July 2024), Amelia S. Magee Esq (until October 2022), Charlie Spalding Esq (until July 2025), and Carson W. Bennett Esq (all of King & Spalding LLP, Atlanta, Georgia, USA); Edward G. Kehoe Esq (until December 2024), Caline Mouawad Esq (until January 2020), Isabel Fernández de la Cuesta Esq (until April 2023), Jessica Beess und Chrostin Esq, Timothy McKenzie Esq, and Vivasvat Dadwal Esq (all of King & Spalding LLP, New York, New York, USA); Anisha Sud Esq (of King & Spalding (Singapore) LLP, Singapore); Sara McBrearty Esq and Nate Bilhartz Esq (both of King & Spalding LLP, Austin, Texas, USA); Eldy Quintanilla Roché Esq (of King & Spalding LLP, Denver, Colorado, USA); Herbert Stern Esq (Stern & Kilcullen

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LLC, Florham Park, New Jersey, USA); and Jan Paulsson Esq, Luke Sobota Esq, Julia Sherman Esq, and William Sullivan Esq (all of Three Crowns LLP, Washington D.C., USA).¹

5. The Respondent: The Respondent is the Republic of Ecuador. It has owned and controlled at all material times Empresa Estatal de Petróleos del Ecuador (herein called “PetroEcuador”, known earlier as its predecessor “CEPE”), a legal person formed under the laws of Ecuador.
6. The Respondent's Legal Representatives: During Track III of the Arbitration, the Respondent was represented by: Juan Carlos Larrea Valencia (Procurador General del Estado), Íñigo Salvador Crespo (Procurador General del Estado until October 2022), Ana María Larrea (Directora Nacional de Asuntos Internacionales y Arbitraje), Claudia Salgado Levy (Directora General de Asuntos Internacionales y Arbitraje until February 2023), Lily Diaz Granados (Subdirectora de Asuntos Internacionales), Nazaret Ramos (Subdirectora de Asuntos Internacionales until April 2022), Christel Gaibor (Subdirectora de Asuntos Internacionales until February 2019), Gary Lopez Velez, Diana Terán Zamora (until February 2024), Macarena Bahamonde (until August 2020) and Xavier Rubio (until April 2019) (all of Procuraduría General Del Estado, República Del Ecuador, Quito, Ecuador); Mark Clodfelter Esq (until July 2021) and Diana Tsutieva Esq (of Foley Hoag LLP, Washington, D.C., USA); Andrew Schwartz Esq, Kenneth Leonetti Esq, Jonathan Ettinger Esq, Mark Finsterwald Esq, and Richard Maidman (until May 2024) (all of Foley Hoag LLP, Boston, MA, USA); Nicholas Renzler Esq (Foley Hoag LLP, New York, NY, USA); and Eduardo Silva Romero, José Manuel García Represa, Audrey Caminades, and Raphaelle Legru (all of Wordstone, Paris, France).²
7. The Arbitration Agreement: The arbitration agreement invoked by the Claimants is contained in Article VI of the Treaty between the United States of America and the

¹ See also Track II Award, para. 1.4, regarding the Claimants' representation in earlier stages of these proceedings. ↩

² See also Track II Award, para. 1.6, regarding the Respondent's representation in earlier stages of these proceedings. ↩

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Republic of Ecuador concerning the Encouragement and Reciprocal Protection of Investment of 27 August 1993 (the “Treaty”), providing (inter alia) as follows:

1. For purposes of this Article, an investment dispute is a dispute between a Party and a national or company of the other Party arising out of or relating to (a) an investment agreement between that Party and such national or company; (b) an investment authorization granted by that Party's foreign investment authority to such national or company; or (c) an alleged breach of any right conferred or created by this Treaty with respect to an investment.

2. In the event of an investment dispute, the parties to the dispute should initially seek a resolution through consultation and negotiation. If the dispute cannot be settled amicably, the national or company concerned may choose to submit the dispute, under one of the following alternatives, for resolution:

(a) to the courts or administrative tribunals of the Party that is a party to the dispute; or

(b) in accordance with any applicable, previously agreed dispute-settlement procedures; or

(c) in accordance with the terms of paragraph 3.

3. (a) Provided that the national or company concerned has not submitted the dispute for resolution under paragraph 2 (a) or (b) and that six months have elapsed from the date on which the dispute arose, the national or company concerned may choose to consent in writing to the submission of the dispute for settlement by binding arbitration:

...

(iii) in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL);

...

4. Each Party hereby consents to the submission of any investment dispute for settlement by binding arbitration in accordance with the choice specified in the written consent of the national or company under paragraph 3. Such consent, together with the written consent of the national or company when given under paragraph 3 shall satisfy the requirement for:

...

(b) an "agreement in writing" for purposes of Article II of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958 (“New York Convention").

5. Any arbitration under paragraph 3(a) (ii), (iii) or (iv) of this Article shall be held in a state that is a party to the New York Convention.

6. Any arbitral award rendered pursuant to this Article shall be final and binding on the parties to the dispute. Each Party undertakes to carry out without delay the provisions of any such award and to provide in its territory for its enforcement.

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8. Arbitration Rules: Pursuant to Article VI(3)(a)(iii) of the Treaty, the Arbitration Agreement incorporates the UNCITRAL Arbitration Rules (1976) (the “UNCITRAL Arbitration Rules”), according to which this Arbitration has been conducted.
9. The Arbitral Tribunal: Pursuant to the Arbitration Agreement and the UNCITRAL Arbitration Rules, the Tribunal is comprised of three arbitrators appointed thereunder as follows:
   1. Dr Grigera Naón: In their Notice of Arbitration dated 23 September 2009, the Claimants notified the Respondent of their appointment as co-arbitrator of Dr Horacio A. Grigera Naón, of 5224 Elliott Road, Bethesda, Maryland 20816, United States of America.
   2. Professor Lowe: On 4 December 2009, the Respondent notified the Claimants of its appointment as co-arbitrator of Professor Vaughan Lowe KC, of Essex Court Chambers, 24 Lincoln's Inn Fields, London WC2A 3EG, United Kingdom.
   3. Professor van den Berg: On 18 March 2020, following the resignation of Mr V.V. Veeder as presiding arbitrator on 1 January 2020, the Secretary-General of the Permanent Court of Arbitration (the “PCA”) appointed as the presiding arbitrator Professor Albert Jan van den Berg, of IT Tower, Avenue Louise 480, 1050 Brussels, Belgium.
10. By further agreement of the Parties, the International Bureau of the PCA was appointed to administer these arbitration proceedings, with Mr Martin Doe (of the PCA) acting as Secretary to the Tribunal. He is assisted by Mr José Luis Aragón Cardiel, also of the PCA.
11. Place of Arbitration: By agreement of the Parties, the legal place (or seat) of this Arbitration is The Hague, the Netherlands.
12. Language of Arbitration: By agreement of the Parties, English and Spanish are the official languages of this Arbitration and, as between them, English is to be the authoritative language, with all oral proceedings to be simultaneously interpreted and transcribed into English and Spanish. Orders, decisions and awards of the Tribunal are to be rendered in English.

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***

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II. TRACK III OF THE ARBITRATION

13. Earlier Orders, Decisions and Awards in Tracks I, IB and II: This Award follows three Orders on Interim Measures, seven Awards, two decisions and 86 procedural orders made in these arbitration proceedings. For ease of reference, the Tribunal's main rulings in this Arbitration include:
    1. The First Interim Award on Interim Measures dated 25 January 2012 (“First Interim Award");
    2. The Second Interim Award on Interim Measures dated 16 February 2012 (“Second Interim Award");
    3. The Third Interim Award on Jurisdiction and Admissibility dated 27 February 2012 ("Third Interim Award");
    4. The Fourth Interim Award on Interim Measures dated 7 February 2013 (“Fourth Interim Award”);
    5. The First Partial Award on Track I dated 17 September 2013 (“Partial Award on Track I");
    6. The Decision on Track I(B) dated 12 March 2015 (“Decision on Track I(B)”);
    7. The Second Partial Award on Track II dated 30 August 2018 (“Track II Award”);
    8. The Decision on the Respondent's Request for Interpretation under Article 35 of the UNCITRAL Arbitration Rules dated 6 November 2018 (“Decision on Interpretation"); and
    9. The Partial Award on Threshold Issues of Track III dated 30 June 2021 (“Partial Award on Track III").
14. This Award is made in Track III of this Arbitration, following Track II. It serves no purpose to revisit here the full procedural history of these arbitration proceedings from September 2009. For simplicity's sake, the Tribunal hereby incorporates by reference Part I of its Third Interim Award, Part A of its Partial Award on Track I, Part B of its

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Decision on Track I(B) and Part I(D) of its Track II Award. It here includes only a summary of the major procedural events following the Track II Award.

15. Track III Procedure: The Tribunal issued its Track II Award on 30 August 2018. As more fully set out in the Operative Part (Part X) of the Track II Award, and further described below, the Tribunal made a series of declarations and orders as to jurisdiction, admissibility, merits and other miscellaneous issues. It also referred all issues still extant between the Parties to be addressed in Track III of the proceedings.
16. On 29 September 2018, the Respondent requested interpretation and clarification of the Track II Award. On 6 November 2018, following further submissions by the Parties, the Tribunal issued its Decision on Interpretation, wherein it declined formally to accede to the Respondent's requests for the interpretation of the Track II Award.
17. On 10 October 2018, the Tribunal issued Procedural Order No. 52, concerning Track III of the Arbitration. The Tribunal there invited the Parties to apply for permission to add any further issue or request for relief to be addressed by the Parties in Track III beyond the extant issues identified in the Operative Part (Part X) of the Track II Award. It also invited the Parties to submit written summaries of their respective claimed amounts for legal costs and expenses until the date of the Order. The Respondent was further invited to show cause why the Tribunal should not vary Paragraph 4 of its Second Interim Award by ordering the release to the Claimants of the amount of USD 50 million deposited by the Claimants with the PCA as security for the Claimants' contingent responsibility to the Respondent in regard to such interim measures.
18. On 28 November 2018, the Parties filed their respective submissions on costs as instructed under paragraph 10.16 of the Track II Award.
19. On 8 December 2018, the Tribunal issued Procedural Order No. 54. Having taken note that the Respondent had no objection should the Tribunal decide to vary paragraph 4 of its Second Interim Award by ordering the release to the Claimants of the amount of USD 50 million deposited by the Claimants with the PCA, the Tribunal there set out directions for the release of the Claimants' security deposit.

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20. On 17 December 2018, the Tribunal issued Procedural Order No. 55. It there identified the issues to be decided in Track III of the Arbitration, as fully set out below.³ The Tribunal also requested the Parties to submit their proposals regarding (i) the procedural timetable for written and oral submissions concerning the issues to be addressed in Track III, as listed above; (ii) a proposed venue for an oral hearing on Track III; (iii) the estimated length of that hearing; and (iv) the preferred range of dates for such hearing.
21. On 19 March 2019, the Tribunal, the Parties and the PCA held a procedural meeting to address the matters set out in Procedural Order No. 55. On 10 April 2019, the Tribunal circulated a draft Procedural Order No. 56, regarding the procedural timetable for Track III, and invited the Parties' comments thereon. Having received the Parties' comments, on 26 April 2019, the Tribunal issued Procedural Order No. 56, setting out the Track III timetable and scheduling a procedural meeting for 28-29 May 2020 (the “Second Procedural Meeting"). It there also invited the Parties to seek a consensus as to the contents of a new confidentiality or protective order for Track III.
22. On 21 May 2019, the Tribunal issued Procedural Order No. 57, whereby it ruled upon the Respondent's 14 May 2019 application for certain amendments to Procedural Order No. 56.
23. On 22 May 2019, the Tribunal issued Procedural Order No. 58, a temporary confidentiality order in regard to the Claimants' Memorial and the Respondent's Counter-Memorial on Track III and the Parties' respective document productions under the International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration (2010 edition) (the “IBA Rules"). The Tribunal ruled that the order would be in force until the Second Procedural Meeting, at which time the Tribunal would review the order de novo.
24. On 17 June 2019, the Tribunal issued Procedural Order No. 59, whereby the Tribunal declined to grant the interim relief requested by the Claimants on 6 June 2019 “relating to information that is confidential pursuant to Procedural Order No. 58”.

³ See para. 94 below.

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25. On 19 July 2019, the Tribunal granted leave to the Claimants to submit a short letter on the contemporaneous status of the LAPs' recognition and enforcement action brought against Chevron in Canada. On 20 July 2019, the Claimants submitted the letter; on 24 July 2019, the Respondent submitted its response.
26. On 19 April 2020 the Tribunal issued Procedural Order No. 60, wherein it defined the issues to be addressed at the Second Procedural Meeting and the timing of written submissions in the lead-up to that meeting. Among other things, Procedural Order No. 60 foresaw that the Parties would file submissions concerning the Claimants' applications (i) "for the Tribunal's guidance concerning the proof that the Tribunal will require for damages consisting of legal fees and costs” (“Request for Guidance”); (ii) to decide certain “threshold issues” (“Request for Partial Award”); (iii) that the confidentiality order in Procedural Order No. 58 remain in place; and (iv) regarding issues of compliance with the Track II Award.
27. On 2 May 2020, the Tribunal issued Procedural Order No. 61, wherein it addressed several requests raised by the Parties in connection with the directions given by the Tribunal in Procedural Order No. 60. It there also declined to postpone the Second Procedural Meeting, as requested by the Respondent.
28. On 10 May 2020, the Tribunal issued Procedural Order No. 62, wherein it addressed a request from the Respondent for certain corrections and clarifications in respect of Procedural Order No. 61.
29. On 15 May 2020, the Tribunal circulated a draft of Procedural Order No. 63, establishing the format, time, and agenda of the Second Procedural Meeting. On 26 May 2020, the Tribunal held a procedural meeting with the Parties (by video conference) in preparation for the Second Procedural Meeting. Immediately following the procedural meeting, the Tribunal issued Procedural Order No. 63.
30. On 28 May and 29 May 2020, the Tribunal, the Parties and the PCA held the Second Procedural Meeting. On 29 May 2020, during the meeting, the Tribunal issued Procedural Order No. 64, whereby it extended the temporary confidentiality order in Procedural Order No. 58 until expressly abrogated.

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31. On 5 June 2020, the Tribunal invited the Claimants to confirm whether the damages categories for which they sought guidance under their Request for Guidance corresponded to the heads of damages set forth in paragraph 479(2)(a)-(m) of the Memorial on Damages, or to any other heads of damages. The Claimants addressed this matter in a letter dated 6 June 2020.

32. On 10 July 2020, the Tribunal issued Procedural Order No. 65. It there declined to bifurcate the Track III proceedings to determine, as a preliminary matter, the threshold questions identified by the Claimants in their Request for Partial Award. The Tribunal also invited the Parties to take into account in their Track III Reply and Rejoinder the considerations set out in the order.

33. On 16 July 2020, the Tribunal issued Procedural Order No. 66, whereby it decided the Parties' outstanding document production requests set out in the Redfern Schedules filed with the Tribunal on 11 May 2020.

34. On 5 August 2020, the Claimants requested that the Tribunal revise the existing Track III schedule. On the basis that the schedule could not be maintained “given the time required for Claimants to clarify and comply with the extensive document production and privilege review and logging obligations imposed by Procedural Order No. 66”, the Claimants requested that the Tribunal set the Request for Partial Award for hearing in March 2021, on the previously reserved dates for the Track III Hearing, with one more round of briefing by the Parties beforehand. The Claimants also requested a stay of all the environmental discovery obligations of both Parties until after the Tribunal had issued a decision on the Request for Partial Award. By a letter dated 11 August 2020, the Respondent requested that the Tribunal, in view of the Claimants' alleged non-compliance with Procedural Order No. 66, order the Claimants to produce immediately "all documents previously provided to their Memorial experts and witnesses", fix a date for the Claimants to produce all other responsive documents and required privilege logs, that adverse inferences be drawn if the Claimants failed to comply with these orders, and that the Claimants submit their Reply as scheduled.

35. After further exchanges of correspondence on these issues, the Tribunal invited the Parties to indicate their availability to make further submissions on these issues at a video conference. On 3 September 2020, the Tribunal held such video conference with the

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Parties. On 28 September 2020, the Tribunal issued Procedural Order No. 67. It there ordered (i) the further bifurcation of Track III with respect to the four preliminary questions raised by the Claimants in their Request for Partial Award; (ii) a stay of the Tribunal's orders on environmental document production; and (iii) that the confidentiality order set out in Procedural Order No. 58 remain in effect for all Track III materials until expressly abrogated. Flowing from its directions on these matters, the Tribunal also issued a revised Track III schedule, which foresaw (inter alia) that a Hearing on the Request for Partial Award would take place on 15-18 March 2021 (the “Hearing on a Partial Award").

36. On 26 October 2020, the Tribunal issued Procedural Order No. 68. It there decided certain outstanding disputes between the Parties concerning the Claimants' 5 October 2020 privilege log, prepared in response to Document Requests Nos. 42-52 in the Respondent's Redfern Schedule.

37. On 5 November 2020, the Tribunal issued Procedural Order No. 69. It there fixed a revised schedule for Track III having taken note of the Parties' agreement to extend certain deadlines and their divergent positions on the extension of other deadlines in the schedule.

38. On 13 November 2020, the Tribunal issued Procedural Order No. 70. It there (i) ordered the Claimants to submit a Revised Appendix 2 to the Memorial on Damages to account for the Claimants' decision to reduce their pecuniary claim; (ii) rejected the Claimants' request that the Tribunal issue an order “to the effect that the production of their invoice detail as well as any inadvertent production of privileged documents would not result in a waiver and that a producing party could 'claw back' any privileged documents post-production, similar to the type of order a U.S. federal district court may enter pursuant to Rule 502(d) of the Federal Rules of Evidence”; and (iii) invited further comments from the Claimants regarding the Respondent's allegations of deficient document production.

39. On 22 December 2020, the Tribunal issued Procedural Order No. 71, whereby it found "that its order in respect of Request No. 31 [of the Respondent's 11 May 2020 Redfern Schedule] does not require the Claimants to produce the information constituting the Unclaimed Invoices or FTI's software. Accordingly, once the Claimants produced the Structured Data relating to Claimed Invoices, they satisfied the Tribunal's order in respect

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of Request No. 31, as clarified in Procedural Orders Nos. 67 and 68.” On this basis, the Tribunal rejected the Respondent's request that the Claimants produce the review database.

40. By a letter dated 8 January 2021, the Tribunal rejected a request from the Respondent for leave to submit a Reply to the Claimants' Response to Ecuador's Objections to Claimants' Privilege and Confidentiality Log, dated 21 December 2020. It there also granted leave to the Respondent to submit a rebuttal expert report to the Claimants' submitted expert report of Judge Stephen G. Larson and made certain adjustments to the Track III schedule.

41. On 8 February 2021, the Tribunal issued Procedural Order No. 72. It there decided outstanding privilege disputes concerning the Claimants' Second Privilege and Confidentiality Log.

42. On 4 March 2021, the Tribunal, the PCA and the Parties attended a procedural meeting (by video conference) in preparation for the Hearing on a Partial Award. During the procedural meeting, the Respondent requested that the Tribunal issue an instruction excluding from the scope of the hearing and from the Tribunal's ensuing decision any issues not directly responsive to the questions raised in the Claimants' Request for Partial Award. The Tribunal ruled upon such request in its Procedural Order No. 73, dated 8 March 2021.

43. The Hearing on a Partial Award was held on 16 March and 17 March 2021 by video conference.

44. By a letter dated 22 May 2021, the Claimants informed the Tribunal of an alleged breach of the Tribunal's confidentiality orders as established in Procedural Orders Nos. 58, 64 and 67. The Respondent addressed such allegations in a letter dated 28 May 2021. By its Procedural Order No. 74, dated 2 June 2021, the Tribunal reaffirmed its prior directions on confidentiality but declined to make any further orders at that juncture.

45. On 30 June 2021, the Tribunal issued its Partial Award on Threshold Issues of Track III (the "Partial Award on Track III”, as defined above). It is further described below.⁴

⁴ See paras. 92-93 below. ↩

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46. On 23 July 2021, the Tribunal issued Procedural Order No. 75, setting forth a revised schedule for Track III, leading to a Main Hearing on Track III to be held from 18 August to 7 September 2022 (the “Track III Hearing").

47. On 1 July 2022, the Tribunal issued Procedural Order No. 76, whereby it rejected a request from the Claimants to strike from the record the expert reports of B. Tod Delaney (bearing the references RE-34 and RE-64). It further addressed the Claimants' request to file additional evidence in response to the Rejoinder on Damages.

48. On 26 July 2022, the Tribunal issued Procedural Order No. 77, whereby it established a Hybrid Hearing Protocol for the Track III Hearing.

49. On 1 August 2022, the Tribunal issued Procedural Order No. 78. It there (i) granted leave to the Parties to submit into the record additional documents listed in their respective communications of 11 July and 25 July 2022, and (ii) rejected the Claimants' request to submit into the record an additional opinion by Dr Ricardo Gil Lavedra.

50. On 11 August 2022, the Tribunal issued Procedural Order No. 79, whereby it (i) rejected the Respondent's request for reconsideration of Procedural Order No. 78; and (ii) invited the Parties to confer and submit a revised joint hearing schedule.

51. The Track III Hearing was held from 18 August to 7 September 2022. It is further described below.⁵

52. On 23 August 2022, the Tribunal issued Procedural Order No. 80, whereby it rejected the Claimants' request to “replace a document that was inadvertently submitted as Exhibit C-3488 with the correct document".

53. On 23 September 2022, the Tribunal issued Procedural Order No. 81, issuing directions concerning (i) post-hearing indexes to be submitted by the Parties; and (ii) corrections to the Track III Hearing transcript.

⁵ See paras. 65-75 below. ↩

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54. Also on 23 September 2022, the Tribunal issued Procedural Order No. 82, deferring its decision on the Respondent's Motion to Strike the Claimants' Claims related to the “Cash Calls" dated 2 September 2022, to its Track III Award.

55. On 14 October 2022, the Tribunal issued Procedural Order No. 83, whereby it invited the Parties to submit a joint Microsoft Excel model for the calculation of damages and interest, provided directions for said model, and set forth the procedure for the submission of the model. On 3 November 2022, the Parties notified the Tribunal that they were unable to reach agreement on a joint damages and interest model, and each submitted a model. On 18 November 2022, the Parties submitted their respective disclaimers in respect of both models. The Claimants' disclaimer was accompanied by certain video tutorials concerning the Claimants' damages model. After being granted leave by the Tribunal, the Respondent filed its own video tutorials concerning its damages model on 9 December 2022.

56. Pursuant to paragraph 5 of Procedural Order No. 83, the Parties were required to provide monthly updates of their joint damages model in which the applicable benchmark interest rates and related data were already built-in as necessary. Starting in January 2023, in view of their failure to agree on a joint damages model, the Parties submitted updated versions of their respective damages model on a monthly basis. On 20 December 2024, the Claimants filed a model including, for the first time, interest calculations for the Claimants' alleged trademark and embargo losses. On 14 January 2025, the Respondent requested the Tribunal to reject the Claimants' 20 December 2024 damages model. On 11 April 2025, the Tribunal (i) instructed the Parties to continue filing damages models as prescribed under paragraph 5 of Procedural Order No. 83; and (ii) noted that it would not draw guidance from the Claimants' 20 December 2024 model in finalizing its award on Track III. The last versions of the Parties' damages models received by the Tribunal prior to the issuance of this Award were filed by the Claimants on 14 October 2025 and by the Respondent on 15 October 2025.

57. On 7 November 2022, the Parties filed their respective post-Track III Hearing indexes.

58. On 13 November 2022, the Tribunal issued Procedural Order No. 84, whereby it determined that issues related to the allocation and assessment of costs and expenses

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within the meaning of Articles 38-40 of the UNCITRAL Arbitration Rules as claimed by the Parties would be dealt with in Track IV of the Arbitration.

59. Written Pleadings: Pursuant to the Tribunal's Procedural Orders, the Parties submitted the following written pleadings during Track III:

1. The Claimants' Memorial on Damages (Track III), dated 31 May 2019 ("Memorial");
2. The Respondent's Counter-Memorial on Damages, dated 28 February 2020 ("Counter-Memorial”);
3. The Claimants' Request for Guidance Concerning the Evidence to Support Claimants' Damage Claim for Legal Fees and Costs, dated 21 April 2020 (defined earlier as "Request for Guidance");
4. The Claimants' Request for a Partial Award on Threshold Issues, dated 21 April 2020 (defined earlier as “Request for Partial Award”);
5. The Respondent's Response to Claimants' Request for Guidance Concerning the Evidence to Support Claimants' Damage Claim for Legal Fees and Costs, dated 19 May 2020;
6. The Respondent's Response to Claimants' Request for a Partial Award on Threshold Issues, dated 19 May 2020;
7. The Claimants' Second Submission on Request for a Partial Award, dated 1 October 2020 (the “Claimants' Second Submission");
8. The Respondent's Second Submission on Request for a Partial Award, dated 15 January 2021 (the “Respondent's Second Submission");
9. The Claimants' Reply Memorial on Damages (Track III), dated 20 August 2021 (the "Reply"); and
10. The Respondent's Rejoinder on Damages, dated 20 May 2022 (the “Rejoinder”).

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60. Whilst the Parties have submitted during these proceedings other written pleadings touching upon issues decided in this Award, the Tribunal considers that their respective claims for relief in Track III can fairly be taken for present purposes from the submissions listed in Section IV infra, save where otherwise indicated below.⁶

61. Written Factual Testimony: During Track III, the Claimants submitted the following written factual testimony:

1. The witness statement of E.J. Rankin, dated 30 May 2019;
2. The third witness statement of Ricardo Reis Veiga, dated 30 May 2019;
3. The first witness statement of David S. Turner, dated 30 May 2019;
4. The witness statement of Colleen Kent, dated 31 May 2019;
5. The fourth witness statement of Ricardo Reis Veiga, dated 29 July 2021;
6. The witness statement of Steven G. Kobre, dated 13 August 2021;
7. The witness statement of Robert A. Mittelstaedt, dated 18 August 2021;
8. The witness statement of Peter E. Seley, dated 18 August 2021; and
9. The second witness statement of David Turner, dated 19 August 2021.

62. The Respondent did not submit written factual testimony during Track III.

63. Written Expert Testimony: During Track III, the Claimants submitted the following written expert testimony:

1. The third expert report of Weston Anson, dated 31 May 2019;
2. The first expert report of Kiran Sequeira, dated 31 May 2019;
3. The first expert report of Steven F. Stanton, dated 31 May 2019;

⁶ See Track II Award, para. 1.47 for a fuller list of written pleadings filed prior to Track III. See also Section XIII below. ↩

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4. The eighth expert report of Cesar Coronel Jones, dated 1 October 2020;
5. The expert report of Stephen G. Larson, dated 21 December 2020;
6. The expert report of Daniel J. Slottje, dated 17 August 2021;
7. The fourth expert report of Weston Anson, dated 19 August 2021;
8. The expert report of José Luis Barzallo Sacoto, dated 19 August 2021;
9. The expert report of Charles Silver, dated 19 August 2021;
10. The expert report of Clyde W. Lea, dated 20 August 2021;
11. The expert report of Sanford Litvack, dated 20 August 2021;
12. The expert report of Mark A. McGrath dated 20 August 2021;
13. The expert report of Geoffrey Parsons Miller, dated 20 August 2021;
14. The expert report of Joseph Ryan, dated 20 August 2021;
15. The second expert report of Kiran Sequeira, dated 20 August 2021; and
16. The second expert report of Steven F. Stanton, dated 20 August 2021.

64. The Respondent submitted the following written expert testimony during Track III:

1. The expert report of Verónica Arias Cabanilla, dated 20 February 2020;
2. The first expert report of Luis Sergio Parraguez Ruiz, dated 22 February 2020;
3. The first expert report of María de los Ángeles Lombeida Araujo, dated 23 February 2020;
4. The first expert report of Luciano de Souza Godoy, dated 25 February 2020;
5. The first expert report of Erik S. Knutsen, dated 25 February 2020;
6. The first expert report of Juliette M. Luycks, dated 25 February 2020;

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7. The first expert report of Fernando García Pullés, dated 26 February 2020;
8. The second expert report of William O. Kerr, dated 26 February 2020;
9. The first expert report of Mari Henry Leigh, dated 26 February 2020;
10. The expert report of David Paige, dated 26 February 2020;
11. The first expert report of S.I. Strong, dated 27 February 2020;
12. The fourth expert report of Fabián Andrade Narváez, dated 28 February 2020;
13. The first expert report of B. Tod Delaney, dated 28 February 2020;
14. The first expert report of Daniel Flores, dated 28 February 2020;
15. The fifth expert report of Fabián Andrade Narváez, dated 14 January 2021;
16. The second expert report of Luis Sergio Parraguez Ruiz, dated 13 January 2021;
17. The expert report of Richard D. Friedman, dated 25 January 2021;
18. The expert report of Misael Ruiz Fierro, dated 12 May 2022;
19. The expert report of Albert J. Lee, dated 13 May 2022;
20. The expert report of Bradley Wendel, dated 17 May 2022;
21. The second expert report of Fernando García Pullés, dated 17 May 2022;
22. The second expert report of María de los Ángeles Lombeida Araujo, dated 17 May 2022;
23. The expert report of William O. Kerr and Gregory E. Smith, dated 18 May 2022;
24. The second expert report of Mari Henry Leigh, dated 18 May 2022;
25. The second expert report of Luciano de Souza Godoy, dated 19 May 2022;

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26. The second expert report of Erik K. Knutsen, dated 19 May 2022;
27. The sixth expert report of Fabián Andrade Narváez, dated 19 May 2022;
28. The second expert report of Juliette Luycks, dated 19 May 2022;
29. The expert report of John L. Trunko, dated 20 May 2022;
30. The expert report of Lewis Baglietto, dated 20 May 2022;
31. The second expert report of Daniel Flores, dated 20 May 2022;
32. The second expert report of S.I. Strong, dated 20 May 2022; and
33. The second expert report of B. Tod Delaney, dated 20 May 2022.⁷

65. The Track III Hearing: Issues under Track III were addressed by the Parties at the oral hearing held at the World Bank, in Washington D.C., USA held from 18 August to 7 September 2022, with the assistance of English and Spanish interpreters and recorded in the form of English and Spanish transcripts. The references below are made to the English version of the Track III Hearing transcript, as follows: “D1.10” signifies the first day, at page 10. As regards witness examinations, “x” signifies direct examination or direct presentation, “xx” signifies cross-examination, “xxx” signifies redirect examination, "xxxx” signifies recross-examination, and “QT” signifies questions from the Tribunal.

66. The Claimants and the Respondent were represented respectively at the Track III Hearing by those persons listed in the verbatim transcript, and it serves no purposes here listing these persons by name, save as follows.

67. For the Claimants, opening oral submissions were made by Jan Paulsson [D1.15], Doak Bishop [D1.42], Wade Coriell [D1.81], Edward Kehoe [D1.129], and Elizabeth Silbert [D1.166].

⁷ See Track II Award, paras. 1.49 ff for a fuller list of written witness and expert testimony submitted prior to Track III. ↩

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68. For the Respondent, opening oral submissions were made by Íñigo Salvador Crespo [D2.218], Andrew Schwartz [D2.226 & 384], Diana Tsutieva [D2.242, 340, & 372], Claudia Salgado Levy [D2.281 & 380], Jonathan Ettinger [D2.288 & 318], Richard Maidman [D2.300 & 360], Mark Finsterwald [D2.305, 330 & 368], Nicholas Renzler [D2.347], and Kenneth Leonetti [D2.394].

69. For the Claimants, further oral submissions were made by Elizabeth Silbert [D3.437], Jan Paulsson [D5.971 & D12.2784], Wade Coriell [D6.1249, D9.2031, D14.3258 & 3315], Doak Bishop [D7.1477, D8.1752, 1778 & 1788], Brian White [D10.2301, D14.3330 & 3359], and Luke Sobota Esq [D11.2600].

70. For the Respondent, further oral submissions were made by Richard Maidman [D3.442], Diana Tsutieva [D5.983, D6.1264, D11.2614 & D12.2800], Claudia Salgado Levy [D14.3300], Andrew Schwartz [D7.1492, D8.1765, 1786, D9.2041, D14.3218, 3307 & 3352], and Mark Finsterwald [D10.2307].

71. For the Claimants, closing oral submissions were made by Doak Bishop [D15.3379], Wade Coriell [D15.3392], Elizabeth Silbert [D15.3437], Craig Miles [D15.3463], Edward Kehoe [D15.3479], and Jan Paulsson [D15.3501].

72. For the Respondent, closing oral submissions were made by Claudia Salgado Levy [D15.3514], Diana Tsutieva [D15.3520], Jonathan Ettinger [D15.3548], Andrew Schwartz [D15.3570], Mark Finsterwald [D15.3598], and Kenneth Leonetti [D.15.3615].

73. The Claimants tendered 9 oral witnesses at the Track III Hearing who were all cross-examined by the Respondent: (i) Ricardo Reis Veiga [D3.454x, 467xx, 579xxx, 596QT, 607xxx & 608xxxx]; (ii) Peter E. Seley [D3.614x, 633xx, D4.711xx, 780xxx & 803QT]; (iii) Robert A. Mittelstaedt [D3.807x, 823xx & 939xxx]; (iv) Charles Silver [D5.995x, 1024xx, 1119xxx & 1123QT]; (v) Sanford Litvack [D5.1135x, 1163xx, D6.1277xx & 1289QT]; (vi) Joseph Ryan [D6.1301x, 1323xx & 1389xxx]; (vii) José Luis Barzallo Sacoto [D6.1401x, 1427xx & 1464xxx]; (viii) Weston Anson [D7.1508x, 1537xx & 1648xxx]; and (ix) Kiran Sequeira [D7.1662x, 1706xx, D8.1802xx & 1899xxx].

74. The Respondent tendered 10 oral witnesses at the Track III Hearing who were all cross-examined by the Claimants: (i) W. Bradley Wendel [D8.1920x & 1947xx]; (ii) S. I. Strong [D9.2051x, 2083xx, 2179xxx & 2196QT]; (iii) Mari Henry Leigh [D9.2206x,

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2245xx, 2275xxx & 2279QT]; (iv) John L. Trunko Esq [D10.2316x, 2342xx, 2485xxx, 2429QT, D11.2567QT, 2581x⁸ & 2582xx⁹]; (v) Fabián Andrade Narváez [D10.2501x, 2520xx, D11.2626xx & 2648xxx]; (vi) Lewis Baglietto [D11.2655x, 2683xx, 2753xxx, 2757QT & 2764xxxx]; (vii) David Paige [D12.2818x, 2843xx & 2854xxx]; (viii) María de los Ángeles Lombeida [D12.2859x & 2885xx]; (ix) Gregory E. Smith [D12.2917x, 2938xx, D13.3007xx & 3032xxx]; and (x) Daniel Flores [D13.3047x, 3098xx, 3156QT, 3169xx, 3171QT & 3176xxx].

75. The Tribunal called one witness: Mark A. McGrath [D11.2545QT, 2562x,¹⁰ & 2563xx¹¹].

76. Track III Procedural Orders: The Tribunal has issued 30 orders relevant to Track III (Procedural Orders Nos 52, 55-84), as follows:¹²

⁸ Examination by counsel for the Respondent. ↩
⁹ Examination by counsel for the Claimants. ↩
¹⁰ Examination by counsel for the Claimants. ↩
¹¹ Examination by counsel for the Respondent. ↩
¹² See Track II Award, Part I, Annex 2 for a list of all procedural orders issued in this Arbitration prior to Track III. ↩

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77. Closing the Record: By its Procedural Order No. 85, dated 28 October 2025, the Tribunal 'closed' the record of this Arbitration as regards the issues under Track III that were to be decided in this Award.

* * *

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III. BACKGROUND TO THE TRACK III AWARD

A. FACTUAL BACKGROUND

78. In Parts IV, V and VI of the Track II Award, the Tribunal considered and made its findings in respect of the Claimants' allegations that several judges of the Lago Agrio Court wrongfully conducted and decided the Lago Agrio Litigation, in breach of the protections provided to the Claimants by the Treaty. Central among these was the Claimants' allegation that Judge Nicolás Zambrano did not write the Lago Agrio Judgment of 14 February 2011 (with its Clarification Order of 4 March 2011) but, rather, that the Lago Agrio Judgment was “ghostwritten", with Judge Zambrano's corrupt connivance, by certain of the Lago Agrio Plaintiffs” (the “LAPs”) representatives.

79. It would serve no purpose to repeat here in full the Tribunal's findings on such allegations. However, for the sake of context the Tribunal provides a brief overview of some key aspects of the factual background of the case and the Tribunal's findings of fact as set out in the Track II Award.

80. Crude Oil Pollution in the Oriente: On 21 February 1964, the Respondent granted oil exploration and production rights in Ecuador's Oriente region to TexPet (a subsidiary of Texaco) and the Ecuadorian Gulf Oil Company (a subsidiary of Gulf) under a written concession made with these companies' local subsidiaries operating as a Consortium.¹³ In 1967, the Consortium discovered significant deposits of crude oil in the Oriente and drilled its first wells. By 1969, the Consortium had found considerable reserves of crude oil.¹⁴ On 6 August 1973, the Respondent, TexPet and Gulf entered into a further concession agreement with a term expiring on 6 June 1992 (the “1973 Concession Agreement"),¹⁵ which, among other things, imposed environmental and related obligations on the Contractors (TexPet and Gulf) and the Operator (TexPet).¹⁶ On 30 June 1990, TexPet ceased to act as the “Operator” under the 1973 Concession Agreement, after

¹³ Track II Award, para. 4.55. ↩
¹⁴ Track II Award, para. 4.56. ↩
¹⁵ Track II Award, para. 4.58. ↩
¹⁶ Track II Award, para. 4.59. ↩

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25 years (1965 to 1990). From 1 July 1990 onwards, PetroEcuador (by its subsidiary, Petroamazonas) became the “Operator” under the 1973 Concession Agreement.¹⁷

81. There is today crude oil pollution in the former concession area of the Oriente, including pollution lying close to human habitation.¹⁸ The origin of such crude oil pollution, apart from accidental leaks and spills, derives principally from a mixture of oil and “produced water” in pits, subject to run-off into adjoining land and water courses.¹⁹

82. The 1995-1998 Settlement and Release Agreements: This term, as used in the Track II Award and in this Award, comprises three sets of contractual documentation: (i) the 1995 Settlement Agreement of 4 May 1995; (ii) the 1996 Municipal and Provincial Releases; and (iii) the 1998 Final Release of 30 September 1998.²⁰ The general features of the 1995-1998 Settlement and Release Agreements are as follows:

(i) The 1995 Settlement Agreement: The 1995 Settlement Agreement was signed for the Respondent by the Minister of Energy and Mines (Dr Galo Abril Ojeda), for PetroEcuador by its Executive President (Dr Federico Vintimilla Ojeda) and for TexPet by its Vice-President (Mr Ricardo Reis Veiga) and its legal representative (Dr Rodrigo Pérez Pallares). It provides (inter alia): “the scope of the Environmental Remedial Work to be undertaken by TexPet to discharge all of its legal and contractual obligations and liability [for] Environmental Impact arising out of the Consortium's operations has been determined and agreed to by TexPet, the Government and PetroEcuador as described in this Contract”; the agreed scope of the environmental remedial work is attached as Annex A; and “TexPet agrees to undertake such Environmental Remedial Work in consideration for being released and discharged of all its legal and contractual obligations and liability for Environmental Impact arising out of the Consortium's operations".²¹

¹⁷ Track II Award, para. 4.62. ↩
¹⁸ Track II Award, para. 4.71. ↩
¹⁹ Track II Award, para. 4.72. ↩
²⁰ Track II Award, para. 3.15. ↩
²¹ Track II Award, paras. 4.157, 4.159. ↩

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By Article 5.1 of the 1995 Settlement Agreement, the Respondent and PetroEcuador release, acquit and forever discharge TexPet and its fellow "Releasees” of “all the Government's and Petroecuador's claims against the Releasees for Environmental Impact arising from the Operations of the Consortium, except for those related to the obligations contracted hereunder for the performance by TexPet of the Scope of Work (Annex A) which shall be released as the Environmental Remedial Work is performed to the satisfaction of the Government and Petroecuador...".²²

(ii) The 1996 Municipal and Provincial Releases: In May-September 1996, the Municipal and Provincial Releases were agreed between TexPet and four municipalities in the Oriente (Shushufindi, Francisco de Orellana, Lago Agrio and La Joya de los Sachas), pursuant to paragraph VII(C) of Annex A of the 1995 Settlement Agreement and approved by the Ecuadorian Courts.²³

(iii) The 1998 Final Release: The Final Release was issued on 30 September 1998, signed by PetroEcuador, the relevant Ministries, and TexPet. In summary, within the former concession area, a total of 250 pits and 7 spills at 133 well sites in 10 fields had been investigated under the Remedial Action Plan agreed by TexPet, Petro Ecuador and the Respondent in September 1995 (the “RAP”). Remedial action was taken at 168 of these locations; and the balance (of 89) not subjected to remedial action because it was not required under the RAP.²⁴

83. The Aguinda Litigation: The Aguinda Complaint was filed in the District Court for the Southern District of New York on 3 November 1993. It pleaded a claim by the Aguinda Plaintiffs as a putative (uncertified) class action under the USA's Federal Rules of Procedure, by named individuals and “on behalf of a class of all others similarly situated” for personal injuries and property damage caused by the defendant's wrongdoing. The original defendant was Texaco.²⁵

²² Track II Award, para. 4.158. ↩
²³ Track II Award, para. 4.164. ↩
²⁴ Track II Award, para. 4.178. ↩
²⁵ Track II Award, para. 4.75. ↩

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84. As pleaded, the named individuals and unnamed class members estimated as numbering 30,000 were all resident in Ecuador from 1972 onwards within a geographical area defined by latitude and longitude, south of the Colombian border. This complaint asserted individual civil claims for personal injury and property damage, aggregated as members of the same putative class. The causes of action were pleaded in tort, including negligence, public nuisance, private nuisance, strict liability, trespass, and civil conspiracy, with relief claimed as compensatory damages, punitive damages and equitable relief to remedy the alleged pollution and contamination “of the plaintiffs' environment and the personal injuries and property damage caused thereby".²⁶

85. After years of litigation at the trial court and appellate levels, by its judgment dated 30 May 2001, the U.S. District Court for the Southern District of New York (Judge Rakoff) dismissed the Aguinda Complaint (for a second time). The Court ordered an unconditional stay on the ground of forum non conveniens because the case had “everything to do with Ecuador and nothing to do with the United States [of America]". As there also recorded: “Following remand [by the Second Circuit to Judge Rakoff], Texaco provided the missing commitment to submit to the jurisdiction of the courts of Ecuador" on 11 January 1999.²⁷ By its judgment dated 16 August 2002, the Second Circuit affirmed, as modified, Judge Rakoff's Order.²⁸

86. The Lago Agrio Litigation: On 7 May 2003, the LAPs filed the Lago Agrio Complaint with the Lago Agrio Court against Chevron (which, by then had “merged” with Texaco) (the "Lago Agrio Complaint”). The Complaint identified the 48 individual plaintiffs as being "domiciled in the Secoya Community of San Pablo de Aguarico, Canton of Shushufundi, Province of Sucumbíos” and “Ecuadorian nationals engaged in farming activities". These plaintiffs were described as having been the same Aguinda Plaintiffs as in the stayed Aguinda Litigation New York, having there sought “enforcement of their own rights as well as those of other people in the same class, as the term is used in [New York's] procedural rules to designate the people who might find themselves in an

²⁶ Track II Award, para. 4.76. ↩
²⁷ Track II Award, paras. 4.82-4.83. ↩
²⁸ Track II Award, para. 4.84. ↩

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identical legal situation with regard to the specifics of the lawsuit [i.e., the Aguinda Litigation]".²⁹

87. The Lago Agrio Court (Judge Zambrano) issued the Lago Agrio Judgment on 14 February 2011 (with its Clarification Order of 4 March 2011), adverse to Chevron. It awarded USD 18.2 billion in damages to be paid by Chevron, including USD 8.6 billion as punitive damages subject to a timely public apology by Chevron, with a 10% award to the Amazonian Defence Front (“ADF”).³⁰

88. Chevron initiated three successive appeals against the Lago Agrio Judgment, resulting in the Judgments of the Provincial Court of Justice of Sucumbios (the “Appellate Court") in 2012, the National Court of Justice (the “Cassation Court”) in 2013, and the Constitutional Court of Ecuador (the “Constitutional Court") in 2018.³¹ In its 12 November 2013 Judgment, the Cassation Court affirmed in part the Lago Agrio Judgment, but nullified the punitive damages imposed for Chevron's omission to "apologise", as required by that Judgment and as upheld by the Appellate Court. As a result, the Cassation Court reduced the Lago Agrio Judgment's award of damages to USD 8.6 billion, with 10% to be paid to the ADF.³² The Constitutional Court issued its Judgment on 27 June 2018, affirming the Judgment of the Cassation Court.³³

89. The 'Ghostwriting' of the Lago Agrio Judgment: In Part VIII of the Track II Award, the Tribunal analysed in the aggregate the factual and forensic conclusions it had reached in Parts IV, V and VI of the Award as regards the Claimants' allegations that the Lago Agrio Judgment was ‘ghostwritten' for Judge Nicolás Zambrano of the Lago Agrio Court:

The facts established on the factual, expert and forensic evidence speak for themselves, as set out at length in Parts IV, V and VI above.

As there explained, the details as to how exactly all or material parts of the Lago Agrio Judgment came to be written, corruptly by certain of the Lago Agrio Plaintiffs' representatives for Judge Zambrano, remain incomplete. The missing factual and forensic evidence is likely available only in Ecuador, if it still exists at all. Yet the circumstantial

²⁹ Track II Award, paras. 4.89-4.90. ↩
³⁰ Track II Award, para. 5.2. ↩
³¹ Track II Award, para. 4.94. ↩
³² Track II Award, para. 5.172. ↩
³³ Track II Award, para. 5.180. ↩

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and other evidence adduced in this arbitration is overwhelming. Short of a signed confession by the miscreants, as rightly submitted by the Claimants at the end of the Track II Hearing, the evidence establishing ‘ghostwriting' in this arbitration “must be the most thorough documentary, video, and testimonial proof of fraud ever put before an arbitral tribunal."

As found by the Tribunal in Parts IV and V above, two of the Lago Agrio Plaintiffs' representatives who were privy to the 'ghostwriting' exercise were Mr Donziger and Mr Fajardo. As the Respondent acknowledged at the Track II Hearing, the participation of Mr Fajardo in 'ghostwriting' for Judge Zambrano, if correct (which the Respondent denies), would suffice to support the Claimants' claims for denial of justice. The Tribunal agrees: the Claimants' inability to identify by name with sufficient probability others of the Lago Agrio Plaintiffs' representatives, also involved in ‘ghostwriting' (in addition to Mr Donziger), cannot by itself exculpate the Respondent from liability for denial of justice. If it were otherwise, the more successful the ghostwriting exercise, the less culpability would result. In any event, for denial of justice, the relevant actor is Judge Zambrano; and his participation in the ‘ghostwriting' of the Lago Agrio Judgment is firmly established on the evidence before this Tribunal.

On such evidence, the Tribunal has found that Judge Zambrano acted corruptly, in return for a bribe promised to him by certain of the Lago Agrio Plaintiffs' representatives. Judge Zambrano's collusive conduct in the 'ghostwriting' of the Lago Agrio Judgment was not authorised under Ecuadorian law. Nor was it under judicial standards long established under international law. He was far from acting as an independent or impartial judge deciding the Lago Agrio Litigation fairly between the parties, under minimum standards for judicial conduct long recognized under international law.³⁴

B. KEY RULINGS IN THE TRIBUNAL'S PRIOR AWARDS AND DECISIONS

90. In its Track II Award, Part I, Annex 1, the Tribunal re-stated the Operative Parts of its Orders on Interim Measures, Awards and Decision on Track I(B). It is unnecessary to repeat those decisions here. For ease of reference, however, the Tribunal repeats here the Operative Parts of the Track II Award and the Partial Award on Track III.

91. Track II Award: Part X (the Operative Part) of the Track II Award reads as follows:

A: Introduction

10.1 For the reasons set out in this Award, based on the evidential materials adduced in these arbitration proceedings together with its earlier awards, orders and decision, the Tribunal makes the following declarations and orders under the Treaty and international law:

B: Declarations as to Jurisdiction and Admissibility

10.2 The Tribunal declares that it has jurisdiction under Article VI of the Treaty over the claims pleaded in this arbitration by the First Claimant (Chevron) and the Second

³⁴ Track II Award, paras. 8.53-8.56. ↩

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Claimant (TexPet) under Articles II(3)(a) and II(3)(c) of the Treaty; and the Tribunal rejects all objections as to lack of jurisdiction pleaded by the Respondent;

10.3 The Tribunal declares that the claims pleaded in this arbitration by the First Claimant and the Second Claimant under Articles II(3)(a) and II(3)(c) of the treaty are admissible under Article VI of the Treaty; and the Tribunal rejects all objections as to non-admissibility pleaded by the Respondent.

C: Declarations as to the Merits

10.4 The Tribunal declares that material parts of the Lago Agrio Judgment of 14 February 2011 (as clarified by order of 4 March 2011) were corruptly 'ghostwritten' for Judge Nicolás Zambrano Lozada, as a judge of the Lago Agrio Court, by one or more of the Lago Agrio Plaintiffs' representatives in return for a promise by such representative(s) to pay to Judge Zambrano a bribe from the proceeds of the Lago Agrio Judgment's enforcement by the Lago Agrio Plaintiffs;

10.5 The Tribunal declares that the Respondent, by issuing, rendering enforceable, maintaining the enforceability and executing the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate, Cassation and Constitutional Courts) and knowingly facilitating its enforcement outside Ecuador, wrongfully committed a denial of justice under the standards both for fair and equitable treatment and for treatment required by customary international law under Article II(3)(a) of the Treaty;

10.6 The Tribunal declares that the Respondent is liable to make full reparation to the First Claimant and the Second Claimant for denial of justice under the standards both for fair and equitable treatment and for treatment required by customary international law under Article II(3)(a) of the Treaty; and the Tribunal rejects the defences pleaded by the Respondent;

10.7 The Tribunal (by a majority) declares, confirming its Decision on Track IB, that the Lago Agrio Complaint of 7 May 1998, as an initial pleading, included individual claims (for personal harm) resting upon individual rights under Ecuadorian law, not falling within the scope of the 1995 Settlement Agreement and that, therefore, the Lago Agrio Complaint was not wholly barred at its inception by res judicata under Ecuadorian law, by virtue of the 1995 Settlement Agreement;

10.8 The Tribunal declares that the said Lago Agrio Judgment (as also decided by the Lago Agrio Appellate, Cassation and Constitutional Courts) decided only diffuse claims as distinct from individual claims for personal harm by the Lago Agrio Plaintiffs, whereby the Respondent violated its obligations towards the First Claimant and the Second Claimant as "Releasees" under the 1995 Settlement Agreement;

10.9 The Tribunal declares that the Respondent is liable to make full reparation to the First Claimant and the Second Claimant under Article II(3)(c) of the Treaty for the non-observation of its obligations towards each of them as a “Releasee” under the 1995 Settlement Agreement; and the Tribunal rejects the defences pleaded by the Respondent;

10.10 The Tribunal declares that, given the Respondent's said denial of justice, the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate, Cassation and Constitutional Courts) grossly violated the fundamental procedural rights of the First

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Claimant (including its rights of defence); the said Lago Agrio Judgment (as thus decided) is contrary to international public policy; and no part of the said Lago Agrio Judgment should be recognised or enforced by any State with knowledge of the Respondent's said denial of justice;

10.11 The Tribunal declares that any injury to the First Claimant or the Second Claimant caused by the recognition or enforcement of any part of the Lago Agrio Judgment within or without Ecuador (as decided by the Lago Agrio Appellate, Cassation and Constitutional Courts) shall be injuries for which the Respondent is liable to make reparation under international law;

10.12 For the avoidance of doubt, the Tribunal declares and confirms that neither this Award nor any of its earlier awards, orders and decision precludes a claim by any of the Lago Agrio Plaintiffs against the First or Second Claimants made for personal harm in respect of his or her individual rights, not being a diffuse claim within the meaning of the 1995 Settlement Agreement.

D: Orders as to the Merits

10.13 The Respondent shall, to the satisfaction of the Tribunal and as unconditional obligations of result (save where otherwise indicated):

(i) Take immediate steps, of its own choosing, to remove the status of enforceability from the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate, Cassation and Constitutional Courts);

(ii) take immediate steps, of its own choosing, to preclude any of the Lago Agrio Plaintiffs, any "trust" purporting to represent their interests (including the "Frente de Defensa La Amazonia"), any of the Lago Agrio Plaintiffs' representatives, and any non-party funder from enforcing any part of the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate, Cassation and Constitutional Courts), directly or indirectly, whether by attachment, arrest, interim injunction, execution or howsoever otherwise;

(iii) on notice from the First or Second Claimants, advise promptly in writing any State (including its judicial branch), where the Lago Agrio Plaintiffs may be seeking directly or indirectly, now or in the future, the enforcement or recognition of any part of the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate, Cassation and Constitutional Courts) of this Tribunal's declarations and orders regarding the Respondent's internationally wrongful acts comprising a denial of justice resulting from the Lago Agrio Judgment (as thus decided); and, for this purpose (being required by legal duty or to pursue a legal right), any Party shall be entitled, notwithstanding Article 32(5) of the UNCITRAL Arbitration Rules, to disclose to the State's judicial branch (on whatever terms that its courts may order) a copy of this Award and its earlier awards, orders and decision;

(iv) abstain from collecting or receiving, directly or indirectly, any proceeds from the enforcement or recognition of any part of the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate, Cassation and Constitutional Courts) within or without Ecuador;

(v) return promptly to the First Claimant any such proceeds that (notwithstanding the foregoing) come into the Respondent's custody, possession or control;

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(vi) take corrective measures, of its own choosing, to "wipe out all the consequences" of all the Respondent's internationally wrongful acts in regard to the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate, Cassation and Constitutional Courts), within the meaning of Article 31 of the International Law Commission's Articles on State Responsibility, excepting only reparation in the form of compensation (as to which, see Section E below);

(vii) comply with its obligations towards the First Claimant and the Second Claimant as "Releasees” under the 1995 Settlement Agreement, in accordance with Article II(3)(c) of the Treaty; and

(viii) subject to further order of this Tribunal in Track III, make full reparation in the form of compensation for any injuries caused to the First Claimant and the Second Claimant by the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate Court, Cassation and Constitutional Courts).

E: Compensation

10.14 All issues as to reparation in the form of compensation for any injuries sustained by the First or Second Claimant, as claimed by the Claimants and denied by the Respondent, including any assessment of the amount of compensation, moral damages, indemnities, reimbursements, payments, expenses and interest, are currently assigned for further submissions by the Parties to Track III. These issues are not decided in this Award.

F: Legal and Arbitration Costs

10.15 All issues relating to the allocation and assessment of costs and expenses (within the meaning of Articles 38-40 of the UNCITRAL Arbitration Rules), as claimed by the Claimants and the Respondent, are currently assigned for further submissions by the Parties later in these arbitration proceedings. These issues are not decided in this Award;

10.16 Nonetheless, so as to facilitate this later exercise as to assessment, the Claimants and the Respondent shall submit written summaries (not to exceed ten pages) of their respective claimed amounts for costs and expenses to date, to be submitted to the Tribunal not later than 90 days following the date of this Award. These summaries shall contain only a breakdown of the claimed amounts and shall not include any submissions as to the merits of the Parties' respective claims for costs (including issues of allocation).

G: Miscellaneous

10.17 The Parties' extant requests for relief, as marked-up in the enclosures to their respective letters dated 19 March and 20 April 2018 for Track III, shall be addressed by the Parties in Track III of these arbitration proceedings;

10.18 The Tribunal confirms, as declared in its Fourth Interim Award on Interim Measures dated 7 February 2013, that the Respondent violated its First and Second Interim Awards on Interim Measures dated 25 January and 16 February 2012 in breach of Article VI of the Treaty, Article 32(3) of the UNCITRAL Arbitration Rules and international law;

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10.19 In accordance with the Tribunal's said Fourth Interim Award, at Paragraph 2 of Part IV (page 31), the ‘show cause' issues relating to compensation claimed by the First and Second Claimants for the Respondent's violations of the said First and Second Interim Awards shall be addressed by the Parties in Track III of these arbitration proceedings;

10.20 The Respondent's application of 1 March 2013 for the reconsideration of the Tribunal's First, Second and Fourth Interim Awards shall be further addressed by the Parties in Track III of these arbitration proceedings;

10.21 In the light of this Award, not later than 90 days following the date of this Award, any Party may apply to the Tribunal for permission to add any further issue or request for relief to be addressed by the Parties in Track III of these arbitration proceedings;

10.22 Further, in the light of this Award, not later than 90 days following the date of this Award, the Respondent may (in writing) show cause why the Tribunal should not vary Paragraph 4 of its Second Interim Award on Interim Measures by ordering the release to the Claimants of the amount of US$ 50 million deposited by the Claimants with the Permanent Court of Arbitration as security for the Claimants' contingent responsibility to the Respondent in regard to such interim measures; and

10.23 Save as aforesaid, the requests for relief made by the First and Second Claimants for decision in this Track II are not granted; and the requests for relief made by the Respondent for decision in this Track II are not granted.

10.24 This Award, although separately signed by the Tribunal's members on three signing pages, constitutes a “partial award" signed by the three arbitrators under Article 32 of the UNCITRAL Arbitration Rules.

92. Partial Award on Track III: As already stated above, by its Procedural Order No. 67 the Tribunal ordered the bifurcation of Track III with respect to the four preliminary questions raised by the Claimants in their Request for Partial Award, which arose from the hypothetical "but-for" reduction and “mitigation” arguments outlined in the Respondent's Counter-Memorial, namely:

Question #1: Is Ecuador's request for a reduction in damages based upon a hypothetical "but-for" scenario barred by the Tribunal's Track II finding that the entire Lago Agrio proceeding was pervaded by a denial of justice comprised of fraud and corruption?

Question #2: Do the Tribunal's prior rulings regarding the scope and effects of the 1995 and 1998 Settlement and Release Agreements, as well as its rulings on its own jurisdiction, preclude both the claims that Ecuador's Counter-Memorial on Damages refers to as "collective" claims and any offset based on individual claims?

Question #3: If any hypothetical “but-for” scenario offset were permitted here, would it be limited to the confines of those claims actually pursued by the 48 named Lago Agrio Plaintiffs and to the actual Lago Agrio Litigation record?

Question #4: Do the Tribunal's prior rulings preclude Ecuador's argument that Claimants failed to mitigate their damages by not pursuing local remedies under Ecuadorian law?

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93. The Operative Part of the Partial Award on Track III reads:

For the reasons set out above, the Tribunal:

(i) Declares, in respect of Question #1, that there is no finding in the Tribunal's Track II Award that the entire Lago Agrio proceeding was pervaded by a denial of justice comprised of fraud and corruption;

(ii) Declares, in respect of Question #2, that its prior rulings do not preclude an offset based on individual claims or collective claims, to the extent that it refers to the legal costs that the Claimants would in all probability have incurred in defending themselves against those claims in a Treaty-compliant Lago Agrio Litigation;

(iii) Declares in respect of Question #3, that any hypothetical but-for scenario offset should in principle at least be limited to the confines of the claims actually pleaded by the 48 named Lago Agrio Plaintiffs and to the actual Lago Agrio Litigation record;

(iv) Declares, in respect of Question #4, that the Tribunal's prior rulings do not preclude the Respondent's argument that the Claimants failed to mitigate their damages by not pursuing local remedies under Ecuadorian law;

(v) Vacates its Decision on the Parties' Document Production Requests in relation to requests concerning environmental matters, as originally set out in Procedural Order No. 66 and stayed by paragraph 7 of Procedural Order No. 67;

(vi) Rejects the Parties' claims and requests to the extent that they contradict the Tribunal's decisions in this Partial Award; and

(vii) Reserves its decision on all other claims and requests for subsequent determination.

C. SCOPE OF TRACK III

94. On 17 December 2018, the Tribunal issued Procedural Order No. 55. It there directed that the issues to be decided in Track III would be those identified in the Track II Award and paragraph 4 of Procedural Order No. 52, namely:

a. All issues as to reparation in the form of compensation for any injuries sustained by the First Claimant or the Second Claimant, as claimed by the Claimants and denied by the Respondent, including any assessment of the amount of compensation, moral damages, indemnities, reimbursements, payments, expenses and interest;

b. All issues relating to the allocation and assessment of costs and expenses (within the meaning of Articles 38-40 of the UNCITRAL Arbitration Rules), as claimed by the Claimants and the Respondent respectively, for Tracks I, II and III;

c. The Parties' extant requests for relief, as marked-up for Track III in the enclosures to their respective letters dated 19 March and 20 April 2018 and set out in the Tribunal's Second Partial Award;

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d. The 'show cause' issues relating to compensation claimed by the First Claimant and the Second Claimant for the Respondent's violations of the First and Second Interim Awards; and

e. The Respondent's application of 1 March 2013 for the reconsideration of the Tribunal's First, Second and Fourth Interim Awards.

95. In respect of item (b) in the preceding quote, and as already noted, by its Procedural Order No. 84 the Tribunal assigned all issues relating to the allocation and assessment of costs and expenses (within the meaning of Articles 38-40 of the UNCITRAL Arbitration Rules), as claimed by the Claimants and the Respondent for further submissions by the Parties to Track IV of the Arbitration. Accordingly, such issues are not addressed in this Award.

* * *

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IV. THE PARTIES' REQUESTS FOR RELIEF IN TRACK III

A. THE CLAIMANTS' REQUESTS FOR RELIEF

96. In their letter dated 20 October 2025, the Claimants indicated the parts of their requests for relief that remain extant for Track III and, separately, Track IV.³⁵ What follows are the Claimants' prayers for relief from the outset of the Arbitration, highlighting in bold the relief extant for Track III (highlighted in yellow in the original), in underscore the relief extant for Track IV (highlighted in blue in the original), and in bold and underscore the relief relevant to both Tracks III and Track IV (in green in the original).

97. In their Amended Memorial on the Merits dated 23 September 2010, the Claimants made the following request for relief (footnotes here omitted):

547. Accordingly, Claimants request an Order and Award granting the following relief:

1. Declaring that under the 1995, 1996 and 1998 Settlement and Release Agreements, Claimants have no liability or responsibility for environmental impact, including but not limited to any alleged liability for impact to human health, the ecosystem, indigenous cultures, the infrastructure, or any liability for unlawful profits, or for performing any further environmental remediation arising out of the former Consortium that was jointly owned by TexPet and Ecuador, or under the expired Concession Contract between TexPet and Ecuador.

2. Declaring that Ecuador has breached the 1995, 1996, and 1998 Settlement and Release Agreements and the U.S.-Ecuador Treaty, including its obligations to afford fair and equitable treatment, full protection and security, an effective means of enforcing rights, non-arbitrary treatment, non- discriminatory treatment, and to observe obligations it entered into under the investment agreements.

3. Declaring that under the Treaty and applicable international law, Chevron is not liable for any judgment rendered in the Lago Agrio Litigation.

4. Declaring that any judgment rendered against Chevron in the Lago Agrio

³⁵ See also Letter from the Claimants to the Tribunal dated 20 October 2025: "Consistent with the enclosure that Claimants submitted on 19 March 2018 listing their requests for relief, Claimants have highlighted each extant request for relief only once and have highlighted only the most recent extant requests. In other words, where Claimants sought relief in an earlier submission and subsequently sought the same relief in a later submission, Claimants have only highlighted the request from the later submission. The Tribunal can disregard the requests for relief that are not highlighted because either they are no longer extant or they are included in the yellow, blue, and green highlighted requests. ↩
Claimants reserve the right to apply for relief from the Tribunal during Track IV, in addition to the relief currently highlighted in blue or green in Enclosure 1, to the extent such relief becomes necessary due to any action or inaction by Respondent."

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Litigation is not final, conclusive or enforceable.

5. Declaring that Ecuador or Petroecuador (or Ecuador and Petroecuador jointly) are exclusively liable for any judgment rendered in the Lago Agrio Litigation.

6. Ordering Ecuador to use all measures necessary to prevent any judgment against Chevron in the Lago Agrio Litigation from becoming final, conclusive or enforceable.

7. Ordering Ecuador to use all measures necessary to enjoin enforcement of any judgment against Chevron rendered in the Lago Agrio Litigation, including enjoining the nominal Plaintiffs from obtaining any related attachments, levies or other enforcement devices.

8. Ordering Ecuador to make a written representation to any court in which the nominal Plaintiffs attempt to enforce a judgment from the Lago Agrio Litigation, stating that the judgment is not final, enforceable or conclusive;

9. Ordering Ecuador to dismiss the Criminal Proceedings in Ecuador against Messrs Ricardo Veiga and Rodrigo Pérez.

10. Ordering Ecuador not to seek the detention, arrest or extradition of Messrs Veiga or Pérez or the encumbrance of any of their property.

11. Awarding Claimants indemnification against Ecuador in connection with a Lago Agrio Judgment, including a specific obligation by Ecuador to pay Claimants the sum of money awarded in to the Lago Agrio judgment.

12. Awarding Claimants any sums that the nominal Lago Agrio Plaintiffs collect against Claimants or their affiliates in connection with enforcing a Lago Agrio judgment.

13. Awarding all costs and attorneys' fees incurred by Claimants in (1) defending the Lago Agrio Litigation and the Criminal Proceedings, (2) pursuing this Arbitration, (3) uncovering the collusive fraud through investigation and discovery proceedings in the United States, (4) opposing the efforts by Ecuador and the Lago Agrio Plaintiffs to stay this Arbitration through litigation in the United States, (5) as well as all costs associated with responding to the relentless public relations campaign by which the Lago Agrio Plaintiffs' lawyers (in collusion with Ecuador) attacked Chevron with false and fraudulent accusations concerning this case. These damages will be quantified at a later stage in these proceedings.

14. Awarding moral damages to compensate Claimants for the non-pecuniary harm that they have suffered due to Ecuador's outrageous and illegal conduct.

15. Awarding both pre- and post-award interest (compounded quarterly) until the date of payment.

16. Any other and further relief that the Tribunal deems just and proper.

98. In their Supplemental Memorial on the Merits dated 20 March 2012, the Claimants made the following request for relief (footnotes here omitted):

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257. Accordingly, Claimants request an Order and Award granting the following relief:

1. Declaring that under the 1995, 1996 and 1998 Settlement and Release Agreements, Claimants have no liability or responsibility for environmental impact, including but not limited to any alleged liability for impact to human health, the ecosystem, indigenous cultures, the infrastructure, or any liability for unlawful profits, or for performing any further environmental remediation arising out of the former Consortium that was jointly owned by TexPet and Ecuador, or under the expired Concession Contract between TexPet and Ecuador;

2. Declaring that Ecuador has breached the 1995, 1996, and 1998 Settlement and Release Agreements;

3. Declaring that Ecuador has breached the U.S.-Ecuador Treaty, including its obligations to afford fair and equitable treatment, full protection and security, an effective means of enforcing rights, non-arbitrary treatment, non- discriminatory treatment, and to observe obligations it entered into under the investment agreements;

4. Declaring that Ecuador has committed a denial of justice under customary international law;

5. Declaring that under the Treaty and applicable international law, Chevron is not liable for any judgment rendered in the Lago Agrio Litigation;

6. Declaring that any judgment rendered against Chevron in the Lago Agrio Litigation is not final, conclusive or enforceable;

7. Declaring that Ecuador or Petroecuador (or Ecuador and Petroecuador jointly) are exclusively liable for any judgment rendered in the Lago Agrio Litigation;

8. Ordering Ecuador to use all measures necessary to prevent any judgment against Chevron in the Lago Agrio Litigation from becoming final, conclusive or enforceable;

9. Ordering Ecuador to use all measures necessary to enjoin enforcement of any judgment against Chevron rendered in the Lago Agrio Litigation, including enjoining the nominal Plaintiffs from obtaining any related attachments, levies or other enforcement devices;

10. Ordering Ecuador to make a written representation to any court in which the nominal Plaintiffs attempt to enforce a judgment from the Lago Agrio Litigation, stating that the judgment is not final, enforceable or conclusive;

11. Awarding Claimants indemnification against Ecuador in connection with a Lago Agrio Judgment, including a specific obligation by Ecuador to pay Claimants the sum of money awarded in to the Lago Agrio Judgment;

12. Awarding Claimants any sums that the nominal Lago Agrio Plaintiffs collect against Claimants or their affiliates in connection with enforcing a Lago Agrio Judgment;

13. Awarding all costs and attorneys' fees incurred by Claimants in (1) defending the

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Lago Agrio Litigation and the Criminal Proceedings, (2) pursuing this Arbitration, (3) uncovering the collusive fraud through investigation and discovery proceedings in the United States, (4) opposing the efforts by Ecuador and the Lago Agrio Plaintiffs to stay this Arbitration through litigation in the United States, (5) as well as all costs associated with responding to the relentless public relations campaign by which the Lago Agrio Plaintiffs' lawyers (in collusion with Ecuador) attacked Chevron with false and fraudulent accusations concerning this case. These damages will be quantified at a later stage in these proceedings;

14. Awarding moral damages to compensate Claimants for the non-pecuniary harm that they have suffered due to Ecuador's outrageous and illegal conduct;

15. Awarding both pre- and post-award interest (compounded quarterly) until the date of payment; and

16. Any other and further relief that the Tribunal deems just and proper.

99. In their Reply Memorial on the Merits for Track 1 dated 29 August 2012, the Claimants requested the following relief:

272. Accordingly, Claimants request a Partial Award that effectively protects Claimants' rights, and reverses (as far as possible) the harmful effects of Ecuador's breaches of the Settlement Agreements and its international-law obligations. To achieve this result, Claimants respectfully submit the following list of requests, from which the Tribunal can fashion a combination of declaratory, injunctive, and monetary relief in protection of Claimants' rights:

A. Specific Performance

1. Order that Ecuador specifically perform the Settlement Agreements.

B. Declaratory Relief

(i) Scope of the Settlement Agreements

1. Declare that both Claimants are “Releasees" under the Settlement Agreements, and were released from all diffuse environmental claims arising from TexPet's operations in Ecuador; and

2. Declare that the claims pleaded in the Lago Agrio Litigation (and upon which the Lago Agrio Judgment is based) are the same diffuse environmental claims settled and released in the Settlement Agreements.

(ii) Legal Effect of the Settlement Agreements

1. Declare that Claimants have no liability or responsibility for satisfying the Lago Agrio Judgment because they were fully released for all such claims by the Settlement Agreements;

2. Declare that the claims pleaded in the Lago Agrio Litigation (and upon which the Lago Agrio Judgment were based) are barred by res judicata and collateral estoppel;

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3. Declare that under the Settlement Agreements, Claimants have no further liability or responsibility for diffuse environmental claims in Ecuador for Environmental Impact arising out of the Consortium's operations, or for performing any further environmental remediation;

4. Declare that Ecuador (through its various branches of Government) has breached the Settlement Agreements, inter alia, by refusing to specifically perform the Settlement Agreements, by refusing to ensure Claimants' enjoyment of their releases and their right to be free of litigation, by refusing to dismiss the Lago Agrio Plaintiffs' claims, by refusing to indemnify Chevron for the Lago Agrio Plaintiffs' claims, by seeking to nullify the Settlement Agreements by illegitimate means, and by refusing to comply with this Tribunal's Interim Awards;

5. Declare that Ecuador's actions have breached the U.S.-Ecuador BIT, including its obligations to afford fair and equitable treatment, full protection and security, effective means of enforcing rights, and to observe obligations it entered into under the overall investment agreements;

6. Declare that enforcement of the Lago Agrio Judgment within or without Ecuador would be inconsistent with Ecuador's obligations under the Settlement Agreements, the BIT and international law;

7. Declare that the Lago Agrio Judgment is a nullity as a matter of international law; and

8. Declare that: (i) the Judgment is not final, enforceable, or conclusive under Ecuadorian and international law, and thus, is not subject to recognition and enforcement within or without Ecuador; (ii) any enforcement of the Judgment would place Ecuador in violation of its international-law obligations; (iii) the Judgment violates international public policy and natural justice, and as a matter of international comity and public policy, the Judgment should not be recognized and enforced.

C. Injunctive Relief

1. Order Ecuador to use all measures necessary to comply with its obligations under the Settlement Agreements to release Claimants (and to ensure that Claimants may effectively enjoy the benefits of such releases) from any liability or responsibility for the Lago Agrio Judgment in Ecuador or in any other country;

2. Order Ecuador to use all measures necessary to prevent the Lago Agrio Judgment from becoming final, conclusive, or enforceable in Ecuador or in any other country;

3. Order Ecuador to use all measures necessary to stay or enjoin enforcement of the Lago Agrio Judgment, including enjoining the Lago Agrio Plaintiffs from obtaining any related attachments, levies, or other enforcement devices in Ecuador or in any other country;

4. Order Ecuador to use all measures necessary to revoke and nullify the Judgment;

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5. Order Ecuador to make a written representation to any court in which the Lago Agrio Plaintiffs attempt to recognize and enforce the Lago Agrio Judgment that: (i) the claims that formed the basis of the Judgment were released by the Government; (ii) the Lago Agrio Court had no personal or subject-matter jurisdiction over Chevron; (iii) the Judgment is a legal nullity; (iv) the Judgment is not final, enforceable, or conclusive under Ecuadorian and international law, and thus, is not subject to recognition and enforcement within or without Ecuador; (v) any enforcement of the Judgment would place Ecuador in violation of its international-law obligations; (vi) the Judgment violates international public policy and natural justice; (vii) any enforcement proceedings should be stayed pending the Tribunal's final award in this arbitration; and (viii) as a matter of international comity and public policy, the Judgment should not be recognized and enforced; and

6. Order that, in the event that any court orders the recognition or enforcement of the Lago Agrio Judgment, Ecuador must satisfy the Judgment directly.

D. Damages, Costs and Attorneys' Fees

1. Award Claimants full indemnification and damages against Ecuador in connection with the Lago Agrio Judgment, including a specific obligation by Ecuador to pay Claimants the sum of money awarded in the Judgment;

2. Award Claimants any sums of money that the Lago Agrio Plaintiffs or others collect against Claimants or their affiliates in connection with enforcing the Judgment in any forum, with such sums to be paid by Respondent;

3. Award all costs and attorneys' fees incurred by Claimants in (i) defending the Lago Agrio Litigation, (ii) pursuing this arbitration, (iii) opposing the efforts by Ecuador and the Lago Agrio Plaintiffs to stay this arbitration through litigation in the United States; and (iv) preparing for and defending against enforcement actions brought by the Lago Agrio Plaintiffs. These amounts will be quantified at the time and in the manner ordered by this Tribunal;

4. Award both pre- and post-award interest (compounded quarterly) until the date of payment; and

5. Award such other and further relief that the Tribunal deems just and proper, including any specific relief appropriate to wipe out all consequences of Respondent's breaches of the Settlement Agreements and its violations of its obligations under the Interim Awards, the BIT and international law.

100. At the Track 1 Hearing on the Merits in November 2012, by a written document, the Claimants made the following request for relief:

I. Request for an Immediate Interim Award as a Result of Ecuador's Breaches of the First and Second Interim Awards:

1. Declare that Ecuador is in breach of the First and Second Interim Awards;

2. Declare that pending the outcome of this arbitration, the Lago Agrio Judgment is not final, enforceable, or conclusive under Ecuadorian and international law, and thus, is not

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subject to recognition and enforcement within or without Ecuador; and

3. Declare that Ecuador is responsible to Claimants in indemnification and damages for all damages, costs, expenses, and attorneys' fees incurred by Claimants as a result of its breach.

II. Request for a Partial Final Award as a Result of Track 1:

A. Declaratory Relief

(i) Scope of the Settlement Agreements

1. Declare that both Claimants are "Releasees" under the Settlement Agreements, and were released from all diffuse environmental claims arising from TexPet's operations in Ecuador; and
2. Declare that the claims pleaded in the Lago Agrio Litigation (and upon which the Lago Agrio Judgment is based) are the same diffuse environmental claims settled and released in the Settlement Agreements.

(ii) Legal Effect of the Settlement Agreements

4. Declare that the Lago Agrio Judgment is a nullity as a matter of international law;

5. Declare that enforcement of the Lago Agrio Judgment within or without Ecuador would be inconsistent with Ecuador's obligations under the Settlement Agreements, the BIT and international law;

6. Declare that Claimants have no liability or responsibility for satisfying the Lago Agrio Judgment because they were fully released for all such claims by the Settlement Agreements;

7. Declare that the claims pleaded in the Lago Agrio Litigation (and upon which the Lago Agrio Judgment were based) are barred by res judicata and collateral estoppel;

8. Declare that under the Settlement Agreements, Claimants have no further liability or responsibility for diffuse environmental claims in Ecuador for Environmental Impact arising out of the Consortium's operations, or for performing any further environmental remediation;

9. Declare that Ecuador (through its various branches of Government) has breached the Settlement Agreements, inter alia, by refusing to specifically perform the Settlement Agreements, by refusing to ensure Claimants' enjoyment of their releases and their right to be free of litigation, by refusing to dismiss the Lago Agrio Plaintiffs' claims, by refusing to indemnify Chevron for the Lago Agrio Plaintiffs' claims, by seeking to nullify the Settlement Agreements by illegitimate means, and by refusing to comply with this Tribunal's Interim Awards;

10. Declare that Ecuador's actions have breached the U.S.-Ecuador BIT, including its obligations to afford fair and equitable treatment, full protection and security, effective means of enforcing rights, and to observe obligations it entered into under the overall

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investment agreements; and

11. Declare that: (i) the Judgment is not final, enforceable, or conclusive under Ecuadorian and international law, and thus, is not subject to recognition and enforcement within or without Ecuador; (ii) any enforcement of the Judgment would place Ecuador in violation of its international-law obligations; (iii) the Judgment violates international public policy and natural justice, and as a matter of international comity and public policy, the Judgment should not be recognized and enforced.

B. Injunctive Relief

1. Order Ecuador to use all measures necessary to comply with its obligations under the Settlement Agreements to release Claimants (and to ensure that Claimants may effectively enjoy the benefits of such releases) from any liability or responsibility for the Lago Agrio Judgment in Ecuador or in any other country;

2. Order Ecuador to use all measures necessary to prevent the Lago Agrio Judgment from becoming final, conclusive, or enforceable in Ecuador or in any other country;

3. Order Ecuador to use all measures necessary to stay or enjoin enforcement of the Lago Agrio Judgment, including enjoining the Lago Agrio Plaintiffs from obtaining any related attachments, levies, or other enforcement devices in Ecuador or in any other country;

4. Order Ecuador to use all measures necessary to revoke and nullify the Judgment;

5. Order Ecuador to make a written representation to any court in which the Lago Agrio Plaintiffs attempt to recognize and enforce the Lago Agrio Judgment that: (i) the claims that formed the basis of the Judgment were released by the Government; (ii) the Lago Agrio Court had no personal or subject-matter jurisdiction over Chevron; (iii) the Judgment is a legal nullity; (iv) the Judgment is not final, enforceable, or conclusive under Ecuadorian and international law, and thus, is not subject to recognition and enforcement within or without Ecuador; (v) any enforcement of the Judgment would place Ecuador in violation of its international- law obligations; (vi) the Judgment violates international public policy and natural justice; (vii) any enforcement proceedings should be stayed pending the Tribunal's final award in this arbitration; and (viii) as a matter of international comity and public policy, the Judgment should not be recognized and enforced; and

6. Order that, in the event that any court orders the recognition or enforcement of the Lago Agrio Judgment, Ecuador must satisfy the Judgment directly.

C. Damages, Costs and Attorneys' Fees

1. Award Claimants full indemnification and damages against Ecuador in connection with the Lago Agrio Judgment, including a specific obligation by Ecuador to pay Claimants the sum of money awarded in the Judgment;

2. Award Claimants any sums of money that the Lago Agrio Plaintiffs or others collect against Claimants or their affiliates in connection with enforcing the Judgment in any forum, with such sums to be paid by Respondent;

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3. Award all costs and attorneys' fees incurred by Claimants in (i) defending the Lago Agrio Litigation, (ii) pursuing this arbitration, (iii) opposing the efforts by Ecuador and the Lago Agrio Plaintiffs to stay this arbitration through litigation in the United States; and (iv) preparing for and defending against enforcement actions brought by the Lago Agrio Plaintiffs. These amounts will be quantified at the time and in the manner ordered by this Tribunal;

4. Award both pre- and post-award interest (compounded quarterly) until the date of payment; and

5. Award such other and further relief that the Tribunal deems just and proper, including any specific relief appropriate to wipe out all consequences of Respondent's breaches of the Settlement Agreements and its violations of its obligations under the Interim Awards, the BIT and international law.

101. In their Amended Reply Memorial - Track II dated 12 June 2013, the Claimants made the following request for relief (footnotes omitted):

424. The unique circumstances of this case require a combination of remedies that includes declarative, injunctive and monetary relief to prevent further (and unprecedented) injury to Claimants, and to compensate them for losses resulting from Ecuador's breaches of its contractual, Treaty, and international law obligations, Claimants request a Final Award on the Merits including the following relief:

1. Declaring that under the 1995, 1996 and 1998 Settlement and Release Agreements, Claimants have no liability or responsibility for environmental impact, including but not limited to any alleged liability for impact to human health, the ecosystem, indigenous cultures, the infrastructure, or any liability for unlawful profits, punitive damages or penalties, or for performing any further environmental remediation arising out of the former Consortium that was jointly owned by TexPet and Ecuador, or under the expired Concession Contract between TexPet and Ecuador;

2. Declaring that Ecuador has breached the 1995, 1996, and 1998 Settlement and Release Agreements;

3. Ordering Ecuador to specifically perform the Settlement and Release Agreements;

4. Declaring that Ecuador has breached the U.S.-Ecuador BIT, including its obligations to afford fair and equitable treatment, full protection and security, an effective means of enforcing rights, non-arbitrary treatment, non- discriminatory treatment, national treatment, and to observe obligations it entered into with regard to investments;

5. Declaring that Ecuador has committed a denial of justice under customary international law;

6. Declaring that under the Treaty and applicable international law, Chevron is not liable for the Judgment;

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7. Declaring that Ecuador is exclusively liable for the Judgment;

8. Nullifying the existence, validity, and all effects of the Judgment, and declaring that the Judgment is a nullity as a matter of international law;

9. Ordering Ecuador to use all measures necessary to enjoin enforcement of the Judgment, including enjoining the nominal Plaintiffs or any Trust from obtaining any related attachments, levies or other enforcement devices;

10. Ordering that, in the event that any court orders the recognition or enforcement of the Judgment, Ecuador must satisfy the Judgment directly;

11. Awarding Claimants indemnification against Ecuador in connection with the Judgment, including a specific obligation by Ecuador to pay Claimants the sum of money awarded in the Judgment;

12. Awarding Claimants any sums that the nominal Lago Agrio Plaintiffs collect against Claimants or their affiliates in connection with enforcing the Judgment, including the amounts embargoed thus far;

13. Declaring that: (i) the Judgment is not final, enforceable, or conclusive under Ecuadorian and/or international law, and thus, is not subject to recognition and enforcement within or without Ecuador; (ii) any enforcement of the Judgment places Ecuador in violation of its international law obligations; (iii) the Judgment violates international public policy and natural justice, and as a matter of international comity and public policy, the Judgment should not be recognized and enforced;

14. Ordering Ecuador to make a written representation to any court in which the Lago Agrio Plaintiffs or any Trust attempt to recognize and enforce the Judgment that: (i) the claims that formed the basis of the Judgment were released by the Government; (ii) the Lago Agrio Court had no personal or subject-matter jurisdiction over Chevron; (iii) the Judgment is a legal nullity; (iv) the Judgment is not final, enforceable, or conclusive under Ecuadorian and/or international law, and thus, is not subject to recognition and enforcement within or without Ecuador; (v) any enforcement of the Judgment places Ecuador in violation of its international law obligations; (vi) the Judgment violates international public policy and natural justice; (vii) any enforcement proceedings should be dismissed; and (viii) as a matter of international comity and public policy, the Judgment should not be recognized and enforced;

15. Awarding all costs and attorneys' fees incurred by Claimants in inter alia (1) pursuing this Arbitration, (2) uncovering the collusive fraud through investigation and discovery proceedings in the United States, and (3) defending against enforcement of the Lago Agrio Judgment in various jurisdictions including Argentina, Brazil, and Canada, as well as other attorneys' fees incurred in related matters;

16. Awarding both pre- and post-award interest (compounded quarterly) until the date of payment; and

17. Any other and further relief that the Tribunal deems just and proper.

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102. In their Supplemental Memorial on Track 1 dated 31 January 2014 (paragraph 32), the Claimants made the following request for relief:

A. Declaring that:

(1) The Lago Agrio Litigation is exclusively a diffuse-rights case.

(2) The 1999 EMA has no legal effect on the Settlement and Release Agreements.

(3) The Lago Agrio Litigation was barred at its inception by res judicata.

(4) By issuing the Lago Agrio Judgment and rendering it enforceable within and without Ecuador, Ecuador violated various provisions of the BIT.

(5) By issuing the Lago Agrio Judgment on diffuse claims barred as res judicata, Ecuador breached the 1995, 1996, and 1998 Settlement and Release Agreements, and also violated Chevron's rights under the BIT.

(6) The Lago Agrio Judgment is a nullity as a matter of Ecuadorian law.

(7) The Lago Agrio Judgment is a nullity as a matter of international law.

(8) The Lago Agrio Judgment is unlawful and consequently devoid of any legal effect.

(9) The Lago Agrio Judgment is a violation of Chevron's rights under the BIT, and is not entitled to enforcement within or without Ecuador.

(10) The Lago Agrio Judgment violates international public policy and natural justice, and that as a matter of international comity and public policy, the Lago Agrio Judgment should not be recognized and enforced.

(11) By: (i) taking measures to enforce the Judgment against assets within Ecuador, and (ii) taking measures to facilitate enforcement of the Judgment in other jurisdictions.

(12) Ecuador is in breach of its obligations under the BIT, and must compensate Claimants for any sum of money collected by the Lago Agrio Plaintiffs and/or their agents as a result of the Judgment.

B. Ordering Ecuador (whether by its judicial, legislative, or executive branches):

(1) To take all measures necessary to set aside or nullify the Lago Agrio

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Judgment under Ecuadorian law.

(2) To take all measures necessary to prevent enforcement and recognition within and without Ecuador of the Lago Agrio Judgment.

(3) To take all measures necessary to prevent the Lago Agrio Plaintiffs or any Trust from obtaining any related attachments, levies, or other enforcement devices under the impugned Judgment.

(4) To make a written representation to any court in which the Lago Agrio Plaintiffs or any Trust attempt to recognize and enforce the Lago Agrio Judgment that: (i) the claims that formed the basis of the Lago Agrio Judgment were validly released under Ecuadorian law by the Government; (ii) the Lago Agrio Judgment is a legal nullity; and (iii) any enforcement of the Lago Agrio Judgment will place Ecuador in violation of its obligations under the BIT.

Claimants also request that the Tribunal provide for a subsequent phase in this arbitration to determine all costs and attorneys' fees that should be awarded to Claimants for being forced to (i) pursue this arbitration; (ii) uncover the Judgment fraud; and (iii) defend against enforcement of the Lago Agrio Judgment in any jurisdiction.

103. In their Supplemental Memorial on Track II dated 9 May 2014, the Claimants made the following request for relief:

A. Declaring that:

1. By issuing the Judgment and rendering it enforceable within and without Ecuador, Ecuador committed a denial of justice under international law in breach of the provisions of the BIT.

2. By issuing the Judgment on diffuse claims barred as res judicata, Ecuador breached the 1995, 1996, and 1998 Settlement and Release Agreements, and, in doing so, violated Chevron's rights under the BIT.

3. The court rendering the Judgment asserted jurisdiction illegitimately and was not competent in the international sphere to try the Lago Agrio case and to pass judgment.

4. The Judgment was issued in a process that violated general standards of due process and in which Chevron did not have an opportunity to present its defense.

5. The Judgment is a nullity as a matter of international law.

6. The Judgment is unlawful and consequently devoid of any legal effect.

7. The Judgment is a violation of Chevron's rights under the BIT, and is not entitled to enforcement within or without Ecuador.

8. The Judgment is contrary to international public policy.

9. The Judgment violates international public policy and natural justice, and that as a

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matter of international comity and public policy, the Judgment should not be recognized and enforced.

10. By taking measures to enforce the Judgment against assets within Ecuador, and taking measures to facilitate enforcement of the Judgment in other jurisdictions, Ecuador is in breach of its obligations under the BIT, and must indemnify Claimants and any of their affiliates for any sum of money collected from them as a result of the Judgment.

B. Ordering Ecuador (whether by its judicial, legislative, or executive branches):

1. To take all measures necessary to set aside or nullify the Judgment under Ecuadorian law.

2. To take all measures necessary to prevent enforcement and recognition within and without Ecuador of the Judgment.

3. To take all measures necessary to prevent the Lago Agrio Plaintiffs or any Trust from obtaining any related attachments, levies, or other enforcement devices under the impugned Judgment.

4. To make a written representation to any court in which the Lago Agrio Plaintiffs or any Trust attempt to recognize and enforce the Judgment that: (i) the claims that formed the basis of the Judgment were validly released under Ecuadorian law by the Government; (ii) the Judgment is a legal nullity; and (iii) any enforcement of the Judgment will place Ecuador in violation of its obligations under the BIT.

5. To abstain from collecting or accepting any proceeds arising from or in connection with the enforcement or execution of the Judgment, and to return to Claimants any such proceeds that may come into Respondent's possession.

C. Awarding Claimants:

1. All costs and attorneys' fees incurred by Claimants in (i) pursuing this arbitration; (ii) uncovering the Judgment fraud; and (iii) defending against enforcement of the Lago Agrio Judgment in any jurisdiction.

2. Indemnification for any and all damages, including fees and costs, arising from Respondent's violation of any injunctive relief this Tribunal has granted or will in the future grant.

3. Indemnification for any and all sums that the Lago Agrio Plaintiffs collect against Claimants or their affiliates in connection with the Judgment.

4. Moral damages to compensate Claimants for the non-pecuniary harm that they have suffered due to Ecuador's illegal conduct.

5. Both pre- and post-award interest (compounded quarterly) until the date of payment.

104. In their Post-Submission Insert to the Claimants' Supplemental Memorial on Track II – Examination of Zambrano Computer Hard Drives dated 15 August 2014, the Claimants made the following request for relief:

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59. Therefore, for the reasons stated above and in Claimants' previous submissions to the Tribunal, Claimants request the Tribunal make the findings and grant them the relief as set forth most recently in Claimants' Supplemental Memorial on Track 2.

105. In their Supplemental Reply to Respondent's Supplemental Memorial Track II Counter-Memorial dated 14 January 2015, the Claimants made the following request for relief:

435. For the reasons stated above, and as set out in Claimants' previous memorials and other submissions, Claimants ask the Tribunal for a Final Award granting them the combination of remedies, including declarative, injunctive, and monetary relief, to prevent further injury to Claimants and to compensate them for losses resulting from Ecuador's breaches of its contractual, Treaty, and international law obligations, as set out below:

A. Declaring that:

1. By issuing the Judgment and rendering it enforceable within and without Ecuador, Ecuador committed a denial of justice under international law and breached provisions of the BIT.

2. By issuing the Judgment on diffuse claims barred as res judicata, Ecuador breached the 1995, 1996, and 1998 Settlement and Release Agreements, and in doing so, violated Chevron's rights under the BIT.

3. The court rendering the Judgment asserted jurisdiction illegitimately and was not competent in the international sphere to try the Lago Agrio case and to pass judgment.

4. The Judgment was issued in a process that violated general standards of due process and in which Chevron did not have an opportunity to present its defense.

5. The Judgment is a nullity as a matter of international law.

6. The Judgment is unlawful and consequently devoid of any legal effect.

7. The Judgment is a violation of Chevron's rights under the BIT, and is not entitled to enforcement within or without Ecuador.

8. The Judgment is contrary to international public policy.

9. The Judgment violates international public policy and natural justice, and that as a matter of international comity and public policy, the Judgment should not be recognized and/or enforced.

10. By taking measures to enforce the Judgment against assets within Ecuador, and taking measures to facilitate enforcement of the Judgment in other jurisdictions, Ecuador is in breach of its obligations under the BIT, and must indemnify Claimants and any of their affiliates for any sum of money collected from them as a result of the Judgment.

B. Ordering Ecuador (whether by its judicial, legislative, or executive branches):

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1. To take all measures necessary to set aside or nullify the Judgment under Ecuadorian law.
2. To take all measures necessary to prevent enforcement and recognition within and without Ecuador of the Judgment.
3. To take all measures necessary to prevent the Plaintiffs or any Trust from obtaining any related attachments, levies, or other enforcement devices under the impugned Judgment.
4. To make a written representation to any court in which the Plaintiffs or any Trust attempt to recognize and/or enforce the Judgment that: (i) the claims that formed the basis of the Judgment were validly released under Ecuadorian law by the Government; (ii) the Judgment is a legal nullity; and (iii) any enforcement of the Judgment will place Ecuador in violation of its obligations under the BIT.
5. To abstain from collecting or accepting any proceeds arising from or in connection with the enforcement or execution of the Judgment, and to return to Claimants any such proceeds that may come into Respondent's possession.

C. Awarding Claimants:

1. All costs and attorneys' fees incurred by Claimants in (i) pursuing this arbitration; (ii) uncovering the Judgment fraud; and (iii) defending against enforcement of the Lago Agrio Judgment in any jurisdiction.
2. Indemnification for any and all damages, including fees and costs, arising from Respondent's violation of any injunctive relief this Tribunal has granted or will in the future grant.
3. Indemnification for any and all sums that the Plaintiffs collect against Claimants or their affiliates in connection with the Judgment.
4. Moral damages to compensate Claimants for the non-pecuniary harm that they have suffered due to Ecuador's illegal conduct.
5. Both pre- and post-award interest (compounded quarterly) until the date of payment.

106. In their Post-Track II Hearing Brief on Track I Issues dated 14 July 2015, the Claimants made the following request for relief:

46. Claimants request relief that effectively protects their rights and reverses the harmful effects of Ecuador's breaches of the Settlement and Release Agreements and its international law obligations. To achieve this result, Claimants respectfully request a Final Award:

A. Declaring that:

1. The Lago Agrio Litigation is exclusively a diffuse-rights case.
2. The 1999 EMA has no legal effect on the Settlement and Release Agreements.

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3. The Lago Agrio Litigation was barred at its inception by res judicata.
4. By issuing the Lago Agrio Judgment and rendering it enforceable within and without Ecuador, Ecuador violated various provisions of the BIT.
5. By issuing the Lago Agrio Judgement on diffuse claims barred as res judicata, Ecuador breached the 1995, 1996 and 1998 Settlement and Release Agreements, and also violated Chevron's rights under the BIT.
6. The Lago Agrio Judgment is a nullity as a matter of international law.
7. The Lago Agrio Judgment is unlawful and consequently devoid of any legal effect.
8. The Lago Agrio Judgment is a violation of Chevron's rights under the BIT, and is not entitled to enforcement within or without Ecuador.
9. The Lago Agrio Judgment violates international public policy and natural justice, and that as a matter of international comity and public policy, the Lago Agrio Judgment should not be recognized and enforced.
10. By: (i) taking measures to enforce the Judgment against assets within Ecuador, and (ii) taking measures to facilitate enforcement of the Judgment in other jurisdictions, Ecuador is in breach of its obligations under the BIT, and must compensate Claimants for any sum of money collected by the Lago Agrio Plaintiffs and/or their agents as a result of the Judgment.

B. Ordering Ecuador (whether by its judicial, legislative, or executive branches):

1. To take all measures necessary to set aside or nullify the Lago Agrio Judgment under Ecuadorian law.
2. To take all measures necessary to prevent enforcement and recognition within and without Ecuador of the Lago Agrio Judgment.
3. To take all measures necessary to prevent the Lago Agrio Plaintiffs or any Trust from obtaining any related attachments, levies, or other enforcement devices under the impugned Judgment.
4. To make a written representation to any court in which the Lago Agrio Plaintiffs or any Trust attempt to recognize and enforce the Lago Agrio Judgment that: (i) the claims that formed the basis of the Lago Agrio Judgment were validly released under Ecuadorian law by the Government; (ii) the Lago Agrio Judgment is a legal nullity; and (iii) any enforcement of the Lago Agrio Judgment will place Ecuador in violation of its obligations under the BIT.

47. Claimants' requested relief is without prejudice to all other remedies sought in relation to Track II or any other remedy that may effectively protect Claimants' rights, including a damage remedy as part of Track III.

107. In their Submission on Costs dated 28 November 2018, the Claimants claimed a total of USD 258,804,126 for costs of legal representation and assistance for Tracks I and II.

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108. In their Memorial on Damages dated 31 May 2019, the Claimants made the following request for relief (footnotes here omitted):

479. To “make full reparation in the form of compensation for any injuries caused to the First Claimant and the Second Claimant by the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate Court, Cassation and Constitutional Courts)[,]" in addition to the Track II relief already ordered, Claimants request an Award on Track III granting the following relief:

1. Awarding Claimants US$ 258,804,126 in Track I and II costs;
2. To the extent not awarded as Track I and II costs, awarding Claimants all of their damages, including all costs and attorneys' fees incurred by Claimants in pursuing this arbitration, uncovering and proving the Judgment fraud, and preparing for and defending against enforcement of the Lago Agrio Judgment in any jurisdiction, including:
   1. US$ 165,948,547.27 in relation to the Lago Agrio Litigation;
   2. US$ 66,286,194.18 in relation to the § 1782 Actions;
   3. US$ 328,258,466.65 in relation to the RICO Action;
   4. US$ 3,703,465.90 in relation to the Ecuador Enforcement Action;
   5. US$ 26,473,951.23 in relation to the Argentina Enforcement Action;
   6. US$ 21,682,698.55 in relation to the Brazil Enforcement Action;
   7. US$ 40,736,344.94 in relation to the Canada Enforcement Action;
   8. US$ 27,534,505.48 in relation to defense against recognition and enforcement in other countries and general recognition and enforcement work;
   9. US$ 39,651,933.78 in relation to the Gibraltar offensive actions and other offensive action against co-conspirators;
   10. US$ 57,768,063.05 in relation to the general defense against the Lago Agrio fraud and the resulting fraudulent Judgment;
   11. US$ 7,065,435.37 in relation to the Ecuadorian Criminal Proceedings;
   12. US$ 35,776,712.89 in relation to the BIT Non-Counsel-of-Record Fees; and
   13. US$ 3,692,384.48 in relation to the Dutch Set-Aside Proceedings.
3. Awarding Claimants:
   1. US$ 85,315,652 in compensation for the Ecuador IP Losses;
   2. US$ 11.8 million in compensation for the Argentina Embargo Losses;
   3. Moral Damages in the amount that the Tribunal deems just and proper;

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4. Ordering Ecuador to indemnify and hold harmless Claimants for any and all damages, including fees and costs, arising from Respondent's violation of any injunctive relief this Tribunal has granted or will in the future grant;
5. Ordering Ecuador to indemnify and hold harmless Claimants from and against any costs incurred in responding to the public relations campaign by which the LAPs lawyers and/or Respondent target Chevron;
6. Ordering Ecuador to use all measures necessary to enjoin enforcement of the Judgment in compliance with the Track II Award;
7. Ordering that, in the event that any court orders the recognition or enforcement of the Judgment, Ecuador must satisfy the Judgment directly;
8. Awarding Claimants any sums that the nominal LAPs or any other party collect against Claimants or their affiliates in connection with enforcing the Judgment;
9. Awarding Claimants contingent damages in the amount of the Lago Agrio Judgment;
10. Ordering Ecuador to indemnify and hold harmless Claimants from and against any loss, expense, liability, damage or cost (including litigation costs and attorneys' and experts' fees) incurred in any jurisdiction by Claimants or their affiliates arising out of (1) any and all attempts to seek the recognition or enforcement of the Judgment within or without Ecuador (including any sums collected in connection with the Judgment); and (2) the Lago Agrio Litigation in Ecuador and any related Ecuadorian Criminal Proceedings;
11. Ordering Ecuador to refrain from providing any funding or support to the LAPs or Related Parties that may assist or support any efforts to seek the recognition or enforcement of the Judgment within or without Ecuador;
12. Ordering Ecuador immediately to cease its continuing violations of the Treaty and the Tribunal's Awards;
13. Ordering Respondent to protect the rights of Claimants' lawyers, experts, witnesses, litigation vendors, consultants, and contractors involved in any litigation or proceedings relating to the Lago Agrio Judgment, whether within or without Ecuador, including this arbitration, the proceedings in the Aguinda litigation in Ecuador, Southern District of New York proceedings, § 1782 proceedings, recognition and enforcement actions, Gibraltar proceedings and others discussed in this Memorial and its attachments and take all steps necessary to ensure they are not subject to arbitrary action (including searches, seizure of person or belongings, arrest or detention), harassment, retaliation, intimidation, threats or public derogatory statements.
14. Awarding Claimants' costs incurred in this Arbitration until completion;
15. Awarding both compound pre- and post-award interest until the date of payment; and
16. Such other and further relief as the Tribunal shall deem just and proper.

109. In their Request for a Partial Award on Threshold Issues dated 21 April 2020, the Claimants made the following request for relief:

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175. In light of the foregoing, Claimants respectfully ask the Tribunal for a Partial Award declaring that: (1) Ecuador's claim for a reduction in damages in this case based upon its hypothetical "but-for" scenario is precluded by the doctrine of res judicata and/or international law.

(2) What Ecuador in its Counter-Memorial refers to as "collective" claims are in fact "diffuse" claims encompassed in the 1995 and 1998 Settlement and Release Agreements, as previously determined by the Tribunal in its prior awards and decisions, which are res judicata.

(3) Ecuador's argument that Claimants failed to mitigate their damages by not pursuing local remedies under Ecuadorian law is precluded under the doctrine of res judicata.

110. In their Second Submission on the Request for a Partial Award dated 1 October 2020, the Claimants made the following request for relief:

222. In light of the foregoing, Claimants respectfully request that the Tribunal find in their favor on the four threshold questions that are the subject of this partial award procedure. Any other finding would allow Ecuador to relitigate issues barred by this Tribunal's prior rulings, the 1995 and 1998 Settlement and Release Agreements, and international law. Ecuador's attempts to relitigate issues previously decided by the Tribunal are a clear violation of the international norm of res judicata and will exacerbate the denial of justice and other treaty violations already found by this Tribunal.

223. Specifically, Claimants request that the Tribunal find as follows:

(1) Ecuador's environmental offset defense shall be dismissed on the basis of any of the following independent grounds:

1. The Tribunal's findings and holdings in the Track II Award that the Lago Agrio Litigation constituted a denial of justice comprised of fraud and corruption preclude Ecuador from any damage offset based upon its hypothetical "but-for" scenario. Moreover, no environmental offset is permissible because the Tribunal cannot rule on the basis of the corrupt Lago Agrio record, and it has ruled that it does not have jurisdiction over all relevant parties.
2. Ecuador's environmental merits defenses are precluded by the Tribunal's findings and holdings in the Track I and Track II Awards that (i) Ecuador released all diffuse and collective claims and (ii) the Tribunal has no jurisdiction over individual damage claims. Moreover, no environmental offset is permissible because the Tribunal already ruled that it has no jurisdiction over any cross-claim or offset for individual claims and that Ecuador failed to prove its environmental cross-claim.
3. The Tribunal's consideration of Ecuador's environmental merits defenses under its hypothetical "but-for" scenario would be limited to evidence of individual claims for personal harm by the 48 named plaintiffs that is contained in the Lago Agrio record. Because individual claims were not prosecuted in the Lago Agrio proceeding and no evidence of individual claims was adduced in the Lago Agrio record, any such "but-for" scenario fails.
4. The Tribunal's findings and holdings in the Track II Award dismissing Ecuador's exhaustion of local remedies defenses preclude Ecuador's damage mitigation defenses based on the same alleged local remedies."

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111. In their Reply on Damages dated 20 August 2021, the Claimants made the following request for relief (footnotes here omitted):

1212. To "make full reparation in the form of compensation for any injuries caused to the First Claimant and the Second Claimant by the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate Court, Cassation and Constitutional Courts)," in addition to the Track II relief already ordered, Claimants request an Award on Track III granting the following relief:

1. Awarding Claimants all of their costs in Tracks I, II, and III of these proceedings;
2. Awarding Claimants all of their damages, including all costs and attorneys' fees incurred by Claimants in uncovering and proving the Judgment fraud, and preparing for and defending against enforcement of the Lago Agrio Judgment in any jurisdiction, including:
   1. US$ 161,525,161.89 in relation to the Lago Agrio Litigation;
   2. US$ 62,363,592.93 in relation to the Section 1782 Actions;
   3. US$ 323,180,099.51 in relation to the RICO Action;
   4. US$ 3,582,889.44 in relation to the Ecuador Enforcement Action;
   5. US$ 25,695,438.12 in relation to the Argentina Enforcement Action;
   6. US$ 20,668,398.44 in relation to the Brazil Enforcement Action;
   7. US$ 39,798,158.90 in relation to the Canada Enforcement Action;
   8. US$ 26,166,897.09 in relation to defense against recognition and enforcement in other countries and general recognition and enforcement work;
   9. US$ 38,421,547.26 in relation to the Gibraltar Actions and General Offensive Measures;
   10. US$ 47,213,917.33 in relation to the general defense against the Lago Agrio fraud and the resulting fraudulent Judgment;
   11. US$ 6,933,905.69 in relation to the Ecuadorian Criminal Proceedings;
   12. US$ 34,653,249.61 in relation to the BIT Non-Counsel-of-Record Fees; and
   13. US$ 3,676,711.53 in relation to the Dutch Set-Aside Proceedings;
3. Awarding Claimants:
   1. US$ 85,315,652 in compensation for the Ecuador IP Losses;
   2. US$ 13 million in compensation for the Argentina Embargo Losses;

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3. Moral Damages in the amount that the Tribunal deems just and proper;

4. Ordering Ecuador to indemnify and hold harmless Claimants for any and all damages, including fees and costs, arising from Ecuador's violation of any injunctive relief this Tribunal has granted or will in the future grant;
5. Ordering Ecuador to indemnify and hold harmless Claimants from and against any costs incurred in responding to the public relations campaign by which the LAPs' lawyers and/or Ecuador target Chevron;
6. Ordering Ecuador to use all measures necessary to enjoin enforcement of the Judgment in compliance with the Track II Award;
7. Ordering that, in the event that any court orders the recognition or enforcement of the Judgment, Ecuador must satisfy the Judgment directly;
8. Awarding Claimants any sums that the nominal LAPs or any other party collect against Claimants or their affiliates in connection with enforcing the Judgment;
9. Awarding Claimants contingent damages in the amount of the Lago Agrio Judgment, contingent on the enforcement of the Judgment and to the extent enforced;
10. Ordering Ecuador to indemnify and hold harmless Claimants from and against any loss, expense, liability, damage or cost (including litigation costs and attorneys' and experts' fees) incurred in any jurisdiction by Claimants or their affiliates arising out of: (i) any and all attempts to seek the recognition or enforcement of the Judgment within or without Ecuador (including any sums collected in connection with the Judgment); and (ii) the Lago Agrio Litigation in Ecuador and any related Ecuadorian Criminal Proceedings;
11. Ordering Ecuador to indemnify and hold harmless Claimants from and against any loss, expense, liability, damage or cost (including litigation costs and attorneys' and experts' fees) arising from Ecuador's violations of the Tribunal’s Orders and Awards;
12. Ordering Ecuador to refrain from providing any funding or support to the LAPs or Related Parties that may assist or support any efforts to seek the recognition or enforcement of the Judgment within or without Ecuador;
13. Ordering Ecuador to cease violations of Procedural Order Nos. 17, 26, 58, 64, and 67;
14. Ordering Ecuador immediately to cease its continuing violations of the Treaty and the Tribunal's Awards;
15. Ordering Ecuador to protect the rights of Claimants' lawyers, experts, witnesses, litigation vendors, consultants, and contractors involved in any litigation or proceedings relating to the Lago Agrio Judgment, whether within or without Ecuador, including this arbitration, the proceedings in the Aguinda litigation in Ecuador, Southern District of New York proceedings, Section 1782 proceedings, recognition and enforcement actions, Gibraltar proceedings and others discussed in this Memorial and its attachments and to take all steps necessary to ensure they are not subject to arbitrary action (including searches,

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seizure of person or belongings, arrest or detention), harassment, retaliation, intimidation, threats or public derogatory statements;

16. Awarding Claimants' costs incurred in this Arbitration until completion;
17. Awarding both compound pre- and post-award interest until the date of payment; and
18. Such other and further relief as the Tribunal shall deem just and proper.³⁶

B. THE RESPONDENT'S REQUESTS FOR RELIEF

112. In its letter dated 20 October 2025, the Respondent indicated the parts of its requests for relief that remain extant for Track III and, separately, Track IV.³⁷ What follows are the Respondent's prayers for relief from the outset of the Arbitration, highlighting in bold the relief extant for Track III (indicated with the words “Track III” in blue in the original), in underscore the relief extant for Track IV (indicated with the words “Track IV” in green in the original), and in bold and underscore the relief relevant to both Tracks III and Track IV (indicated with the words “Track III and Track IV").

113. In its Track 1 Counter-Memorial dated 3 July 2012, the Respondent made the following request for relief (with sub-paragraphs here added for ease of reference):

263. Based on the foregoing, the Republic respectfully requests that the Tribunal declare that it does not have jurisdiction over Chevron's claims under the Settlement and Release Agreements and reject TexPet's contractual claims under the 1995 Settlement Agreement. In particular, the Republic requests that the Tribunal:

[1] Dismiss Chevron's claims under the 1995 Settlement Agreement and the 1998 Final Release for lack of jurisdiction under Article VI(1)(a) of the Treaty;

[2] Dismiss Chevron's claims for lack of jurisdiction under Article VI(1)(c) of the Treaty to the extent that its treaty claims are predicated on breach of the 1995 Settlement Agreement and/or the 1998 Final Release;

[3] Dismiss Chevron's claims under the 1995 Settlement Agreement and the 1998 Final

³⁶ See also Reply, fn 2079: “The relief requested herein is not intended to limit the requests for relief made by Claimants in other Memorials, which are incorporated herein by reference to the extent extant and not already granted." ↩

³⁷ See also Letter from the Respondent to the Tribunal dated 20 October 2025: "For the avoidance of doubt, Respondent's completeness check was limited to Respondent's formal written submissions; Respondent did not conduct a review of all other documents submitted in the arbitration record or at various hearings or meetings, or a review of oral presentations. In marking up Enclosure I at the Tribunal's request, Respondent does not waive any of its requests for relief of any form that are or remain extant for Tracks III and/or IV. Rather, Respondent expressly preserves any and all such requests.” ↩

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Release on the merits, should the Tribunal find that Chevron has standing in this Arbitration as a matter of jurisdiction;

[4] Dismiss TexPet's claims under the 1995 Settlement Agreement on the merits;

[5] Declare specifically that the Respondent has not breached the 1995 Settlement Agreement or the 1998 Final Release;

[6] Dismiss all of Claimants' claims as they relate to the 1996 Local Settlements, both as a matter of jurisdiction and on the merits;

[7] Declare further that the Respondent is under no obligation to indemnify, protect, defend or otherwise hold Claimants harmless against claims by third parties;

[8] Declare that the 1995 Settlement Agreement has no effect on third parties, and specifically, that the release of liability contained therein does not extend to rights and claims potentially held by third parties or could otherwise bar third-party claims arising from the environmental impact of TexPet's operations in Ecuador against TexPet or any of the defined Releasees;

[9] Award Respondent all costs and attorneys' fees in connection with this phase of the proceedings;

[10] Award Respondent any further relief that the Tribunal deems just and proper.

114. In its Track 1 Rejoinder Memorial dated 26 October 2012, the Respondent made the following request for relief (with sub-paragraphs here added for ease of reference):

192. Based on the foregoing, the Republic respectfully requests that the Tribunal issue an Award that:

[1] Denies all the relief and each remedy requested by Claimants in relation to Track 1, including the relief and remedies requested in Paragraph 272 of Claimants' Reply on the Merits;

[2] Declares that Chevron is not a “Releasee" under the 1995 Settlement Agreement and therefore has no basis to assert claims under Article VI(1)(a) of the Treaty.

[3] Dismisses Chevron's claims under the 1995 Settlement Agreement and the 1998 Final Release on the merits, should the Tribunal find that Chevron has standing in this Arbitration as a matter of jurisdiction;

[4] Declares that TexPet does not have standing to assert claims under the 1995 Settlement Agreement as a matter of Ecuadorian law;

[5] Dismisses TexPet's claims under the 1995 Settlement Agreement and the 1998 Final Release on the merits;

[6] Declares specifically that the Respondent has not breached the 1995 Settlement Agreement or the 1998 Final Release;

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[7] Dismisses all of Claimants' claims as they relate to the 1996 Local Settlements, both as a matter of jurisdiction and on the merits;

[8] Declares further that the Respondent is under no obligation to indemnify, protect, defend or otherwise hold Claimants harmless against claims by, or judgments or other relief obtained by, third parties including the claims filed by the Lago Agrio Plaintiffs, the Lago Agrio Judgment, and the enforcement thereof;

[9] Declares that the 1995 Settlement Agreement has no effect on third parties, and specifically, that the release of liability contained therein does not extend to rights and claims potentially held by third parties or could otherwise bar third-party claims arising from the environmental impact of TexPet's operations in Ecuador against TexPet or any of the defined Releasees;

[10] Declares that the Lago Agrio Litigation was not barred by res judicata or collateral estoppel;

[11] Awards Respondent all costs and attorneys' fees incurred by Respondent in connection with this phase of the proceedings; and that

[12] Awards Respondent any further relief that the Tribunal deems just and proper.

115. In its Track 1 Supplementary Counter-Memorial dated 31 March 2014, the Respondent made the following request for relief:

143. Based on the foregoing, together with the Republic's previous Track 1 submissions and argument and testimony presented in the November 2012 Hearing on the Merits, the Republic respectfully requests that the Tribunal issue an Award that:

1. Denies all the relief and each remedy requested by Claimants in relation to Track 1, including the relief and remedies requested in Paragraph 32 of Claimants' Supplemental Track 1 Memorial;
2. Dismisses on the merits Chevron's claims under the 1995 Settlement Agreement and the 1998 Final Release;
3. Dismisses on the merits TexPet's claims under the 1995 Settlement Agreement and the 1998 Final Release;
4. Declares specifically that the Respondent has not breached the 1995 Settlement Agreement or the 1998 Final Release;
5. Dismisses all of Claimants' claims as they relate to the 1996 Local Settlements, reached between TexPet and local government entities;
6. Declares that the Lago Agrio Litigation was not barred by res judicata or collateral estoppel;
7. Awards Respondent all costs and attorneys' fees incurred by Respondent

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in connection with this phase of the proceedings; and

8. Awards Respondent any further relief that the Tribunal deems just and proper.

116. In its Track II Counter Memorial on the Merits dated 18 February 2013, the Respondent made the following request for relief:

542. For the aforementioned reasons, the Republic requests that the Tribunal issue a Final Award that grants the following relief:

1. Declaring that the Tribunal lacks jurisdiction over Claimants' denial of justice claims, or that it refuses to exercise such jurisdiction because such claims are too remote to any investment.
2. Alternatively, dismissing Claimants' denial of justice and Treaty claims due to the failure of Chevron to exhaust local remedies available to it to challenge the Lago Agrio Judgment in Ecuador.
3. Alternatively, dismissing Claimants' Treaty and denial of justice claims because the rights that Claimants claim to have under the 1995 Settlement Agreement do not exist or were not breached.
4. Alternatively, even if the 1995 Settlement Agreement has been breached by the Republic, dismissing all of Claimants' Treaty claims, inter alia, because Claimants have separately failed to establish that the Republic has violated the effective means clause; the fair and equitable treatment clause; the full protection and security clause; the arbitrary and discriminatory treatment clause.
5. Alternatively, even if the 1995 Settlement Agreement has been breached by the Republic, dismissing Claimants' denial of justice claims because Claimants have failed to establish that the Republic has denied justice to Claimants under principles of customary international law.
6. Otherwise dismissing all of Claimants' claims against the Republic in these arbitration proceedings as meritless.
7. Awarding all costs and attorneys' fees incurred by the Republic in this arbitral proceeding.
8. Any other and further relief that the Tribunal deems just and proper.

543. To the extent the Tribunal finds the Republic responsible for a violation of international law, the Republic requests that the Tribunal conduct a further phase (Track 3) of the arbitration sufficient to determine Chevron's actual liability in fact for the claims asserted against it in Lago Agrio and to fashion a final award that takes into consideration such established liability.

544. The Republic reincorporates by reference its Request for Relief in Track I to the extent that such Request remains pending.

545. The Republic reserves its rights to supplement its pleadings and request for relief.

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117. In its Track II Rejoinder on the Merits dated 16 December 2013, the Respondent made the following request for relief (footnotes here omitted):

387. For the aforementioned reasons, the Republic requests that the Tribunal issue a Final Award, in which the Tribunal:

1. Denies all the relief and each remedy requested by Claimants in relation to Track II, including the relief and remedies requested in Paragraph 424 of Claimants' Amended Track II Reply on the Merits.
2. Declares that it lacks jurisdiction over Claimants' denial of justice claims, or refuses to exercise such jurisdiction because such claims are too remote to any investment.
3. Alternatively, dismisses Claimants' denial of justice and Treaty claims due to Chevron's failure to exhaust local remedies available to it to challenge the Lago Agrio Judgment in Ecuador.
4. Alternatively, dismisses Claimants' Treaty and denial of justice claims because the rights that Claimants claim to have under the 1995 Settlement Agreement, the 1998 Final Release, and/or the 1996 Local Settlements do not exist or were not breached.
5. Alternatively, even if the 1995 Settlement Agreement, the 1998 Final Release, and/or the 1996 Local Settlements was breached by the Republic, dismisses all of Claimants' Treaty claims because Claimants have separately failed to establish that the Republic has violated any of the Treaty's provisions.
6. Alternatively, even if the 1995 Settlement Agreement, the 1998 Final Release, and/or the 1996 Local Settlements has been breached by the Republic, dismisses Claimants' denial of justice claims because Claimants have failed to establish that the Republic has denied justice to Claimants under principles of customary international law.
7. Alternatively, even if any of Claimants' Treaty or denial of justice claims are upheld, declares that the Lago Agrio Judgment is not null and void because nullification is not an available or appropriate remedy under international law and such nullification would unjustly enrich Claimants.
8. Alternatively, even if any of Claimants' claims are upheld, orders the arbitration proceedings to continue to Track 3, so that the Tribunal may assess what Chevron's liability should have been for the claims asserted in Lago Agrio so that the Tribunal may fashion a final award that takes into consideration such liability.
9. Declares further that the Respondent is under no obligation to indemnify, protect, defend or otherwise hold Claimants harmless against claims by third parties.
10. Declares that the 1995 Settlement Agreement has no effect on the claims brought in the Lago Agrio Litigation.
11. Otherwise dismisses all of Claimants' claims against the Republic in these

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arbitration proceedings as meritless.

12. Orders, pursuant to Article 40 of the UNCITRAL Arbitration Rules, Claimants to pay all costs and expenses of this arbitration proceeding, including the fees and expenses of the Tribunal and the cost of the Republic's legal representation, plus pre-award and post-award interest thereon.
13. Awards any other and further relief that the Tribunal deems just and proper.

388. The Republic reincorporates by reference its Request for Relief in Track I and in its Track II Counter-Memorial on the Merits to the extent that such Request remains pending.

389. The Republic reserves its rights to supplement its pleadings and request for relief.

118. In its Track II Supplemental Counter-Memorial dated 7 November 2014, the Respondent made the following request for relief (footnotes here omitted):

481. For the aforementioned reasons, the Republic requests that the Tribunal issue a Final Award:

1. Declaring that it lacks jurisdiction over Claimants' denial of justice and Treaty claims against the Republic.
2. Alternatively, assuming the Tribunal finds it has jurisdiction over the denial of justice and Treaty claims, it should dismiss Claimants' denial of justice and Treaty claims against the Republic as meritless.
3. Declaring that Claimants do not possess the rights they claim to have under the 1995 Settlement Agreement, the 1998 Final Release, and/or the 1996 Local Settlements in connection with the Lago Agrio Litigation.
4. Declaring further that no breach of the 1995 Settlement Agreement, the 1998 Final Release, and/or the 1996 Local Settlements occurred in connection with the Lago Agrio Litigation.
5. Denying all the relief and each remedy requested by Claimants in relation to Track II, including the relief requested in Paragraph 199 of their Supplemental Track II Memorial on the Merits.

482. Alternatively, if any of Claimants' claims are upheld, the Republic requests, for the aforementioned reasons, that the Tribunal issue a Partial Award, in which the Tribunal:

1. Orders the arbitration proceedings to proceed to Track 3, so that the Tribunal may assess Chevron's actual liability in respect of the claims asserted against them in the Lago Agrio Litigation so that the Tribunal may fashion a final award that takes into consideration such liability.
2. Declares that the Respondent is under no obligation to indemnify, protect, defend or otherwise hold Claimants harmless against claims by third parties, including but not limited to, Claimants' request for attorneys' fees incurred

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in any enforcement action in any jurisdiction.

3. Declares that Claimants are not entitled to moral damages.
4. Declares that the Lago Agrio Judgment is not null and void because nullification is not an available or appropriate remedy under international law and such nullification would unjustly enrich Claimants.

483. In all events, the Republic requests that, pursuant to Article 40 of the UNCITRAL Arbitration Rules, Claimants be ordered to pay all costs and expenses of this arbitration proceeding, including the fees and expenses of the Tribunal and the cost of the Republic's legal representation, plus pre-award and post-award interest thereon. The Republic also asks that the Tribunal grant it any other and further relief that the Tribunal deems just and proper.

484. The Republic incorporates by reference its Request for Relief in Track I and in its Track II Counter-Memorial and Rejoinder on the Merits to the extent that such Requests remain pending.

119. In its Track II Supplemental Rejoinder on the Merits dated 17 March 2015, the Respondent made the following request for relief (footnotes here omitted):

446. For the aforementioned reasons, the Republic requests that the Tribunal issue a Final Award:

1. Declaring that it lacks jurisdiction over Claimants' denial of justice and related treaty claims against the Republic.
2. Alternatively, assuming the Tribunal finds it has jurisdiction over the denial of justice and Treaty claims, dismissing Claimants' denial of justice and related treaty claims against the Republic as not ripe for adjudication under international law in light of Claimants' failure to exhaust available local remedies, and as otherwise meritless.
3. Declaring that Claimants do not possess the rights they claim to have under the 1995 Settlement Agreement, the 1998 Final Release, and/or the 1996 Local Settlements in connection with the Lago Agrio Litigation.
4. Declaring further that no breach of the 1995 Settlement Agreement, the 1998 Final Release, and/or the 1996 Local Settlements occurred in connection with the Lago Agrio Litigation.
5. Denying all the relief and each remedy requested by Claimants in relation to Track II, including the relief requested in Paragraph 435 of their Supplemental Track II Reply.

447. Alternatively, if any of Claimants' claims are upheld, the Republic requests, for the aforementioned reasons, that the Tribunal issue a Partial Award, in which the Tribunal:

1. Orders the arbitration proceedings to proceed to Track 3, so that the Tribunal may assess Chevron's actual liability in respect of the claims asserted against them in the Lago Agrio Litigation so that the Tribunal may fashion a final award that takes

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into consideration such liability.

2. Declares that the Respondent is under no obligation to indemnify, protect, defend or otherwise hold Claimants harmless against claims by third parties, including but not limited to, Claimants' request for attorneys' fees incurred in any enforcement action in any jurisdiction.
3. Declares that Claimants are not entitled to moral damages.
4. Declares that the Lago Agrio Judgment is not null and void because nullification is not an available or appropriate remedy under international law and such nullification would unjustly enrich Claimants.

448. In all events, the Republic requests that, pursuant to Article 40 of the UNCITRAL Arbitration Rules, Claimants be ordered to pay all costs and expenses of this arbitration proceeding, including the fees and expenses of the Tribunal and the cost of the Republic's legal representation, plus pre-award and post-award interest thereon. The Republic also asks that the Tribunal grant it any other and further relief that the Tribunal deems just and proper.

449. The Republic incorporates by reference its Request for Relief in Track I and in its Track II Counter-Memorial, Rejoinder, and Supplemental Counter-Memorial, to the extent that such Requests remain pending.

120. In Paragraph 449 of its Track II Supplemental Rejoinder (cited immediately above), the Respondent incorporates by general reference certain pending relief requested in its earlier pleadings submitted under both Track I and Track II, namely, as cited above (i) as to Track I, the Respondent's Track 1 Counter-Memorial (Paragraph 263), the Respondent's Track I Rejoinder (Paragraph 192), the Respondent's Track I Supplemental Counter-Memorial (Paragraph 143); and (ii) as to Track II, the Respondent's Track II Counter-Memorial on the Merits (Paragraph 542), the Respondent's Track II Rejoinder on the Merits (Paragraph 387), the Respondent's Track II Supplemental Counter-Memorial (Paragraphs 481-483).³⁸

121. In its Post-Track II Hearing Memorial on Track I Issues dated 15 July 2015, the Respondent requested relief as there more generally set out, without a formal prayer for relief.

³⁸ For this request, the Respondent indicated “Same as referenced above for Track III and Track IV". ↩

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122. In its Submission on Costs dated 28 November 2018, the Respondent claimed a total of USD 72,825,262.65 for legal fees and costs, while reserving its right to update this amount.

123. In its Counter-Memorial on Damages dated 28 February 2020, the Respondent makes the following request for relief:

1382. For the aforementioned reasons, Respondent requests that the Tribunal issue a Final Award:

1. Denying all the relief and each remedy requested by Claimants in paragraph 479 of their Memorial on Damages;
2. Should the Tribunal consider that its Interim Awards have not been superseded by the Second Partial Award on Track II, granting Respondent's application of 1 March 2013 for “Reconsideration of the First, Second and Fourth Interim Awards"; and
3. Pursuant to Article 40 of the UNCITRAL Arbitration Rules, ordering Claimants to pay all costs and expenses of this arbitration proceeding, including the fees and expenses of the Tribunal and the cost of Respondent's legal representation, plus pre-award and post-award interest thereon.

1383. Respondent also asks that the Tribunal grant it any other and further relief that the Tribunal deems just and proper.

124. In its Response to the Claimants' Request for a Partial Award dated 19 May 2020, the Respondent makes the following request for relief:

211. In light of the foregoing, Respondent respectfully urges the Tribunal to decline to hear the Request for a Partial Award as a preliminary matter.

212. In the event that the Tribunal is inclined to hear the Request for a Partial Award as a preliminary matter, Respondent respectfully requests the Tribunal decline to hear or consider the issues raised in Question #1 and Question #3 of the Request.

213. In the event that the Tribunal is inclined to hear the Request for a Partial Award as a preliminary matter, Respondent respectfully requests that it not be heard at the Procedural Meeting scheduled for 28-29 May 2020, but at a later date pursuant to a full hearing procedure in accordance with Article 15(2) of the UNCITRAL Rules affording the Parties a full and reasonable opportunity to present their cases.

214. Further, in the event that the Tribunal is inclined to hear the Request for a Partial Award, and to render a partial award, Respondent respectfully requests that such a partial award:

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(1) Reject the relief sought in paragraph 175 of the Claimants' Request for a Partial Award;³⁹

(2) Declare that Respondent's contentions for reduction of damages based on its “but-for" argument are not precluded by res judicata and/or international law;⁴⁰

(3) Declare that Respondent's arguments regarding individual claims for individual and collective rights have not been previously determined by the Tribunal in its prior awards and decisions and are, therefore, not res judicata;

(4) Declare that the consideration of Respondent's but-for argument shall not be limited to evidence in the record of the Lago Agrio proceedings;⁴¹

(5) Declare that Respondent's arguments regarding Claimants' failure to mitigate damages by not pursuing local remedies under Ecuadorian law are not precluded by res judicata; and

(6) Award Respondent all of its costs of arbitration, including its cost of representation, in connection with the Request together with interest at a reasonable rate.

125. In its Second Submission on the Claimants' Request for a Partial Award dated 15 January 2021, the Respondent makes the following request for relief:

283. In light of the foregoing, Respondent requests that, based on the arguments presented by the Parties in connection with Claimants' Request for a Partial Award, the Tribunal issue a partial award in favor of Respondent on the preliminary questions it agreed to consider in its Procedural Order No. 67, as follows:

(1) Reject the relief sought in paragraph 175 of the Claimants' Request for a Partial Award and paragraphs 222 and 223 of Claimants' Second Submission;⁴²

(2) Declare that Respondent's contentions for reduction of damages based on its “but-for" argument are not precluded by res judicata and/or international law;⁴³

(3) Declare that Respondent's arguments regarding individual claims for individual and collective rights have not been previously determined by the Tribunal in its prior awards and decisions regarding the scope and effect of the 1995 Settlement Agreement and are, therefore, not precluded by res judicata;

³⁹ For this request for relief, the Respondent stated "Track III – to the extent not resolved by the Tribunal's Partial Award dated 30 June 2021". ↩

⁴⁰ For this request for relief, the Respondent stated “Track III – to the extent not resolved by the Tribunal's Partial Award dated 30 June 2021". ↩

⁴¹ For this request for relief, the Respondent stated “Track III – to the extent not resolved by the Tribunal's Partial Award dated 30 June 2021". ↩

⁴² For this request for relief, the Respondent stated "Track III – to the extent not resolved by the Tribunal's Partial Award dated 30 June 2021". ↩

⁴³ For this request for relief, the Respondent stated "Track III – to the extent not resolved by the Tribunal's Partial Award dated 30 June 2021". ↩

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(4) Declare that the consideration of Respondent's but-for argument shall not be limited to evidence in the record of the Lago Agrio proceedings;⁴⁴

(5) Declare that Respondent's arguments regarding Claimants' failure to mitigate damages by not pursuing local remedies under Ecuadorian law are not precluded by res judicata; and

(6) Award Respondent all of its costs of arbitration, including its cost of representation, in connection with the Request together with interest at a reasonable rate.

284. Respondent respectfully requests further that the Tribunal decline to make determinations with respect to the issues raised by Claimants' arguments, as identified above, pertaining to the merits of Respondent's environmental but-for argument and proceed to the consideration of all Track III issues.

126. In its Rejoinder on Damages dated 20 May 2022, the Respondent makes the following request for relief:

1940. For all of the aforementioned reasons, and those set forth in its Counter-Memorial On Damages, Respondent respectfully requests that the Tribunal issue a Final Award:

1. Denying all the relief and each remedy requested by Claimants in paragraph 479 of their Memorial on Damages and paragraph 1212 of their Reply;
2. Should the Tribunal consider that its Interim Awards have not been superseded by the Second Partial Award on Track II, granting Respondent's application of 1 March 2013 for “Reconsideration of the First, Second and Fourth Interim Awards” and vacating those Awards; and
3. Pursuant to Article 40 of the UNCITRAL Arbitration Rules, ordering Claimants to pay all the costs and expenses of this arbitration proceeding, including the fees and expenses of the Tribunal and the costs of Respondent's legal representation and assistance, plus pre-award and post-award interest thereon.

1941. Respondent also asks that the Tribunal grant it any other and further relief that the Tribunal deems just and proper.

127. In its Letter to the Tribunal dated 2 September 2022, the Respondent makes the following request for relief:

For these reasons, Respondent requests that the Tribunal strike from the damages claim any fees and costs that Claimants attribute to the Ecuador Legal Team, and in the alternative, draw an adverse inference against Claimants for failing to produce the invoices referenced in Claimants' Cash Call documents.

***

⁴⁴ For this request for relief, the Respondent stated “Track III – to the extent not resolved by the Tribunal's Partial Award dated 30 June 2021". ↩

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V. OVERVIEW OF THE CLAIMANTS' CLAIMS IN TRACK III

128. In this Section, the Tribunal provides an general overview of the Claimants' claims in Track III. In particular, the Tribunal shall describe: (i) certain cross-cutting issues touching upon the legal standards governing the Claimants' damages claims; (ii) the 16 categories of damages claimed by the Claimants; (iii) the Claimants' indemnification claim; and (iv) the Claimants' request for further injunctive relief.

A. GENERAL MATTERS AND LEGAL STANDARDS

129. The Claimants' damages claims are premised on three legal bases stemming from the Tribunal's findings in the Track II Award. Namely, the Claimants claim that they incurred damages:

(i) Starting on 1 January 2004 by virtue of the Respondent's breach of Article II(3)(c) of the Treaty (the “Umbrella Clause");

(ii) In respect of the Respondent's denial of justice starting on 22 August 2006 (when the Claimants assert Ecuador's wrongful acts began) or, in the alternative, on 1 March 2012 (when the Lago Agrio Judgment was rendered enforceable); and

(iii) From 1 March 2012 as a result of the Respondent's breach of the First and Second Interim Awards.⁴⁵

130. Section VI of this Award sets out the Parties' respective positions on general matters and legal standards cutting across these three legal bases, which include:

(i) Legal principles on compensation, including the applicable standard of compensation (particularly for legal fees and expenses claimed as damages), causation, the distinction between direct and incidental damages, the determination of the date(s) of the Treaty breaches, and the Respondent's so-called but-for argument, according to which the Claimants “must prove what the situation would in all probability have been if there had been no Treaty breaches,

⁴⁵ Reply, para. 672. ↩

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and what legal expenses and risk of judgment they would in all probability have faced in that situation";⁴⁶

(ii) Whether the Respondent's breaches of the First and Second Interim Awards give rise to compensation (and, relatedly, the Respondent's request for reconsideration of the First and Second Interim Awards);

(iii) Whether the Claimants are entitled to compensation for the legal fees and expenses incurred by Chevron's subsidiaries, whether or not outside of Ecuador, to prepare and defend themselves against the efforts to enforce the Lago Agrio Judgment worldwide;

(iv) Whether the Claimants fulfilled their duty to mitigate under international law;

(v) Whether legal fees and expenses allegedly awarded or recovered by the Claimants and their subsidiaries in legal proceedings beyond this Arbitration are recoverable as damages;

(vi) Certain tax implications arising from the Claimants' damages claims; and

(vii) What type of evidence of loss is required to satisfy the Claimants' burden of proof in respect of their damages claims for the reimbursement of legal fees and expenses.

131. The Tribunal shall address these issues in Section VII of this Award.

B. SPECIFIC DAMAGES CATEGORIES

132. Furthermore, the Claimants independently invoke each of the three legal bases identified in paragraph 129 above to claim damages across 16 distinct damages categories. 13 of those damages categories relate to legal fees and expenses allegedly incurred as a result of the Respondent's Treaty breaches, with 10 of those categories relating to distinct proceedings outside the present Arbitration. What follows is a concise summary of each of these proceedings:

⁴⁶ Counter-Memorial, para. 940. ↩

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(i) The Lago Agrio Litigation (Ecuador): As described above, the Lago Agrio Litigation started with the filing of the Lago Agrio Complaint on 7 May 2003.⁴⁷ Following the issuance of the Lago Agrio Judgment on 14 February 2011 (with its Clarification Order of 4 March 2011), adverse to Chevron, Chevron initiated three successive appeals against the Judgment, resulting in the Judgments of the Appellate Court (2012), the Cassation Court (2013) and the Constitutional Court (2018).⁴⁸

(ii) Ecuador Enforcement Proceedings: On 1 March 2012, the Lago Agrio Appellate Court declared the Lago Agrio Judgment enforceable; on 3 August 2012, the Lago Agrio Court ordered Chevron to pay the judgment debt within 24 hours; and on 15 October 2012, the Lago Agrio Court ordered that the Lago Agrio Judgment's execution “be applicable to the entirety of the assets of Chevron Corporation, until such time as the entire obligation has been satisfied.” Hereinafter, the Tribunal shall refer to these proceedings as the “Ecuador Enforcement Proceedings".⁴⁹

(iii) Argentina Enforcement Proceedings: On 5 November 2012, the LAPs commenced embargo proceedings, seeking to attach the assets of certain Chevron subsidiaries in Argentina.⁵⁰ A few days thereafter, on 12 November 2012, the LAPs filed enforcement proceedings in Argentina, seeking recognition of the Lago Agrio Judgment.⁵¹ Hereinafter, the Tribunal shall refer to these proceedings jointly as the “Argentina Enforcement Proceedings”.

(iv) Brazil Recognition Proceedings: On 27 June 2012, the LAPs sought recognition of the Lago Agrio Judgment in Brazil.⁵² Hereinafter, the Tribunal shall refer to these proceedings as the “Brazil Recognition Proceedings”.

⁴⁷ Track II Award, paras. 4.89-4.94. ↩

⁴⁸ Track II Award, para. 4.94. See also Memorial, Appendix 3. ↩

⁴⁹ Track II Award, para. 4.133. ↩

⁵⁰ C-2656, Ex Parte Motion before Argentina's National Civil Trial Courts, 5 November 2012. ↩

⁵¹ Track II Award, Part I – Annex 4, paras. 14-16. See also Memorial, Appendix 4. ↩

⁵² Track II Award, Part I – Annex 4, paras. 11-13. See also Memorial, Appendix 5. ↩

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(v) Canada Enforcement Proceedings: On 30 May 2012, the LAPs initiated legal proceedings in Ontario, Canada to enforce the Lago Agrio Judgment against certain local subsidiaries of Chevron.⁵³ Hereinafter, the Tribunal shall refer to these proceedings as the “Canada Enforcement Proceedings”.

(vi) The RICO Litigation (New York, USA): This lawsuit was brought by Chevron on 1 February 2011 before the U.S. District Court for the Southern District of New York (the "SDNY”) against Mr Stephen Donziger and the Law Offices of Steven R. Donziger, Mr Pablo Fajardo, Mr Luis Yanza, Stratus Consulting, Mr Douglas Beltman, Ms Anne Maest, 47 of the LAPs and several others. Chevron claimed, as originally pleaded, damages and injunctive relief for a pattern of racketeering activity and violations of 18 USC Section 1962 and New York State law.⁵⁴ Hereinafter, the Tribunal shall refer to these proceedings as the “RICO Litigation”.

(vii) The Section 1782 Proceedings (USA): Beginning in December 2009, Chevron initiated numerous legal proceedings in several U.S. District Courts in the USA under USC Section 1782 in order to obtain discovery for use in the Lago Agrio Litigation, the Criminal Proceedings against Mr Ricardo Reis Veiga and Dr. Rodrigo Pérez Pallares, and this Arbitration. These proceedings were directed to (inter alia) Mr Stephen Donziger, Mr Joseph Berlinger, Mr Cristobal Bonifaz, Mr Joseph C. Kohn, Mr Norman Nelson Alberto Wray Espinosa, Dr Charles William Calmbacher, Mr Charles W. Champ Sr., Mr Daniel Rourke, Stratus Consulting Inc., E-Tech and Banco Pichincha. The Respondent, in turn, later initiated legal proceedings in the USA under USC Section 1782 in order to obtain discovery for use in this Arbitration, including Mr John A. Connor.⁵⁵ Hereinafter, the Tribunal shall refer to these proceedings jointly as the “Section 1782 Proceedings".

(viii) The Gibraltar Proceedings (Gibraltar, United Kingdom): Chevron began legal proceedings in Gibraltar against certain non-party funders of the Lago Agrio

⁵³ Track II Award, Part I – Annex 4, paras. 6-10. See also Memorial, Appendix 6. ↩

⁵⁴ Track II Award, paras. 4.109-4.114. See also Memorial, Appendix 9. ↩

⁵⁵ Track II Award, paras. 4.106-4.108. See also Memorial, Appendices 11-12, 14-42, 44. ↩

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Litigation and ostensible beneficiaries of and administrators for recoveries from the enforcement of the Lago Agrio Judgment, including Mr James Russel DeLeon, the Woodsford Group and other defendants.⁵⁶ Hereinafter, the Tribunal shall refer to these proceedings jointly as the “Gibraltar Proceedings”.

(ix) The Criminal Proceedings (Ecuador): In 2003, the Respondent's Comptroller-General initiated criminal proceedings, later to become prosecutions, against (inter alia) Mr Ricardo Reis Veiga (a national of the USA) and Dr Rodrigo Pérez Pallares (a national of Ecuador). These Criminal Prosecutions alleged “falsity in a notarial instrument" (later “ideological falsehood") under Articles 338 and 339 of the Ecuadorian Penal Code, committed by Mr Patricio Rivadeneira (the former Minister of Energy and Mines), Dr Ramiro Gordillo (the former Executive President of PetroEcuador), Mr Luis Alban Granizo (the former Manager of Petroproduccion), Mr Veiga and Dr Pérez (TexPet's Vice-President and legal representative, respectively). The alleged falsity concerned the 1995 Settlement Agreement (with associated documentation), signed by the Ministry of Energy and Mines, PetroEcuador and TexPet.⁵⁷ Hereinafter, the Tribunal shall refer to these proceedings as the “Criminal Proceedings”.

(x) The Dutch Set-Aside Proceedings (The Hague, the Netherlands): As already stated above, to date, the Tribunal has made seven awards in this Arbitration.⁵⁸ With the exception of the Partial Award on Track III, the Respondent applied to annul the Tribunal's six remaining awards before the Dutch Courts.⁵⁹ Hereinafter, the Tribunal shall refer to these proceedings as the “Dutch Set-Aside Proceedings”.

133. In addition to the above 10 damages categories, the Claimants claim damages in respect of three damages categories which, although also related to legal fees and expenses, do not arise directly from specific judicial proceedings:

⁵⁶ Track II Award, para. 4.137. See also Memorial, Appendix 7. ↩

⁵⁷ Track II Award, paras. 4.122-4.131. See also Memorial, Appendix 13. ↩

⁵⁸ See para. 13 above. ↩

⁵⁹ Track II Award, paras. 4.146-4.148. See also Memorial, Appendix 10. ↩

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(i) The category “Costs of Planning Against Potential Enforcement in other Jurisdictions" concerns the legal fees and expenses the Claimants allegedly incurred to "prepare and implement [Chevron's] defensive strategy in anticipation of continuing efforts by the LAPs to enforce the fraudulent Lago Agrio Judgment in multiple jurisdictions around the world".⁶⁰

(ii) The category “General Defence” concerns the legal fees and expenses the Claimants allegedly incurred “in the General Defense against the Lago Agrio fraud and the resulting fraudulent Judgment”.⁶¹

(iii) The category “Treaty Arbitration Costs incurred by Non-Counsel of Record” concerns legal fees and expenses allegedly incurred by non-counsel of record in connection with this Arbitration.⁶² The Claimants' primary position, however, is that such fees and expenses should be reimbursed as costs of this Arbitration under Article 38 of the UNCITRAL Arbitration Rules.⁶³

134. Lastly, aside from the above 13 damages categories comprising legal fees and expenses, the Claimants seek damages under three additional headings:

(i) The category “Embargo Losses in Argentina" pertains to the losses allegedly suffered by one of Chevron's subsidiaries as a result of the 6 November 2012 ex parte embargo order obtained by the LAPs in the Argentina Enforcement Proceedings, whereby the Argentine Courts attached certain assets owned by Chevron's Argentine and Danish subsidiaries in Argentina in aid of enforcement of the Lago Agrio Judgment.⁶⁴

(ii) The category “Intellectual Property Losses in Ecuador" pertaints to the intellectual property losses the Claimants claim to have incurred in Ecuador,

⁶⁰ Memorial, para. 392; Reply, para. 939, Updated Appendix 2, p. 403; C-3462, Indexes of Claimed Invoices by Damage Category (“General R&E" tab). See also Memorial, para. 396, where the original amount claimed was USD 27,534,505.48. ↩

⁶¹ Memorial, para. 422; Reply, para. 1007. ↩

⁶² Memorial, para. 414; Reply, para. 981. ↩

⁶³ Memorial, para. 414; Reply, para. 980. ↩

⁶⁴ C-2349, Order issued by the National Civil Trial Court No. 61 of Argentina in Aguinda Salazar Maria vs. Chevron Corporation on Preventive Measures, 6 November 2012. ↩

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resulting from the 2012 embargo imposed by the Lago Agrio Court of trademarks and other intellectual property owned by three Chevron subsidiaries, which were earmarked for auction and sale for the benefit of the LAPs in aid of enforcement of the Lago Agrio Judgment.⁶⁵

(iii) The category “Moral Damages" pertains to the moral damages the Claimants allegedly suffered as a result of the Criminal Proceedings, the Respondent's media campaign against the Claimants, and the Respondent's breach of the Tribunal's Interim Orders and Awards.⁶⁶

135. The details of each of these 16 damages categories and the Parties' respective positions thereon are addressed in Sections VIII and IX below.

136. In total, the Claimants seek USD 793,879,967.74 for the 13 categories of damages related to legal fees and expenses.⁶⁷ They also request (i) USD 85,315,652 in damages for the Intellectual Property Losses in Ecuador; (ii) USD 13,000,000 in damages for the Embargo Losses in Argentina; and (iii) Moral Damages in the amount that the Tribunal deems just and proper.⁶⁸ In addition, the Claimants claim pre- and post- award interest from the date of occurrence of the damages until the Respondent's full and final payment.⁶⁹

C. INDEMNIFICATION

137. Aside from the 16 aforementioned damages categories concerning pecuniary damages, the Claimants request under the heading of “Contingent Damages” that the Tribunal order the Respondent to indemnify them for any further damages resulting from pending or future enforcement actions of the Lago Agrio Judgment.⁷⁰ The Claimants clarify that they do not request that the Respondent establish an escrow account to ensure the availability

⁶⁵ Memorial, para. 431; Reply, paras. 1038-1039, 1082. ↩

⁶⁶ Memorial, paras. 150, 447; Reply, paras. 1114, 1122. ↩

⁶⁷ Reply, Updated Appendix 2, p. 1. ↩

⁶⁸ Reply, para. 1212(3). ↩

⁶⁹ Reply, para. 1132. ↩

⁷⁰ Memorial, paras. 154-155. ↩

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of funds for indemnification, but reserve the right to do so.⁷¹ The Claimants' indemnification request is premised on the Tribunal's declaration in its Track II Award that "any injury to the First Claimant or the Second Claimant caused by the recognition or enforcement of any part of the Lago Agrio Judgment within or without Ecuador (as decided by the Lago Agrio Appellate, Cassation and Constitutional Courts) shall be injuries for which the Respondent is liable to make full reparation under international law".⁷²

138. The Tribunal shall address the Claimants' indemnity claim in Section XI below.

D. INJUNCTIVE RELIEF

139. Lastly, the Claimants point to several instances following the issuance of the Track II Award showing that the Respondent refuses to comply with the Track II Award.⁷³ Such instances include (i) declarations made by the Vice-President and the Attorney-General of Ecuador allegedly condemning the Award and stating the aim of avoiding its enforcement; (ii) an order issued by Ecuador's Ombudsman Office granting a request from Mr Fajardo seeking relief from potential disruptions to the enforcement of the Lago Agrio Judgment; and (iii) the granting of public funds to the ADF (the nominal beneficiary of the Lago Agrio Judgment).⁷⁴ Against this background, the Claimants request further injunctive relief as set out in their prayer for relief “to wipe out all of the consequences of Ecuador's internationally wrongful acts and to achieve the obligations of result that the Tribunal imposed.”⁷⁵

140. The Tribunal shall address the Claimants' request for injunctive relief in Section XII below.

***

⁷¹ Memorial, para. 155. ↩

⁷² Track II Award, para. 10.11. ↩

⁷³ Memorial, para. 156. ↩

⁷⁴ Memorial, paras. 157-160. ↩

⁷⁵ Memorial, para. 161. See Claimants' Request for Relief in Section IV.A above. ↩

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VI. THE PARTIES' POSITIONS ON GENERAL MATTERS AND LEGAL STANDARDS

A. LEGAL PRINCIPLES ON COMPENSATION

1. General Damages Principles

(a) The Claimants' Position

141. Standard of compensation: Noting that the Treaty is silent as to the standard of compensation for breaches of FET (including denial of justice) and its Umbrella Clause, the Claimants submit that customary international law fills the lacuna and provides the governing rules of compensation in this case, with Chorzów Factory providing the applicable standard of compensation.⁷⁶ Under Chorzów Factory, any award should “as far as possible wipe out all the consequences of the illegal act and re-establish the situation which would in all probability have existed if the act had not been committed.”⁷⁷ Therefore, the Claimants state, restitution is the preferred remedy, to be replaced by compensation for any financially assessable damage when restitution is not available.⁷⁸

142. Causation: In respect of causation under international law, the Claimants acknowledge that it is generally understood as encompassing elements of factual and legal causation, including the principles that “the harm must not be too remote” and the breach “must be the proximate cause of the harm”.⁷⁹ The Claimants therefore assert that “the relevant legal test here for proximate causation is whether a reasonable party in Ecuador's position could foresee that Chevron ... could pursue the types of defensive and proactive legal

⁷⁶ Memorial, paras. 163-167; CLA-116, ADC Affiliate Limited and ADC and ADMC Management Limited v. Hungary, ICSID Case No. ARB/03/16, Award, 2 October 2006, para. 481; CLA-231, Rumeli Telekom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. v. Kazakhstan, ICSID Case No. ARB/05/16, Award, 29 July 2008, para. 789. ↩

⁷⁷ Memorial, paras. 168-170; CLA-116, ADC Affiliate Limited and ADC and ADMC Management Limited v. Hungary, ICSID Case No. ARB/03/16, Award, 2 October 2006, para. 493; CLA-406, Case Concerning the Factory at Chorzów (Germany v. Poland), Judgment, 1928 PCIJ Series A, No. 17, 13 September 1928, p. 47. ↩

⁷⁸ Memorial, paras. 171-176; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Articles 35 and 36. ↩

⁷⁹ Memorial, para. 182; CLA-463, S.D. Myers v. Canada, Second Partial Award, 21 October 2002, para. 140. See also Track III Hearing Transcript, Day 1 (18 August 2022), p. 133 (Kehoe). ↩

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actions that Chevron did in response to Ecuador's wrongful conduct.”⁸⁰ The Claimants specify that the question refers to the foreseeability of the type of damage, not its quantum.⁸¹

143. In the Claimants' view, however, the causation analysis may be simplified in circumstances of deliberate harm by the host State, in which case some investment tribunals have found that “there is no question of remoteness or foreseeability of damage",⁸² and “a deliberate intent to harm .. is a sufficient basis, by itself, for causation."⁸³ Citing to the International Law Commission's Articles on State Responsibility (the “ILC Articles”) and Professor Bin Cheng, the Claimants deny the Respondent's argument that this is an “invented rule”.⁸⁴

144. The Claimants further cite the ILC Articles for the proposition that a State is responsible for harm caused for wrongful conduct, even if other factors contributed to the injury.⁸⁵ Flowing from this, the Claimants assert that Ecuador may not avoid responsibility for the harm resulting from its breaches of the Treaty by pointing to the acts of third parties, such as the LAPs and their representatives.⁸⁶ Rather, the Claimants submit that a State's responsibility for wrongful actions committed in concert with other actors is consistent with concepts of joint tortfeasor liability.⁸⁷ In turn, the Claimants reject the Respondent's suggestion that their damages are the product of contributory negligence, which, they note, is a "high bar" under international law and in any event is not met here: relying on

⁸⁰ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 129-130 (Kehoe). ↩

⁸¹ Track III Hearing Transcript, Day 1 (18 August 2022), p. 137 (Kehoe). ↩

⁸² Memorial, para. 183; CLA-288, James Crawford, THE INTERNATIONAL LAW COMMISSION'S ARTICLES ON STATE RESPONSIBILITY: INTRODUCTION, TEXT AND COMMENTARIES (2002), pp. 204-205; CLA-689, Ioannis Kardassopoulos v. Georgia, ICSID Case Nos. ARB/05/18 and ARB/07/15, Award, 3 March 2010, paras. 468-469. ↩

⁸³ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 53-54 (Bishop). ↩

⁸⁴ Reply, paras. 236-238; CLA-682, Bin Cheng, GENERAL PRINCIPLES OF LAW AS APPLIED TO INTERNATIONAL COURTS AND TRIBUNALS (1953), pp. 251-253; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Article 31, para. 10. ↩

⁸⁵ Memorial, para. 187; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Article 31, para. 12. ↩

⁸⁶ Memorial, para. 188; Reply, paras. 257-272; CLA-418, United States Diplomatic and Consular Staff in Tehran (United States v. Iran), Judgment, 1980 ICJ Report 3, 24 May 1980, paras. 17-18; CLA-550, The Corfu Channel Case (Merits) (United Kingdom v. Albania), Judgment, 1949 ICJ Report 4, 9 April 1949, pp. 18-23. ↩

⁸⁷ Reply, paras. 272-277. ↩

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the expert opinion of Mr Joseph Ryan and the witness statement of Mr Peter Seley, the Claimants submit that a “reasonable” general counsel would have approached the dispute in a similar way as the Claimants effectively did.⁸⁸

145. The Claimants also assert that the Tribunal's findings of liability should be understood within the meaning of Article 15 of the ILC Articles as treaty breaches arising out of a composite act, that is, “a series of actions or omissions defined in the aggregate as wrongful when the action or omission occurs which, taken with the other actions or omissions, is sufficient to constitute the wrongful act.”⁸⁹

146. Regarding their claimed losses as direct damages, including legal fees and expenses, the Claimants assert that the Respondent misstates the test for proximate causation.⁹⁰ According to the Claimants, proximate causation is not based on determining whether causal links are “too remote”, but on an analysis of the natural, objectively foreseeable consequences flowing from an international delict.⁹¹ In any event, the Claimants state that proximate causation has already been established because the Tribunal has found that the Respondent deliberately harmed them,⁹² namely:

Much or all of the harm to Chevron was deliberately caused by Ecuador's refusal as a State to comply with its settlement obligations, by its Executive's refusal to investigate the evidence of fraud presented to them, by its Judiciary's refusal to consider or investigate the evidence of fraud presented, by the State's refusal to comply with this Tribunal's Interim Orders and Awards, and by the State's promotion of the enforcement of the Lago Agrio Judgment.⁹³

⁸⁸ Reply, paras. 278-293; Ryan Expert Report, paras. 47-48; Seley Witness Statement, Section III. ↩

⁸⁹ Memorial, para. 189; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Art. 15(1). ↩

⁹⁰ Reply, para. 223. ↩

⁹¹ Reply, paras. 231-235; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Art. 31, para. 10; CLA-682, Bin Cheng, GENERAL PRINCIPLES OF LAW AS APPLIED TO INTERNATIONAL COURTS AND TRIBUNALS (1953), pp. 241-253. ↩

⁹² Memorial, para. 185, Section IX; Reply, paras. 237, 239-240. ↩

⁹³ Memorial, paras. 185. ↩

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147. For the same reason, the Claimants contend that their damages were not only foreseeable, but actually foreseen by the Respondent.⁹⁴

148. In response to the Respondent's but-for arguments on causation, the Claimants submit that the full reparation standard does not “require[] a party entitled to reparation to disprove all conceivable alternatives."⁹⁵ The Claimants contend that the Respondent seeks to impose a stricter causation standard on the Claimants than it does on itself.⁹⁶

149. Incidental damages: If the Tribunal decides not to award the Claimants' legal fees and expenses as direct damages, the Claimants request, in the alternative, that the Tribunal award them as incidental damages, i.e., forms of “reparation [that] include[] sums allowed in respect of expenses incurred by reason of the injury sustained.”⁹⁷ Whether an expense qualifies as an "incidental expense", the Claimants note, depends on whether it was incurred to “repair damage” or “mitigate loss arising from the breach”.⁹⁸ Further, they submit that incidental expenses that are “reasonably incurred” are recoverable, thus rejecting the Respondent's “attempts to graft an additional necessity requirement.”⁹⁹ Such "reasonableness”, the Claimants assert, is assessed case-by-case and in context.¹⁰⁰ The Claimants underlines that international law permits claimants to recover incidental expenses "reasonably incurred to prevent foreseeable damages caused by a State's breach", including costs incurred before a breach in order to prevent or mitigate foreseeable damages.¹⁰¹ According to the Claimants, whether their damages are characterized as direct or indirect does not affect the Respondent's burden to prove its

⁹⁴ Reply, paras. 242-256. ↩

⁹⁵ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 168-172 (Silbert). ↩

⁹⁶ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 172-174 (Silbert). ↩

⁹⁷ Reply, paras. 294-298; RLA-702, Sixth report of the Special Rapporteur, Mr. F.V. García-Amador (13th session of the ILC (1961)), A/CN.4/134 and Add.1 (in Yearbook, 1961, vol. II), para. 166. ↩

⁹⁸ Reply, para. 296; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Art. 36, para. 34. ↩

⁹⁹ Reply, paras. 303-309; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Art. 36, para. 34; CLA-652, Sergey Ripinsky and Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2016), p. 305. ↩

¹⁰⁰ Reply, paras. 310-313. ↩

¹⁰¹ Reply, paras. 360-365; Track III Hearing Transcript, Day 1 (18 August 2022), p. 74 (Bishop). ↩

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affirmative defence that Chevron failed to mitigate, but does affect the Claimants' burden to prove causation by adding a reasonableness test in addition to proximate causation.¹⁰²

150. Mitigation: While the Claimants acknowledge that there is a duty to mitigate under international law,¹⁰³ they disagree with the Respondent's stance that only losses that "could not have been avoided by reasonable action” are recoverable.¹⁰⁴ Rather, the Claimants submit that "in accordance with the doctrine of mitigation recognized in international law, expenses are recoverable provided that they are incurred by the Claimant in reasonably attempting to mitigate its losses.”¹⁰⁵ They add that there must be a causal link between the wrongful acts and the mitigation efforts.¹⁰⁶ The Claimants explain that “the causal link is established if the costs were reasonably incurred in response to either damage or potential loss, and the standard of proof for that, for reasonably incurred, is the proportionality of the Measures that were taken."¹⁰⁷ In the Claimants' submission, mitigation efforts are normally granted significant deference by both international tribunals and domestic courts, with decisions on measures taken and costs incurred appraised for whether they were “unreasonable or irrational".¹⁰⁸ According to the Claimants, respondents bear the burden of demonstrating that an award should be reduced because the claimants unreasonably failed to mitigate.¹⁰⁹

151. Burden of Proof: With respect to their alternative claim for incidental damages, the Claimants contend that Ecuador's argument that Chevron unreasonably over-spent on its litigation is in essence an affirmative defence for failure to mitigate damages.¹¹⁰ Being an

¹⁰² Track III Hearing Transcript, Day 15 (7 September 2022), pp. 3395-3397 (Coriell). ↩

¹⁰³ Track III Hearing Transcript, Day 1 (18 August 2022), p. 85 (Coriell). ↩

¹⁰⁴ Reply, paras. 321-323. ↩

¹⁰⁵ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 86-87 (Coriell). ↩

¹⁰⁶ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 85, 88 (Coriell). ↩

¹⁰⁷ Track III Hearing Transcript, Day 1 (18 August 2022), p. 88 (Coriell). ↩

¹⁰⁸ Track III Hearing Transcript, Day 15 (7 September 2022), pp. 3407-3415 (Coriell). ↩

¹⁰⁹ Reply, paras. 324-330; CLA-633, Himpurna California Energy Ltd v. PT (Persero) Perusahaan Listruik Nagara (PLN), Final Award, 4 May 1999, para. 258; RLA-787, Hrvatska Elektroprivreda d.d. v. Slovenia, ICSID Case No. ARB/05/24, Award, 17 December 2015, para. 386. ↩

¹¹⁰ Reply, paras. 367-380. ↩

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affirmative defence, the Claimants submit, Ecuador bears the burden of establishing that Chevron's litigation costs were unreasonable.¹¹¹

(b) The Respondent's Position

152. Standard of compensation: The Respondent agrees that Chorzów Factory sets out the applicable customary international law standard for reparation for an internationally wrongful act.¹¹² It considers, however, that the Claimants overlook essential aspects of Chorzów – namely, it posits that no losses are recoverable other than those (i) actually suffered by claimants; (ii) directly caused by the breach; (iii) not reasonably avoidable; (iv) incurred after the breach, (v) reasonable and necessary; and (vi) sufficiently proven.¹¹³ These requirements are addressed seriatim.

153. Actual losses: Citing to Article 36 of the ILC Articles, the Respondent posits that only losses actually suffered by the Claimants are recoverable, meaning that “uncertain, speculative or otherwise unproven losses are not recoverable, even if liability is established against the Respondent.”¹¹⁴ Otherwise, the Respondent notes, the aggrieved party would be put in a better position than the one it would have been in, had the breach not occurred.¹¹⁵ Similarly, the Respondent asserts that only losses suffered by the Claimants, and not third parties, are recoverable, as claimants must “own the asset” they claim to have lost due to the breach.¹¹⁶

154. Causation: The Respondent submits that the Claimants must prove proximate causation for both direct and incidental damages.¹¹⁷ The Respondent also distinguishes factual and

¹¹¹ Reply, paras. 367-380. See also Track III Hearing Transcript, Day 1 (18 August 2022), p. 48 (Bishop), pp. 89-98 (Coriell). ↩

¹¹² Counter-Memorial, para. 183. ↩

¹¹³ Counter-Memorial, paras. 183-186. ↩

¹¹⁴ Counter-Memorial, paras. 188-189; RLA-103, LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc .v. Argentina, ICSID Case No. ARB/02/1, Award, 25 July 2007, para. 45; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Art. 36, para. 4. ↩

¹¹⁵ Counter-Memorial, para. 190; RLA-702, ILC, International Responsibility: Sixth Report by F.V. Garcia Amador, Special Rapporteur, UN Doc. A/CN.4/134 and Add.1, 26 January 1961, para. 178. ↩

¹¹⁶ Counter-Memorial, para. 191; RLA-768, Emmis International Holding, B.V. et al. v. Hungary, ICSID Case No. ARB/12/2, Award, 16 April 2014, para. 169. ↩

¹¹⁷ Track III Hearing Transcript, Day 2 (19 August 2022), pp. 265-266 (Tsutieva); Day 15 (7 September 2022), pp. 3532-3534 (Tsutieva). ↩

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legal elements in causation: “[f]actually, a claimant must prove that but-for the State's unlawful act, the harm would not have occurred”; “[l]egally, a claimant must show that the injury was proximately caused by the State's actions, and that it is not merely an indirect or remote consequence of the breach."¹¹⁸ The Respondent considers the Claimants to have originally posited the correct test for proximate causation, namely, whether alleged losses, in terms of foreseeability from the standpoint of a reasonable person, “are the natural and foreseeable consequence of the State's treaty breaches".¹¹⁹

155. The Respondent derives the but-for requirement from Chorzów's requirement to "reestablish the situation which would, in all probability, have existed if that act had not been committed.”¹²⁰ This means that even if there was a breach, the Claimants must still show that the harm “would in fact have been averted if the respondent had acted in compliance with its legal obligations”¹²¹ – a showing which, in the Respondent's view, the Claimants fail to make.¹²²

156. In addition, the Respondent explains that proximate causation “serves to prevent liability for a potentially endless chain of events" by resorting to notions such as “directness, proximity and foreseeability of loss.”¹²³ According to the Respondent, the consequences of failing to prove direct causation can include a finding of international responsibility without incurring an obligation to pay compensation¹²⁴ or the exclusion of specific categories of damages that are too remote or unrelated to a breach.¹²⁵ It is thus wrong, in

¹¹⁸ Counter-Memorial, para. 194. ↩

¹¹⁹ Track III Hearing Transcript, Day 2 (19 August 2022), pp. 270 (Tsutieva). ↩

¹²⁰ Counter-Memorial, para. 195; CLA-406, Case Concerning the Factory at Chorzów (Germany v. Poland), Judgment, 1928 PCIJ Series A, No. 17, 13 September 1928, p. 47 (emphasis by the Respondent). ↩

¹²¹ Counter-Memorial, paras. 196-203; RLA-813, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware, Inc. v. Canada, PCA Case No. 2009-04, Award on Damages, 10 January 2019, para. 110; CLA-640, Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Serbia and Montenegro), Judgment, ICJ Reports 2007, para. 462. ↩

¹²² Counter-Memorial, para. 203; Rejoinder, paras. 186-187. ↩

¹²³ Counter-Memorial, paras. 205-207; RLA-719, Case of Aloeboetoe et al. v. Suriname, IACHR, Judgment (Reparations and Costs), 10 September 1993, p. 12, para. 48; RLA-738, Sergey Ripinsky and Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2008), p. 115. ↩

¹²⁴ Counter-Memorial, para. 208; CLA-642, The Rompetrol Group N.V. v. Romania, ICSID Case No. ARB/06/2, Award, 6 May 2013. ↩

¹²⁵ Counter-Memorial, para. 209; CLA-655, Autopista Concesionada de Venezuela, C.A. v. Venezuela, ICSID Case No. ARB/00/5, Award, 23 September 2003, paras. 270-277. ↩

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the Respondent's view, to equate the requirement of legal causation to foreseeability alone, as the Claimants suggest.¹²⁶ Likewise, the Respondent rejects the Claimants' “invented” rule that the causation analysis may be “simplified” in cases of deliberate harm, as “deliberateness” does not equate to “proximity”.¹²⁷ Regardless, the Respondent states that the Tribunal has not found that Ecuador acted with deliberate intent to harm.¹²⁸

157. The Respondent further stresses that tribunals have deemed intervening acts by third parties to constitute the legal cause of a claimant's own losses, either because the conduct is the sole cause in the chain of events leading to the loss or because the intervening event renders the State's wrongful action too remote.¹²⁹ Similarly, the Respondent considers that a claimant's contribution to its own injury requires the denial or significant reduction of damages.¹³⁰ The Respondent adds that the “chain of causation requires reasonableness throughout the Claimants' efforts to mitigate."¹³¹ The Respondent underlines that tribunals have significantly reduced or rejected damages where claimants have failed to establish causation.¹³²

158. Mitigation: The Respondent further notes that the Claimants also have a duty to mitigate their damages reasonably, failing which they lose any entitlement to compensation for all damages that could have been avoided.¹³³ Mitigation is relevant to the Respondent's arguments that the Claimants and their lawyers failed to “exercise billing judgment" and

¹²⁶ Counter-Memorial, para. 210; Rejoinder, paras. 189-199; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Art. 31, para. 10. ↩

¹²⁷ Counter-Memorial, paras. 211-212; Rejoinder, paras. 200-208; RLA-807, UAB E energija v. Latvia, ICSID Case No. ARB/12/33, Award, 22 December 2017, paras. 1143-1144. ↩

¹²⁸ Track III Hearing Transcript, Day 2 (19 August 2022), pp. 272-273 (Tsutieva). ↩

¹²⁹ Counter-Memorial, paras. 213-214; Rejoinder, paras. 230-239; CLA-463, S.D. Myers v. Canada, Second Partial Award, 21 October 2002, para. 95; CLA-614, Ioan Micula, Viorel Micula, S.C. European Food S.A, S.C. Starmill S.R.L. and S.C. Multipack S.R.L. v. Romania, ICSID Case No. ARB/05/20, Award, 11 December 2013, paras. 926-927. ↩

¹³⁰ Counter-Memorial, paras. 215-216; Rejoinder, paras. 218-229; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Art. 39, para. 5. ↩

¹³¹ Track III Hearing Transcript, Day 2 (19 August 2022), p. 266 (Tsutieva). ↩

¹³² Track III Hearing Transcript, Day 15 (7 September 2022), pp. 3544-3545 (Tsutieva). ↩

¹³³ Counter-Memorial, paras. 218-222; CLA-670, Case concerning the Gabcikovo-Nagymaros Project (Hungary v. Slovakia), Judgment, ICJ Reports 1997, 25 September 1997, p. 55, para. 80. ↩

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to undertake specific action, as further elaborated in Section VI.D below.¹³⁴ The Respondent asserts that mitigation must be undertaken after the breach to be compensated and that compensable mitigation cannot begin in anticipation of a breach.¹³⁵

159. Incidental damages: Recoverable incidental losses, the Respondent submits, are only those incurred after a breach (here, after the Lago Agrio Judgment became final in 2018)¹³⁶ and which were reasonable and necessary.¹³⁷ Citing to Ripinsky and Williams, the Respondent defines incidental expenses as those “which the investor has incurred (or is likely to incur) exclusively as a consequence of [the respondent's] unlawful conduct" - including legal expenses.¹³⁸ In the Respondent's view, all of the legal fees and expenses sought by the Claimants are incidental damages, and is critical of the Claimants” “volte-face" argument in their Reply that all of their claimed legal fees are now direct damages: in its view, the only "direct damage" that conceivably could have been caused by the Treaty breaches would have been payment of the final Lago Agrio Judgment amount.¹³⁹ As a consequence of their status as incidental damages, the Respondent submits that only legal fees incurred after the breach are potentially recoverable, as “incidental damages" are defined as arising from the breach.¹⁴⁰ The Respondent adds that the Claimants must show that their claimed incidental damages were both reasonable and necessary.¹⁴¹ However, they dispute the Claimants' position that reasonableness can be met by showing proportionality.¹⁴²

¹³⁴ Counter-Memorial, paras. 218, 222. ↩

¹³⁵ Track III Hearing Transcript, Day 15 (7 September 2022), pp. 3537-3543 (Tsutieva). ↩

¹³⁶ Counter-Memorial, paras. 224-227; Rejoinder, paras. 278-287; CLA-221, MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Chile, ICSID Case No. ARB/01/7, Award, 25 May 2004, para. 240(ii). ↩

¹³⁷ Counter-Memorial, paras. 228-232; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Art. 36, para. 34. ↩

¹³⁸ Counter-Memorial, para. 223; RLA-738, Sergey Ripinsky and Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2008), p. 299. ↩

¹³⁹ Rejoinder, paras. 242-250. ↩

¹⁴⁰ Track III Hearing Transcript, Day 2 (19 August 2022), pp. 259-260 (Tsutieva). ↩

¹⁴¹ Track III Hearing Transcript, Day 2 (19 August 2022), pp. 261 (Tsutieva). ↩

¹⁴² Track III Hearing Transcript, Day 15 (7 September 2022), p. 3535 (Tsutieva). ↩

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160. Burden of proof: The Respondent submits that the Claimants bear the burden of proving their losses, including “the fact and the amount of loss, . . . the causal link between the respondent's conduct and the loss",¹⁴³ as well as, for incidental damages,¹⁴⁴ the reasonableness¹⁴⁵ and the necessity of the loss.¹⁴⁶ The Respondent adds that its affirmative defence of failure to mitigate “doesn't become relevant until the Claimant first proves that it has incurred damages”, including so-called mitigation expenses.¹⁴⁷ In addition, the Respondent asserts that the Claimants bear the burden to establish but-for causation for their damages.¹⁴⁸ The Respondent rejects the Claimants' assertion that the Respondent must determine which time entries are unreasonable as such position lies on two faulty assumptions: (i) incorrectly assuming equality of information; and (ii) assuming the integrity of their allocation of specific claimed fees and costs into categories.¹⁴⁹

2. Legal Fees and Expenses as Damages

(a) The Claimants' Position

161. To make the Claimants “whole” and wipe out the consequences of the Respondent's breaches, the Claimants assert that they are entitled to recover, as a primary head of direct damages, the legal fees incurred in various proceedings as a consequence of the Respondent's delicts, including the costs and expenses of this Arbitration to which they claim they are separately entitled under the UNCITRAL Arbitration Rules.¹⁵⁰ Such legal fees and expenses, they claim, “are compensable if they were reasonably incurred to repair damage and otherwise mitigate loss arising from the breach",¹⁵¹ meaning that only

¹⁴³ Counter-Memorial, paras. 234-236; RLA-738, Sergey Ripinsky and Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2008), p. 162. ↩

¹⁴⁴ Track III Hearing Transcript, Day 2 (19 August 2022), pp. 261-263 (Tsutieva). ↩

¹⁴⁵ Rejoinder, paras. 251-265. ↩

¹⁴⁶ Rejoinder, paras. 266-277. ↩

¹⁴⁷ Track III Hearing Transcript, Day 2 (19 August 2022), pp. 237-238 (Schwartz). ↩

¹⁴⁸ Track III Hearing Transcript, Day 2 (19 August 2022), p. 275 (Tsutieva). ↩

¹⁴⁹ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3606 (Finsterwald). ↩

¹⁵⁰ Memorial, paras. 177-178. See para. 132 ff above for a list of the proceedings in respect of which the Claimants claim the reimbursement of legal fees and expenses. ↩

¹⁵¹ Memorial, para. 178; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Art. 36, para. 34. ↩

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a causal relationship between the State's breaches and a claimant's costs needs to exist.¹⁵² According to the Claimants, awarding such costs in the amount actually incurred, and not any lesser amount, is “necessary to achieve the objective of 'full compensation” when those costs were “incurred in the course of defending from the 'attacks' of the host country authorities” or “incurred to repair damage and otherwise mitigate loss arising from a breach."¹⁵³ The Claimants add that “cost-shifting regimes" are irrelevant here as they are "generally designed only to award partial legal costs, not full damages.”¹⁵⁴ Further, the Claimants submit that their sought legal fees and expenses have already been market-tested, in that they have been reviewed and paid by Chevron.¹⁵⁵

162. Should the Tribunal not award legal fees and expenses as direct damages, the Claimants request that they be awarded as incidental damages, as is often sought in accordance with Chorzów Factory's full reparation principle.¹⁵⁶ The Claimants submit that a two-level analysis determines whether the legal costs are direct or indirect damages. First, the causation analysis must consider the measure taken. If the measure “was a natural consequence of Ecuador's breach or if it was intended by Ecuador or if it was foreseeable, then it's a direct damage”.¹⁵⁷ If the measure is instead mitigation, then it constitutes incidental damage, and the Claimants must further prove that the measure was “a reasonable effort to mitigate against harm and potential harm".¹⁵⁸ The second level considers "how much a reasonable measure costs”, where the Claimants submit that Ecuador bears the “burden to prove its affirmative defense of Chevron's alleged failure to mitigate its legal spend".¹⁵⁹

¹⁵² Memorial, para. 178. ↩

¹⁵³ Memorial, para. 178; CLA-652, Sergey Ripinsky and Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2016), pp. 299-300. ↩

¹⁵⁴ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 49-50 (Bishop), Day 15 (7 September 2022), p. 3480 (Kehoe). ↩

¹⁵⁵ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 49-50 (Bishop). ↩

¹⁵⁶ Reply, paras. 297-302; CLA-903, UP and C.D Holding Internationale v. Hungary, ICSID Case No. ARB/13/35, Award, 9 October 2018, paras. 541-542. ↩

¹⁵⁷ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3395 (Coriell). ↩

¹⁵⁸ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3395 (Coriell). ↩

¹⁵⁹ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3396 (Coriell). ↩

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163. Relying on the expert opinion of Professor Charles Silver, the Claimants posit that incurring legal fees and expenses was necessary to protect their rights and proactively mitigate damages flowing from the Respondent's Treaty breaches.¹⁶⁰ As to whether such legal fees and expenses were reasonable, the Claimants submit that they are where they meet two criteria: (i) “were those fees and costs paid by a party at a time when it had no assurance that it would be able to recover those costs[?]” and (ii) are the legal costs proportionate to what was at stake in the litigation?”.¹⁶¹ The Claimants offer witness testimony and expert opinion to the effect that their claimed fees and costs were reasonable.¹⁶² Similarly, they also consider their mitigation strategy to be reasonable in view of the extent of the harm threatening Chevron, the urgency created by the threat of the Lago Agrio Judgment, the complexity of the Lago Agrio Litigation and the cost controls implemented by the Claimants.¹⁶³ In any event, the Claimants state that it is for the Respondent to prove its affirmative defence that the Claimants' acts of mitigation were unreasonable.¹⁶⁴

(a) The Respondent's Position

164. In the Respondent's view, the Claimants' suggestion that the sole criterion for compensability is “whether legal expenses were actually paid” is an attempt to avoid the application of the standards of compensation under international law requiring that compensable legal expenses be proven, reasonable, and necessary in relation to the tasks to be performed.¹⁶⁵ According to the Respondent, it follows from such principles that detailed billing records are required to determine whether legal expenses, being incidental legal expenses, are compensable.¹⁶⁶ The Respondent derives ample recognition for the

¹⁶⁰ Reply, paras. 299-302; Silver Expert Report, paras. 141-152. ↩

¹⁶¹ Track III Hearing Transcript, Day 1 (18 August 2022), p. 49 (Bishop). See also the Claimants' expert Professor Geoffrey Miller' explanation that the litigation expenditure of a public business corporation should be presumed reasonable unless the contrary is shown. Reply, paras. 312-313; Miller Expert Report, para. 18. ↩

¹⁶² Reply, paras. 314-320; Litvack Expert Report; Lea Expert Report; Ryan Expert Report; Silver Expert Report; Miller Expert Report. ↩

¹⁶³ Reply, paras. 331-359; Silver Expert Report; Miller Expert Report; Ryan Expert Report. ↩

¹⁶⁴ Reply, paras. 367-380; RLA-884, AIG Capital Partners, Inc. and CJSC Tema Real Estate Company v. Kazakhstan, ICSID Case No. ARB/01/6, Award, 7 October 2003, para. 10.6.4. ↩

¹⁶⁵ Counter-Memorial, paras. 360-361, 363. ↩

¹⁶⁶ Counter-Memorial, paras. 362-363. ↩

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requirement that compensable legal expenses be reasonable and necessary from the decisions of international courts and tribunals.¹⁶⁷ In its view, the Claimants' attempts to “invent an entirely new standard” are unsupported by the legal authorities upon which they rely.¹⁶⁸ The Respondent is critical, in particular, of the Claimants' argument that their legal fees and expenses should be presumed reasonable because legal expenses deserve "significant deference",¹⁶⁹ since: (i) there is no deference for unreasonable expenses under international law;¹⁷⁰ (ii) the risks and amount at stake in the Lago Agrio Litigation do not entitle the Claimants to recover any unreasonable amount of damages;¹⁷¹ and (iii) even in the context of assessing costs of arbitration, tribunals do not presume that the parties' expenses are reasonable just because they were paid.¹⁷²

165. Similarly, the Respondent posits that major national jurisdictions also require that claimed legal expenses be reasonable and necessary.¹⁷³ In the Respondent's view, resorting to standards developed by national jurisdictions may be of use in circumstances where “international law has not yet developed its own intellectual tools of assessing whether particular expenditure has been incurred reasonably.”¹⁷⁴ Among others, the Respondent identifies as relevant the standards applied in the United States,¹⁷⁵ Canada,¹⁷⁶ the United

¹⁶⁷ Counter-Memorial, paras. 364-369; RLA-722, The Islamic Republic of Iran v. The United States of America, IUSCTR, Cases Nos. A15 (IV) and A24-FT, Award No. 590- A15(IV)/A24-FT, 28 December 1998, paras. 57, 71, 120; RLA-745, Case of Handölsdalen Sami Village and Others v. Sweden, Judgment, ECHR Application No. 39014/04, 30 March 2010, para. 73; RLA-766, Total S.A. v. Argentina, ICSID Case No. ARB/04/1, Award, 27 November 2013, paras. 188-189; RLA-817; Magyar Farming Company Ltd, Kintyre Kft and Inicia Zrt v. Hungary, ICSID Case No. ARB/17/27, Award of the Tribunal, 13 November 2019, para. 439. ↩

¹⁶⁸ Counter-Memorial, paras. 370-379. ↩

¹⁶⁹ Rejoinder, para. 288. ↩

¹⁷⁰ Rejoinder, paras. 289-292; RLA-787, Hrvatska Elektroprivreda d.d. v. Slovenia, ICSID Case No. ARB/05/24, Award, 17 December 2015, paras. 215, 400. ↩

¹⁷¹ Rejoinder, paras. 293-296; RLA-792, Peter A. Allard v. Barbados, PCA Case No. 2012-06, Award, 27 June 2016, paras. 308-309; CLA-641, Libananco Holdings Co. Limited v. Turkey, ICSID Case No. ARB/06/8, Award, 2 September 2011, paras. 559-569. ↩

¹⁷² Rejoinder, paras. 297-304; RLA-771, European American Investment Bank AG v. Slovakia, PCA Case No. 2010-17, UNCITRAL, Award on Costs, 20 August 2014, para. 43; CLA-706, ICC Commission Report, DECISIONS ON COSTS IN INTERNATIONAL ARBITRATION (2015), pp. 5, 7, 12, 13, paras. 15, 19, 28, 65, 68, 70. ↩

¹⁷³ Counter-Memorial, paras. 380-407. ↩

¹⁷⁴ Counter-Memorial, para. 380; RLA-738, Sergey Ripinsky and Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2008), p. 306. ↩

¹⁷⁵ Counter-Memorial, paras. 381-386; RE-35, Leigh Expert Report; RE-36, Paige Expert Report. ↩

¹⁷⁶ Counter-Memorial, paras. 387-391; RE-39, First Knutsen Expert Report. ↩

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Kingdom,¹⁷⁷ other common law jurisdictions such as Australia, New Zealand, Singapore and Gibraltar,¹⁷⁸ Argentina,¹⁷⁹ Brazil¹⁸⁰ and the Netherlands.¹⁸¹

166. Flowing from such standards, the Respondent asserts that legal expenses can be proven to be reasonable and necessary only through contemporaneous and detailed billing records.¹⁸² Without invoices, the Respondent submits, the Tribunal has no basis on which to award damages.¹⁸³ Relying on Avco v. Iran, the Respondent also argues that a lack of invoices may lead to a denial of damages outside the legal fees context.¹⁸⁴

167. In the Respondent's view, the Claimants' claim for legal fees and expenses falls short of this standard. Relying on the expert report of Ms Mari Henry Leigh, the Respondent states that the lack of information on hours invoiced, fees invoiced, timekeeper identities and related billing narratives makes it impossible to:

• evaluate the appropriate number of hours which would have been spent on a given task;
• multiply such hours by a reasonable rate in a lodestar analysis;
• determine what discrete tasks were even performed in order to get a broad sense of the tangible and intangible work product prepared;
• determine the extent to which the costs were spent on non-legal efforts;
• determine the extent to which various timekeepers' efforts unnecessarily duplicated the work of other timekeepers in the various actions;

¹⁷⁷ Counter-Memorial, paras. 392-398; RE-36, Paige Expert Report. ↩

¹⁷⁸ Counter-Memorial, para. 399; RE-36, Paige Expert Report. ↩

¹⁷⁹ Counter-Memorial, paras. 400-401; RE-38, First García Pullés Expert Report. ↩

¹⁸⁰ Counter-Memorial, para. 402; RE-37, First Souza Godoy Expert Report. ↩

¹⁸¹ Counter-Memorial, paras. 403-406; RE-47, Luycks Expert Report. ↩

¹⁸² Counter-Memorial, paras. 408-417; RLA-722, The Islamic Republic of Iran v. The United States of America, IUSCTR, Cases Nos. A15 (IV) and A24-FT, Award No. 590- A15(IV)/A24-FT, 28 December 1998, para. 102; RLA-769, The Islamic Republic of Iran v. The United States of America, IUSCTR, Cases Nos. A15 (IV) and A24-FT, Award No. 620- A15(IV)/A24-FT, 2 July 2014, paras. 125, 154, 206-208. ↩

¹⁸³ Counter-Memorial, paras. 410-414; RLA-764, Kiliç İnşaat İthalat İhracat Sanayi Ve Ticaret Anonim Şirketi v. Turkmenistan, ICSID Case No. ARB/10/1, Award, 2 July 2013, para. 9.2.7; CLA-313, Bronner Case (United States v. Mexico), Award, 4 November 1874 in John Basset Moore, HISTORY AND DIGEST OF THE INTERNATIONAL ARBITRATIONS TO WHICH THE UNITED STATES HAS BEEN A PARTY (1898), p. 3134; CLA-665, Sylvania Tech. Sys, Inc. v. Iran, Case No. 64, 8 IUSCTR., 27 June 1985, pp. 25-26. ↩

¹⁸⁴ Counter-Memorial, para. 415; RLA-713, AVCO Corporation v. Iran Aircraft Industries, Iran Helicopter Support and Renewal Company of others, IUSCTR Case No. 261, Partial Award No. 377-261-3, 18 July 1988, paras. 35-38. ↩

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• determine the extent to which excessive efforts were spent on given tasks;

• determine to which the claimed costs include efforts a reasonable attorney would have known to be unfruitful and unnecessary;

• determine the extent to which Claimants improperly utilized attorneys whose hourly rate was not commensurate with the efficient performance of the task;

• determine the extent to which Claimants’ submission includes work for which no additional efforts were needed as the work was previously performed at an earlier time or in conjunction with another work product.¹⁸⁵

168. In this respect, the Respondent rejects the Claimants’ attempt to shift the burden of proving that the incidental expenses they claim were reasonable: it denies the Claimants’ characterisation of those legal fees as mitigation expenses (since many were paid before the Treaty breaches happened and, in its view, would have been paid irrespective of such breaches) and considers that the Tribunal has already placed that burden on the Claimants by its Procedural Order No. 65.¹⁸⁶

169. The Respondent further considers that the Claimants have not proven (and the Tribunal has never held) that Ecuador intended to harm them – much less that it intended to inflict the specific losses claimed in this Arbitration, which is the showing required under international law.¹⁸⁷

3. Date of Breach

170. The Parties disagree regarding the date of breach upon which the Respondent became responsible for the damages caused to the Claimants. In particular, the Parties reach diverging conclusions on the dates of breach applicable to the Respondent’s denial of justice,¹⁸⁸ its breach of the Umbrella Clause by failing to abide by the 1995 Settlement

¹⁸⁵ Counter-Memorial, paras. 416-417; RE-35, Leigh Expert Report, paras. 80-89. ↩

¹⁸⁶ Rejoinder, paras. 251-265. ↩

¹⁸⁷ Rejoinder, paras. 209-217; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56^th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary on Art. 31, para. 10. ↩

¹⁸⁸ Track II Award, para. 10.6: “The Tribunal declares that the Respondent is liable to make full reparation to the First Claimant and the Second Claimant for denial of justice under the standards both for fair and equitable treatment and for treatment required by customary international law under Article II(3)(a) of the Treaty; and the Tribunal rejects the defences pleaded by the Respondent”. ↩

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Agreement¹⁸⁹ and to its breaches of the First and Second Interim Awards,¹⁹⁰ as further explained below.

(a) Denial of Justice and Umbrella Clause

1. The Claimants’ Position

171. Based on the premise that the Tribunal’s findings of liability should be understood as treaty breaches arising out of a composite act as defined under Article 15 of the ILC Articles, the Claimants state that the Tribunal must look at “the first of the actions or omissions in the series” for the purposes of establishing a date of breach upon which Ecuador became internationally responsible for each head of the Claimants’ damages.¹⁹¹ They request the Tribunal to consider all losses occurring after this date as fully recoverable in accordance with the Chorzów Factory full reparation principle.¹⁹²

172. Applying this rationale, the Claimants identify the following dates of breach: (i) the Respondent’s denial of justice is a composite act that began to occur on 22 August 2006, or, alternatively, 1 April 2008 or 1 March 2012; and (ii) the Respondent’s Umbrella Clause breach began to occur on 1 January 2004 or, alternatively, 14 February 2011 or 1 March 2012.¹⁹³

173. Date of Denial of Justice Breach: Relying, among others, on the travaux préparatoires of the ILC Articles, Chevron v. Ecuador I and OAO Tatneft v. Ukraine, the Claimants characterize the Respondent’s denial of justice as a composite act comprised of several

¹⁸⁹ Track II Award, para. 10.9: “The Tribunal declares that the Respondent is liable to make full reparation to the First Claimant and the Second Claimant under Article II(3)(c) of the Treaty for the non-observation of its obligations towards each of them as a “Releasee” under the 1995 Settlement Agreement; and the Tribunal rejects the defences pleaded by the Respondent”. ↩

¹⁹⁰ Track II Award, para. 10.18: “The Tribunal confirms, as declared in its Fourth Interim Award on Interim Measures dated 7 February 2013, that the Respondent violated its First and Second Interim Awards on Interim Measures dated 25 January and 16 February 2012 in breach of Article VI of the Treaty, Art. 32(3) of the UNCITRAL Arbitration Rules and international law.” ↩

¹⁹¹ Memorial, paras. 189-190; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56^th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Art. 15(2); CLA-693, Swisslion DOO Skopje v. Macedonia, ICSID Case No. ARB/09/16, Award, 6 July 2012, paras. 275-276, fn 340. ↩

¹⁹² Memorial, para. 190. ↩

¹⁹³ Reply, para. 163. See also Reply, para. 175. ↩

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wrongful acts and omissions,¹⁹⁴ rejecting the Respondent’s contrary position.¹⁹⁵ In their submission, the first wrongful act in the chain of events took place on 22 August 2006, when “Judge Yánez was blackmailed into granting the [LAPs’] improper request to terminate the proceedings”.¹⁹⁶ After that point, the costs incurred by the Claimants “were not in service of defending its position in a fair and impartial proceeding. They rather responded to the series of fraudulent acts that characterized the remainder of the Lago Agrio Litigation.”¹⁹⁷ Citing to the ILC Articles, the Claimants posit that this is the date from which damages begin to accrue, since the duration of a composite breach extends from the first contributing action or omission in the pattern through the action or omission that consummates the breach.¹⁹⁸

174. In this respect, the Claimants reject as contrary to the principle of full reparation the Respondent’s position that, even if its denial of justice is a composite breach, damages could not be predicated on acts or omissions predating the consummation of the breach.¹⁹⁹ In the Claimants’ view, Chorzów Factory “logically requires that a State responsible for a composite breach make reparation for the entire breach—the entire series of actions or omissions from beginning to end.”²⁰⁰ The Claimants refer to similar approaches taken in connection with the treatment of genocide and creeping expropriations, which are also composite breaches.²⁰¹

¹⁹⁴ Reply, para. 177. ↩

¹⁹⁵ Reply, paras. 181-187; CLA-694, Chevron Corporation and Texaco Petroleum Corporation v. Ecuador, PCA Case No. 34877, Interim Award, 1 December 2008, paras. 299-301; CLA-881, International Law Commission, Draft Articles on State Responsibility with Commentaries Thereto Adopted by the International Law Commission on First Reading, (1997), Art. 25(3); CLA-883, OAO Tatneft v. Ukraine, PCA Case No. 2008-8, Award on the Merits, 29 July 2014, para. 462; Track II Award, para. 8.76. ↩

¹⁹⁶ Reply, para. 178; Track II Award, para. 4.262. ↩

¹⁹⁷ Reply, para. 193. ↩

¹⁹⁸ Reply, paras.178-180; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56^th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Art. 15(2). ↩

¹⁹⁹ Reply, para. 187. ↩

²⁰⁰ Reply, paras. 188-192; CLA-913, Walter Bau AG (in Liquidation) v. Thailand, UNCITRAL, Award, 1 July 2009, paras. 9.88, 13.2; CLA-688, Alwyn V. Freeman, THE INTERNATIONAL RESPONSIBILITY OF STATES FOR DENIAL OF JUSTICE (1973), p. 593. ↩

²⁰¹ Reply, paras. 190-192; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56^th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary of Art. 15, para. 2. ↩

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175. In the alternative, the Claimants submit that damages should be measured from the other wrongful acts comprising the denial of justice: the Cabrera fraud (1 April 2008), the Zambrano ‘ghostwriting’ (21 December 2010), the issuance of the Lago Agrio Judgment (14 February 2011), or the date on which said judgment became enforceable (1 March 2012).²⁰²

176. Lastly, the Claimants reject the Respondent’s position that its liability began only on the date of the Constitutional Court Judgment (27 July 2018).²⁰³ They assert that the Respondent misrepresents the Tribunal’s finding that the denial of justice breach was consummated “as at 1 March 2012”.²⁰⁴ The Claimants also consider such position to be unsupported by case law²⁰⁵ and inconsistent with (i) the Respondent’s own argument that the Claimants should have mitigated damages before 2018, such as by failing to post a bond in 2011; and, relatedly (ii) the fact that the Claimants, as part of their efforts to mitigate their losses, had to defend themselves in Canada, Argentina and Brazil before local remedies where exhausted.²⁰⁶

177. Date of Umbrella Clause Breach: While acknowledging (as determined by the Tribunal in its Decision on Track I(B)) that the 7 May 2003 Lago Agrio Complaint pleaded both individual and diffuse claims,²⁰⁷ the Claimants state that by the close of the evidentiary period on 29 October 2003, the LAPs had failed to present evidence to establish individual damages, meaning that from that point onwards the Lago Agrio Litigation was necessarily limited to diffuse rights.²⁰⁸ Against this background, applying a standard of appropriateness in the circumstances to determine the time required for a “failure to act” to mature into an international wrong, the Claimants suggest that by 1 January 2004 (at the latest) the Ecuadorian government should have intervened to defend their rights under

²⁰² Reply, paras. 194-199; Track II Award, paras. 4.293-4.317, 5.245-5.247, 6.20-6.23, 7.133-7.152. ↩

²⁰³ Reply, paras. 210. ↩

²⁰⁴ Reply, paras. 201-203; Track II Award, paras. 8.59-8.60, 9.53-9.54, 9.75, 10.5. ↩

²⁰⁵ Reply, paras. 207-209. ↩

²⁰⁶ Reply, paras. 205-206. ↩

²⁰⁷ Reply, para. 166; Decision on Track I(B), para. 186(1). ↩

²⁰⁸ Reply, paras. 167-170. ↩

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the 1995 Settlement Agreement.²⁰⁹ Since the Respondent failed to do so, the Claimants state that from that point forward they were exclusively incurring costs to defend against diffuse claims already barred by the 1995 Settlement Agreement, “which is precisely what the doctrine of res judicata is intended to prevent.”²¹⁰ As such, 1 January 2004, the Claimants’ proposed date of damages for the Umbrella Clause breach, is the date on which the Respondent “acting through its judiciary, began to violate the terms of the [1995 Settlement Agreement] when it refused to give [1995 Settlement Agreement] res judicata effect . . . against Chevron’s explicit objection.”²¹¹

178. In the alternative, the Claimants propose that damages for the breach of the Umbrella Clause run from 14 February 2011, the date of issuance of the Lago Agrio Judgment, which the Claimants reiterate was based exclusively on the released diffuse claims.²¹² In the further alternative, the Claimants consider that damages should run from 1 March 2012, when the Lago Agrio Judgment became enforceable.²¹³

2. The Respondent’s Position

179. According to the Respondent, the date of issuance of the Judgment of the Constitutional Court (27 June 2018) is the earliest point at which a denial of justice and Umbrella Clause breach could have been consummated, meaning that the Claimants are not entitled to any legal expenses incurred before that date.²¹⁴

180. First, as support for this proposition, the Respondent recalls the finality requirement of denial of justice, pursuant to which judicial decisions do not constitute breaches of international obligations until they constitute outcomes of the judicial system as a

²⁰⁹ Reply, para. 172; CLA-418, United States Diplomatic and Consular Staff in Tehran (United States v. Iran), Judgment, 1980 ICJ Report 3, 24 May 1980, pp. 30-31; CLA-550, The Corfu Channel Case (Merits) (United Kingdom v. Albania), Judgment, 1949 ICJ Report 4, 9 April 1949, pp. 22-23. ↩

²¹⁰ Reply, para. 169. ↩

²¹¹ Reply, para. 164. See C-72, Lawsuit for Alleged Damages filed before the President of the Superior Court of “Nueva Loja,” in Lago Agrio, Province of Sucumbios; on May 7, 2003, by 48 Inhabitants of the Orellana and the Sucumbios Province, Superior Court of Nueva Loja, Chevron Answer to Lago Agrio Complaint, 21 October 2003, p. 5. ↩

²¹² Reply, para. 174. ↩

²¹³ Reply, para. 175. ↩

²¹⁴ Counter-Memorial, Section IV(B)1, 2; Rejoinder, paras. 71-81. ↩

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whole.²¹⁵ In turn, the Respondent explains that exhaustion of local remedies is a substantive requirement that underscores the finality requirement: a claimant must have recourse to the court of last resort that is “reasonably available” to it in light of its situation.²¹⁶ In the Respondent’s view, it follows from these principles that nothing preceding the final decision of the system can constitute or have the effects of the breach.²¹⁷ Similarly, the Respondent submits that the requirement of completeness of a breach through the acts of the judiciary also applies to the Tribunal’s finding that the Respondent breached the 1995 Settlement Agreement “by the acts of its judicial branch”.²¹⁸

181. Taking note of these requirements, the Respondent submits that Chevron did not exhaust its local remedies against the Lago Agrio Judgment until the issuance of the Judgment of the Constitutional Court.²¹⁹ It recalls, in this regard, that the claims submitted in Chevron’s petition to the Constitutional Court included the two claims that the Tribunal found resulted in the two Treaty breaches: (i) the alleged procedural fraud throughout the Lago Agrio Litigation; and (ii) the violation through the Cassation Court’s decision of Chevron’s “constitutional right to legal certainty in connection with the alleged existence of res judicata” in relation to the 1995 Settlement Agreement.²²⁰ According to the Respondent, because Ecuador’s legal system includes a constitutional appeal, the Claimants’ resort to the Constitutional Court represents their exhaustion of local remedies: under relevant customary international law and within the paradigm of denial of justice, it is irrelevant whether the remedy is ordinary or special.²²¹ In the Respondent’s

²¹⁵ Counter-Memorial, paras. 254-255; Rejoinder, paras. 61-70; RLA-307, Jan Oostergetel and Theodora Laurentius v. Slovakia, UNCITRAL, Final Award, 23 April 2012, paras. 272-273; RLA-651, Franck Charles Arif v. Moldova, ICSID Case No. ARB/11/23, Award, 8 April 2013, paras. 442-443. ↩

²¹⁶ Counter-Memorial, paras. 256-264; CLA-44, Loewen Group, Inc. and Raymond L. Loewen v. United States, ICSID Case No. ARB(AF)/98/3, Award, 26 June 2003, para. 154; Track II Award, para. 7.117. ↩

²¹⁷ Counter-Memorial, para. 264. ↩

²¹⁸ Counter-Memorial, paras. 265-267; RLA-812, B. Demirkol, JUDICIAL ACTS AND INVESTMENT TREATY ARBITRATION (2018), p. 83; Track II Award, para. 8.8. ↩

²¹⁹ Counter-Memorial, Section IV(B)(2)(a). ↩

²²⁰ Counter-Memorial, para. 274; C-2409, Chevron’s Extraordinary Action for Protection, pp. 60-61; C-2551, Constitutional Court Case No. 0105-14-EP, p. 67. ↩

²²¹ Counter-Memorial, paras. 268-270; RLA-812, Berk Demirkol, JUDICIAL ACTS AND INVESTMENT TREATY ARBITRATION (2018), p. 87; CLA-321, Draft Articles on Diplomatic Protection with Commentaries (United Nations 2006), Art. 14(2). ↩

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view, the Tribunal adopted such approach in its Track II Award by consistently emphasizing that the Lago Agrio Judgment was left unremedied by the judicial system as a whole.²²² The Respondent applies the same analysis to the Umbrella Clause breach, recalling the Tribunal’s ruling that the violation also occurred through the “acts of [the Respondent’s] judicial branch” and was left unremedied by the Constitutional Court.²²³

182. The Respondent further rejects the Claimants’ argument that the denial of justice and Umbrella Clause breaches consist of a composite act within the meaning of Article 15 of the ILC Articles²²⁴ – an argument which, the Respondent notes, was neither argued by the Parties in the lead-up to the Track II Award nor mentioned by the Tribunal therein.²²⁵ According to the Respondent, as a matter of law, “the term ‘composite act’ refers to obligations which can only be breached through a series of measures rather than through an individual act”, such as obligations concerning genocide, apartheid or crimes against humanity.²²⁶ In contrast, the Respondent notes, a denial of justice can occur in a single instance, so long as that instance represents the final outcome of the domestic legal system.²²⁷ The Respondent rejects the Claimants’ suggestion that the travaux préparatoires of the ILC Articles support the proposition that denial of justice is a “complex act” – a position which it claims is “predicated on a concept that was jettisoned” by the ILC on second reading.²²⁸

183. Should the Tribunal determine that the denial of justice and Umbrella Clause breaches consist of a composite act, the Respondent submits that damages for such breaches cannot be predicated on elements preceding the consummation of the breach, as Article 15 of the ILC Articles does not address awards of damages, only temporal issues for purposes of

²²² Counter-Memorial, paras. 271-273; Track II Award, paras. 8.26, 8.59-8.60, 8.71, 10.5. ↩

²²³ Counter-Memorial, para. 276; Track II Award, paras. 8.6-8.8. ↩

²²⁴ Counter-Memorial, paras. 277-283; Rejoinder, paras. 82-120. ↩

²²⁵ Rejoinder, para. 84. ↩

²²⁶ Counter-Memorial, paras. 278-279; RLA-430, Draft Articles on Responsibility of States for Internationally Wrongful Acts with commentaries, pp. 62-63; RLA-775, Scott Vesel, A ‘Creeping Violation’ of the Fair and Equitable Treatment Standard?, ARB. INT’L, Vol. 30, No. 3, p. 556 (emphasis in original). ↩

²²⁷ Counter-Memorial, paras. 280-282; Rejoinder, paras. 85-96; RLA-812, Berk Demirkol, JUDICIAL ACTS AND INVESTMENT TREATY ARBITRATION (2018), p. 84. ↩

²²⁸ Rejoinder, paras. 97-107; CLA-911, James Crawford, STATE RESPONSIBILITY (2013), pp. 269-271. ↩

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jurisdiction.²²⁹ The Respondent notes that the “handful” of cases that applied the “composite act” theory to cases involving findings of creeping expropriation “confirm that damages for a breach consisting of a composite act cannot be tied to elements preceding the culminating act or omission in the series.”²³⁰ It notes that there no cases where damages for legal fees and expenses incurred in legal proceedings prior to the culmination of a denial of justice were awarded.²³¹ Similarly, the Respondent rejects the Claimants’ argument that the composite act theory extends back the date for accrual of legal fees to the date of the first act in the chain; rather, damages must be limited to proven legal costs with a requisite degree of certainty that are causally connected to the acts or omissions comprising the precise breach found by the Tribunal.²³²

184. Flowing from the above, the Respondent requests that the Claimants’ claim for legal expenses incurred before the Judgment of the Constitutional Court be dismissed, as compensable loss “cannot be caused before an international delict has come into being.”²³³ According to the Respondent, this is true whether or not the denial of justice is seen as a composite act, as the date on which the breach crystallised remains the same.²³⁴ Claiming damages preceding the breach as “investment expenditures” should also fail, in the Respondent’s view, because defending a litigation is not an investment covered by the Treaty.²³⁵ Similarly, no damages should be recovered for acts that were not part of the Treaty breaches, such as Judge Yánez’s stopping of the judicial inspections²³⁶ or the Cabrera fraud,²³⁷ which the Tribunal determined were not the cause of the breaches. For the reason that the Ecuadorian Executive had no obligation to intervene in the Lago Agrio Litigation (as already determined in the Track II Award), the Respondent also rejects the

²²⁹ Counter-Memorial, paras. 284-293; Rejoinder, paras. 121-131. ↩

²³⁰ Counter-Memorial, paras. 285-289 (emphasis in the original); CLA-227, Siemens A.G. v. Argentina, ICSID Case No. ARB/02/8, Award, 6 February 2007, para. 264; CLA-228, Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentina, ICSID Case No. ARB/97/3, Award, 20 August 2007, para. 7.5.32. ↩

²³¹ Counter-Memorial, paras. 290-291; Rejoinder, paras. 121-131. ↩

²³² Rejoinder, paras. 136-139; CLA-693, Swisslion DOO Skopje v. Macedonia, ICSID Case No. ARB/09/16, Award, 6 July 2012, paras. 268, 275-276, 300, 304, 337, 349-350. ↩

²³³ Counter-Memorial, paras. 294-303; Rejoinder, paras. 132-134. ↩

²³⁴ Counter-Memorial, paras. 296-298. ↩

²³⁵ Rejoinder, paras. 174-184. ↩

²³⁶ Rejoinder, paras. 140-147. ↩

²³⁷ Rejoinder, paras. 148-152. ↩

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Claimants’ reliance on 1 January 2004 as the date of breach of the Umbrella Clause.²³⁸ The Respondent makes the same observation in respect of the judicial branch’s failure to dismiss the claims for diffuse rights at the outset of the litigation (for which the Tribunal did not fault the Respondent).²³⁹

185. Taking account of the above factors, according to the Respondent’s legal fees expert Ms Leigh, the maximum potential obligation after excluding amounts pre-dating the 2018 Constitutional Court Judgment is expected to be less than USD 13,679,730²⁴⁰ (later updated to USD 10,727,019).²⁴¹

(b) First and Second Interim Awards

1. The Claimants’ Position

186. According to the Claimants, the Respondent’s breach of the First and Second Interim Awards is a continuing act that commenced on 1 March 2012, when the Lago Agrio Judgment was certified as enforceable.²⁴² Citing to the Track II Award,²⁴³ the Claimants recall that such conduct was in breach of (i) the direction in the 25 January 2012 First Interim Award that the Respondent “take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment [against Chevron] in the Lago Agrio case”;²⁴⁴ and (ii) the instruction in the 16 February 2012 Second Interim Award that the Respondent “preclude any certification by the Respondent that would cause the said judgments to be enforceable against the First Claimant.”²⁴⁵

²³⁸ Rejoinder, paras. 153-168; Track II Award, paras. 9.28, 10.8; First Partial Award on Track I, paras. 76, 79. ↩

²³⁹ Rejoinder, paras. 169-173. ↩

²⁴⁰ Counter-Memorial, para. 301; RE-35, Leigh Expert Report, paras. 120, 123-133. ↩

²⁴¹ Rejoinder, paras. 132-134; RE-61, Second Leigh Expert Report, para. 84. ↩

²⁴² Reply, para. 163. ↩

²⁴³ Reply, para. 214; Track II Award, paras. 7.130, 7.132. ↩

²⁴⁴ Reply, para. 214; First Interim Award, dispositif, Section VI(2)(i). ↩

²⁴⁵ Reply, para. 214; Second Interim Award, para. 3. ↩

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2. The Respondent’s Position

187. As a threshold issue, the Respondent observes that the Claimants fail clearly to distinguish between breaches of the Treaty and breaches of the Tribunal’s Interim Orders and Awards.²⁴⁶ This notwithstanding, the Respondent maintains that “because separate damages cannot be awarded for the breaches of the Tribunal’s Interim Orders and Awards, those breaches cannot alter the Date of Breach for the Treaty violations and no legal expenses incurred prior to the Constitutional Court Decision can be awarded.”²⁴⁷

4. But-For Scenario

188. In its Counter-Memorial, the Respondent raised for the first time its but-for argument, which it summarized as follows:

Under principles of international law . . . in order to prevail in their damages claims, Claimants must prove what the situation would in all probability have been if there had been no Treaty breaches, and what legal expenses and risk of judgment they would in all probability have faced in that situation. Specifically, Claimants must show what portion, if any, of any otherwise claimable legal expenses Chevron would not have had to incur in Treaty-compliant proceedings to defend against the LAPs’ individual claims that were not settled by the 1995 Settlement Agreement as found by the Tribunal, in light of both the risk of any judgment against them that was reasonably possible and global enforcement of that judgment.

But Claimants have made no such showing. Indeed, Claimants have failed even to address the situation that would in all probability have occurred had the breaches of the Treaty been avoided. This failure is fatal to all of Claimants’ claims. They quite simply have failed to meet their burden of proving this fundamental element of the international law standard for compensatory damages.²⁴⁸

189. In its Partial Award on Track III, the Tribunal decided in a preliminary fashion three questions raised by the Claimants in connection with the Respondent’s but-for argument, namely:

• Question #1: Is Ecuador’s request for a reduction in damages based upon a hypothetical “but-for” scenario barred by the Tribunal’s Track II finding that the entire Lago Agrio proceeding was pervaded by a denial of justice comprised of fraud and corruption?

• Question #2: Do the Tribunal’s prior rulings regarding the scope and effects of the 1995 and 1998 Settlement and Release Agreements, as well as its rulings on its own

²⁴⁶ Counter-Memorial, para. 1361. ↩

²⁴⁷ Counter-Memorial, para. 1361. ↩

²⁴⁸ Counter-Memorial, paras. 940-941. ↩

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• jurisdiction, preclude both the claims that Ecuador’s Counter-Memorial on Damages refers to as “collective” claims and any offset based on individual claims?

  Question #3: If any hypothetical “but-for” scenario offset were permitted here, would it be limited to the confines of those claims actually pursued by the 48 named Lago Agrio Plaintiffs and to the actual Lago Agrio Litigation record?

190. In respect of these questions, the Tribunal made the following declarations:

(i) Declares, in respect of Question #1, that there is no finding in the Tribunal’s Track II Award that the entire Lago Agrio proceeding was pervaded by a denial of justice comprised of fraud and corruption;

(ii) Declares, in respect of Question #2, that its prior rulings do not preclude an offset based on individual claims or collective claims, to the extent that it refers to the legal costs that the Claimants would in all probability have incurred in defending themselves against those claims in a Treaty-compliant Lago Agrio Litigation;

(iii) Declares in respect of Question #3, that any hypothetical but-for scenario offset should in principle at least be limited to the confines of the claims actually pleaded by the 48 named Lago Agrio Plaintiffs and to the actual Lago Agrio Litigation record. . .²⁴⁹

191. As also memorialized in the Partial Award on Track III, during the Hearing on a Partial Award held in March 2021, Counsel for the Respondent clarified that the Respondent is “not seeking any offset against [the Claimants’] legal costs damages claim for any environmental liability.”²⁵⁰

192. With this preamble, the Parties’ respective positions on the Respondent’s but-for argument are summarized below.

(a) The Respondent’s Position

193. The Respondent’s but-for argument is based on the Chorzów Factory standard of full reparation, pursuant to which, as already stated above, the Tribunal must not only “wipe out all the consequences of the illegal act” but must also “reestablish the situation which would, in all probability, have existed if that act had not been committed.”²⁵¹ Citing to contemporary cases for the proposition that what would have happened in domestic proceedings but-for the treaty breach must be considered in assessing any damages for

²⁴⁹ Partial Award on Track III, para. 188 (i)-(iii). ↩

²⁵⁰ Partial Award on Track III, para. 185. ↩

²⁵¹ Counter-Memorial, para. 945 (emphasis in the original); CLA-406, Case Concerning the Factory at Chorzów (Merits) (Germany v. Poland), Judgment, 1928 PCIJ Series A, No. 17, 13 September 1928, p. 47. ↩

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the judicial system’s conduct,²⁵² the Respondent argues that the Claimants must prove that the legal fees and expenses they incurred exceeded what they would in all probability have incurred had the Treaty breaches been avoided²⁵³ with a sufficient degree of certainty.²⁵⁴ In this connection, the Respondent posits that legal fees and expenses that were incurred to exhaust local remedies in the Lago Agrio Litigation are not compensable.²⁵⁵

194. Further, the Respondent rejects the Claimants’ argument that a but-for analysis is inappropriate in a denial of justice case (a proposition which, it states, was rejected by the Tribunal its Partial Award in Track III)²⁵⁶ and is also critical of the notion that it seeks a “do-over through a second but-for trial”, as a but-for analysis is required under Chorzów Factory.²⁵⁷ In particular, the Respondent explains that the Tribunal need not determine “who would have won, but what the litigation would have cost Chevron.”²⁵⁸

195. The Respondent is critical of the Claimants’ failure to meet their burden of proof in respect of the but-for scenario in their Memorial²⁵⁹ and reiterates its position in response to the Claimants’ Reply.²⁶⁰ At the Track III Hearing, the Respondent explained that the but-for principle demonstrates that there can be no compensable damages where possible alternative scenarios evince a lack of a causal link between the breach and the alleged

²⁵² Counter-Memorial, paras. 946-952; RLA-709, Sramek v. Austria, Judgment, ECHR Application No. 8790/79, 22 October 1984; RLA-793, Philip Morris Brands Sàrl, Philip Morris Products S.A. and Abal Hermanos S.A. v. Uruguay, ICSID Case No. ARB/10/7, Award, 8 July 2016, para. 575, fn 838; RLA-813, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware, Inc. v. Canada, PCA Case No. 2009-04, Award on Damages, 10 January 2019, paras. 110; CLA-686, White Industries Australia Limited v. India, UNCITRAL, Final Award, 30 November 2011, paras. 14.2.2-14.2.66. ↩

²⁵³ Counter-Memorial, paras. 953-956; RLA-351, Chevron Corporation and Texaco Petroleum Corporation v. Ecuador, PCA Case No. AA277, Final Award, 31 August 2011, para. 308. ↩

²⁵⁴ Counter-Memorial, paras. 957-962; RLA-813, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware, Inc. v. Canada, PCA Case No. 2009-04, Award on Damages, 10 January 2019, paras. 168, 276. ↩

²⁵⁵ Rejoinder, paras. 332-338; RLA-1038, Lion Mexico Consolidated L.P. v. Mexico, ICSID Case No. ARB(AF)/15/2, Award, 20 September 2021, paras. 847-848. ↩

²⁵⁶ Rejoinder, para. 317; Partial Award on Track III, para. 171. ↩

²⁵⁷ Rejoinder, paras. 315-321. ↩

²⁵⁸ Rejoinder, paras. 453-459; RLA-433, Joseph Charles Lemire v. Ukraine, ICSID Case No. ARB/06/18, Award, 28 March 2011, paras. 198-200. ↩

²⁵⁹ Counter-Memorial, paras. 963-966. ↩

²⁶⁰ Rejoinder, paras. 322-331; RLA-813, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware, Inc. v. Canada, PCA Case No. 2009-04, Award on Damages, 10 January 2019, para. 110. ↩

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damages.²⁶¹ Such burden, the Respondent asserts, cannot be shifted to Ecuador,²⁶² and even if such was the case, the Respondent considers that it has satisfied it.²⁶³

196. In any event, the Respondent asserts that the Claimants cannot meet their burden of proof because “evidence shows that in all probability Chevron would have faced substantial individual claims for non-diffuse rights in the Lago Agrio Proceeding that had a reasonable possibility of prevailing.”²⁶⁴ In particular, the Respondent refers to a scenario where

had the Ecuadorian courts acted to prevent the defects of the first instance judgment from consummating a Treaty breach, Chevron would still have had to defend against the individual claims of the LAPs for violations of their individual and collective rights as asserted in the Lago Agrio Complaint. A decision of either the Constitutional Court or NCJ to nullify the judgment, as sought by Claimants, due to the improper rendering of the judgment, and the application of the 1995 Settlement Agreement to the LAPs’ diffuse claims, would have avoided the Treaty breaches found by the Tribunal and resulted in litigation and adjudication of those individual claims.²⁶⁵

197. As regards this but-for scenario, the Respondent first argues, relying on the expert opinion of Dr Fabián Andrade, that correction of the Lago Agrio Judgment would have resulted in the remand of the case to the trial court for further adjudication²⁶⁶ (or, in the alternative, either the appellate court or the trial court would have issued a Treaty-compliant judgment).²⁶⁷ In connection with the earlier scenario, the Respondent recalls that, in bringing the Lago Agrio Complaint, the LAPs sought relief not only for violations of diffuse rights under Article 23(6) of the Constitution, but also for their individual claims for non-diffuse rights “violated and threatened by environmental contamination caused by TexPet’s activities.”²⁶⁸ In any event, the Respondent believes that the likelihood of any of these scenarios lies in both the LAPs’ “steadfast determination to vindicate their

²⁶¹ Track III Hearing Transcript, Day 2 (19 August 2022), p. 279 (Tsutieva). ↩

²⁶² Rejoinder, paras. 328-329; RLA-1034, Muhammet Çap and Bankrupt Sehil Inşaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan, ICSID Case No. ARB/12/6, Award, 4 May 2021, para. 728. ↩

²⁶³ Rejoinder, paras. 330-331. ↩

²⁶⁴ Counter-Memorial, paras. 967-1166. ↩

²⁶⁵ Counter-Memorial, para. 967. ↩

²⁶⁶ Counter-Memorial, paras. 971-977; Rejoinder, paras. 372-376; RE-46, Fourth Andrade Narváez Expert Report, paras. 13, 27-35. ↩

²⁶⁷ Counter-Memorial, paras. 977-981. ↩

²⁶⁸ Counter-Memorial, para. 978. ↩

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rights” and “significant evidence that their individual claims . . . were substantial and litigable”.²⁶⁹

198. As such, the Respondent argues that adjudication of the LAPs’ individual claims resting upon individual rights set out in the Lago Agrio Complaint (which, the Respondent recalls, were outside the scope of the 1995 Settlement Agreement, as confirmed by this Tribunal) could have proceeded, and the Claimants would have needed to defend against them.²⁷⁰ Such individual claims, the Respondent notes, included individual claims based upon individual rights and individual claims based upon collective rights:²⁷¹

(i) Individual claims based upon individual rights in the Lago Agrio Complaint, the Respondent states, encompassed three sets of individual rights capable of being threatened by environmental contamination: (1) their rights to health and to live in a healthy and ecologically balanced environment; (2) their property rights as individual landowners; and (3) their proprietary rights as owners to assets other than land.²⁷² Citing to the First Partial Award on Track I, the Respondent argues that such individual claims constitute “environmental claim[s] made by an individual in respect of personal harm in respect of that individual’s rights separate and different from the Respondent”, meaning that they were not released by the Respondent in the 1995 Settlement Agreement and thus must form part of the but-for scenario.²⁷³ Likewise, the Respondent denies as impossible under Ecuadorian law the Claimants’ argument that such claims were somehow abandoned.²⁷⁴

(ii) In turn, individual claims based upon collective rights concern, according to the Respondent, the collective rights of each of the Pimampiro, Rumipamba, San Pablo

²⁶⁹ Rejoinder, paras. 382-383. ↩

²⁷⁰ Counter-Memorial, paras. 973-976; Track II Award, para. 10.7: “The Tribunal (by a majority) declares, confirming its Decision on Track IB, that the Lago Agrio Complaint of 7 May 1998, as an initial pleading, included individual claims (for personal harm) resting upon individual rights under Ecuadorian law, not falling within the scope of the 1995 Settlement Agreement and that, therefore, the Lago Agrio Complaint was not wholly barred at its inception by res judicata under Ecuadorian law, by virtue of the 1995 Settlement Agreement.” See also First Partial Award on Track I, para. 112(3); Decision on Track I(B), para. 186(1). ↩

²⁷¹ Counter-Memorial, para. 979; Rejoinder, para. 341. ↩

²⁷² Counter-Memorial, paras. 980-984; Rejoinder, paras. 342-344. ↩

²⁷³ Rejoinder, paras. 346-351; First Partial Award on Track I, para. 112(3). ↩

²⁷⁴ Rejoinder, paras. 390-394; 438-452; RE-48, Fifth Andrade Narváez Expert Report, paras. 10, 19, 22-23. ↩

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de Aguarico and Dureno municipalities to enjoy a healthy and ecologically balanced environment – a right which the Respondent asserts is guaranteed by Articles 23(6) and 88 of the 1998 Constitution.²⁷⁵ Further, the Respondent asserts that those LAPs who are indigenous peoples (the inhabitants of San Pablo de Aguarico and Rumipamba) also made claims regarding rights to which they were entitled as indigenous peoples, including a claim for compensation under Article 15 of ILO Convention No. 169 to remedy the damage caused to their “natural surrounding and the loss of their territories, resources or traditional means of subsistence.”²⁷⁶

(iii) According to the Respondent, such claims for collective rights are distinct from the LAPs’ individual claims for diffuse rights (which, as noted above, could not be adjudicated by a Treaty-compliant Lago Agrio court in the but-for world).²⁷⁷ In the Respondent’s submission, a distinction exists in Ecuadorian law in that a collective right “corresponds to a collectivity identifiable by its group purpose and common interests”, while a diffuse right belongs to “a community of indeterminate people.”²⁷⁸ In any event, the Respondent notes that claims based upon collective rights are claims for personal harm: “a violation of a collective right endangers the particular community’s existence, which necessarily entails a specific harm to the members of a particular community.”²⁷⁹

199. On this basis, the Respondent argues that substantial evidence of contamination injuring the LAPs’ non-diffuse rights would have been available to support their individual claims for non-diffuse rights on remand.²⁸⁰ In its Counter-Memorial, the Respondent reviewed such evidence, which included “analysis conducted by Respondent’s experts during both

²⁷⁵ Counter-Memorial, para. 986; RE-40, First Parraguez Ruiz Expert Report, para. 18; RE-49, Second Parraguez Ruiz Expert Report, para. 52. ↩

²⁷⁶ Counter-Memorial, paras. 987-989, 991; Rejoinder, paras. 342-344. ↩

²⁷⁷ Counter-Memorial, para. 992; Rejoinder, paras. 342-344. ↩

²⁷⁸ Counter-Memorial, paras. 993-995; Rejoinder, paras. 354-367; RE-40, First Parraguez Ruiz Expert Report, paras. 8-9. ↩

²⁷⁹ Rejoinder, paras. 363-367. ↩

²⁸⁰ Counter-Memorial, paras. 997-1125. ↩

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Track III and prior phases of this proceeding.”²⁸¹ In its Rejoinder, the Respondent provides an updated analysis, having taken note of the Tribunal’s ruling in the Partial Award on Track III that both the evidence in the Lago Agrio Litigation record and that which “can be expected from the original complaint and surrounding circumstances” should be considered.²⁸²

200. By reference to the Tribunal’s rulings in its Partial Award on Track III, the Respondent denies that a but-for scenario based on claims for violations of non-diffuse rights would render the 1995-1998 Settlement and Release Agreements illusory:²⁸³

Ecuadorian law is clear that merely because the remedies for the types of individual claims pleaded in the Lago Agrio Complaint are similar to those for diffuse rights claims does not convert them into diffuse rights claims or otherwise render the Settlement Agreement illusory. As the Ecuadorian Supreme Court’s decision in Delfina Torres demonstrates, seeking to remedy a “broad scope of environmental harm caused by a defendant’s wrongdoing” through “a claim for relief in the form of remedial works d[oes] not, by [itself], affect the characterisation of a claim as an individual claim under Ecuadorian law.” In light of this reasoning and the Tribunal’s recognition that “[i]f there were to be individual claims for personal harm by the Aguinda or Lago Agrio Plaintiffs (not being diffuse claims) in further legal proceedings,” remediation “in the former concession area” may be an available remedy, the existence of a remedy extending beyond the individual LAPs’ properties in the but-for scenario does not render the Settlement Agreement illusory.²⁸⁴

201. According to the Respondent, the remedies available for the LAPs’ individual claims for non-diffuse rights would have been substantial.²⁸⁵ In its submission, such remedies could have included (inter alia): (i) an order to perform a program of environmental remediation and restoration, medical monitoring and pecuniary damages;²⁸⁶ and (ii) a “comprehensive environmental remedy” which would have “likely cost more than USD 1 billion”.²⁸⁷ The Respondent considers that the Claimants’ alternative proposed analysis, based on individual lawsuits litigated by TexPet, cannot establish that Chevron would not have faced significant liability, since the “comparatively low amounts-in-controversy of these

²⁸¹ Counter-Memorial, para. 1006. See generally Counter-Memorial, paras. 997-1125. ↩

²⁸² Rejoinder, paras. 399-430; Partial Award on Track III, para. 174. ↩

²⁸³ Rejoinder, paras. 430-433; Partial Award on Track III, para. 164. ↩

²⁸⁴ Rejoinder, para. 432; Track II Award, para. 8.75. ↩

²⁸⁵ Counter-Memorial, paras. 1126-1158. ↩

²⁸⁶ Counter-Memorial, paras. 1130. ↩

²⁸⁷ Counter-Memorial, paras. 1141-1158. See also Track III Hearing Transcript, Day 2 (19 August 2022), pp. 288-299 (Ettinger). ↩

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lawsuits reflect the fact that the plaintiffs that brought them sought, for the most part, to vindicate limited personal-injury type claims and damages to proprietary rights.”²⁸⁸

202. Based on the above arguments, the Respondent states that, on remand from a higher-instance court, there is a reasonable likelihood that the Lago Agrio Court would have granted the LAPs’ individual claims, since, under relevant Ecuadorian legislation, the Claimants likely would not have been able to meet their burden to disprove harm, an absence of fault or the absence of a causal link according to the theory of sufficient cause.²⁸⁹ Regardless of outcome, the Respondent considers that “litigating this issue would have caused Chevron to incur substantive legal fees”, in particular given the amount Chevron actually spent.²⁹⁰

203. Lastly, the Respondent rejects as “procedurally impossible” the Claimants’ proposed but-for scenario, in which the Lago Agrio Court could have avoided Treaty breaches “by dismissing the LAPs’ entire case by the arbitrarily selected date of 1 January 2004”.²⁹¹ Relying on the expert opinion of Dr Fabián Andrade, the Respondent denies that the court could have terminated the LAPs’ case on that date based on Chevron’s res judicata objection; rather, such objection would have been addressed in the normal course when the Lago Agrio Judgment was issued in 2011.²⁹² Even if the early dismissal of the claim in 2004 had been possible, the Respondent believes that it not have been the end of the litigation; instead, the LAPs would have likely continued to press their non-diffuse claims against the Claimants, either in the same or a different lawsuit.²⁹³

²⁸⁸ Rejoinder, paras. 460-465. See also Rejoinder, paras. 466-477. ↩

²⁸⁹ Counter-Memorial, paras. 1159-1165. ↩

²⁹⁰ Track III Hearing Transcript, Day 2 (19 August 2022), p. 285 (Salgado). See also Track III Hearing Transcript, Day 2 (19 August 2022), p. 285 (Salgado); Day 15 (7 September 2022), pp. 3551-3553 (Ettinger). ↩

²⁹¹ Rejoinder, para. 384. ↩

²⁹² Rejoinder, paras. 384-385; RE-46, Fourth Andrade Narváez Expert Report, paras. 89-94. ↩

²⁹³ Rejoinder, paras. 386-387. ↩

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(b) The Claimants’ Position

204. Citing to the Chorzów Factory standard, the Claimants argue that the Respondent is not entitled to any reduction in damages under a hypothetical but-for scenario.²⁹⁴

205. First, the Claimants assert that the Respondent’s proposed but-for analysis finds no roots in Chorzów Factory and is inappropriate in a denial of justice case.²⁹⁵ In their view, adopting the Respondent’s approach would remove any incentive for States to abstain from committing denials of justice: “[n]ot only would the victim of the denial of justice have to meet a very high standard for establishing the State’s bad act, but even if the victim succeeds against those odds, the State would then get a do-over before the international tribunal, where the worst that can happen is that the State gets credited for hypothetically acting as it should have all along.”²⁹⁶

206. Second, citing to past cases where the burden of proof was shifted where, as here, “the lack of real-world evidence resulted from the breaching party’s fault”, the Claimants consider that the Respondent has not met its burden of proving their damages in a but-for scenario.²⁹⁷ Among other things, the Claimants state that the Respondent “has never specified the exact claims that would hypothetically be at issue, nor their relationship to the real-world Lago Agrio Litigation.”²⁹⁸

207. Third, and in any event, the Claimants posit that the Respondent’s proposed but-for analysis does not reflect the most likely scenario, as required under Chorzów Factory.²⁹⁹ The Claimants consider the Respondent’s but-for scenario to be disconnected from the actual historical record.³⁰⁰ According to the Claimants, the “most likely scenario” must instead be determined by asking “what would have happened in a ‘but for’ world in which

²⁹⁴ Reply, paras. 589-660. ↩

²⁹⁵ Reply, paras. 594-595. ↩

²⁹⁶ Reply, para. 595. ↩

²⁹⁷ Reply, paras. 596-597; CLA-664, Marco Gavazzi and Stefano Gavazzi v. Romania, ICSID Case No. ARB/12/25, Excerpts of Award, 18 April 2017, para. 224. ↩

²⁹⁸ Reply, para. 597. ↩

²⁹⁹ Reply, paras. 598-605. See also Track III Hearing Transcript, Day 1 (18 August 2022), pp. 179-185, 192-195 (Silbert) (arguing that the Respondent’s proposed but-for scenario is detached from the historical record and speculative). ↩

³⁰⁰ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 179-185 (Silbert). ↩

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Ecuador was in compliance with the Treaty and all other unrelated facts remain the same?”³⁰¹ In their view, such scenario would be as follows:

The LAPs would have filed a Lago Agrio Complaint exactly as they did in the real Lago Agrio Litigation. The LAPs and their representatives would have prosecuted that Lago Agrio Complaint to the same extent, as to the same issues and claims, on the same record, and with the same degree of misconduct as they did in the real Lago Agrio Litigation. The essential difference in the most likely but-for scenario is that the Lago Agrio Court would have dismissed the Lago Agrio Complaint as to the diffuse claims by no later than January 1, 2004; this is the date by which . . . Ecuador ought to have addressed, and given effect to, the 1995 Settlement Agreement. That would have brought an end to the case with negligible litigation costs because, in the real world, the 48 LAPs chose not to pursue individual claims for personal harm.³⁰²

208. Against this scenario, the Claimants criticize the Respondent’s proposed but-for hypothetical because it asks the Tribunal to assume: (i) a world in which the LAPs diligently pursued individual claims for personal harm against Chevron (when, in fact, the opposite happened); and (ii) the LAPs’ team did not commit fraud and corruption (when, in fact, the LAPs’ representatives “chose to go to the ‘dark side’ [] because the evidence developed during the judicial-inspection process disproved their claims against Chevron”).³⁰³

209. Fourth, the Claimants assert that any but-for analysis involving individual claims for personal harm would require the Tribunal to rule on third-party claims and expose the Claimants to potential double liability.³⁰⁴ In the Claimants’ view, such a but-for world would be inconsistent with the Track II Award determination that a decision by the Tribunal on environmental issues could prejudice the determination of those same issues if they are argued anew by the Aguinda or Lago Agrio plaintiffs.³⁰⁵

³⁰¹ Reply, para. 598. ↩

³⁰² Reply, para. 599. ↩

³⁰³ Reply, paras. 602-603. ↩

³⁰⁴ Reply, paras. 606-609. ↩

³⁰⁵ Reply, paras. 607-609; Track II Award paras. 7.13, 8.73; Partial Award on Track III, para. 141. ↩

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210. Fifth, in the Claimants’ view, any but-for analysis would be severely limited by the Tribunal’s Partial Award on Track III.³⁰⁶ In particular, the Claimants derive the following implications from such Award:

(i) Any but-for analysis would be limited to an offset of “legal costs against legal costs”, thus excluding any analysis of hypothetical liability or a hypothetical litigation against third parties.³⁰⁷

(ii) Environmental issues are outside the scope of Track III and no further environmental evidence is relevant as part of a purported set-off of damages, which is why the Claimants declined to submit further environmental evidence with their Reply.³⁰⁸

(iii) No but-for scenario will be accepted that renders the 1995-1998 Settlement Agreements “illusory”, including, in particular, a hypothetical where alleged “collective rights for personal harm” are asserted.³⁰⁹

(iv) Any claims other than those by an individual claiming personal harm are precluded from the but-for world, as there is no such thing as an “individual claim for collective rights” in Ecuadorian law that falls outside of the 1995-1998 Settlement and Release Agreements:³¹⁰ (i) at the time of the Releases, the assertion of non-individual rights belonged exclusively to the State;³¹¹ (ii) “diffuse” and “collective” rights are not “non-individual rights” and are not designed to vindicate individual claims for personal harm;³¹² and (iii) a diffuse right does not lose its character as

³⁰⁶ See Track III Hearing Transcript, Day 1 (18 August 2022), pp. 174-179 (Silbert). ↩

³⁰⁷ Reply, paras. 611-613; Partial Award on Track III, paras. 141, 166. ↩

³⁰⁸ Reply, paras. 614-615; Partial Award on Track III, paras. 186-187. See also Track III Hearing Transcript, Day 1 (18 August 2022), pp. 178-179 (Silbert). ↩

³⁰⁹ Reply, paras. 616-621; Partial Award on Track III, para. 164; Track II Award, paras. 5.223-5.224; First Partial Award on Track I, paras. 106-107. ↩

³¹⁰ Reply, paras. 622-631. ↩

³¹¹ Reply, para.625; Eighth Coronel Jones Expert Report, paras. 9, 10, 18. ↩

³¹² Reply, paras. 626-627; Eighth Coronel Jones Expert Report, paras. 36(ii), 39, 40. ↩

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such merely because it is asserted by a claimant who belongs to a defined community.³¹³

(v) Any but-for scenario is limited to individual claims for personal harm by the 48 named LAPs in the Lago Agrio Complaint and their evidence in the Lago Agrio Litigation record,³¹⁴ in respect of which the Claimants observe the following: (i) the Respondent has failed to articulate the nature and extent of the alleged individual claims for personal harm of the 48 LAPs;³¹⁵ (ii) the Lago Agrio Litigation record is “too suffused with fraud” to be a reliable source of any information;³¹⁶ and (iii) even if it could, such record includes no evidence of specific personal harm to the individual 48 named LAPs.³¹⁷

211. Sixth, the Claimants recall that in the but-for world the Respondent would not be entitled to an offset based on an indemnification order, as “decisively rejected” by the Tribunal in its Partial Award on Track III.³¹⁸

212. Seventh, should the Tribunal decide to undertake a but-for analysis, the Claimants consider that it should be based on the Claimants’ actual litigation costs and other real-world evidence, which, in the Claimants’ view, constitute the proper comparators.³¹⁹ Among other things, the Claimants explain that between 1995 and 2015 TexPet successfully defended against several real lawsuits for individual claims for personal harm allegedly caused by operations in the former concession area (the average amount in controversy was USD 484,114, a figure that could be applied to each of the 48 LAPs, reaching a total set-off of USD 23,237,474).³²⁰ Based on this hypothetical amount in controversy and on the fact that, in the real world, they incurred only 4 to 9 cents in legal costs for each dollar of liability they faced under the Lago Agrio Judgment, the Claimants

³¹³ Reply, para. 628; Eighth Coronel Jones Expert Report, para. 38. ↩

³¹⁴ Reply, paras. 632-646. ↩

³¹⁵ Reply, paras. 634-639. ↩

³¹⁶ Reply, paras. 640-642; Partial Award on Track III, paras. 125, 127, ↩

³¹⁷ Reply, paras. 643-646. ↩

³¹⁸ Reply, paras. 647-648; Partial Award on Track III, para. 142. ↩

³¹⁹ Reply, paras. 650-660. ↩

³²⁰ Reply, paras. 652-655; Claimants’ Second Submission, Appendix of Individual Rights Cases. ↩

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estimate that their hypothetical legal fees and expenses to defend themselves in the but-for scenario would be between USD 929,498 and USD 2,091,372 (a “far cry” from the “up to 1.6 billion” offset sought by the Respondent).³²¹ The Claimants further note that the USD 161.5 million they actually spent in legal costs in the Lago Agrio Litigation include the work defending themselves from the Respondent’s Treaty breaches, meaning that their legal fees and expenses defending against hypothetical individual claims for personal harm would have been “orders of magnitude lower” than the funds actually spent.³²² As to the evidence allowed in the hypothetical scenario, the Claimants note that it would be limited to properties owned by the 48 named LAPs (thus excluding the judicial inspection process of the former concession area that took place in the real world) and, even if evidence of personal harm were introduced, the Claimants believe that the scope of the but-for scenario would be significantly limited compared to the scope of the original Lago Agrio Litigation.³²³

213. Eighth, the Claimants submit that the Respondent cannot argue both that Chevron’s real-world legal fees and expenses are excessive, while also stating that it would have spent roughly the same amount in the but-for Teaty-compliant scenario.³²⁴

214. Ninth, and last, the Claimants note that the Respondent’s but-for scenario only pertains to legal fees and expenses Chevron would have spent in a Treaty-compliant Lago Agrio Litigation, and thus applies only to a subset of the Claimants’ claims.³²⁵

B. NON-COMPLIANCE WITH INTERIM AWARDS

215. As already noted above,³²⁶ the Claimants request damages not only in connection with the Respondent’s breach of the Umbrella Clause and its denial of justice, but also as regards the Respondent’s “refusal” to comply with the First and Second Interim Awards.

³²¹ Reply, paras. 656-659. ↩

³²² Reply, para. 658. ↩

³²³ Reply, paras. 659-660. ↩

³²⁴ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 166-167 (Silbert). ↩

³²⁵ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 167-168 (Silbert). ↩

³²⁶ See para. 129(iii) above. ↩

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216. In reply, the Respondent posits first that the First and Second Interim Awards have been superseded by the Track II Award.³²⁷ Second, the Respondent maintains that, in any event, any purported breaches of those Awards would not give rise to compensable damages.³²⁸ Third, the Respondent has also re-submitted its request for reconsideration of the First, Second and Fourth Interim Awards, as further described below.³²⁹

1. Non-Compliance

(a) The Claimants’ Position

217. Recalling the Tribunal’s findings in its Fourth Interim Award and Track II Award that Ecuador violated the Tribunal’s First and Second Interim Awards by issuing a certificate of enforceability for the Lago Agrio Judgment on 1 March 2012, the Claimants affirm that they are entitled to damages as a result of such violations.³³⁰ In the Claimants’ view, the Respondent’s breach of those Interim Awards was the natural and foreseeable cause of those damages incurred after the First Interim Award was issued on 25 January 2012,³³¹ meaning that the Claimants’ failure to post a bond could not constitute an intervening cause that would sever the causal link between the breach and the damage.³³²

218. First, the Claimants reject the Respondent’s argument that the Track II Award superseded the First and Second Interim Awards and that, as a result, they “cannot attempt to seek damages for interim measures that are no longer extant”; they cite in this respect the ILC Articles for the proposition that the obligation of reparation “arises automatically” upon breach of an international obligation.³³³ Further, they consider the Respondent’s interpretation to be at odds with the terms of the Track II Award, which imposes the same

³²⁷ Counter-Memorial, paras. 1350-1353; Rejoinder, paras. 1877-1880. ↩

³²⁸ Counter-Memorial, paras. 1354-1364; Rejoinder, paras. 1881-1885. ↩

³²⁹ Counter-Memorial, paras. 1365-1376; Rejoinder, para. 1891. ↩

³³⁰ Memorial, paras. 133-135, 156-161; Reply, paras. 381-395. ↩

³³¹ Reply, para. 393. ↩

³³² Reply, paras. 394-395. ↩

³³³ Reply, paras. 383-384; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56^th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Commentary to Art. 31, para. 4. ↩

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interim relief in respect of the Respondent’s ongoing violations for the future, and not for the past.³³⁴

219. Second, the Claimants reject the Respondent’s argument that no damages can flow from the breach of the First and Second Interim awards because no arbitral tribunal “has the jurisdiction to enforce compliance with its interim awards”:³³⁵ in their view, such argument is based on an artificial distinction between a breach of an interim award and all other breaches of international law for the purpose of full reparation.³³⁶ They recall that the Tribunal has asked the Respondent “to show cause . . . why [it] should not now compensate the First Claimant for any harm caused by the Respondent’s violations of the First and Second Interim Awards . . .”, meaning that the burden is on the Respondent to establish why full reparation should not be awarded in respect of such violations.³³⁷

(b) The Respondent’s Position

220. As a threshold issue, the Respondent argues that the First and Second Interim Awards have been superseded by the Track II Award, thus rendering moot any claim for damages due to non-compliance with those awards.³³⁸

221. Even if the Tribunal were to find that those Interim Awards have not been superseded, the Respondent submits that the Claimants would still not be entitled to compensation for its breaches of those awards.³³⁹ First, the Respondent asserts that there is no legal basis in the Treaty or international law for the premise that compensation can be awarded for breaches of interim awards: an international arbitral tribunal becomes functus officio once an award has been rendered and “has no ongoing legal role in promoting enforcement.”³⁴⁰

³³⁴ Reply, para. 385. ↩

³³⁵ Reply, paras. 386-391. ↩

³³⁶ Reply, paras-387-390; CLA-291, ILC Articles on State Responsibility, Report of the International Law Commission on the Work of its Fifty-Third Session, UN GAOR, 56^th Sess., Supp. No. 10, UN Doc. A/56/10 (2001), Art. 31(1). ↩

³³⁷ Reply, para. 391. ↩

³³⁸ Counter-Memorial, paras. 1350-1353; Rejoinder, paras. 1877-1880. ↩

³³⁹ Counter-Memorial, paras.1354-1364. ↩

³⁴⁰ Counter-Memorial, paras. 1356-1361; Rejoinder, paras. 1881-1885, 1918. ↩

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222. Second, the Respondent explains that a causal link must be established between a breach and the damages sought,³⁴¹ yet there is none between the Respondent’s failure to prevent the certification of the Lago Agrio Judgment and the Claimants’ alleged damages.³⁴² According to the Respondent, the Claimants’ failure to post a bond with the Lago Agrio Court to prevent the enforcement of the Lago Agrio Judgment “constitutes an intervening cause that severs any chain of causality that might otherwise have existed between Respondent’s breaches of the First and Second Interim Awards and the losses Claimants allege to have suffered in respect to preventing the enforcement of the Lago Agrio Judgment.”³⁴³

223. Third, the Respondent further rejects as contrary to international law any possibility of a merger between the Treaty breaches and the breaches of the Interim Awards.³⁴⁴ To the extent there has been a merger, the Respondent considers that

any overlapping claim for damages for such violations would be subject to many of the same defenses that Respondent has interposed to the claims for damages resulting from the Treaty breaches, including without limitation those relating to principles of causation, mitigation of damages, and Claimants’ failure to establish that the claimed fees and costs were reasonable and necessary or prove any of their other alleged losses.³⁴⁵

224. Lastly, the Respondent submits that it has complied with the Tribunal’s orders in the Track II Award to the extent possible under Ecuadorian law.³⁴⁶ It notes, in particular, that the content of the Track II Award was communicated to the President of the Republic, the Chief Judge of the Constitutional Court and the Chief Justice of the court sitting in Sucumbíos so that they could consider actions to take within the scope of their powers.³⁴⁷ The competent authorities in Canada, Argentina and Brazil were also informed,³⁴⁸ as was the President of the Provincial Court of Sucumbíos (who, in the understanding of the

³⁴¹ Track III Hearing Transcript, Day 2 (19 August 2022), p. 381 (Salgado). ↩

³⁴² Counter-Memorial, paras. 1362-1364; Rejoinder, paras. 1886-1887. ↩

³⁴³ Counter-Memorial, paras. 1362-1364. ↩

³⁴⁴ Rejoinder, para. 1888; CLA-640, Case Concerning the Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and Herzegovina v. Serbia and Montenegro), Judgment, ICJ Reports 2027, 26 February 2007, para. 469. ↩

³⁴⁵ Rejoinder, para. 1889. ↩

³⁴⁶ Rejoinder, paras. 1920-1925. ↩

³⁴⁷ Rejoinder, para. 1920. ↩

³⁴⁸ Rejoinder, para. 1921. ↩

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Attorney-General, will not certify any copies of the Lago Agrio Judgment going forward).³⁴⁹

2. The Respondent’s Request for Reconsideration of the First, Second and Fourth Interim Awards

(a) The Respondent’s Position

225. On 1 March 2013, following the issuance of the Fourth Interim Award, the Respondent submitted a request for reconsideration of the First, Second and Fourth Interim Awards on the following grounds:

The First and Second Interim Awards did not explicitly provide that the Respondent would be expected to violate its own Constitution and laws in order to comply;

• the premise of the First and Second Interim Awards (that harm to Claimants cannot be repaired by monetary compensation) is irreconcilable with the determination made in the Fourth Interim Award (that Respondent is now obliged to pay compensation for harm caused by breach of the First and Second Interim Awards);

• the Fourth Interim Award fails to acknowledge Respondent’s consistent position that it is constrained by international law from preventing the enforceability of an otherwise enforceable domestic judgment;

• the Tribunal should revisit its reliance upon international law to conclude that the Respondent cannot invoke Ecuadorian law to excuse non-compliance with the Tribunal’s First and Second Interim Awards;

• the question of whether a State Party has complied with the obligation in Article IV(6) of the Treaty is not justiciable before a tribunal constituted to determine an investment dispute; and

• Article VI(6) of the Treaty cannot be read in conjunction with Article 26 of the UNCITRAL Rules as conferring a legislative power upon an Article VI(3) tribunal to create a new international obligation for State Parties.³⁵⁰

226. Should the Tribunal consider that its Interim Awards have not been superseded by the Track II Award and to have been validly decided, the Respondent maintains its application for reconsideration.³⁵¹

³⁴⁹ Rejoinder, para. 1922. ↩

³⁵⁰ Counter-Memorial, para. 1365. ↩

³⁵¹ Counter-Memorial, para. 1366; Rejoinder, para. 1891. ↩

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227. First, the Respondent asserts that the First and Second Interim Awards were based on the wrong premise that there is a “sufficient likelihood that [the] harm to the Claimants may be irreparable in the form of monetary compensation”, and should be vacated for that reason.³⁵² In the Respondent’s view, when first requesting interim relief from the Tribunal against the possibility of enforcement of the Lago Agrio Judgment, the Claimants “complained only of monetary harm and the inconvenience of litigation; the former can be cured by monetary compensation, and the latter the Tribunal has no mandate to shield Claimants from.”³⁵³

228. Second, recalling that an arbitral tribunal cannot mandate that a State violate its internal laws in order to comply with procedural measures, the Respondent reiterates that there is no legal mechanism by which it could have prevented the Lago Agrio Judgment from becoming enforceable.³⁵⁴

229. Third, the Respondent asserts that its alleged breach of the interim awards cannot be interpreted as a breach of the Treaty, since Article VI(6) of the Treaty, providing for the final and binding character of awards, concerns only awards that resolve an “investment dispute”, thus excluding awards on interim measures.³⁵⁵

(b) The Claimants’ Position

230. In the Claimants’ view, the Respondent has failed to substantiate its application for reconsideration.³⁵⁶ First, the Claimants assert that the Respondent could have revoked the Ecuadorian court order that certified the Lago Agrio Judgment as enforceable, and note that the notion that the Respondent had no mechanism by which to render the Judgment unenforceable has been repeatedly rejected by the Dutch courts in set-aside proceedings.³⁵⁷ Second, the Claimants reject the proposition that a breach of the

³⁵² Rejoinder, paras. 1892-1896; Second Interim Award, para. 2. ↩

³⁵³ Rejoinder, para. 1895. ↩

³⁵⁴ Counter-Memorial, paras. 1367-1372; Rejoinder, paras. 1897-1904; RLA-15, Plama Consortium Limited v. Bulgaria, ICSID Case No. ARB/03/24, Order on Provisional Measures, 6 September 2005, para. 43. See also, Track III Hearing Transcript, Day 2 (19 August 2022), pp. 382-383 (Salgado). ↩

³⁵⁵ Counter-Memorial, paras. 1373-1376; Rejoinder, paras. 1909-1915. ↩

³⁵⁶ Reply, paras. 396-399. ↩

³⁵⁷ Reply, para. 397; C-3147, The Republic of Ecuador v. Chevron Corporation et al., C/09/570029 / HA ZA 19-268, Judgment, 16 September 2020, paras. 5.24-5.25, 5.44-5.46. ↩

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Tribunal’s interim orders and awards does not constitute a breach of the Treaty: they recall that the UNCITRAL Arbitration Rules (which allow interim orders to be converted into interim awards) are incorporated into the Treaty through Article VI(3)(a)(iii), meaning that any such interim award is “final and binding” under Treaty Article VI(6).³⁵⁸

C. INTERNATIONAL SUBSIDIARIES

1. The Claimants’ Position

231. The Claimants consider that they are entitled to compensation for the legal fees and expenses incurred by Chevron’s subsidiaries, inside and outside of Ecuador, to prepare and defend themselves against the efforts to enforce the Lago Agrio Judgment worldwide.³⁵⁹

232. First, according to the Claimants, it is well established that parent-shareholders like Chevron may claim for losses which are incurred directly by wholly-owned subsidiaries and only indirectly by the parent.³⁶⁰ As support for this proposition, the Claimants rely on the text of the Treaty (which defines “investments” as “any type of investment . . . owned directly or indirectly”, including “companies, shares of stock or other interests in companies” and investment arbitral awards.³⁶¹ The Claimants further note that, while Chevron and its subsidiaries are distinct and legally separate entities, the attachment order of the Lago Agrio Court treats all of Chevron’s subsidiaries as the same company. For this reason, the Claimants believe that the Respondent should be estopped from claiming that they cannot also claim damages for the subsidiary targets of the attachment order.³⁶²

233. Second, in the Claimants’ view, the fact that some of the adverse effects of the Lago Agrio Court’s attachment order occurred outside of Ecuador does not diminish the Respondent’s

³⁵⁸ Reply, paras. 398-399; Track II Award, para. 10.18. ↩

³⁵⁹ Memorial, paras. 202-208. ↩

³⁶⁰ Memorial, para. 203. ↩

³⁶¹ Memorial, paras. 203-205; Reply, paras. 406-417; C-279, Treaty between the United States of America and the Republic of Ecuador concerning the Encouragement and Reciprocal Protection of Investment, 11 May 1997, Art. I(1)(a)(ii); CLA-605, Pope and Talbot Inc. v. Canada, UNCITRAL, Award in respect of Damages, 31 March 2002, para. 80; CLA-666, Eastern Sugar B.V. v. Czech Republic, SCC Case No. 088/2004, Partial Award, 27 March 2007, para. 367. ↩

³⁶² Memorial, para. 206; Reply, para. 417; Track II Award, paras. 7.111-7.112. ↩

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responsibility for them,³⁶³ especially when, as here, the Respondent “used its domestic jurisdiction to inflict a series of transnational damages upon the investor.”³⁶⁴ Relying on S.D. Myers v. Canada, the Claimants deny that international law imposes any particular geographical limitation with respect to the location of losses recoverable by an investor.³⁶⁵

234. Third, in respect of the Respondent’s argument that the Claimants are estopped from claiming damages incurred by Chevron’s subsidiaries because they prevailed in the relevant enforcement proceedings by relying on the principle of corporate separateness, the Claimants posit that it was the Respondent’s own judiciary that required it to raise the separateness defence, as the 15 October 2012 attachment order “illegally pierced the veil” of dozens of Chevron’s subsidiaries and affiliates.³⁶⁶ The Claimants further submit that corporate separateness does not mean that they cannot claim loss for the damages Chevron’s international subsidiaries suffered, as the expenses incurred by the subsidiaries were the result of the “corrupt orders” of the Ecuadorian judiciary.³⁶⁷

235. Finally, the Claimants submit that they are entitled to recover for their subsidiaries’ legal costs due to “Ecuador’s breach of the international-law duties of good faith, just as the Tribunal found in Track II”.³⁶⁸

2. The Respondent’s Position

236. The Respondent denies the proposition that the Claimants may under international law claim as damages losses suffered by third-country subsidiaries with separate legal personalities, such as Chevron’s Danish, Argentine, Brazilian or Canadian subsidiaries.³⁶⁹

³⁶³ Memorial, para. 207; Reply, paras. 413-414; Track II Award, para. 7.27. ↩

³⁶⁴ Reply, para. 416. ↩

³⁶⁵ Memorial, paras. 207-208; CLA-463, S.D. Myers v. Canada, Second Partial Award, 21 October 2002, paras. 117-118. ↩

³⁶⁶ Reply, paras. 418-420. ↩

³⁶⁷ Reply, para. 421. ↩

³⁶⁸ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 77-78 (Bishop). ↩

³⁶⁹ Counter-Memorial, paras. 306-308, 312-315; Rejoinder, paras. 479-481, 494-507; RLA-778, Khan Resources v. Mongolia, PCA Case No. 2011-09, Award on the Merits, 2 March 2015, para. 388; RLA-747, Gemplus S.A. and others v. Mexico and Talsud S.A. v. Mexico, ICSID Cases Nos. ARB(AF)/04/3 and ARB(AF)/04/4, Award, 16 June 2010, paras. 12-50; RLA-811, South American Silver v. Bolivia, PCA Case No. 2013-15, Award, 22 November 2018, para. 800. ↩

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In this connection, the Respondent rejects the Claimants’ argument that the lex specialis of the Treaty recognizes that damage to a wholly-owned subsidiary “causes indirect equivalent value loss to the parent” because the Treaty’s protections extend only to the Claimants’ in Ecuador.³⁷⁰ This proposition, in its view, is consistent with a bilateral investment treaty’s primary objective to attract foreign investment to a particular host State.³⁷¹ Similarly, the fact that the Lago Agrio Court’s attachment order permitted enforcement outside of Ecuador “does not move the needle”, since those non-U.S. subsidiaries are neither claimants in this proceeding nor the Claimants’ protected investment, meaning that the Tribunal lacks jurisdiction to adjudicate any losses they experienced.³⁷² The Respondent adds that only Chevron and TexPet have standing to assert damages in these proceedings.³⁷³

237. Even if international law permitted such recovery, in the Respondent’s submission, the Claimants have failed to prove that they actually suffered losses as a result of the legal fees and expenses incurred by Chevron’s subsidiaries.³⁷⁴ In particular, the Respondent observes that the Claimants have failed to provide “information on profitability, sales, debt or tax liability . . . that Chevron paid its subsidiaries’ invoices, or had to reimburse them for their expenses,”³⁷⁵ information which the Respondent claims “is easily accessible to them.”³⁷⁶ It adds that the Claimants have not proven who incurred and paid for the expenses indicated in the claimed invoices.³⁷⁷ The Respondent rejects as lacking

³⁷⁰ Counter-Memorial, para. 309; C-279, Treaty between the United States of America and the Republic of Ecuador concerning the Encouragement and Reciprocal Protection of Investment, 11 May 1997, Art. I(1)(a), defining “investment” as “every kind of investment in the territory of one Party owned or controlled directly or indirectly by nationals or companies of the other Party”. See also Track II Award, para. 7.70; Third Interim Award, para. 4.15. ↩

³⁷¹ Counter-Memorial, para. 311; Rejoinder, para. 486. ↩

³⁷² Rejoinder, para. 485. See also, Track III Hearing Transcript, Day 2 (19 August 2022), p. 303 (Maidman). ↩

³⁷³ Track III Hearing Transcript, Day 2 (19 August 2022), pp. 304-305 (Maidman). ↩

³⁷⁴ Counter-Memorial, paras. 316-319; Rejoinder, paras. 482-483. ↩

³⁷⁵ Counter-Memorial, paras. 319, 324; CLA-659, Unión Fenosa Gas, S.A. v. Egypt, ICSID Case No. ARB/14/4, Award, 31 August 2018, paras. 10.117-10.118, 10.120. ↩

³⁷⁶ Counter-Memorial, para. 325. ↩

³⁷⁷ Track III Hearing Transcript, Day 2 (19 August 2022), p. 301 (Maidman). ↩

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support Mr Kiran Sequeira’s expert testimony that a parent incurs 100% of its subsidiary’s loss.³⁷⁸

238. Similarly, the Respondent asserts that such claim should be dismissed on the basis of judicial estoppel, as it is inconsistent with the Claimants’ position in the relevant enforcement proceedings,³⁷⁹ where Chevron prevailed by relying on the separate legal personalities of its subsidiaries.³⁸⁰ It also rejects as unsupported the Claimants own argument that the Respondent is estopped from denying liability for harm caused to Chevron and its subsidiaries – and, even if such estoppel argument had merit, the Respondent considers that it could not create jurisdiction over the subsidiaries’ losses under the Treaty.³⁸¹

239. Lastly, the Respondent notes that as part of document production the Claimants produced multiple engagement letters between their subsidiaries and law firms (none of which represented the Claimants at all) without indicating who paid those bills.³⁸² To the extent that the Claimants chose to pay other company’s bills, the Respondent considers that such voluntary assumption would constitute a break in the chain of causation.³⁸³

D. FAILURE TO MITIGATE

1. Introduction

(a) The Respondent’s Position

240. According to the Respondent, the Claimants’ own conduct contributed to their increased or exacerbated costs, in breach of their duty to mitigate damages following the Treaty

³⁷⁸ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3629 (Leonetti). ↩

³⁷⁹ Counter-Memorial, paras. 320, 322; Track II Award, para. 7.107; CLA-435, Chevron v. Ecuador, 638 F.3d at 389 n. 9, p. 15. ↩

³⁸⁰ Counter-Memorial, para. 321. ↩

³⁸¹ Rejoinder, paras. 487-492. ↩

³⁸² Rejoinder, paras. 508-511. ↩

³⁸³ Rejoinder, para. 512; RLA-1001, Occidental Petroleum Corporation and Occidental Exploration and Production Company v. Ecuador, ICSID Case No. ARB/06/11, Decision on Annulment of the Award, 2 November 2015, para. 263; Track III Hearing Transcript, Day 2 (19 August 2022), p. 305 (Maidman). ↩

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breaches.³⁸⁴ Such instances of an alleged failure to mitigate include the Claimants’ failure to: (i) to recuse Judge Zambrano; (ii) post a bond to suspend the enforceability of the Lago Agrio Judgment; (iii) file an action under the Collusion Prosecution Act (the “CPA”); and (iv) refrain from initiating the RICO Litigation.³⁸⁵

241. In its Partial Award on Track III, the Tribunal decided as a preliminary question whether “the Tribunal’s prior rulings preclude Ecuador’s argument that Claimants failed to mitigate their damages by not pursuing local remedies under Ecuadorian law” (Question #4). The Tribunal answered this question in the negative, thus allowing the Respondent’s mitigation defence to proceed.³⁸⁶

242. In this respect, the Respondent highlights in its Rejoinder the Tribunal’s determination that the standard for exhaustion of local remedies is not the same as the standard for the duty to mitigate, as suggested by the Claimants.³⁸⁷

(b) The Claimants’ Position

243. Generally, the Claimants assert that they fully mitigated their damages by (inter alia) obtaining interim orders and awards from the Tribunal requiring the Respondent to prevent the Lago Agrio Judgment from becoming or remaining enforceable.³⁸⁸ They state that the Respondent could have stopped the Lago Agrio Judgment and the LAPs’ enforcement efforts, but to this day has not done so,³⁸⁹ in violation of the Tribunal’s Track II Award.³⁹⁰ Instead, the Claimants tried to mitigate their damages by (i) filing Section 1782 actions to obtain evidence to prevent enforcement of the Judgment; (ii) filing the RICO Litigation to thwart the risk of enforcement in the USA and elsewhere; (iii) filing the Gibraltar Proceedings to cut off enforcement funding; and (iv) preparing to defend

³⁸⁴ Counter-Memorial, para. 1167; RLA-813, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware, Inc. v. Canada, PCA Case No. 2009-04, Award on Damages, 10 January 2019, para. 204. ↩

³⁸⁵ Counter-Memorial, paras. 1167-1201. ↩

³⁸⁶ Partial Award on Track III, paras. 178-184, 188(iv). ↩

³⁸⁷ Rejoinder, paras. 577-579. ↩

³⁸⁸ Reply, para. 422. ↩

³⁸⁹ Track III Hearing Transcript, Day 15 (7 September 2022), pp. 3383-3384 (Bishop). ↩

³⁹⁰ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3391 (Bishop). ↩

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themselves against enforcement in numerous jurisdictions.³⁹¹ Regarding the sums disbursed, the Claimants reject the Respondent’s accusation that Chevron had a motive to overspend.³⁹²

244. In respect of the Respondent’s mitigation defence, the Claimants submit that (i) under international law they are not required to pursue remedies that are ancillary, discretionary or futile;³⁹³ (ii) there is no requirement to exhaust local remedies in the mitigation context under the Treaty or international law;³⁹⁴ and (iii) the Tribunal’s reasons for rejecting Ecuador’s exhaustion arguments apply equally to mitigation – and, relatedly, pursuing any of the Respondent’s proposed remedies, in their view, “would have had the opposite effect of mitigation”.³⁹⁵ The Claimants further assert that the Respondent would have the Claimants mitigate, not in their desired manner (which worked), but rather in Ecuador’s preferred manner (which would not have worked).³⁹⁶

2. Recusal of Judge Zambrano

(a) The Respondent’s Position

245. The Respondent points to evidence on record indicating, in its view, that the Claimants’ legal representatives had knowledge in real time about Judge Zambrano’s corruption, including affidavits submitted by Chevron’s lead trial lawyers in the RICO Litigation, the fact that the RICO action was filed two weeks before the Lago Agrio Judgment was issued, and the Claimants’ publicizing of their ghostwriting allegations within hours after the Judgment issued.³⁹⁷ According to the Respondent, as part of its own strategy, Chevron chose to allow the ghostwriting to take place.³⁹⁸ In its view, the Claimants had several

³⁹¹ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 101-104 (Coriell). ↩

³⁹² Track III Hearing Transcript, Day 15 (7 September 2022), pp. 3389-3391 (Bishop). ↩

³⁹³ Reply, paras. 430-433; RLA-813, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware, Inc. v. Canada, PCA Case No. 2009-04, Award on Damages, 10 January 2019, paras. 206-214. ↩

³⁹⁴ Reply, paras. 434-436; RLA-813, William Richard Clayton, Douglas Clayton, Daniel Clayton and Bilcon of Delaware, Inc. v. Canada, PCA Case No. 2009-04, Award on Damages, 10 January 2019, para. 213. ↩

³⁹⁵ Reply, paras. 437-439; Track II Award, paras. 7.123, 7.132-7.135, 7.145, 7.154; Partial Award on Track III, para. 183. ↩

³⁹⁶ Track III Hearing Transcript, Day 1 (18 August 2022), p. 123 (Coriell). ↩

³⁹⁷ Counter-Memorial, paras. 1169-1177; Rejoinder, paras. 582-596. ↩

³⁹⁸ Counter-Memorial, para. 1171. ↩

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means at their disposal to try to stop Judge Zambrano from carrying out what they believed to be his scheme and thus avert their alleged damages in their entirety, such as filing a complaint before the Judicial Council of Ecuador to remove Judge Zambrano or moving to recuse him on the basis of alleged corruption.³⁹⁹

(b) The Claimants’ Position

246. The Claimants assert that the Respondent, in arguing that the Claimants should have recused Judge Zambrano, “entirely neglects the context of the Ecuadorian environment in which Chevron found itself in 2009 and 2010 and grossly misrepresents the underlying facts”.⁴⁰⁰ According to the Claimants, any attempt to recuse Judge Zambrano would have been futile and would have only resulted in sanctions for Chevron’s Ecuadorian counsel.⁴⁰¹ To put these arguments into context, the Claimants recall instances of “public and government-sponsored animosity against Chevron” starting in 2009,⁴⁰² as well as instances of Ecuadorian judges as well as the Prosecutor General “turn[ing] a blind eye towards both the evidence Chevron submitted and its requests for a meaningful investigation in Ecuador.”⁴⁰³ In particular, the Claimants assert that the context omitted by the Respondent includes:

(i) the lack of objective evidence of Judge Zambrano’s overtures towards Chevron in 2009; (ii) the public pressure campaign against Chevron and its attorneys; (iii) not knowing that Judge Zambrano would assume jurisdiction over the case after Judge Ordóñez’s recusal; (iv) the lack of objective evidence in 2010 of Judge Zambrano’s agreement with the LAPs to enter a judgment against Chevron (much less of a ghostwriting and bribery scheme); (v) the fact that the ghostwritten Lago Agrio Judgment had not been issued; (vi) the lack of success in getting the Ecuadorian judiciary to investigate prior instances of judicial misconduct; and (vii) the fear of retaliation against Chevron’s attorneys. Against this background, Claimants’ decision not to attempt to recuse Judge Zambrano was reasonable.⁴⁰⁴

³⁹⁹ Counter-Memorial, paras. 1176-1177. See also Track III Hearing Transcript, Day 2 (19 August 2022), pp. 384-390 (Schwartz). ↩

⁴⁰⁰ Reply, para. 463. ↩

⁴⁰¹ Reply, paras. 463, 476. ↩

⁴⁰² Reply, paras. 467-470. ↩

⁴⁰³ Reply, paras. 471-475; Track II Award, paras. 8.27, 8.34, 8.38, 8.59; Track III Hearing Transcript, Day 15 (7 September 2022), pp. 3384-3386 (Bishop). ↩

⁴⁰⁴ Reply, para. 478. ↩

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247. The Claimants cite Mr Veiga’s assertion that recusing Judge Zambrano would not necessarily have brought an honest just to the case, as they state that at least four presiding judges were dishonest.⁴⁰⁵

248. Lastly, the Claimants request the Tribunal (i) to decline to undertake “a multitude of second-guesses made years [after the fact] applying an absolute standard to the [c]laimant’s conduct with the benefit of hindsight”;⁴⁰⁶ and (ii) not to allow the Respondent to “profit from its own wrongdoing by pointing to Chevron’s decisions taken in difficult circumstances created by Ecuador itself.”⁴⁰⁷

3. Posting of a Bond

(a) The Respondent’s Position

249. The Respondent submits that the Claimants could have delayed the Lago Agrio Court’s certification of the Lago Agrio Judgment for enforcement by posting a bond, as allowed under the Ecuadorian Cassation Appeal Act.⁴⁰⁸ While acknowledging that the Tribunal accepted the Claimants’ contrary position for the purposes of exhaustion of local remedies in its Track II Award,⁴⁰⁹ the Respondent asserts that the Tribunal did not take into account “all the evidence on record relating to potential amounts that Chevron would have to post”, which, in its submission, could have been as low as 0.016 per cent of the lower instance court’s USD 18.6 billion judgment (approximately USD 3 million).⁴¹⁰ As a result, the Respondent states, the LAPs would not have filed recognition proceedings in Canada, Argentina or Brazil until the second half of 2018.⁴¹¹ Whether the proceedings

⁴⁰⁵ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3388 (Bishop). ↩

⁴⁰⁶ Reply, para. 482 (brackets in original); CLA-659, Unión Fenosa Gas, S.A. v. Egypt, ICSID Case No. ARB/14/4, Award, 31 August 2018, para. 10.132. ↩

⁴⁰⁷ Reply, para. 483. ↩

⁴⁰⁸ Counter-Memorial, paras. 1178-1183; C-316, Law on Cassation Arts. 3, 5, 8, 10, and 11, Final Provisions and Sources (update), Arts. 10, 11. ↩

⁴⁰⁹ Track II Award, paras. 7.125-7.135. ↩

⁴¹⁰ Counter-Memorial, paras. 1179-1180; Rejoinder, paras. 614-615. ↩

⁴¹¹ Counter-Memorial, paras. 1181-1183. ↩

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were “laden with procedural irregularities”, as the Claimants argue, does not, in the Respondent’s submission, excuse their not posting a bond.⁴¹²

(b) The Claimants’ Position

250. The Claimants consider that their decision not to post a bond was reasonable in the circumstances.⁴¹³ They recall in this respect the Tribunal’s findings in the Track II Award that Chevron acted reasonably by not posting a bond because (i) the company was entitled to rely on the Tribunal’s Awards on Interim Measures aimed at ensuring that the Lago Agrio Judgment would not become enforceable;⁴¹⁴ and (ii) in the circumstances prevailing at the time, it would not have been reasonable to require the Claimants to post a bond of the required size (between USD 180 million and USD 14.6 billion) so as to suspend enforcement.⁴¹⁵ Similarly, the Claimants suggest that if they had posted a bond, the Respondent would now be liable also for the amount of the bond, since they would not have satisfied the Judgment upon completion of the appeals process.⁴¹⁶ The Claimants also deny that they had a duty under international law to post “costly financial security” to mitigate damages.⁴¹⁷

4. Collusion Prosecution Act

(a) The Respondent’s Position

251. According to the Respondent, the remedies available to the Claimants under the CPA, had they elected to file an action, would have included full nullification of the Lago Agrio Judgment, as well as damages, imprisonment, and disciplinary proceedings against those involved (including both the lawyers and the judges).⁴¹⁸ The Respondent recalls the Tribunal’s finding in its Track II Award that Chevron had the possibility to pursue its

⁴¹² Rejoinder, para. 616. ↩

⁴¹³ Reply, paras. 440-448. ↩

⁴¹⁴ Reply, para. 441; Track II Award, para. 7.132; First Interim Award, p. 16; Second Interim Award, para. 3. ↩

⁴¹⁵ Reply, paras. 443, 446. ↩

⁴¹⁶ Reply, paras. 444-445; Track II Award, paras. 7.134-7.135. ↩

⁴¹⁷ Reply, para. 445; CLA-917, Cairn Energy PLC and Cairn UK Holdings Limited v. India, PCA Case No. 2016-07, Final Award, 21 December 2020, para. 1894. ↩

⁴¹⁸ Counter-Memorial, paras. 1184-1185; Rejoinder, paras. 597-598; RLA-493, Collusion Prosecution Act, Arts. 4-7. ↩

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claims under the CPA, which, while not effective to stop the Judgment from becoming enforceable due to the duration of CPA proceedings, might have still ended the status of enforceability even prior to the date when the LAPs sought its first enforcement in Canada, on 30 May 2012,⁴¹⁹ and would have entailed only a small increase in the Claimants’ alleged fees and expenses.⁴²⁰ The Respondent asserts that the Claimants have recognised that the CPA was a potentially viable means of mitigation.⁴²¹ Instead, the Respondent notes, the Claimants elected to forgo this opportunity and institute the RICO Litigation in the United States, as further discussed below.⁴²²

(b) The Claimants’ Position

252. The Claimants also consider reasonable their decision not to file a case under the CPA “because such action would not have been an appropriate and timely remedy”,⁴²³ as also found by the Tribunal in its Track II Award.⁴²⁴ It was not appropriate, they say, because the Respondent had a duty to investigate the corruption within the court itself and “the State cannot leave remedial action to the efforts of private litigants.”⁴²⁵ Further, in the Claimants’ submission, no timely relief would have been granted because a CPA case is subject to the ultima ratio condition (meaning that a CPA claim may only be filed when there is no other mechanism to resolve the matter), because during the pendency of a CPA action the Lago Agrio Judgment would have remained enforceable and because no Ecuadorian court would have granted such discretionary relief to Chevron in 2012.⁴²⁶

5. RICO Litigation

(a) The Respondent’s Position

253. In the Respondent’s view, the Claimants expended enormous resources in the RICO Litigation that did not advance their enforcement-resisting strategy, instead of resisting

⁴¹⁹ Counter-Memorial, paras. 1188-1189; Rejoinder, paras. 606, 608-610. ↩

⁴²⁰ Rejoinder, para. 602. ↩

⁴²¹ Track III Hearing Transcript, Day 2 (19 August 2022), pp. 390-394 (Schwartz). ↩

⁴²² Counter-Memorial, para. 1190. ↩

⁴²³ Reply, paras. 449-461. ↩

⁴²⁴ Reply, paras. 451-452; Track II Award, paras. 7.145-7.148. ↩

⁴²⁵ Reply, para. 452; Track II Award, para. 7.145. ↩

⁴²⁶ Reply, paras. 453-458; Sixth Coronel Jones Expert Report, para. 29; Track II Award, para. 8.28. ↩

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enforcement defensively, a “far more effective and less expensive option”.⁴²⁷ Relying on the expert opinion of Professor S.I. Strong, the Respondent asserts that (i) there was little chance ex-ante that non-US courts would find a RICO judgment a persuasive authority; (ii) the relief obtained through the judgment (a constructive trust and an injunction against profiting from the Lago Agrio Judgment) “would likely be difficult to enforce outside the United States”; and (iii) within the USA, Chevron would have better been served by waiting to defend against an enforcement action.⁴²⁸

(b) The Claimants’ Position

254. The Claimants’ arguments regarding mitigation as regards the RICO Litigation are addressed in Section VIII.G below.

E. FEES ALLEGEDLY INCURRED IN OTHER PROCEEDINGS

1. The Claimants’ Position

(a) Introduction

255. According to the Claimants, legal expenses incurred in other proceedings are recoverable as damages in this Arbitration to the extent that they are uncollectable in those proceedings, as confirmed in investor-State arbitration practice, commercial arbitration, and even U.S. law.⁴²⁹ The Claimants confirm that they “do not seek and expressly disclaim any double recovery” arising from the damages they might be awarded in connection with those proceedings, while noting that, in any event, such damages are owed due to the Respondent’s Treaty breaches and were not actually litigated or decided in the other cases.⁴³⁰

⁴²⁷ Counter-Memorial, paras. 1191-1192, 1194-1200. ↩

⁴²⁸ Counter-Memorial, paras. 1192-1194; RE-44, First Strong Expert Report, paras. 20-23, 81-83, 86, 89. ↩

⁴²⁹ Reply, paras. 486-502; CLA-605, Pope and Talbot Inc. v. Canada, UNCITRAL, Award in respect of Damages, 31 March 2002, para. 85; CLA-652, Sergey Ripinsky and Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2016), p. 302; CLA-688, Alwyn.V. Freeman, THE INTERNATIONAL RESPONSIBILITY OF STATES FOR DENIAL OF JUSTICE (1970), pp. 592-593; CLA-907, Final Award in ICC Case No. 14046, published in Albert Jan van den Berg (ed), Yearbook Commercial Arbitration, Volume XXXV, 2010, p. 245; Miller Expert Report, para. 35. ↩

⁴³⁰ Reply, para. 501. ↩

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256. Further, the Claimants reject as faulty the Respondent’s proposition that “in cases where Chevron has made a claim for an attorney fee award, it should be estopped from seeking larger damages in this Tribunal”.⁴³¹ Relying on the expert opinion of Professor Geoffrey Miller, the Claimants note that here “Chevron has a low prospect of being paid by some of the parties who have been, or might be, ordered to compensate Chevron for its costs.”⁴³²

257. On the basis that the Respondent is “conflating legal orders”, the Claimants further reject the proposition that this Tribunal is bound by domestic laws or the res judicata effect domestic court decisions on legal fees.⁴³³ The Claimants rely on past decisions of investor-State tribunals rejecting reliance on domestic law to reduce damages or interest under international law.⁴³⁴ Similarly, the Claimants argue that res judicata does not apply between different legal orders.⁴³⁵

258. The Claimants’ arguments in respect of each ancillary proceeding are addressed seriatim.

(b) RICO Litigation

259. As further discussed in Section VIII.G below, the Claimants claim the legal expenses incurred in the RICO Litigation as recoverable damages under international law. For this reason, the Claimants state that cost issues before U.S. courts under the RICO statute have no bearing on the assessment of damages in this case under international law.⁴³⁶ In the alternative, the Claimants argue that they mitigated their damages by not pursuing the damages they seek in this Arbitration before U.S. courts against defendants “who were all individuals, starting with Mr Donziger and the LAPs”, meaning that none of them

⁴³¹ Reply, para. 502. ↩

⁴³² Reply, para. 502; Miller Expert Report, paras. 35-36, 41-42. ↩

⁴³³ Reply, paras. 503-508. ↩

⁴³⁴ Reply, paras. 504-507; CLA-242, Middle East Cement Shipping and Handling Co. S.A. v. Egypt, ICSID Case No. ARB/99/6, Award, 12 April 2002, para. 174; RLA-851, Wena Hotels Ltd. v. Egypt, ICSID Case No. ARB/98/4, Decision (Annulment Proceeding), 5 February 2002, para. 53. ↩

⁴³⁵ Reply, para. 507; CLA-568, Helnan International Hotels A/S v. Egypt, ICSID Case No. ARB/05/19, Award, 3 July 2008, paras. 123-125; RLA-81, Industria Nacional de Alimentos, S.A. and Indalsa Perú, S.A. (formerly Empresas Lucchetti, S.A. and Lucchetti Perú, S.A.) v. Peru, ICSID Case No. ARB/03/4, Decision on Annulment, 5 September 2007, para. 87. ↩

⁴³⁶ Reply, para. 523. ↩

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would have the assets necessary to honour a multi-hundred million dollar cost order.⁴³⁷ Relying on the testimony of Mr Peter Seley, the Claimants explain that their RICO fee application sought only USD 32 million “in the interest of streamlining the Court’s consideration of [Chevron’s] application.”⁴³⁸

(c) Enforcement Proceedings

260. Flowing from their position that res judicata cannot apply as between legal orders, the Claimants posit that the question before this Tribunal is whether the damages they seek for the legal expenses incurred in the Argentina and Canada Enforcement Proceedings and the Brazil Recognition Proceedings “qualify as recoverable damages under international law”, which they claim they do.⁴³⁹ In connection with such proceedings, the Claimants reiterate that the analysis and the standard to be applied by those national courts for awarding legal costs and by this Tribunal under international law are different (especially within the context of the Argentina Enforcement Proceedings, where Chevron did not seek a cost order).⁴⁴⁰ The Claimants confirm that any costs that have been collected have been deducted from the amounts claimed in this Arbitration, meaning that no question of estoppel arises.⁴⁴¹

261. In the alternative, to the extent that the Claimants did not pursue the recovery of their legal fees and expenses at the domestic level, the Claimants state that they did so to mitigate damages: they assert that any action to recover fees against the LAPs would have been futile because they did not have assets in those jurisdictions and sought to proceed in those countries in forma pauperis.⁴⁴²

(d) Gibraltar Proceedings

262. As further explained in Section VIII.I below, the Claimants state that their legal expenses in the Gibraltar Proceedings qualify as recoverable damages because they were necessary

⁴³⁷ Reply, para. 525. ↩

⁴³⁸ Reply, para. 525; Seley Witness Statement, para. 80. ↩

⁴³⁹ Reply, paras. 513-517. See also Sections VIII.C, VIII.D, VIII.E below. ↩

⁴⁴⁰ Reply, paras. 513-514. ↩

⁴⁴¹ Reply, para. 515. ↩

⁴⁴² Reply, para. 516. ↩

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to mitigate the injury “by targeting third-party funders and funding vehicles that were indispensable to fund the Lago Agrio Litigation and the LAPs' efforts to enforce the fraudulent Lago Agrio Judgment.”⁴⁴³ They deny the Respondent's suggestion that Chevron is violating the terms of the Gibraltar court orders awarding costs or confirming the settlement of costs issues by consent, as there is no res judicata effect of those court orders in this Arbitration and the settlements in question did not include Ecuador.⁴⁴⁴ The Claimants further note that they have been unable to recover the costs they were awarded in the Amazonia Action, meaning that such award raises no issues of double recovery.⁴⁴⁵

(e) Section 1782 Proceedings

263. As further elaborated in Section VIII.H below, the Claimants also posit that the legal fees and expenses they incurred in the Section 1782 Proceedings qualify as well as recoverable damages, as “they proved critical in exposing the fraud against Chevron and were necessitated by Ecuador's internationally wrongful acts.”⁴⁴⁶ Rebutting the Respondent's argument that Chevron “promised not to seek to recover” in this Arbitration the legal fees and expenses it incurred in connection with the Section 1782 Proceedings, the Claimants refer to a Joint Stipulation filed by the parties in the Weinberg 1782 as evidence that they never undertook before U.S. courts that they would not seek their legal expenses against Ecuador as damages in this Arbitration.⁴⁴⁷

264. Similarly, the Claimants request an award for the legal fees and expenses incurred for Gibson Dunn and Jones Day's work in developing evidence for the purpose of this Arbitration through the Section 1782 Proceedings and the RICO Litigation.⁴⁴⁸

(f) Dutch Set-Aside Proceedings

265. The Claimants further request reimbursement as incidental expenses of the legal fees incurred in two set-aside proceedings in the Netherlands, namely: (i) the Respondent's

⁴⁴³ Reply, paras. 518-521; Kobre Witness Statement, para. 14. ↩

⁴⁴⁴ Reply, para. 519. ↩

⁴⁴⁵ Reply, para. 519. See paras. 1870 ff for further information on the Amazonia Action. ↩

⁴⁴⁶ Reply, para. 527. ↩

⁴⁴⁷ Reply, para. 527. ↩

⁴⁴⁸ Reply, paras. 531-538. ↩

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attempt to set aside the First, Second, Third and Fourth Interim Awards, all of which were rejected as of 12 April 2019; and (ii) the Respondent's request for annulment of the Track II Award.⁴⁴⁹ They confirm, in this regard, that they are not conflating the set-aside proceedings for this Arbitration with the Chevron v. Ecuador I set-aside proceedings.⁴⁵⁰

266. In the Claimants' view, the Respondent's litigation in the Netherlands was “frivolous”, largely consisting in “recycl[ing] and repackag[ing]” the jurisdictional arguments made before this Tribunal and in the preceding Chevron v. Ecuador I arbitration, which the Claimants characterize as dilatory litigation tactics for the purpose of hindering compliance.⁴⁵¹ The Claimants posit that their legal fees and expenses incurred in connection with those proceedings were reasonable, as well as the foreseeable consequence of the Respondent's breaches and the subsequent defence of the Tribunal's awards by the Claimants in set-aside proceedings.⁴⁵²

267. Lastly, noting that they do not seek the double recovery of any amounts, the Claimants withdraw from their damages claim the EUR 13,484.34 that they were granted by the Dutch courts in the Interim Awards set-aside proceedings.⁴⁵³

2. The Respondent's Position

(a) Introduction

268. The Respondent submits that the Claimants are not entitled to legal fees and expenses incurred in ancillary proceedings in which they could have recovered legal expenses;⁴⁵⁴ in its view, the more appropriate forum to seek legal expenses is the forum in which those expenses were incurred.⁴⁵⁵ The Respondent also requests that the Claimants not be

⁴⁴⁹ Reply, paras. 539-542. See Section VIII.L below. ↩

⁴⁵⁰ Memorial, Appendix 10; Reply, paras. 554-558. ↩

⁴⁵¹ Reply, paras. 545-553. ↩

⁴⁵² Reply, para. 559. ↩

⁴⁵³ Reply, paras. 560-563. ↩

⁴⁵⁴ Counter-Memorial, paras. 327-359; Rejoinder, paras. 517-524; RLA-774, British Caribbean Bank Limited v. Belize, PCA Case No. 2010-18, Award, 19 December 2014, paras. 110-114, 326; CLA-219, Petrobart Limited v. Kyrgyzstan, SCC Case No. 126/2003, Award, 29 March 2005, p. 6. ↩

⁴⁵⁵ Counter-Memorial, para. 327. ↩

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allowed to recover certain fees and expenses that they promised not to seek to recover, as further detailed below.⁴⁵⁶

269. Additionally, the Respondent requests the Tribunal to be “mindful” of the fees already recovered by the Claimants in other proceedings so as to prevent them from seeking any double recovery. For instance, and as further elaborated below the Respondent alleges that the Claimants have recovered legal expenses before the Gibraltar, Canadian and Dutch Courts, which should be excluded from their damages claim in this Arbitration.⁴⁵⁷ With the exception of those proceedings, the Respondent asserts that the Claimants have failed to identify which fees they and their subsidiaries have, and have not, requested in other proceedings, as well as the fees they have already recovered.⁴⁵⁸

270. In response to the Claimants' argument that it is conflating legal orders, the Respondent clarifies that it wishes the Tribunal to treat the determinations on costs of such domestic courts as persuasive when establishing whether such costs were reasonable and necessary under international law.⁴⁵⁹

271. The Respondent's arguments in respect of each ancillary proceeding are addressed seriatim.

(b) RICO Litigation

272. The Respondent recalls the Order received by Chevron in the RICO Litigation that it “shall recover of Donziger and the LAP Representatives, and each of them, jointly and severally, the costs of this action.”⁴⁶⁰ Chevron thereafter sought an award of USD 32,334,584 for attorney's fees that it claimed were “reasonable and necessary”,⁴⁶¹ followed by a supplementary request for an additional USD 3,433,384.30 after the

⁴⁵⁶ Counter-Memorial, paras. 354-357; Rejoinder, paras. 528-532. ↩

⁴⁵⁷ Rejoinder, paras. 534-538. ↩

⁴⁵⁸ Counter-Memorial, para. 358; Rejoinder, para. 533. ↩

⁴⁵⁹ Rejoinder, paras. 525-527. ↩

⁴⁶⁰ Counter-Memorial, para. 337; C-2134, Judgment as to Donziger Defendants and Defendants Camacho and Piguaje, Chevron Corporation v. Steven Donziger, et al., 11 Civ. 0691 (LAK), U.S. District Court, SDNY, para. 9; Track II Award, para. 4.483. ↩

⁴⁶¹ Counter-Memorial, para. 338; R-1603, Chevron Corp. v. Steven Donziger, SDNY. Case 1:11-cv-00691-LAK-RWL, D.E. 1890 Memorandum of Law Applications for Attorneys' Fees, 18 March 2014. ↩

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Claimants' Track III Memorial was filed.⁴⁶² The Respondent observes that such figures represent a total of 13% of the approximately USD 267 million of RICO fees that the Claimants claim in this proceeding.⁴⁶³ In the Respondent's view, “Chevron's decision to request such a drastically reduced sum from the RICO court is compelling evidence that Chevron did not believe that it could recover a greater amount under the ‘reasonable and necessary' standard that the RICO court must apply.”⁴⁶⁴

(c) Enforcement Proceedings

273. Generally, the Respondent asserts that the Claimants should not recover any legal expenses incurred in connection with the enforcement proceedings in Canada, Brazil, and Argentina, as legal expenses in those jurisdictions cannot be claimed as damages; rather, it is for the courts to determine the scope of an award on costs to the extent that such costs were reasonable and necessary:

(i) Canada: According to the Respondent, in Canada, the Claimants or their subsidiaries “already recovered what they could reasonably recover”⁴⁶⁵ – legal costs “were dealt with at each step of the proceedings”, as foreseen under Ontario law, and were agreed upon between the parties or fixed by the Canadian courts at the appellate level.⁴⁶⁶ The Claimants or their subsidiaries were awarded approximately CAD 375,000, as opposed to the approximately USD 40 million they seek in this Arbitration in relation to the Canada Enforcement Proceedings.⁴⁶⁷ Relying on the expert opinion of Professor Erik Knutsen, the Respondent argues that the matter of costs in this litigation is closed, meaning that re-opening it would be contrary to the principle of res judicata.⁴⁶⁸

⁴⁶² Counter-Memorial, para. 338; R-1610, Chevron Corp. v. Steven Donziger, SDNY. Case 1:11-cv-00691-LAK-RWL, D.E. 2244 Chevron Memorandum of Law ISO Motion for Attorneys' Fees, 18 June 2019. ↩

⁴⁶³ Counter-Memorial, para. 338. ↩

⁴⁶⁴ Counter-Memorial, paras. 339-340. ↩

⁴⁶⁵ Counter-Memorial, para. 341. ↩

⁴⁶⁶ Counter-Memorial, para. 341, RE-39, First Knutsen Expert Report, pp. 20, 26-27. ↩

⁴⁶⁷ Counter-Memorial, para. 342; RE-39, First Knutsen Expert Report, p. 25. ↩

⁴⁶⁸ Counter-Memorial, paras. 343-344; RE-39, First Knutsen Expert Report, p. 20. ↩

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(ii) Brazil: Similarly, the Respondent explains that in Brazil there exists a mechanism for the winning party's attorneys to recover a success fee directly from the losing party, with such “court-mandated fee” (sucumbência) being established by the court.⁴⁶⁹ On this basis, the Respondent says, the Brazilian Superior Court of Justice awarded the attorneys approximately USD 30,000, as opposed to the approximately USD 21 million that the Claimants demand for the Brazil Recognition Proceedings.⁴⁷⁰

(iii) Argentina: According to the Respondent, the Claimants' subsidiaries' lawyers had the opportunity to seek costs in the first of the Argentina Enforcement Proceedings (concerning the attachment of certain assets), which they won, but they declined to do so.⁴⁷¹ In the expert opinion of Dr García Pullés, the Claimants are now precluded from seeking costs in that litigation, as the statute of limitations has expired, but they may still do so in the separate proceedings concerning the recognition of the Lago Agrio Judgment in Argentina.⁴⁷² In circumstances in which the reasonable amount of recoverable costs should have been decided or can still be decided, the Respondent believes that the Claimants should not be able to recover those same costs in this Arbitration.⁴⁷³

(d) Gibraltar Proceedings

274. Noting that Ecuador was not a party to the Gibraltar Proceedings, the Respondent posits that the Claimants should not be able to recover any of their Gibraltar expenses, as they already received significant cost awards from the courts presiding over the DeLeon and Amazonia Actions – respectively, an award on costs for an amount yet to be determined in DeLeon and GBP 17,500 in Amazonia, where the court also awarded Chevron certain of its attorneys' fees incurred in the RICO Litigation in the amount of

⁴⁶⁹ Counter-Memorial, para. 346, RE-37, First Souza Godoy Expert Report, paras. 51-52. ↩

⁴⁷⁰ Counter-Memorial, para. 347. ↩

⁴⁷¹ Counter-Memorial, paras. 348-349; RE-38, First García Pullés Expert Report, p. 43. ↩

⁴⁷² Counter-Memorial, para. 349; RE-38, First García Pullés Expert Report, pp. 11, 35. ↩

⁴⁷³ Counter-Memorial, para. 350. ↩

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USD 28,035,219.37.⁴⁷⁴ Similarly, the Respondent observes that the Claimants also settled many of the costs issues in the Gibraltar Proceedings, meaning that it violates the court orders adopting those stipulations by requesting such costs in this Arbitration.⁴⁷⁵

(e) Section 1782 Proceedings

275. The Respondent observes that in some of the Section 1782 actions, such as Kohn and MCSquared, Chevron stipulated that each party would bear its own fees and costs for the respective proceedings, and the courts approved such stipulations by entering them as court orders.⁴⁷⁶ Thus, the Respondent requests that the Tribunal decline to award those same fees and costs to the Claimants, as doing so would be in breach of the relevant court orders.⁴⁷⁷

(f) Dutch Set-Aside Proceedings

276. According to the Respondent, the Dutch courts also adjudicated all legal expense issues between Chevron and Ecuador based on their own fixed remuneration fee system, pursuant to which the Respondent has already been ordered to pay the Claimants such amounts.⁴⁷⁸ The Respondent considers the Claimants' claim for set-aside costs as an unprecedented “attack on fundamental principles of international arbitration”, especially when, as here, no assertions were made that the initiation of the set-aside proceedings was abusive or had improper purposes.⁴⁷⁹

⁴⁷⁴ Counter-Memorial, para. 351. See paras. 1861 ff and 1870 ff for further information on the DeLeon and Amazonia Actions. ↩

⁴⁷⁵ Counter-Memorial, paras. 356-357. ↩

⁴⁷⁶ Counter-Memorial, para. 355; R-1605, In re Application of Chevron Corporation, E.D. Pa. Case 2:10-mc-00208-JD, D.E. 86 Order of Dismissal, 9 February 2015; R-1606, Chevron Corp. v. MCSquared PR, Inc, SDNY. Case 1:14-mc-00392-LAK, D.E. 47 Stipulation of Dismissal, 17 August 2017. ↩

⁴⁷⁷ Counter-Memorial, paras. 355, 357. ↩

⁴⁷⁸ Counter-Memorial, para. 353; RE-47, First Luycks Expert Report, paras. 4.4.1-4.4.2. ↩

⁴⁷⁹ Rejoinder, paras. 539-547. ↩

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F. TAX IMPLICATIONS

1. The Respondent's Position

277. The Respondent submits that the Claimants' damages claim fails to account for certain “tax implications”.⁴⁸⁰ First, according to the Respondent, the Claimants' alleged damages calculations must, but fail to, account for tax savings they incurred by deducting from their corporate income taxes the legal expenses they now claim.⁴⁸¹ Second, the Respondent asserts that the corporate tax rate that Claimants would pay on a potential award would be lower than the corporate tax rate at the time that they incurred the legal expenses in question; therefore, they “would receive a windfall if they were awarded interest now without adjusting for the lower tax rate environment.”⁴⁸²

278. Regarding the first point, the Respondent emphasizes that international law does not allow recovery beyond actual loss.⁴⁸³ The Respondent underlines that the Claimants admit to deducting the legal fees they claim as damages at the U.S. marginal tax rate for each year allegedly incurred.⁴⁸⁴ Consequently, the Respondent states, the Claimants did not incur the full cost they seek to recover, and awarding their claimed fees without accounting for tax savings would unjustly enrich them.⁴⁸⁵ The Respondent considers the Claimants' authorities cited to challenge this proposition inapposite,⁴⁸⁶ and considers that the award in Chevron v. Ecuador I supports its position.⁴⁸⁷

279. As for the second point, the Respondent contends that granting interest on the amounts that the Claimants saved in taxes would constitute “an impermissible windfall", as

⁴⁸⁰ Counter-Memorial, para. 1306. ↩

⁴⁸¹ Counter-Memorial, para. 1306. ↩

⁴⁸² Counter-Memorial, para. 1307; Rejoinder, para. 548; RE-42, First Flores Expert Report, para. 74 (The U.S. corporate income tax rate decreased from 35% (2003-2018) to 21% (2018 onwards)). ↩

⁴⁸³ Rejoinder, paras. 548, 557-558; RLA-430, Draft Articles on Responsibility of States for Internationally Wrongful Acts with commentaries, p. 105; RLA-702, ILC, International Responsibility: Sixth Report by F.V. Garcia Amador, Special Rapporteur, UN Doc. A/CN.4/134 and Add.1, 26 January 1961, para. 178. ↩

⁴⁸⁴ Rejoinder, para. 548. ↩

⁴⁸⁵ Rejoinder, para. 549. ↩

⁴⁸⁶ Rejoinder, paras. 558-559. ↩

⁴⁸⁷ Rejoinder, para. 560. ↩

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Claimants maintained use of the funds saved.⁴⁸⁸ The Respondent rejects the Claimants' challenge that the corporate tax rate on the date they collect on the Award is unknown, and submit that the Tribunal, in any event, could state in the Award that “any amount owed by Ecuador must be adjusted to the extent that the tax rate has changed".⁴⁸⁹

280. The Respondent adds that the “Claimants seek to unfairly take advantage of the decrease in the U.S. corporate tax rate that occurred in 2018.”⁴⁹⁰ Until that change, the Claimants were able to reduce their taxes by 35% of their claimed fees and expenses; now, the Respondent submits, the Claimants will only pay tax on a possible award at 21%, profiting the 14% difference.⁴⁹¹

2. The Claimants' Position

281. The Claimants submit that the Respondent's arguments on tax implications are speculative in that Ecuador assumes that the tax rates will not change before the Claimants collect on the Award on an unknown future date.⁴⁹² The Claimants add that the Respondent's argument is legally incorrect, as “[i]nternational jurisprudence has consistently held that the tax consequences of the Tribunal's award in the investor's home country are irrelevant for purposes of determining the amount of compensation owed, and it is improper for the tribunals to make such determinations.”⁴⁹³ The Claimants note that the Respondent cites no authority to the contrary.⁴⁹⁴

282. In addition, the Claimants explain that Ecuador's argument is distinct from scenarios in which tribunals subtract taxes that would have been owed to the respondent government

⁴⁸⁸ Rejoinder, paras. 551, 561. ↩

⁴⁸⁹ Rejoinder, para. 564. ↩

⁴⁹⁰ Rejoinder, para. 552. ↩

⁴⁹¹ Rejoinder, para. 552. ↩

⁴⁹² Reply, paras. 568-572; Second Sequeira Expert Report, para. 117. ↩

⁴⁹³ Reply, paras. 573-580; CLA-240, Ceskoslovenska Obchodni Banka, A.S. v. Slovakia, ICSID Case No. ARB/97/4, Award, 29 December 2004, para. 367; CLA-766, Les Laboratoires Servier, S.A.A., Biofarma, S.A.S., Arts et Techniques du Progres S.A.S. v. Poland, PCA Case No. 2010-12, Final Award, 14 February 2012, para. 666; RLA-760, Mobil Investments Canada Inc. and Murphy Oil Corporation v. Canada, ICSID Case No. ARB(AF)/07/4, Decision on Liability and on Principles of Quantum, 22 May 2012, para. 485; RLA-813, William Ralph Clayton, Bilcon of Delaware, Inc. and others v. Canada, PCA Case No. 2009-04, Award on Damages, 10 January 2019, para. 313. ↩

⁴⁹⁴ Reply, paras. 575, 587. ↩

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in a but-for scenario.⁴⁹⁵ The Claimants note that such was the case in Chevron v. Ecuador I, in which the Claimants owed tax liabilities to Ecuador (as opposed to the U.S. or California) which would have been due in the but-for scenario.⁴⁹⁶ They further add that the Chevron v. Ecuador I tribunal stated that taxes only fall within the ambit of the tribunal's damages assessment where they can be deducted with certainty, and may be accounted for when there is a provision in an agreement or an established practice.⁴⁹⁷ In the Claimants' view, none of these criteria is satisfied here.⁴⁹⁸

G. EVIDENCE OF LEGAL FEES AND EXPENSES

1. Introduction

283. Evidence of Loss accompanying the Memorial on Damages: As evidence that the Claimants incurred, documented and paid the legal fees and expenses they seek in Track III, the Claimants provided several witness statements and an expert report together with their Memorial on Damages:

1. Ms Colleen Kent, Senior Business Analyst at Chevron, describes Chevron's billing procedures and systems as concerns the relevant Ecuador-related costs. She explains:

   Most invoices are submitted electronically from outside law firms and other vendors through the “Collaborati" e-billing software which transfers the invoice to the "TeamConnect" software used internally at Chevron for invoice review. . .
   
   Collaborati will reject an invoice outright (and not even migrate it to TeamConnect) if the invoice contains incorrect information, such as unapproved timekeepers, unapproved billing rates, etc. . . .
   
   TeamConnect is an electronic platform designed for electronic review, processing, and approval of invoices. . .
   
   Chevron's legal analysts will review the invoices and may reject outright, or reduce appropriately, invoices for non-conforming items such as unapproved expenses, excessive hours by individual timekeepers, etc. The legal analyst will

⁴⁹⁵ Reply, paras. 581-587. ↩

⁴⁹⁶ Reply, paras. 582-583; RLA-351, Chevron Corporation and Texaco Petroleum Corporation v. Ecuador, PCA Case No. AA277, Final Award on the Merits, 31 August 2011, para. 311. ↩

⁴⁹⁷ Reply, para. 583; RLA-351, Chevron Corporation and Texaco Petroleum Corporation v. Ecuador, PCA Case No. AA277, Final Award on the Merits, 31 August 2011, para. 311. ↩

⁴⁹⁸ Reply, para. 584. ↩

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also review to ensure that tasks are performed at the appropriate level of seniority and may reject or adjust amounts accordingly. Chevron also typically will not pay for items such as administrative tasks. In addition, Chevron requires that all expenses be justified, and may reject payment of expenses if either element is missing...

Invoices may nonetheless undergo up to three additional levels of internal Chevron review...

Chevron implemented cost-saving and cost-control measures for the Ecuador Dispute, including the negotiation of discounts. . .

Once an invoice is approved for payment through TeamConnect, the invoice moves from TeamConnect to the SAP system (Chevron's electronic payment system) and is placed in line for payment. . .

All the amounts claimed by Chevron in this arbitration were actually paid by Chevron (or its subsidiaries).⁴⁹⁹

2. Mr E.J. Rankin, an eDiscovery Specialist at Chevron, explains that he was instructed to collect the billing data for each outside vendor that billed Chevron for Ecuador-related work for export to FTI Consulting (“FTI").⁵⁰⁰ To do that, he collected three types of data:

   Structured Data, which is maintained in Chevron's TeamConnect billing system. Mr. Rankin obtained access to this Structured Data from Chevron's Information Technology group then transferred it to an electronic file transfer (“EFT”) site maintained by FTI. . .
   
   Invoices. These include invoices that were not in Chevron's possession (for example, where a vendor sent the invoice to an outside law firm, the law firm paid the invoice, and then the law firm sought reimbursement from Chevron through the law firm's own bill). As with the Structured Data, Mr. Rankin transferred it to FTI's EFT site...
   
   Backup Data. Mr. Rankin also obtained all of the attachments to the invoices and transferred them to FTI's EFT site.⁵⁰¹

3. David Turner, the leader of FTI's Data and Analytics Group for the Americas, describes the process of receiving the data described in Mr Rankin's witness statement, obtaining additional data directly from vendors and compiling all that data into a report titled “Summary of Fees and Costs Report”, which is discussed in

⁴⁹⁹ Kent Witness Statement, paras. 10-12, 14, 19, 23-26, 28, 33-34, 36. ↩

⁵⁰⁰ Memorial, para. 196; Rankin Witness Statement, para. 7. ↩

⁵⁰¹ Memorial, para. 196; Rankin Witness Statement, paras. 9-14. ↩

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further detail below.⁵⁰² He explains how FTI then loaded the data into a database accessible to the Claimants' outside counsel for their review, following which FTI provided the information about the payments that are the subject of the Claimants' claims to Deloitte.⁵⁰³

4. Steve Stanton of Deloitte describes how Deloitte validated and confirmed that Chevron paid pursuant to its electronic payment system each outside law firm/vendor an amount that equals or exceeds the amount claimed by Chevron as damages in the “Summary of Fees and Costs Report”.⁵⁰⁴ Mr Stanton explains that 93% of the invoices could be validated via electronic matching, while he manually matched the remaining 7%.⁵⁰⁵

284. Mr Turner's “Summary of Fees and Costs Report", filed as Appendix 2 to the Memorial, is “a summary of the Claimants' claimed costs in each proceeding by law firm/vendor and amount, from 1 January 2004 through 9 May 2019.”⁵⁰⁶ In turn, Appendices 3 through 44 to the Memorial are “detailed narrative summaries of each of the litigation proceedings for which Chevron claims legal costs as damages, including discussions of their necessity, value and costs drivers, together with supporting evidence.”⁵⁰⁷

285. Purported Deficiencies Identified in Counter-Memorial on Damages: In its Counter-Memorial, the Respondent argued that the Claimants' showing of compensable legal expenses in their Memorial fell “far short” of the minimum showing required.⁵⁰⁸ More precisely, the Respondent was critical of how the Claimants, “rather than turning all of the relevant billing data and invoices” to the Respondent and the Tribunal for inspection, “used them to construct a thousand-plus page ‘summary' that is as useless as it is voluminous", as it “omits crucial information concerning the dates on which services

⁵⁰² Memorial, para. 197, Appendix 2; Turner Witness Statement, paras. 2-18. ↩

⁵⁰³ Memorial, para. 198; Turner Witness Statement, paras. 14-15, 18. ↩

⁵⁰⁴ Memorial, para. 199; Stanton Expert Report, paras. 16-47. ↩

⁵⁰⁵ Memorial, para. 200; Stanton Expert Report, para. 40. ↩

⁵⁰⁶ Memorial, para. 12. An Updated Appendix 2 was enclosed with the Reply. ↩

⁵⁰⁷ Memorial, para. 12. ↩

⁵⁰⁸ Counter-Memorial, paras. 418-462. ↩

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were provided and costs incurred, as well as information showing who billed what time, at what rates, for what tasks, and for what purposes.”⁵⁰⁹

286. In particular, the Respondent's Counter-Memorial identified numerous purported deficiencies in the Claimants' showing of compensable legal expenses.⁵¹⁰ The Respondent was generally critical of the witness expert and other evidence provided by the Claimants,⁵¹¹ which the Respondent deemed insufficient⁵¹² and, in its view, failed to include “evidence of billing judgment”⁵¹³ and to identify “who actually made payments and who actually received payments".⁵¹⁴ By “failing to submit the invoices that they allege Chevron paid”, the Respondent argued, “Claimants fail to prove that the legal expenses claimed were reasonable and necessary.”⁵¹⁵

287. The Respondent further noted that the limited evidence produced by the Claimants with their Memorial showed that they had included significant amounts which, in its view, could not be justified.⁵¹⁶ For instance, fees were claimed for:

1. “Entire categories of proceedings that were not caused by the breaches found by the Tribunal”, such as the Criminal Proceedings, the Gibraltar Proceedings, the RICO Litigation and categories such as “general defense costs”, the “costs of Chevron's media war with the LAPs and their supporters” and “planning and preparing costs";⁵¹⁷

⁵⁰⁹ Counter-Memorial, paras. 15. ↩

⁵¹⁰ Counter-Memorial, para. 418. ↩

⁵¹¹ Counter-Memorial, paras. 418-441. ↩

⁵¹² Counter-Memorial, paras. 446-450. ↩

⁵¹³ Counter-Memorial, paras. 442-443. ↩

⁵¹⁴ Counter-Memorial, paras. 444-445. ↩

⁵¹⁵ Counter-Memorial, paras. 451-462. ↩

⁵¹⁶ Counter-Memorial, paras. 463-594. ↩

⁵¹⁷ Counter-Memorial, paras. 465-473. ↩

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2. “Proceedings pursued by Chevron for purposes other than defending against the Lago Agrio Complaint and Judgment”, such as the RICO Litigation and the Section 1782 Proceedings;⁵¹⁸
3. Activities and proceedings the Respondent considers unnecessary, including the RICO Litigation, the Section 1782 Proceedings, certain pre-enforcement work (including for actions that were never filed) and a public relations campaign;⁵¹⁹
4. “Costs that Chevron spent duplicating its own work”, including, prominently, several instances of parallel Section 1782 Proceedings seeking production of the same materials;⁵²⁰
5. “Unsuccessful activities”, which, in the Respondent's view, are by definition not reasonable and therefore not recoverable, such as failed motions in the RICO Litigation and failed Section 1782 Proceedings;⁵²¹
6. Activities unrelated to this Arbitration and to the Claimants' defence against enforcement of the Lago Agrio Judgment, such as “Chevron's defense of Veiga and Perez in criminal proceedings in Ecuador", Chevron's “media campaign", and attempts by Chevron to recover costs in the RICO Litigation, as well as “judgment discovery and motion practice against Donziger and third parties in an effort to locate assets to enforce its judgment";⁵²²
7. “Abandoned activities”, including the abandonment of several of the Section 1782 Proceedings (MCSquared, Netflix, Weinberg Group) and portions of the RICO Litigation;⁵²³
8. “Frivolous activities”, including (1) “sanctionable activities”, such as Chevron “abusing the subpoena process” in the RICO Litigation; (2) “petty activities”,

⁵¹⁸ Counter-Memorial, paras. 474-481. ↩

⁵¹⁹ Counter-Memorial, paras. 482-506. ↩

⁵²⁰ Counter-Memorial, paras. 507-515. ↩

⁵²¹ Counter-Memorial, paras. 516-530. ↩

⁵²² Counter-Memorial, paras. 531-538. ↩

⁵²³ Counter-Memorial, paras. 539-544. ↩

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generally characterized by the Respondent as “Chevron's 'unfortunate pattern of needlessly attacking other parties' counsel”; (3) “hopeless activities”, including motions filed in the RICO Litigation, several of the Section 1782 Proceedings and the Lago Agrio Litigation “that never had a chance to succeed";⁵²⁴ (4) “hypocritical activities”, generally characterized by the Respondent as instances of Chevron taking “inconsistent positions in its litigation matters”;⁵²⁵ (5) “excessive activities”, including instances of “excessive litigation”, “overstaffing”, “excessively large filings", or “excessive fees billed by Chevron's U.S. counsel in proceedings in non-US jurisdictions”;⁵²⁶ and

9. “Activities related to alleged abuses and excesses by the LAPs, their counsel, and other parties", which the Respondent notes it did not commit and constitute intervening acts cutting off the causal link between the Treaty breaches and the Claimants' losses.⁵²⁷

288. Subsequent Production and Filing of Additional Evidence: By its Procedural Order No. 65, the Tribunal (inter alia) provided guidance to the Parties as regards as to whether, “in order to satisfy the burden of proof for their claims . . . they must, in addition to the Damages Evidence presented by them . . . also produce the billing records or invoices underlying the said Damages Evidence".⁵²⁸ Among other things, the Tribunal issued the following guidance:

84. . . . the Tribunal considers that the production of the following documents may be ordered, particularly where they have been relied on by the Claimants' experts and witnesses and form the basis of the Claimants' Damages Evidence:

1. invoices underlying the claimed fees and costs, along with documents identifying the timekeeper, expert or other vendor (which together form the basis of Appendix 2), as well as a brief narrative of the work done by each person, to be provided through either the production of the actual timesheets or any other document which discloses a brief narrative of the work done;

⁵²⁴ Counter-Memorial, paras. 553-562. ↩

⁵²⁵ Counter-Memorial, paras. 563-567 ↩

⁵²⁶ Counter-Memorial, paras. 568-585. ↩

⁵²⁷ Counter-Memorial, paras. 586-592. ↩

⁵²⁸ Procedural Order No. 65, para. 61. ↩

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2. documents showing payments of legal fees or costs, including amount, date, payer and payee, to be satisfied with emails, billing records, paid invoices or comparable materials;
3. documents disclosing fee caps, if any, imposed by the Claimants on counsel, expert or vendor fees and costs;
4. case records of the relevant proceedings, including submissions filed and orders and judgments issued;
5. any claims for (and rulings on) costs raised in any of the proceedings for which the Claimants are seeking recovery of fees and costs;
6. documents identifying work done in relation to the proceedings prior to the issuance of the Lago Agrio Judgment where a direct causation with the Treaty breach is or could be established;
7. expert reports prepared in connection with the Ecuador dispute; and
8. any documents on the basis of which the expert reports and witness statements tendered in Track III of the proceedings have been prepared.

289. Further, by its Procedural Order No. 66, the Tribunal decided the Parties' outstanding document production requests set out in the Redfern Schedules filed with the Tribunal on 11 May 2020, including several requests for the production of documents concerning attorneys' fees and costs.

290. Thereafter, the Claimants filed their Reply and the Respondent filed its Rejoinder, both of which addressed new evidence on damages provided by the Claimants as described above. What follows are the Parties' positions on the sufficiency of the evidence of loss provided by the Claimants as drawn from those submissions.

2. The Claimants' Position

291. Generally, the Claimants posit that the evidence they have provided with their submissions shows that their damages were actually incurred, actually paid and reasonable “in the face of the extraordinary harm”.⁵²⁹ Such evidence includes the Claimants' claimed invoices and time entries,⁵³⁰ the Appendices accompanying the

⁵²⁹ Reply, paras. 677-697. ↩

⁵³⁰ See C-3244 to C-3437, C-3462. ↩

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Memorial (and updated versions provided with their Reply),⁵³¹ expert reports and witness statements from the Claimants' in-house lawyer and external counsel.⁵³² In particular:

1. The witness statements accompanying the Reply include the Fourth Witness Statement of Ricardo Reis Veiga, dated 29 July 2019; the Witness Statement of Peter E. Seley, dated 18 August 2021; the Witness Statement of Robert A. Mittelstaedt, dated 18 August 2021; the Witness Statement of Steven Kobre, dated 13 August 2021 and the second witness statement of David Turner, dated 19 August 2021. As explained by the Claimants, “the three major U.S.-based outside law firms—Gibson, Dunn & Crutcher, Jones Day, and Kobre & Kim—have each provided a witness statement from a partner responsible for that firm's invoices (respectively, Mr Seley, Mr Mittelstaedt, and Mr Kobre). They explain the work that each firm performed (or supervised, in the case of non-U.S. counsel) and why it was reasonable and necessary to accomplish Chevron's objectives and ultimately mitigate the harm resulting from Ecuador's unremedied breaches. In addition, one of the senior decision-makers within Chevron concerning the dispute with Ecuador, Mr Ricardo Reis Veiga, provides a supplemental witness statement explaining the substantial risks that Chevron faced (including a discussion on the vulnerability of Chevron's assets at the relevant time) and the reasons why Chevron was forced to defend itself and mitigate its harm through each of the claimed actions and their direct causal link to Ecuador's continuing misconduct. He also describes Chevron's hiring, case management, and internal review processes during the relevant time period. Finally, Mr David Turner of FTI Consulting provides a brief supplemental statement explaining the changes to Appendix 2 (i.e., the Summary of Fees and Costs) and the USD 30,698,736.03 reduction in Chevron's damages claim since the first version of Appendix 2 was submitted with Claimants' Memorial on Damages.”⁵³³
2. The expert reports accompanying the Reply include the Expert Report of Steven F. Stanton, dated 20 August 2021 (“who explains the closure of the small variance he

⁵³¹ See Reply, Updated Appendix 2. ↩

⁵³² Reply, para. 686. ↩

⁵³³ Reply, para. 28. ↩

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observed in his first report to confirm Chevron's full payment of all the claimed invoices"); the Second Expert Report of Kiran Sequeira, dated 20 August 2021 (“who defends the interest rates used, updates his pre-award interest calculations, provides a dynamic model with “switches” which allows the Tribunal to make various determinations and easily assess the impact on quantum under different scenarios and alternative interest rates, and responds to Ecuador's critique of his calculation of Chevron's losses arising from the embargoed Argentine bank accounts"); the Fourth Expert Report of Weston Anson, dated 19 August 2021 (“who defends his (unchanged) valuation of Chevron's embargoed [IP] in Ecuador and responds to the criticisms of it by Ecuador and its counter-expert”); the Expert Report of José Luis Barzallo Sacoto, dated 19 August 2021 (“who refutes the erroneous claim of Ecuador and its expert that the embargo of Chevron's IP was not tantamount to a loss of control over those assets; he demonstrates that the embargo of Chevron's IP had the effect of limiting Chevron's right to use, enjoy and sell its property"); the respective Expert Reports of Joseph P. Ryan, Sandy Litvack and Clyde Lea, all dated 20 August 2021 (“three eminent former general or deputy general counsels of large multi-national companies . . . who explain their opinion that, from the perspective of decision-makers faced with the unprecedented risks Chevron faced, the USD 800 million in claimed legal fees and expenses was reasonable"); the Expert Reports of Charles Silver and Geoffrey Miller, respectively dated 19 August and 20 August 2021 (“renowned experts on attorneys' fees in the United States [who] observe that, despite the conclusion of Ecuador's experts that Chevron's claimed fees are supposedly 'shockingly high' and unnecessary, Ecuador's experts entirely ignore important and relevant considerations such as the success of Chevron's actions, Chevron's incentives to contain costs that they had no assurance of ever recovering from Ecuador (and the steps Chevron took to carefully monitor its spending to insure against inefficiency and waste), and the high stakes Chevron was facing"); the Expert Report of Daniel Slottje, dated 17 August 2021 (“who provides a statistically valid representative sample of about 400 invoices (to 95% accuracy) from the universe of 7,700-plus claimed invoices, which the experts were then able to review in further support of their conclusions that the fees and costs Chevron incurred were reasonable and lacked any material evidence of duplication, inefficiency, or other waste”); and the

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expert report of Mark A. McGrath, dated 20 August 2021 (“[a]n expert on legal spend analytics, he applied data analytics on Chevron's claimed invoices to identify normative factors such as timekeeper rates and staffing leverage and tenure [and] concludes that the claimed invoices bear no unusual indicia and thus are per se consistent with standard billing practices, Chevron had strong processes in place to manage and control its legal spend, and Chevron's outside law firms and vendors generally exercised care and diligence in their billing practices").⁵³⁴

292. The Claimants assert that they used a robust billing procedure and accounting system for the dispute, which involved a multi-level process and Chevron's “Corporation and Affiliate 2007 Guidelines for Outside Counsel” (together with its subsequent versions, “Chevron's Guidelines”), which were routinely followed.⁵³⁵

293. Further, the Claimants consider that the amount of damage incurred and paid was reasonable in the circumstances and proportionate to the risks of the Lago Agrio Litigation (a criterion which, they note, is relevant only with respect to incidental damages, and not direct damages).⁵³⁶ In the Claimants' view, contrary to the opinion of the Respondent's fee auditing experts, the Tribunal need not engage in an invoice-by-invoice line review item to reach the conclusion that their damages were reasonable, as those experts never reached the conclusion that Chevron “stood to gain by being profligate" or that “Chevron's expenditures were exceptional for litigations of this magnitude".⁵³⁷ In their view, the Tribunal has discretion to assess the reasonableness of their fees and costs in other ways, “such as by reviewing billing and expense summaries, receiving fact and expert testimony, or relying on its members' experiences, knowledge and first-hand observations of proceedings.”⁵³⁸

294. This notwithstanding, should the Tribunal decide to engage in such a detailed review, the Claimants consider that the expert opinion of Mr McGrath (a “legal and litigation spend

⁵³⁴ See Reply, paras. 29-37. ↩

⁵³⁵ Reply, paras. 678-679; Lea Expert Report, paras. 44-46. ↩

⁵³⁶ Reply, paras. 680-692; Lea Expert Report, paras. 35, 40. ↩

⁵³⁷ Reply, paras. 681-686; Silver Expert Report, paras. 28, 77, 90, 93; Miller Expert Report, para. 35. ↩

⁵³⁸ Reply, para. 683. ↩

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management and analytics expert) it would confirm the reasonableness of their claimed fees and costs.⁵³⁹ Similarly the Claimants' experts Mr Lea, Mr Ryan (both of who are former general counsel) and Professor Miller each reviewed a “statistically valid representative sample of about 400 invoices (to 95% accuracy) from the universe of 7,700-plus claimed invoices” provided by Mr Slottje of FTI (the “Invoice Sample"), with each of them confirming that the fees and costs claimed were reasonable.⁵⁴⁰

295. In addition, the Claimants posit that their litigation strategy was reasonable, including their decision to hire multiple law firms to spearhead their different litigation efforts.⁵⁴¹ Among other things, the Claimants state that all law firms involved devised strategies to ensure that litigation efforts were as seamless as possible, with Chevron's outside counsel actively working with in-house attorneys on a daily basis and ensuring that each firm's billing practices complied with the company's expectations.⁵⁴²

296. The Claimants reject the Respondent's criticisms of a limited number of invoice and time-entry allocations, asserting it disregards context.⁵⁴³ In addition, the Claimants submit that the Respondent's experts are “unhelpful to this Tribunal” and do not provide a basis for the Tribunal to reduce the Claimants' damages.⁵⁴⁴

3. The Respondent's Position

297. According to the Respondent, the Claimants “essentially restarted their case at the Reply stage, but they did not cure their Memorial-state failure to prove that the fees and costs they claim are reasonable and necessary.”⁵⁴⁵ In its view, the Claimants' Reply failed to address many of the problems that the Respondent identified in the Counter-Memorial: for instance, the Respondent asserts that the Claimants failed to (i) indicate which entities

⁵³⁹ Reply, para. 688; McGrath Expert Report, paras. 1, 26. ↩

⁵⁴⁰ Reply, paras. 36, 690-692; C-3243, Representative Invoice Sample; Ryan Expert Report, para. 85; Miller Expert Report, para. 34; Lea Expert Report, para. 47. ↩

⁵⁴¹ Reply, paras. 661-665, 693-698. ↩

⁵⁴² Reply, paras. 694-697; Seley Witness Statement, paras. 12, 15, 18, 20-23. ↩

⁵⁴³ Track III Hearing Transcript, Day 1 (18 August 2022), pp. 201-202 (Silbert), Day 15 (7 September 2022), pp. 3485-3486 (Kehoe). ↩

⁵⁴⁴ Track III Hearing Transcript, Day 15 (7 September 2022), pp. 3486-3494 (Kehoe). ↩

⁵⁴⁵ Rejoinder, para. 619. ↩

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paid the invoices underlying their claim;⁵⁴⁶ (ii) explain how they allocated USD 793 million in claimed fees across 13 of their damage categories;⁵⁴⁷ (iii) show whether their outside law firms, vendors and experts established budgets or adhered to them;⁵⁴⁸ (iv) provide an audit of the invoices;⁵⁴⁹ or (v) remove unreasonable time entries from their claims.⁵⁵⁰ Similarly, the Respondent considers that the non-invoice documents that the Claimants produced (which comprise correspondence, spreadsheets exported from Chevron's billing software TeamConnect and another version of Appendix 2 to the Memorial) fail to demonstrate billing judgment.⁵⁵¹ The Respondent also points out that the Claimants retracted their claim for over USD 30 million when the Tribunal ordered the production of invoices, which would otherwise likely have remained claimed. In the Respondent's view, this circumstance undermines the Claimants' stance for deference.⁵⁵²

298. As concerns invoice auditing, the Respondent considers the Claimants' Invoice Sample to be inadequate from a statistical perspective,⁵⁵³ and criticises the “data analytics" expert opinion of Mr Mark McGrath as “superficial and outdated".⁵⁵⁴ Instead, the Respondent invites the Tribunal to consider the audit performed by its legal fee expert, Mr John Trunko,⁵⁵⁵ who identified “abundant amounts of unreasonable fees and costs in Claimants' invoices”,⁵⁵⁶ as also concluded separately by the Respondent upon its own review.⁵⁵⁷ The Respondent offers a few examples of “unreasonable fees and costs and misallocated invoice time entries” that it found in its review, which include (inter alia):

⁵⁴⁶ Rejoinder, paras. 627, 648-655. ↩

⁵⁴⁷ Rejoinder, para. 628. ↩

⁵⁴⁸ Rejoinder, paras. 627-632. ↩

⁵⁴⁹ Track III Hearing Transcript, Day 2 (19 August 2022), p. 308 (Finsterwald). ↩

⁵⁵⁰ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3604 (Finsterwald). ↩

⁵⁵¹ Rejoinder, paras. 646-647. ↩

⁵⁵² Track III Hearing Transcript, Day 2 (19 August 2022), p. 308 (Finsterwald). ↩

⁵⁵³ Rejoinder, paras. 657-660; RE-61, Second Leigh Expert Report, paras. 51-60; RE-65, Lee Expert Report, paras. 9-14, 23-25. ↩

⁵⁵⁴ Rejoinder, paras. 661-678. ↩

⁵⁵⁵ Rejoinder, para. 660; RE-51, Trunko Expert Report. ↩

⁵⁵⁶ Rejoinder, paras. 844-846. ↩

⁵⁵⁷ Rejoinder, paras. 847-899. ↩

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1. “Unrelated activities”, such as fees for working in Chevron v. Ecuador I, public relations activities or lobbying;⁵⁵⁸
2. “Abandoned work”, such as an unpursued complaint for declaratory judgment for a Chevron subsidiary in Argentina or work in preparation for a BIT arbitration against PetroEcuador that was never initiated;⁵⁵⁹
3. “Frivolous activities”, such as an iPad bought by a Gibson Dunn attorney or time spent dining by attorneys;⁵⁶⁰
4. “Excessive activities”, generally constituting alleged instances of overbilling or serial motions submitted in the RICO and 1782 Litigations;⁵⁶¹
5. “Billing time for working on client billing issues”;⁵⁶²
6. “Administrative/clerical activities”,⁵⁶³ and “Training and background activities",⁵⁶⁴ which the Respondent claims were billed “chronically” in violation of Chevron's Guidelines;
7. “Vaguely described activities” in the relevant time entries;⁵⁶⁵
8. “Non-working time and exorbitant travel expenses”;⁵⁶⁶
9. “Time spent not working";⁵⁶⁷ and

⁵⁵⁸ Rejoinder, paras. 850-869. ↩

⁵⁵⁹ Rejoinder, paras. 870-873. ↩

⁵⁶⁰ Rejoinder, paras. 874-877. ↩

⁵⁶¹ Rejoinder, paras. 878-883. ↩

⁵⁶² Rejoinder, para. 884. ↩

⁵⁶³ Rejoinder, paras. 885-887. ↩

⁵⁶⁴ Rejoinder, para. 888. ↩

⁵⁶⁵ Rejoinder, paras. 889-892. ↩

⁵⁶⁶ Rejoinder, paras. 893-895. ↩

⁵⁶⁷ Rejoinder, para. 896. ↩

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10. “Misallocated fees and costs" among the Claimants' 13 damages categories pertaining to legal fees and expenses.⁵⁶⁸

299. The Respondent dismisses the Claimants' admonition to review time entries in context, noting that the context has been redacted.⁵⁶⁹

300. The Respondent further dismisses the witness statement of Ms Colleen Kent, who it notes was at the lowest level of Chevron's fee review hierarchy and only began reviewing invoices in January 2016.⁵⁷⁰ The Respondent is also critical of the four lawyer witness statements provided by the Claimants in an attempt to prove that their litigation strategy was reasonable and necessary,⁵⁷¹ which include Mr Veiga (formerly of Chevron),⁵⁷² Mr Seley (of Gibson Dunn),⁵⁷³ Mr Mittelstaedt (of Jones Day)⁵⁷⁴ and Mr Kobre (of Kobre & Kim).⁵⁷⁵ Similarly, the Respondent considers that the Claimants' legal fee experts also fail to demonstrate that the Claimants' claimed fees and costs are reasonable.⁵⁷⁶ The Respondent adds that, at the Track III Hearing, the Claimants “did not provide testimony from witnesses who analyze and explain the fees and costs set forth in the invoices.”⁵⁷⁷ Rather, the Respondent contends that the evidence available demonstrates that Chevron failed to follow its own billing guidelines and control processes.⁵⁷⁸

***

⁵⁶⁸ Rejoinder, paras. 897-899. ↩

⁵⁶⁹ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3604 (Finsterwald). ↩

⁵⁷⁰ Track III Hearing Transcript, Day 2 (19 August 2022), p. 307 (Finsterwald). ↩

⁵⁷¹ Rejoinder, paras. 679-737. ↩

⁵⁷² Rejoinder, paras. 681-709; Fourth Veiga Witness. ↩

⁵⁷³ Rejoinder, paras. 717-718; Seley Witness Statement. See also Rejoinder, paras. 719-737. ↩

⁵⁷⁴ Rejoinder, paras. 712-716; Mittelstaedt Witness Statement. See also Rejoinder, paras. 719-737. ↩

⁵⁷⁵ Rejoinder, para. 718; Kobre Witness Statement. See also Rejoinder, paras. 719-737. ↩

⁵⁷⁶ Rejoinder, paras. 738-840. ↩

⁵⁷⁷ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3599 (Finsterwald). ↩

⁵⁷⁸ Track III Hearing Transcript, Day 15 (7 September 2022), p. 3601 (Finsterwald). ↩

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VII. THE TRIBUNAL'S ANALYSIS ON GENERAL MATTERS AND LEGAL STANDARDS

301. In this Section, the Tribunal presents its analysis and determinations on various general matters and legal standards that influence the overall evaluation of the Claimants' damages claims in Track III. For ease of reference, such matters comprise:

1. Causation;
2. Non-compliance with Interim Awards;
3. International Subsidiaries;
4. Failure to Mitigate;
5. Fees Allegedly Incurred in Other Proceedings;
6. Tax Implications; and
7. Evidence of Legal Fees and Expenses.

302. In accordance with these standards, the Tribunal shall consider in Sections VIII and IX below each of the 16 categories of damages asserted by the Claimants.

A. CAUSATION

1. Introduction

303. Any analysis of reparation under international law must start with the internationally wrongful conduct leading to the alleged injury. This is a corollary of the principle of customary international law reflected in Article 31(1) of the ILC Articles, pursuant to which “[t]he responsible State is under an obligation to make full reparation for the injury caused by the internationally wrongful act". It is also a corollary of the applicable full reparation standard set forth in Chorzów Factory, pursuant to which full reparation for an international illegal act “must, as far as possible, wipe out all the consequences of the

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illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed.”⁵⁷⁹

304. For ease of reference, the Tribunal recalls that the Claimants claim compensation for:

1. Damages purportedly incurred in respect of the Respondent's denial of justice from 22 August 2006 (when the Claimants assert Ecuador's wrongful acts began) or, in the alternative, from 1 March 2012 (when the Lago Agrio Judgment was rendered enforceable);
2. Damages purportedly incurred after 1 January 2004 by virtue of the Respondent's breach of the Umbrella Clause of the Treaty; and
3. Damages purportedly incurred from 1 March 2012 as a result of the Respondent's breach of the First and Second Interim Awards.⁵⁸⁰

305. For the sake of simplicity, the Tribunal shall hereinafter use the following shorthand terms for the Respondent's internationally wrongful acts: (i) “Denial of Justice Breach” for its declarations in paragraphs 10.4 and 10.5 of the Track II Award concerning the Respondent's violation of Article II(3)(a) of the Treaty and customary international law for denial of justice; (ii) “Umbrella Clause Breach” for its declarations in paragraphs 10.7 and 10.8 of the Track II Award concerning the Respondent's violation of Article II(3)(c) of the Treaty (Umbrella Clause); and (iii) “Interim Awards Breach” for its declaration in paragraph 10.18 of the Track II Award concerning the Respondent's violation of the First and Second Interim Awards.⁵⁸¹

306. Further, paragraph (2) of Article 31 of the ILC Articles describes the “injury” for the purposes of paragraph (1) as the subject matter of reparation: “Injury includes any damage, whether material or moral, caused by the internationally wrongful act of a

⁵⁷⁹ CLA-406, Case Concerning the Factory at Chorzów (Germany v. Poland), 1928 PCIJ Series A, No. 17, Judgment, 13 September 1928, pp. 31-32. ↩

⁵⁸⁰ Reply, para. 672. ↩

⁵⁸¹ See para. 91 above for the full Operative Part of the Track II Award. ↩

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State".⁵⁸² Under this framework of analysis, the Tribunal is required to isolate the “injury resulting from and ascribable to” the Respondent's internationally wrongful acts from “any and all consequences flowing from" them to determine the extent to which reparation is warranted.⁵⁸³

307. The unusual circumstances of this case turn this causation analysis into a complex inquiry.

308. First, at least two of the Respondent's Treaty breaches were complex acts spanning multiple years and instrumentalities within the Ecuadorian State. The applicable principles of causation require the Tribunal to identify the appropriate reference point(s) or event(s) within the scope of the Treaty breaches by reference to which the injuries “caused by" those breaches can be identified.

309. Second, from the viewpoint of the injury caused by the Respondent's internationally wrongful acts, the Tribunal must stress the unconventional nature of the factual pattern it is required to analyse, as already advanced in the Track II Award:

The Lago Agrio Litigation was therefore likely to involve, from its outset, numerous national jurisdictions other than Ecuador. This feature makes the present case unusual. Earlier cases on denial of justice have concerned an alleged wrong and an alleged injury taking place within the same State. Here, the injury to Chevron was always intended to take place, at least in part, in one or more foreign jurisdictions elsewhere than Ecuador, whether by the enforcement of the Lago Agrio Judgment or by an enforced “amicable” settlement. Thus, the Lago Agrio Litigation was transnational in the broadest sense, as confirmed by the multiplicity of foreign lawsuits and arbitrations in the USA, Argentina, Brazil, Canada, the Netherlands and elsewhere following the issuance of the Lago Agrio Judgment.⁵⁸⁴

310. Adding to the complexity of the inquiry before the Tribunal, the injuries for which reparation is sought in Track III to a large extent do not coincide with the injury that is said to have been the originally “intended” or foreseeable result of the wrongful act (i.e., “the enforcement of the Lago Agrio Judgment or . . . an enforced 'amicable' settlement" as indicated in the above quote). As stated by the Claimants, “the vast majority of [their] actual damages result from the attorneys' fees and other costs that Claimants were obliged

⁵⁸² CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 31, Commentary (9). ↩

⁵⁸³ CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 31, Commentary (9). ↩

⁵⁸⁴ Track II Award, para. 7.27. ↩

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to incur in defending themselves against the massive fraud perpetrated through the Lago Agrio Litigation and enforcement proceedings and preparing for the defense of additional enforcement proceedings that may be brought in the future.”⁵⁸⁵ Such costs concern dozens of proceedings spanning multiple jurisdictions and occurring over many years, many of them starting before the issuance the Lago Agrio Judgment on 14 February 2011. Indeed, for a significant portion of those costs, the Claimants today claim compensation even if the Tribunal finds that they were incurred prior to the crystallisation of the Respondent's internationally wrongful acts.⁵⁸⁶

2. Track II Findings

311. Notwithstanding this complexity, the Tribunal must recall that many of the proximate causation issues that have been raised in Track III were already analysed and disposed of in the Track II Award. While the Tribunal there assigned for further submissions in Track III all issues as to reparation in the form of compensation for any injuries sustained by the Claimants,⁵⁸⁷ it dealt extensively with other forms of reparation⁵⁸⁸ – which, as already noted, must be premised on a finding of injury under international law as a matter of principle. Indeed, the Track II Award includes carefully circumscribed findings regarding the injury flowing from the Respondent's internationally wrongful acts.

312. The Tribunal will address more fully the connection between each of the Respondent's Treaty breaches and the Claimants' injuries in Section VII.A.4 below. In the paragraphs that immediately follow, the Tribunal will limit itself to identifying the Track II findings of injury with which it must remain consistent in this Award on Track III.

⁵⁸⁵ Memorial, para. 144. ↩

⁵⁸⁶ Track III Hearing Transcript, Day 12 (2 September 2022), p. 2788 (Paulsson): “The obligation to make full reparation for an injury caused by an internationally wrongful act does include an obligation to pay damages for costs incurred by the victim prior to the consummation of the breach; and such damages may be characterized either as direct damages or as incidental damages for costs of mitigation.” See also Track III Hearing Transcript, Day 12 (2 September 2022), pp. 2794-2800 (Paulsson). ↩

⁵⁸⁷ Track II Award, para. 10.14: “All issues as to reparation in the form of compensation for any injuries sustained by the First or Second Claimant, as claimed by the Claimants and denied by the Respondent, including any assessment of the amount of compensation, moral damages, indemnities, reimbursements, payments, expenses and interest, are currently assigned for further submissions by the Parties to Track III. These issues are not decided in this Award." ↩

⁵⁸⁸ See generally Track II Award, Parts IX and X. ↩

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313. At the outset, the Tribunal recalls that the Track II Award ordered reparation in the form of several declarations and orders specifically targeted at wiping out the consequences of the recognition and enforcement of the Lago Agrio Judgment.⁵⁸⁹ Of those measures, the Tribunal said:

As to international law, the Tribunal has decided that the Respondent breached its obligations, by a denial of justice, in issuing the Lago Agrio Judgment, rendering it enforceable and maintaining its enforceability by the Lago Agrio Plaintiffs.

In Part VIII above, as to the right of a party to receive a fair hearing before an impartial tribunal, the Tribunal has already referred to Article 10 of the Universal Declaration of Human Rights, Article 14 of the International Covenant on Civil and Political Rights and Articles 2 and 6 of the UN Basic Principles on the Independence of the Judiciary. The violation of such a right by judicial corruption is proscribed by the UN Convention against Corruption ratified by the General Assembly on 31 October 2003 (to which the Respondent is a Contracting Party). In World Duty Free (2006), in the context of corruption by bribery, the tribunal identified, as a matter of international public policy, an international consensus as to universal standards and accepted norms of conduct that must be applied in all fora. It concluded: “In light of domestic laws and international conventions relating to corruption, and in light of the decisions taken in this matter by courts and arbitral tribunals, this Tribunal is convinced that bribery is contrary to the international public policy of most, if not all, States. . .”. In the Tribunal's view, judicial bribery must rank as one of the more serious cases of corruption, striking directly at the rule of law, access to justice and public confidence in the legal system; and also, as regards the foreign enforcement of a corrupt judgment, at the law of nations. Accordingly, the Tribunal concludes that the Lago Agrio Judgment (with the judgments of the Lago Agrio Appellate, Cassation and Constitutional Courts) violates international public policy. As a matter of international comity, it must follow that the Lago Agrio Judgment should not be recognised or enforced by the courts of other States.

In the Tribunal's view, the reinstatement of the Claimants' rights under international law requires of the Respondent the immediate suspension of the enforceability of the Lago Agrio Judgment and the implementation of such other corrective measures as are necessary to “wipe out all the consequences" of the Respondent's internationally wrongful acts, so as to re-establish the situation which would have existed if those internationally wrongful acts had not been committed by the Respondent.

The Tribunal considers that these measures, subject to their elaboration in the form of declarations and orders below, are appropriate in the present circumstances of this case. These circumstances do not require the Tribunal itself to declare the nullity of the Lago Agrio Judgment under international law.⁵⁹⁰

314. Critically, among these measures of reparation as are “necessary to 'wipe out all the consequences' of the Respondent's internationally wrongful acts” is the Tribunal's declaration that any injury caused by the recognition or enforcement of any part of the

⁵⁸⁹ Track II Award, paras. 10.10, 10.11, 10.13. ↩

⁵⁹⁰ Track II Award, paras. 9.15-9.18 (emphasis by the Tribunal). ↩

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Lago Agrio Judgment within or without Ecuador warrants reparation under international law:

10.11 The Tribunal declares that any injury to the First Claimant or the Second Claimant caused by the recognition or enforcement of any part of the Lago Agrio Judgment within or without Ecuador (as decided by the Lago Agrio Appellate, Cassation and Constitutional Courts) shall be injuries for which the Respondent is liable to make reparation under international law;⁵⁹¹

315. In the same vein, the Tribunal's subsequent order to the Respondent to make full reparation in the form of compensation is specifically circumscribed to any injuries caused to the Claimants by the unremedied Lago Agrio Judgment,⁵⁹² subject to further determination in this Track III:

10.13 The Respondent shall, to the satisfaction of the Tribunal and as unconditional obligations of result (save where otherwise indicated):

...

(viii) subject to further order of this Tribunal in Track III, make full reparation in the form of compensation for any injuries caused to the First Claimant and the Second Claimant by the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate Court, Cassation and Constitutional Courts).⁵⁹³

316. One can extract several conclusions from the above rulings. First, the Tribunal identified the recognition and enforcement of any part of the Lago Agrio Judgment as the specific source of the injury caused by the Respondent's internationally wrongful acts. Second, any injuries caused to the Claimants by the unremedied Lago Agrio Judgment warrant reparation in the form of compensation in an amount to be determined in Track III. Third, no other forms of injury warranting reparation are identified in Parts IX or X of the Track II Award, the Tribunal having expressly stated that “[s]ave as aforesaid, the requests for relief made by the [Parties] for decision in this Track II are not granted".⁵⁹⁴

⁵⁹¹ Track II Award, para. 10.11 (emphasis by the Tribunal). ↩

⁵⁹² See Track II Award, para. 8.27: “By the shorthand terms "uncorrected" and "unremedied", here and elsewhere in this Award, the Tribunal means that the Lago Agrio Judgment (excepting its award of punitive damages) was considered by the Lago Agrio Appellate Court, Cassation and Constitutional Courts, in full knowledge of the complaints of serious procedural impropriety, without appropriate steps being taken to address the allegations of procedural fraud, judicial misconduct and ‘ghostwriting' raised by Chevron at the time.” Such terms are used with this same meaning in this Award. ↩

⁵⁹³ Track II Award, para. 10.13(viii) (emphasis by the Tribunal). ↩

⁵⁹⁴ Track II Award, para. 10.23. ↩

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317. In sum, the Tribunal has already identified the uncorrected Lago Agrio Judgment – and specifically its recognition and enforcement – as the primary source of the Claimants' injuries caused by the Respondent's internationally wrongful acts. As such, international law requires that any measure of full reparation implemented in Track III be targeted specifically at wiping out the injuries caused by the recognition and enforcement of the uncorrected Lago Agrio Judgment. Absent a finding of a separate and independent source of injury flowing from the Respondent's internationally wrongful acts, reparation cannot go beyond this limit.

3. Direct and Incidental Damages

(a) Introduction

318. Having reached this conclusion, the Tribunal is better placed to distinguish the injuries flowing from the Respondent's internationally wrongful acts that must be categorised as damages proximately caused by those acts (or ‘direct damages' for shorthand) from those that constitute incidental damages “reasonably incurred to repair damage and otherwise mitigate loss" arising from those wrongs.⁵⁹⁵ The Tribunal already addressed this distinction in Procedural Order No. 65, which, it must be recalled, was issued after the filing of the Respondent's Counter-Memorial and before the filing of the Claimants' Reply:

The Tribunal further notes that an assessment of the individual claims under Categories (a)-(m) may be approached differently by it depending on the nature of the causal connection between the Treaty breaches and the alleged losses. In particular, a distinction may be established, at least, among those heads of damages that are proximately caused by the breaches; and those which are incidental, or otherwise incurred as the costs of reasonable mitigation measures. In line with this distinction, the relevant test for reasonableness may vary depending on the nature of each head of damages.

In respect of damages claimed to have been proximately caused by the breaches of the Treaty, the assessment is fundamentally one of proximate causation, not of reasonableness. Yet, the reasonableness of the Claimants' actions in the face of wrongful conduct may still be relevant to this analysis. As per the commentary to the ILC Articles, “[e]ven the wholly innocent victim of wrongful conduct is expected to act reasonably when confronted by the injury. Although often expressed in terms of a 'duty to mitigate', this is not a legal obligation which itself gives rise to responsibility. It is rather that a failure to mitigate by the injured party may preclude recovery to that extent." Moreover, a certain degree of unreasonable conduct may break the chain of causation altogether or even constitute an

⁵⁹⁵ CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 36, Commentary (34). ↩

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independent contribution to the injury under Article 39 of the ILC Articles. Reasonableness is not as such an independent, positive element of the test for proximate causation under Article 31 of the ILC Articles.

On the other hand, reasonableness does constitute a specific requirement for the recovery of incidental damages. The Claimants are bound to prove that such costs were “reasonably incurred to remedy or mitigate damage flowing from an internationally wrongful act".

Accordingly, a reasonableness analysis may not be necessary where direct causation between the breach and the incurred fees and costs is clear and has not been severed (without prejudice to the actual spending having to be proved). It will, however, be necessary for all claims for incidental damages.

As noted above, the Claimants contend that all of their claims under Categories (a)-(m) fall under the primary head of damages. At this stage, it is not entirely clear to the Tribunal whether there are any claims under Categories (a)-(m) and, if so, which are those claims for which the Claimants consider that some form of a reasonableness assessment might be undertaken by the Tribunal. For instance, it is not entirely clear to the Tribunal at this stage, whether the costs and fees pertaining to the Lago Agrio Litigation and the enforcement actions in Ecuador, Argentina, Brazil and Canada, and the Ecuadorian Criminal Proceedings (Categories (a), (d)-(g), and (k)) are claimed exclusively as damages proximately caused by the Respondent's breaches, potentially subjecting them to a different standard of scrutiny for reasonableness. Conversely, it is not entirely clear to the Tribunal at this stage whether the costs and fees associated with the § 1782 Actions, the RICO Litigation, the planning and preparation to defend against potential enforcement actions in other jurisdictions, and the Gibraltar Litigation (Categories (b)-(c) and (h)-(i)) are claimed alternatively as incidental costs and mitigation measures, potentially subjecting them to different standards. The Tribunal would consider it useful to be further briefed by the Parties on this issue in their second round of submissions in the Track III proceedings.⁵⁹⁶

319. Thereafter, the Claimants confirmed in their Reply and at the Track III Hearing that all of their claimed legal fees and expenses constitute direct damages and are recoverable in the alternative as incidental damages.⁵⁹⁷ The Respondent disputes this, contending that they all constitute incidental expenses.⁵⁹⁸

⁵⁹⁶ Procedural Order No. 65, 10 July 2020, paras. 74-78. “Categories (a)-(m)", as referenced in this quote, correspond to the Claimants' claims listed in items (a) through (m) of paragraph 479(2) of their Memorial: “a. US$ 165,948,547.27 in relation to the Lago Agrio Litigation; b. US$ 66,286,194.18 in relation to the § 1782 Actions; c. US$ 328,258,466.65 in relation to the RICO Action; d. US$ 3,703,465.90 in relation to the Ecuador Enforcement Action; e. US$ 26,473,951.23 in relation to the Argentina Enforcement Action; f. US$ 21,682,698.55 in relation to the Brazil Enforcement Action; g. US$ 40,736,344.94 in relation to the Canada Enforcement Action; h. US$ 27,534,505.48 in relation to defense against recognition and enforcement in other countries and general recognition and enforcement work; i. US$ 39,651,933.78 in relation to the Gibraltar offensive actions and other offensive action against co-conspirators; j. US$ 57,768,063.05 in relation to the general defense against the Lago Agrio fraud and the resulting fraudulent Judgment; k. US$ 7,065,435.37 in relation to the Ecuadorian Criminal Proceedings; l. US$ 35,776,712.89 in relation to the BIT Non-Counsel-of-Record Fees; and m. US$ 3,692,384.48 in relation to the Dutch Set-Aside Proceedings." ↩

⁵⁹⁷ Reply, para. 17; Track III Hearing Transcript, Day 1 (18 August 2022), pp. 16-17 (Paulsson). ↩

⁵⁹⁸ Counter-Memorial, paras. 223, 228, 364; Rejoinder, paras. 243-251. ↩

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320. In accordance with the foregoing, the Tribunal makes preliminary determinations in this Section regarding the proper categorisation of the Claimants' claimed damages as direct or incidental damages and the showings required to grant compensation in each instance.

(b) Direct Damages

321. The Tribunal addresses first direct damages. Having determined that the uncorrected Lago Agrio Judgment is the primary source of the Claimants' injuries, the Tribunal can readily categorise any injury caused by the recognition or enforcement of any part of the Lago Agrio Judgment as a form of direct damage flowing naturally from the Respondent's internationally wrongful acts. Examples of conduct amounting to an enforcement, as identified by the Tribunal in the Track II Award, include, without limitation, “attachment, arrest, interim injunction [or] execution".⁵⁹⁹ As further explained below, an embargo would also fit this description.⁶⁰⁰ For instance, the arrest of an oil tanker owned by the Claimants premised on the recognition and enforcement of the Lago Agrio Judgment would constitute a form of direct damage.

322. As noted by the Tribunal in Procedural Order No. 65, the assessment of direct damages under international law is fundamentally one of proximate causation, not of reasonableness.⁶⁰¹ Indeed, reasonableness is a measure of the actions undertaken by the injured party when confronted with the injury, not of the injury itself.⁶⁰² In the instant case, the injury as particularized in the preceding paragraph flows naturally from the breach without any intervening action from the Claimants, obviating any need for a reasonableness analysis.

⁵⁹⁹ Track II Award, para. 10.13(ii). See also Track II Award, para. 7.25: “Outside Ecuador, however, Chevron, with its large group of associated companies, indirectly owned (and still owns) substantial assets, including ocean-going vessels, bank deposits around the world, and other properties. By their nature, vessels and bank deposits were and remain vulnerable to arrest, attachment or seizure by the Lago Agrio Plaintiffs upon the Lago Agrio Judgment's enforcement in multiple jurisdictions, especially ex parte without prior notice. Even if Chevron were in a position to discharge promptly such an order freezing a bank deposit or arresting a vessel, the damage to Chevron and its associated companies from such repeated actions could have been very significant (as it may still be)." ↩

⁶⁰⁰ See Section IX.A below, concerning Embargo Losses in Argentina. ↩

⁶⁰¹ Procedural Order No. 65, 10 July 2020, para. 75; CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 31, Commentary (10). ↩

⁶⁰² CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 36, Commentary (10): “It is well established that incidental expenses are compensable if they were reasonably incurred to repair damage and otherwise mitigate loss arising from the breach." ↩

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323. Furthermore, as agreed by the Parties, the onus is on the injured party (the Claimants) to establish proximate causation as regards direct damages.⁶⁰³ However, any failure by the Claimants to mitigate such damage may preclude recovery to that extent.⁶⁰⁴ The burden to prove that the Claimants did not fulfil this duty to mitigate lies with the Respondent.⁶⁰⁵

324. A matter related to the question of burden of proof is the standard of proof and, relatedly, the degree of granularity of the evidence required to establish damages under international law, whether direct or incidental.

325. As to the first question, the Tribunal has been given no reason to apply a different standard of proof to damages other than the generally applicable standard of balance of probabilities.⁶⁰⁶

326. In respect of the question of granularity, the Parties have brought no source to the attention of the Tribunal mandating a specific level of granular analysis of damages under international law.⁶⁰⁷ As such, granularity is better dealt with as a question of sufficiency or adequacy of the evidence on damages.⁶⁰⁸ The Tribunal will address this matter in full in Sections VIII and IX below. As more fully explained there, only three of the 16 damages categories analysed in this Award (Embargo in Argentina, Intellectual Property Losses in Ecuador, and Moral Damages) may be addressed within the purview of direct damages. All other damages categories concern legal fees and expenses and are therefore only compensable as incidental damages, an issue to which the Tribunal now turns.

⁶⁰³ Track III Hearing Transcript, Day 7 (26 August 2022), p. 1479 (Bishop), p. 1492 (Schwartz). See also CLA-617, Gold Reserve Inc. v. Venezuela, ICSID Case No. ARB(AF)/09/1, Award, 22 September 2014, para. 685. ↩

⁶⁰⁴ CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 31, Commentary (11). ↩

⁶⁰⁵ Track III Hearing Transcript, Day 7 (26 August 2022), p. 1478 (Bishop), p. 1492 (Schwartz). ↩

⁶⁰⁶ Track II Award, para. 8.42; Track III Hearing Transcript, Day 7 (26 August 2022), p. 1482 (Bishop); Day 8, p. 1753 (Bishop). See also CLA-617, Gold Reserve Inc. v. Venezuela, ICSID Case No. ARB(AF)/09/1, Award, 22 September 2014, para. 685. ↩

⁶⁰⁷ See Letter from the Tribunal to the Parties dated 23 August 2022, Question 8: “What is the degree of granularity required for proof of damages under international law or what principles determine the details that must be proven?”; Track III Hearing Transcript, Day 7 (26 August 2022), pp. 1478-1491 (Bishop), pp. 1491-1503 (Schwartz); Day 8 (29 August 2022), pp. 1752-1765 (Bishop), pp. 1765-1778 (Schwartz). ↩

⁶⁰⁸ See Procedural Order No. 65, 10 July 2020, paras. 81-85. ↩

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(c) Incidental Damages

1. The Requirement of Causation for the Compensation of Incidental Damages

327. The Tribunal turns now to incidental damages. Generally, such damages shall be compensable in this Arbitration if they were “reasonably incurred to repair damage and otherwise mitigate loss” arising from the recognition and enforcement of any part of the Lago Agrio Judgment. Under this framework of analysis, the legal fees and expenses reasonably incurred by the Claimants in attempting to repair damage and otherwise mitigate the enormous anticipated losses that would arise from the recognition and enforcement of the Lago Agrio Judgment will generally fall under the heading of incidental damages.⁶⁰⁹ Building on the example in paragraph 321 above, while the actual arrest of an oil tanker owned by the Claimants premised on the recognition and enforcement of the Lago Agrio Judgment would constitute a form of direct damage, the legal fees and expenses reasonably incurred by the Claimants to anticipate and resist such an arrest, or to overturn the arrest after it has been enforced, would amount to incidental damages.⁶¹⁰

328. As with direct damages, it is the Claimants' burden to establish causation between any incidental damages for which compensation is sought and the Respondent's wrongs.⁶¹¹ Within the realm of incidental damages, however, the relevant causation assessment is not whether such damages flow naturally from a breach (i.e., whether they were proximately caused by the breach) but rather whether they were incurred in reaction to an injury arising from a breach and were geared towards minimizing the effects of such injury (i.e., whether they were “incurred to repair damage and otherwise mitigate loss

⁶⁰⁹ CLA-652, Sergey Ripinsky, Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2016), pp. 302-303: “Professional fees: Incidental expenses may be incurred in the course of defending from the ‘attacks' of the host-country authorities"; CLA-605, Pope & Talbot Inc. v. Canada, UNCITRAL, Award in respect of Damages, 31 March 2002, para. 85; CLA-655, Autopista Concesionada de Venezuela, C.A. v. Venezuela, ICSID Case No. ARB/00/5, Award, 23 September 2003, para. 275. ↩

⁶¹⁰ The Tribunal observes that this classification as between direct and incidental damages might have required further refinement vis-à-vis discreet components on the Claimants' damages claims in circumstances where the aim of a recognition and enforcement action was to force an 'amicable' settlement on the Claimants and the Claimants made payments to settle the action (see para. 309 above). However, none of the Claimants' damages claims concerns such scenario. Accordingly, the Tribunal considers that its classification is correct for the purposes of this Award and notes that, in any event, any such reclassification would have no significant effect on the determination of the questions currently pending before the Tribunal. ↩

⁶¹¹ Track III Hearing Transcript, Day 7 (26 August 2022), p. 1479 (Bishop), p. 1492 (Schwartz). ↩

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arising from the breach”).⁶¹² In other words, incidental damages by definition seek to mitigate some form of direct damage – in this case, the damage arising directly from the recognition and enforcement of the uncorrected Lago Agrio Judgment. As such, incidental damages amount to a secondary source of injury, the primary source being any form of direct damage as just described.

329. Accordingly, to the extent they amount to a form of damage caused by the internationally wrongful act of a State, incidental damages also form part of the injury that constitutes the subject matter of reparation under Article 31(2) of the ILC Articles.⁶¹³ By way of example, if a fire is deliberately and unlawfully lit which will directly threaten a neighbouring property when it spreads, the injury can properly be said to arise before the fire actually reaches the neighbouring property, and the costs of reasonable measures to protect against the fire are recoverable.

330. In this respect, the Tribunal must observe that it is uncommon for a damages claim to be centred principally on incidental harm occurring outside the main chain of events of the treaty breach – here, the Lago Agrio Litigation occurring in Ecuador. While such circumstance is explained by the special features of this claim (including primarily the transnational risk of enforcement of the Lago Agrio Judgment),⁶¹⁴ it also raises an inevitable question of remoteness of the damage. Thus, in the Tribunal's view, the required causal link must be established clearly and in an itemized fashion for each mitigation measure to warrant reparation. Similarly, the Tribunal will bear in mind the need to distinguish between the legal fees and expenses spent to minimize the effects of the Respondent's Treaty breaches and those which form part of the normal cost of doing business in the host State, which by definition are not recoverable as damages.

331. In reaching this conclusion, the Tribunal has taken note of the Claimants' argument that damages must be deemed to be caused by the breach when they were deliberately caused

⁶¹² CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 36, Commentary (34). ↩

⁶¹³ CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 31, Commentary (9) (“Injury includes any damage, whether material or moral, caused by the internationally wrongful act of a State") (emphasis by the Tribunal). ↩

⁶¹⁴ Track II Award, paras. 7.24-7.27. ↩

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by the wrongdoer.⁶¹⁵ The Tribunal considers this to be, at most, a factor that must be taken into account when performing a proximate causation analysis and only vis-à-vis direct damages;⁶¹⁶ it cannot serve as a basis to obviate the proximate causation analysis required under international law for the assessment of direct damages or the additional layer of analysis required for the assessment of incidental damages (i.e., whether incidental damages were incurred in reaction to some form of direct damage).

2. The Requirement of Reasonableness for the Compensation of Incidental Damages

332. Aside from causation, and unlike direct damages, incidental damages are subject to a requirement of reasonableness – again, the notion of reasonableness implies an assessment of the Claimants' reaction to any direct damage flowing from the Respondent's internationally wrongful acts.⁶¹⁷ The onus is on the Claimants to prove that any legal costs spent to mitigate the injury were “reasonably incurred”, as already indicated by the Tribunal in Procedural Order No. 65.⁶¹⁸

333. According to the Claimants, however, the allocation of the burden of proof on reasonableness includes an additional layer of analysis. In their submission, once the Claimants have satisfied the burden to establish that a particular measure is reasonable, the burden shifts to the Respondent to establish that the amount of costs incurred in undertaking such measure is unreasonable. This is so, the Claimants say, because such challenge is tantamount to an affirmative defence of a failure to mitigate damage.⁶¹⁹

334. The Tribunal finds no basis to adopt the twofold analysis proposed by the Claimants. The reasonableness requirement for the compensation of incidental damages is connected to

⁶¹⁵ Track III Hearing Transcript, Day 1 (18 August 2022), p. 35 (Paulsson). ↩

⁶¹⁶ CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 31, Commentary (10): “There is a further element, associated with the exclusion of injury that is too 'remote' or 'consequential' to be the subject of reparation. In some cases, the criterion of 'directness' may be used, in others 'foreseeability' or 'proximity'. But other factors may also be relevant: for example, whether State organs deliberately caused the harm in question, or whether the harm was caused within the ambit of the rule which was breached, having regard to the purpose of that rule." (emphasis by the Tribunal) ↩

⁶¹⁷ CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 36, Commentary (34). ↩

⁶¹⁸ Procedural Order No. 65, 10 July 2020, para. 76. ↩

⁶¹⁹ Track III Hearing Transcript, Day 6 (25 August 2022), p. 1253 (Coriell). ↩

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the reasonableness criterion underlying the duty to mitigate but must not be conflated with it. When compensation is sought for incidental damages, reasonableness arises as a requirement for compensation under Article 36 of the ILC Articles and as such it must be established by the party requesting compensation. The breaching party may challenge the reasonableness of the amounts sought, but such challenge should not be equated to a failure to mitigate as an affirmative defence against a request for reparation (Article 31 of the ILC Articles), which seeks to address the injured party's failure to act reasonably when confronted by the injury and preclude recovery to that extent.⁶²⁰ It is not concerned with the injured party's failure to mitigate its own conduct.

335. Consequently, having claimed compensation for incidental damages, the onus is on the Claimants to prove the reasonableness of both the mitigation measures they undertook and the amounts spent in connection with each of those measures.⁶²¹

336. Lastly, the Parties have also briefed the Tribunal extensively regarding the applicable test for reasonableness as regards incidental damages.⁶²² Having assessed the materials before it, the Tribunal finds no need and no basis to formulate a comprehensive test for reasonableness in the abstract and detached from the factual matrix of the case: no such test has been fully settled yet in international law,⁶²³ and in any event, as already noted elsewhere by the Tribunal, a reasonableness analysis is always context-dependent.⁶²⁴ It is however prepared to accept, as agreed by the Parties, that the test for reasonableness is an

⁶²⁰ CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 31, Commentary (11): “Even the wholly innocent victim of wrongful conduct is expected to act reasonably when confronted by the injury." (emphasis by the Tribunal). ↩

⁶²¹ See e.g. RLA-738, Sergey Ripinsky & Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2008), p. 305, fn 217: “In cases where a claimant seeks recovery of the cost of litigation with third parties, he will have to show that it was reasonable for him to defend in those proceedings, in addition to establishing the reasonableness of the amount of professional costs"; RLA-722, Iran v. United States, Cases Nos. A15 (IV) and A24-FT, Award No. 590- A15(IV)/A24-FT, 28 December 1998, para. 102: “The Tribunal expects Iran to show in the second phase of these proceedings what expenses it incurred with respect to each specific case and what was the particular justification for the specific sums it spent." ↩

⁶²² See, inter alia, Track III Hearing Transcript, Day 6 (25 August 2022), pp. 1261-1264 (Coriell), pp. 1266-1269 (Tsutieva). ↩

⁶²³ RLA-738, Sergey Ripinsky & Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2008), p. 306: “Since international law has not yet developed its own intellectual tools of assessing whether particular expenditure has been incurred reasonably, national experiences will be of use." ↩

⁶²⁴ Partial Award on Track III, para. 182. ↩

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objective one.⁶²⁵ It also accepts necessity as a component of reasonableness, albeit not as an independent requirement of the test under international law, which finds no clear support in the authorities filed by the Parties. Proportionality – which is embedded separately in the test for proximate causation as regards compensation⁶²⁶ – may also be regarded as a component of reasonableness when understood as proportionality between the measures undertaken and the mitigation goals sought by the injured party.⁶²⁷

337. The Tribunal has taken note of other factors suggested by the Parties as pertaining to the reasonableness test when applied to legal fees and expenses conceptualized as incidental damages.⁶²⁸ The key factors or indicia proposed by the Claimants include the following:

1. There is a presumption of reasonableness and deference to a claimant's business judgment.
2. Payment of legal fees and expenses without a guarantee of recovery constitutes strong evidence of reasonableness.
3. Reasonableness is assessed at the relevant time, not with the benefit of hindsight.
4. Consistent success constitutes evidence of reasonableness.
5. Reasonableness is a range, not a fixed point.⁶²⁹

⁶²⁵ Track III Hearing Transcript, Day 6 (25 August 2022), p. 1261 (Coriell), p. 1270 (Tsutieva). ↩

⁶²⁶ CLA-291, ILC Articles on Responsibility of States for Internationally Wrongful Acts (updated compilation) (2001), Art. 34, Commentary (5): “The issue is whether the principle of proportionality should be articulated as an aspect of the obligation to make full reparation. In these articles, proportionality is addressed in the context of each form of reparation, taking into account its specific character . . . Compensation is limited to damage actually suffered as a result of the internationally wrongful act, and excludes damage which is indirect or remote." ↩

⁶²⁷ RLA-738, Sergey Ripinsky & Kevin Williams, DAMAGES IN INTERNATIONAL INVESTMENT LAW (2008), p. 306: “This standard inevitably calls for a case-by-case consideration as to whether the mitigation expenses were reasonably incurred in the circumstances of a particular claim. It appears that the reasonableness of incidental expenses may generally be assessed by examining the proportionality of the measures taken in order to achieve the claimants' legitimate objectives.” (emphasis in original) ↩

⁶²⁸ Track III Hearing Transcript, Day 6 (25 August 2022), pp. 1263-1264 (Coriell), pp. 1264-1276 (Tsutieva). ↩

⁶²⁹ Track III Hearing – Claimants' Presentation on Question 5 (25 August 2022), Slide 12; Track III Hearing Transcript, Day 6 (25 August 2022) pp. 1263-1264 (Coriell). ↩

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338. In turn, the Respondent's proposed factors include:

1. A showing that the Claimants “were reasonably compelled in the prudent defense of their interests to undertake particular decisions",⁶³⁰ which must be “a reasonable perception in light of the situation prevailing at the time".⁶³¹
2. Fees must be the product of reasonable billing judgment by lawyers.⁶³²
3. Regardless of actual spending, all fees are subject to scrutiny for reasonableness and necessity.⁶³³
4. It is “ludicrous to treat the spending of hundreds of millions of dollars of legal fees as some kind of market determination that tribunals and courts are not permitted to review."⁶³⁴

339. The Tribunal will assess these factors in full within the context of each head of damages later in this Award. At this stage it will only share the observations that follow.

340. First, it is common ground between the Parties that reasonableness should be assessed contemporaneously and not with the benefit of hindsight. The Tribunal accepts this proposition as being consistent with Article 36 of the ILC Articles.

341. Accordingly, the Tribunal is prepared to grant a certain level of deference to the Claimants' decisions as to which specific mitigation measures to undertake in real time,⁶³⁵ particularly so in view of the global risk of enforcement of the Lago Agrio Judgment and the need to coordinate actions in multiple jurisdictions. However, the Tribunal finds no basis in international law for the proposition that the Claimants' exercise of business

⁶³⁰ Track III Hearing Transcript, Day 6 (25 August 2022), p. 1265 (Tsutieva). ↩

⁶³¹ Track III Hearing Transcript, Day 6 (25 August 2022), p. 1270 (Tsutieva). ↩

⁶³² Track III Hearing Transcript, Day 6 (25 August 2022), p. 1268 (Tsutieva). ↩