SAN FRANCISCO, March 30 (Reuters) - Chevron Corp
An arbitration panel ruled on Tuesday that Ecuador's courts violated international law by delaying rulings on commercial disputes between a subsidiary of the second-largest U.S. oil company and Ecuador's government.
The arbitration panel partially resolved seven claims that Texaco, bought by Chevron in 2001, filed in Ecuador from 1991 to 1993, and awarded the company $700 million, Chevron said.
"It is a partial decision," Ecuador's solicitor general, Diego Garcia, said in a statement. "It is inexact to say that Ecuador has been ordered to pay compensation of $700 million."
The panel found that Ecuador's courts had breached a trade treaty between the South American country and the United States by not ruling on the cases.
It is the same treaty that Chevron is citing in its arbitration claim filed in September over alleged interference by the government in a blockbuster case brought by indigenous Ecuadoreans who accuse Texaco of damaging the environment and their health through its operations there. [ID:nN23418073]
With a ruling by the Ecuadorean judge on that case expected at some point this year, lawyers for the plaintiffs accused Chevron of forum shopping by bringing in the arbitrators.
Chevron has spent 17 years battling that claim, which a court expert has said could result in damages of up to $27 billion against the San Ramon, California-based company.
The plaintiffs and Chevron both expect the court to rule against the company, which vows to appeal any ruling against it, arguing that Ecuador's courts are biased.
In its ruling on Tuesday, the panel found Ecuador violated the U.S-Ecuador Bilateral Investment Treaty by not providing an effective means of asserting claims and enforcing rights.
"We have maintained for some time that Ecuador's courts are failing to administer justice when it comes to Chevron and its affiliates, and an international tribunal has now agreed," Chevron's general counsel, Hewitt Pate, said in a statement.
Chevron filed the arbitration claim in December 2006, and the $700 million in damages is pending further proceedings to determine taxes, compound interest and costs.
Chevron shares rose more than 40 cents, or 0.5 percent, in extended trading in response to the ruling, after closing largely unchanged at $75.30 on the New York Stock Exchange. (Reporting by Braden Reddall and Hugh Bronstein in Bogota; Editing by Toni Reinhold and Richard Chang)