Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-13-07103/USCOURTS-caDC-13-07103-0/pdf.json

Parties Involved:
Chevron Corporation
Appellee
Texaco Petroleum Company
Appellee
The Republic of Ecuador
Appellant

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 12, 2015 Decided August 4, 2015

No. 13-7103

CHEVRON CORPORATION AND TEXACO PETROLEUM COMPANY,

APPELLEES

v.

THE REPUBLIC OF ECUADOR,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 1:12-cv-01247)

Mark N. Bravin argued the cause for appellant. With him 

on the briefs were Eric M. Goldstein and Eric T. Werlinger.

Jeffrey S. Bucholtz argued the cause for appellees. With

him on the brief were Brian Callanan, James P. Sullivan, 

Brian A. White, and Caline Mouawad.

Before: GARLAND, Chief Judge, and SRINIVASAN and 

WILKINS, Circuit Judges.

Opinion for the Court filed by Circuit Judge WILKINS.

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WILKINS, Circuit Judge:

For the last twenty years, the Republic of Ecuador and 

energy industry giant Chevron Corporation have been locked 

in a struggle involving a series of lawsuits related to an 

investment and development agreement. The dispute began 

in the Ecuadorian court system, where it languished 

unresolved for over a decade. It then proceeded to an 

international arbitration tribunal, whose verdict in Chevron’s 

favor was appealed and sustained at all levels of the Dutch 

judiciary. The dispute made it to our shores in an action for 

confirmation of the arbitral award before the District Court 

for the District of Columbia. The District Court confirmed 

the arbitral award, prompting yet another appeal. We now 

affirm.

I.

In 1973, Chevron1 and Ecuador signed an agreement 

allowing Chevron to develop Ecuadorian oil fields in 

exchange for providing below-market oil to the Ecuadorian 

government for domestic use. The deal was set to expire in 

1992, and the parties were unable to agree to an extension. 

As the expiration date approached, Chevron filed several 

breach of contract suits against Ecuador. In 1995, Chevron 

and Ecuador signed a settlement agreement conclusively 

terminating all rights and obligations between the parties. 

The agreement provided for the continuation of the pending 

lawsuits.

In 1993, the United States and Ecuador signed a Bilateral 

Investment Treaty (“BIT”)—formally known as the Treaty 

 1 For purposes of this opinion, “Chevron” refers both to the 

Chevron Corporation and to its predecessor, Texaco Petroleum Co.

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Between the Government of the United States of America and 

the Government of the Republic of Ecuador for the 

Encouragement and Reciprocal Protection of Investment—

which took effect in 1997. Under this treaty, Ecuador made a 

standing offer to American investors to arbitrate disputes 

involving investments that existed on or after the treaty’s 

effective date. J.A. 297, 300. For purposes of the BIT, the 

definition of “investment” included “a claim to money or a 

claim to performance having economic value, and associated 

with an investment.” J.A. 294. 

In 2006, Chevron commenced an international arbitration 

action before a three-member tribunal based out of The 

Hague, claiming that Ecuador had violated the BIT by failing 

to resolve its lawsuits in a timely fashion. Ecuador objected 

to the tribunal’s jurisdiction, arguing that it had never agreed 

to arbitrate with Chevron. The basis of this objection was 

Ecuador’s contention that Chevron’s investments in Ecuador 

had terminated no later than 1995, two years prior to the entry 

into force of the BIT. The tribunal rejected the jurisdictional 

challenge, finding that Chevron’s lawsuits were 

“investments” within the meaning of the BIT, and, after 

determining that Ecuador had delayed disposition of the 

lawsuits, ultimately decided against Ecuador on the majority 

of the breach of contract claims, awarding Chevron 

approximately $96 million. Ecuador challenged the award in 

the Dutch court system; the challenge was rejected by the 

District Court of The Hague, The Hague Court of Appeal, and 

the Dutch Supreme Court.

On July 27, 2012, Chevron petitioned the District Court 

to confirm the arbitral award under the Convention on the 

Recognition and Enforcement of Foreign Arbitral Awards 

(“New York Convention”), which has been incorporated into 

the Federal Arbitration Act. See 9 U.S.C. §§ 201-208. 

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Ecuador raised three arguments in opposition: (1) that the 

District Court lacked subject-matter jurisdiction under the 

Foreign Sovereign Immunities Act (“FSIA”); (2) that 

confirmation should be denied under the New York 

Convention; and (3) that a stay should be granted until the 

Dutch Supreme Court could resolve the then-pending appeal 

of the award.

The District Court determined that it had subject-matter 

jurisdiction under 28 U.S.C. § 1605(a)(6), which provides that 

sovereign immunity does not prevent a suit to confirm an 

award made pursuant to an arbitration agreement governed by 

an international treaty, because the award was made pursuant 

to the BIT and governed by the New York Convention. J.A. 

1427-28. The District Court rejected Ecuador’s argument that 

the FSIA required the District Court to undertake a de novo 

analysis of whether the dispute was arbitrable under the BIT. 

J.A. 1428-29. The District Court reviewed the question of 

arbitrability, however, as part of its consideration of whether 

the confirmation should be denied under the New York 

Convention, J.A. 1430-45, and found that the parties had 

“clearly and unmistakably agreed” that the tribunal would 

resolve such questions. J.A. 1436. Having made this finding, 

the District Court engaged in a deferential review of the 

tribunal’s arbitrability decision and determined that it was 

clearly supported by the text of the BIT. J.A. 1439. The 

District Court rejected Ecuador’s argument that confirming 

the order was against public policy and denied the requested 

stay. J.A. 1439-46. Ecuador filed a timely appeal. We 

affirm.

II.

As a general matter, the FSIA grants foreign states 

immunity from the jurisdiction of the courts of the United 

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States. 28 U.S.C. § 1604. In enacting the FSIA, however, 

Congress enumerated several exceptions to this jurisdictional 

restriction. These exceptions “provide[] the sole basis for 

obtaining jurisdiction over a foreign state in federal court.” 

Argentine Republic v. Amerada Hess Shipping Corp., 488 

U.S. 428, 439 (1989); see also Verlinden B.V. v. Cent. Bank of 

Nigeria, 461 U.S. 480, 488-89 (1983). At issue in this case is 

the arbitration exception, which provides for federal court 

jurisdiction “in any case . . . in which the action is brought, 

either to enforce an [arbitration] agreement made by the 

foreign state with or for the benefit of a private party . . . or to 

confirm an award made pursuant to such an agreement to 

arbitrate, if . . . the agreement or award is or may be governed 

by a treaty . . . in force for the United States calling for the 

recognition and enforcement of arbitral awards.” 28 U.S.C. § 

1605(a)(6). 

The District Court concluded that the jurisdictional 

requirements of the FSIA were met because “the Award’s 

own language indicates it was rendered pursuant to the BIT” 

and “the Award is clearly governed by the New York 

Convention.” Chevron Corp. v. Republic of Ecuador, 949 F. 

Supp. 2d 57, 62 (D.D.C. 2013). Ecuador argues that the 

District Court failed to determine in the first instance that an 

arbitration agreement existed, instead deferring to the 

judgment of the arbitrator. Had the District Court undertaken 

the correct analysis, the argument goes, it would have 

determined that Ecuador had never agreed to arbitrate its 

dispute with Chevron, thus denying the District Court 

jurisdiction to enforce the arbitral award. Chevron primarily 

argues that the statute permits jurisdiction so long as the 

plaintiff presents a non-frivolous claim that the foreign 

sovereign has consented to arbitration. 

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A.

There are two types of jurisdictional authorizations: (1) 

“jurisdiction [that] depends on particular factual propositions” 

and (2) “jurisdiction [that] depends on the plaintiff’s asserting 

a particular type of claim.” Agudas Chasidei Chabad of U.S. 

v. Russian Fed’n, 528 F.3d 934, 940 (D.C. Cir. 2008). 

Ecuador argues that the § 1605(a)(6) exception requires the 

District Court to make three findings: “(1) a foreign state has 

agreed to arbitrate; (2) there is an award based on that 

agreement; and (3) the award is governed by a treaty signed 

by the United States calling for the recognition and 

enforcement of arbitral awards.” Appellant’s Br. at 23. 

Chevron argues that the exception allows jurisdiction any 

time a plaintiff asserts a non-frivolous claim involving an 

arbitration award. Appellee’s Br. at 30-31.

For the most part, Ecuador has the better argument, and 

has identified the relevant jurisdictional facts. In most 

instances, the existence of an arbitration agreement is a 

“purely factual predicate[] independent of the plaintiff’s 

claim.” Chabad, 528 F.3d at 940. Likewise, the existence of 

an award is a factual question that the District Court must 

resolve in order to maintain jurisdiction. If there is no 

arbitration agreement or no award to enforce, the District 

Court lacks jurisdiction over the foreign state and the action 

must be dismissed.

2

 2 The statute does not require that the District Court determine that 

the award is governed by a treaty; if the first two jurisdictional facts 

are established, the District Court has jurisdiction so long as the 

award “is or may be governed by a treaty.” 28 U.S.C. § 1605(a)(6)

(emphasis added). This element of the jurisdictional authorization 

is thus closer to the claim-based jurisdictional test proposed by 

Chevron. The distinction is irrelevant for purposes of this case, as 

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As the plaintiff, Chevron bears the initial burden of 

supporting its claim that the FSIA exception applies. See id. 

“[T]his is only a burden of production; the burden of 

persuasion rests with the foreign sovereign claiming 

immunity, which must establish the absence of the factual 

basis by a preponderance of the evidence.” Id. Chevron has 

met its burden of production by producing the BIT, Chevron’s 

notice of arbitration against Ecuador, and the tribunal’s 

arbitration decision. Ecuador does not dispute the existence 

of the BIT, Chevron’s notice, or the tribunal’s arbitration 

decision, but instead challenges the District Court’s 

conclusion that the BIT (or the combination of the BIT and 

Chevron’s notice of arbitration) is an arbitration agreement 

between Ecuador and Chevron. 

B.

Ecuador argues that the FSIA required the District Court 

to make a de novo determination of whether Ecuador’s offer 

to arbitrate in the BIT encompassed Chevron’s breach of 

contract claims. According to Ecuador, if Chevron’s claims 

are not covered by the BIT, then Ecuador never agreed to 

arbitrate with Chevron, and the District Court consequently 

lacked jurisdiction. In Ecuador’s view, the arbitrability 

question is therefore a jurisdictional question that must be 

addressed by the District Court.

Ecuador conflates the jurisdictional standard of the FSIA 

with the standard for review under the New York Convention. 

For FSIA purposes, Chevron made a prima facie showing that 

there was an arbitration agreement by producing the BIT and 

 

the parties do not dispute that the New York Convention governs 

arbitral awards issued pursuant to the BIT.

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the notice of arbitration. Once Chevron made this showing, 

the burden shifted to Ecuador to demonstrate by a 

preponderance of the evidence that the BIT and the notice to 

arbitrate did not constitute a valid arbitration agreement 

between the parties. Cf. Chabad, 528 F.3d at 940. The 

jurisdictional task before the District Court was to determine 

whether Ecuador had sufficiently rebutted the presumption 

that the BIT and Chevron’s notice of arbitration constituted an 

agreement to arbitrate.

3

The Supreme Court’s recent decision in BG Group, PLC 

v. Republic of Argentina, 134 S. Ct. 1198 (2014), is 

instructive on this point. In BG Group, Argentina’s primary 

argument was similar to Ecuador’s in the present case. By its 

terms, the Bilateral Investment Treaty between the United 

Kingdom and Argentina required an investor to litigate its 

claims in the local court system before submitting the claims 

to arbitration. 134 S. Ct. at 1204. BG Group submitted a 

claim to arbitration without observing this process. The 

arbitration panel concluded that Argentina had waived the 

local litigation requirement and found in BG Group’s favor on 

the merits. Id. at 1204-05. When BG Group sought to 

confirm the award in the District Court for the District of 

Columbia, the District Court deferred to the arbitrators’ 

 3 The District Court eschewed making this determination as part of 

its jurisdictional analysis. This was error. The statute requires the 

District Court to satisfy itself that the party challenging immunity 

has presented prima facie evidence of an agreement between the 

parties and that the sovereign asserting immunity has failed to 

sufficiently rebut that evidence. There is no need to remand, 

however, because the District Court elsewhere found that the BIT 

and the notice of arbitration together constituted an agreement 

between the parties. See Chevron, 949 F. Supp. 2d at 63 (“The 

Court thus finds [Chevron] had a valid agreement to arbitrate under 

the BIT.”).

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determination regarding the local litigation requirement. 

Republic of Argentina v. BG Group PLC, 715 F. Supp. 2d 

108, 121-22 (D.D.C. 2010). This Court reversed, holding that 

“[b]ecause the Treaty provides that a precondition to 

arbitration of an investor’s claim is an initial resort to a 

contracting party’s court . . . the question of arbitrability is an 

independent question of law for the court to decide.” 

Republic of Argentina v. BG Group PLC, 665 F.3d 1363, 

1371 (D.C. Cir. 2012).

The Supreme Court reversed. The Court “treat[ed] the 

document . . . as if it were an ordinary contract between 

private parties”—Argentina and BG Group—and concluded 

that the parties had intended to allow the arbitrator to 

determine whether the local litigation requirement had been 

satisfied. BG Group, 134 S. Ct. at 1206 (majority op.). In 

doing so, the Court implicitly rejected Argentina’s contention 

that its offer to arbitrate only applied to investors who 

complied with the local litigation requirement. As the Chief 

Justice noted in his dissent, “[t]he majority opinion nowhere 

explains when and how Argentina agreed with BG Group to 

submit to arbitration. Instead, the majority seems to assume 

that, in agreeing with the United Kingdom to adopt [the 

arbitration provision] along with the rest of the treaty, 

Argentina thereby formed an agreement with all potential 

U.K. investors . . . to submit all investment-related disputes to 

arbitration.” BG Group, 134 S. Ct. at 1216 (Roberts, C.J., 

dissenting). 

While we are mindful of the Chief Justice’s concerns, we 

agree with his interpretation of the Court’s opinion. The BIT 

includes a standing offer to all potential U.S. investors to 

arbitrate investment disputes, which Chevron accepted in the 

manner required by the treaty. The FSIA therefore allows 

federal courts to exercise jurisdiction over Ecuador in order to 

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consider an action to confirm or enforce the award. The 

dispute over whether the lawsuits were “investments” for 

purposes of the treaty is properly considered as part of review 

under the New York Convention.

C.

Even were we to conclude that the FSIA required a de 

novo determination of arbitrability, however, we would still 

find that the District Court had jurisdiction. In order to 

prevail on its jurisdictional argument, Ecuador would have to 

demonstrate by a preponderance of the evidence that 

Chevron’s suits were not “investments” within the meaning of 

the BIT. This Ecuador has failed to do. 

For purposes of the BIT, “‘investment’ means every kind 

of investment in the territory of one Party owned or controlled 

directly or indirectly by nationals or companies of the other 

Party . . . and includes . . . a claim to money or a claim to 

performance having economic value, and associated with an 

investment.” BIT Article I.1(a)(iii), J.A. 294. Ecuador argues 

that the final phrase – “and associated with an investment” –

means that a lawsuit must be associated with an investment 

that existed within the effective period of the BIT in order to 

qualify as an investment under the BIT. This is a misreading 

of the treaty terms for two reasons.

First, Article I.3 provides that “[a]ny alteration of the 

form in which assets are invested or reinvested shall not affect 

their character as investment.” In conjunction with the BIT’s 

non-exhaustive definition of “investment,” Article I.3 

suggests that an investment continues to exist until it has been 

fully wound up and all claims have been settled. Chevron’s 

lawsuits were therefore continuations of its initial investment 

in Ecuador and protected by the BIT. 

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Second, Article XII limits the application of the BIT “to 

investments existing at the time of entry into force as well as 

to investments made or acquired thereafter.” J.A. 300. The 

investments referred to by this article are investments as 

defined in Article I, and include “a claim to money or a claim 

to performance having economic value, and associated with 

an investment.” J.A. 294. Ecuador argues that the Article XII 

temporal limitation applies both to the claim and to the 

investment with which that claim is associated. We disagree. 

In our view, Article XII applies only to “investments” as 

defined by Article I, and not to the use of the term 

“investments” within the definitional paragraph. A lawsuit 

that existed at the time of entry into force of the BIT is 

consequently an “investment” for BIT purposes so long as 

that lawsuit is associated with an investment as generally 

defined: “An expenditure to acquire property or assets in 

order to produce revenue; the asset so acquired.” BLACK’S 

LAW DICTIONARY (6th ed. 1990). Chevron’s breach of 

contract lawsuits indisputably were associated with its preBIT investment activities, and the lawsuits indisputably 

existed when the BIT entered into force. The lawsuits 

themselves were therefore “investments” within the meaning 

of the treaty.

The District Court correctly determined that the BIT and 

Chevron’s notice to arbitrate satisfied the jurisdictional 

requirements of the FSIA. Even if the FSIA required the de 

novo review of arbitrability suggested by Ecuador, however, 

the District Court would still have properly exercised 

jurisdiction because Ecuador failed to demonstrate by a 

preponderance of the evidence that Chevron’s lawsuits were 

not protected by the BIT. 

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III.

Ecuador’s arguments against confirmation of the award 

under the New York Convention are largely coextensive with 

its arguments related to the District Court’s jurisdiction. 

There is no merit to these arguments, and the District Court 

properly confirmed the award.

As recognized by the court below, “the [New York 

Convention] affords the district court little discretion in 

refusing or deferring enforcement of foreign arbitral awards.” 

Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724, 727 

(D.C. Cir. 2012); see also Appellee’s Brief Add. 3 (New York 

Convention provision setting forth exclusive grounds on 

which enforcement of an award may be refused). Ecuador 

asserts two grounds on which confirmation of the award 

should be denied: Articles V(1)(c) and V(2)(b) of the New 

York Convention. Article V(1)(c) provides that an award 

may be refused if it “deals with a difference not contemplated 

by or not falling within the terms of the submission to 

arbitration,” and V(2)(b) allows refusal if “the recognition or 

enforcement of the award would be contrary to the public 

policy” of the country in which enforcement is sought. 

Ecuador’s reliance on Article V(1)(c) is misplaced. The 

District Court did not need to reach the question of whether 

Chevron’s lawsuits fell within the terms of submission to 

arbitration because the BIT allows the arbitration tribunal to 

make that determination. As discussed supra, the Supreme 

Court has analyzed a similar bilateral investment treaty as if it 

were a contract between the sovereign and the investor 

corporation seeking to confirm an arbitral award. “Where 

ordinary contracts are at issue, it is up to the parties to 

determine whether a particular matter is primarily for 

arbitrators or for courts to decide. If the contract is silent on 

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the matter . . . courts presume that the parties intend courts, 

not arbitrators, to decide . . . disputes about ‘arbitrability.’” 

BG Group, 134 S. Ct. at 1206 (internal citations omitted). 

The BIT is not silent on who decides arbitrability. Article VI 

of the BIT provides that the investor company may submit a 

matter to arbitration “in accordance with the Arbitration Rules 

of the United Nations Commission on International Trade 

Law (UNCITRAL).” BIT Art. VI(3)(a)(iii), J.A. 298. Under 

these rules, which the BIT incorporates by reference, “[t]he 

arbitral tribunal shall have the power to rule on objections that 

it has no jurisdiction, including any objections with respect to 

the existence or validity of the arbitration clause,” and “shall 

have the power to determine the existence or the validity of 

the contract of which an arbitration clause forms a part.” 

UNCITRAL Arbitration Rules, G.A. Res. 31/91 art. 21 (Dec. 

15, 1976). Ecuador therefore consented to allow the arbitral 

tribunal to decide issues of arbitrability—including whether 

Chevron had “investments” within the meaning of the treaty. 

See also Oracle America, Inc. v. Myriad Group A.G., 724 

F.3d 1069, 1077 (9th Cir. 2013) (“Incorporation of the 

UNCITRAL arbitration rules . . . constitutes clear and 

unmistakable evidence that the parties agreed to arbitrate 

arbitrability.”); Schneider v. Kingdom of Thailand, 688 F.3d 

68, 72 (2d Cir. 2012) (“[A] bilateral investment treaty’s 

incorporation of the . . . UNCITRAL rules [is] clear and 

unmistakable evidence that the parties intended questions of 

arbitrability to be decided by the arbitral panel in the first 

instance.”) (internal quotation marks omitted). There was no 

need for the District Court to independently determine that 

Chevron’s suits satisfied the BIT’s parameters once it had 

concluded that the parties had delegated this task to the 

arbitrator.

Ecuador’s Article V(2)(b) arguments are similarly rooted 

in the “erroneous premise” that the BIT does not apply. See

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Appellant’s Br. at 55-56 (“Finally, the District Court erred by 

failing to deny confirmation on public-policy grounds. At the 

root of its incorrect analysis was the erroneous premise that 

the Republic and Chevron agreed to arbitrate.”). Relying on 

this premise, Ecuador identifies two aspects of American 

public policy that are purportedly inconsistent with 

confirmation of the award. First, Ecuador argues that “the 

Award is repugnant to the policy that forum-selection clauses 

in agreements between sophisticated parties will be upheld” 

because Chevron and Ecuador had contractually agreed that 

Chevron’s claims would be litigated in Ecuadorian courts. 

Appellant’s Br. at 57-58. Second, Ecuador argues that

confirmation is inconsistent with respect for foreign 

sovereignty, claiming that “the Tribunal effectively usurped 

the jurisdictional authority of the Ecuadorian judiciary, the 

only adjudicative body authorized to hale the Republic into 

court to respond to Chevron’s lawsuits.” Appellant’s Br. at 

58.

The primary flaw with the first argument is that it 

misapprehends the nature of Chevron’s action. Chevron’s 

breach of contract claims were brought in Ecuadorian courts, 

as required by the initial investment agreement and ratified by 

the 1995 settlement agreement.4

 Chevron’s arbitration action 

alleged that Ecuador had unduly delayed resolution of those 

 4 As Chevron notes, the 1995 settlement agreement did not 

expressly indicate that the claims would remain in Ecuadorian 

courts: “Any and all claims, of any type . . . which are separate 

from this agreement and which exist judicially between the parties, 

shall continue to be heard before the authorities having the 

appropriate jurisdiction.” J.A. 182. While the use of the word 

“continue” indicates that the claims were to remain in Ecuadorian 

courts (where they were at the time of the settlement agreement), 

the language does not plainly foreclose proceedings before other 

authorities.

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claims in violation of the BIT. J.A. 813-14. The issue 

initially before the arbitration panel was not whether Ecuador 

had breached its contract with Chevron, but instead whether 

Ecuador had breached the BIT by failing to resolve the 

contract suits in a timely fashion. In signing the BIT, Ecuador 

agreed to arbitration of precisely this type of action. See Art.

II(7), J.A. 297 (“Each Party shall provide effective means of 

asserting claims and enforcing rights with respect to 

investment, investment agreements, and investment 

authorizations.”). 

A similar consideration forecloses Ecuador’s claim of 

jurisdictional usurpation. The Tribunal did not usurp the 

authority of the Ecuadorian judiciary; Ecuador ceded that 

authority, first by signing the BIT, and then by failing to 

resolve Chevron’s legal actions in a timely fashion.

Contrary to Ecuador’s protestations, enforcement of the 

arbitral award is fully consistent with the public policy of the 

United States, most notably the “emphatic federal policy in 

favor of arbitral dispute resolution,” Mitsubishi Motors Corp. 

v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985). 

By signing the BIT, Ecuador agreed to allow independent and 

neutral arbitrators to determine whether an investor company 

could take advantage of the substantive and procedural 

protections in the BIT. Chevron followed the proper 

procedure to request arbitration under the BIT, and the 

arbitrator determined that it had jurisdiction. Four courts have 

also considered and rejected Ecuador’s argument that 

Chevron did not have the right to avail itself of the BIT’s 

arbitration clause. Ecuador has given us no reason to 

conclude that these many authorities ruled in error.

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IV.

For the foregoing reasons, we affirm the District Court’s

confirmation of the arbitral award to Chevron.

So ordered.

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