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Award

FREQUENTLY USED ABBREVIATIONS AND ACRONYMS
[CA] [EL] Legal Authority [Claimant] [Respondent]
[CE] [E] Exhibit [Claimant] [Respondent]
Amended Request for Arbitration Claimant's Amended Request for Arbitration, dated 18 July 2008
Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings (2006)
BIT or the Treaty Agreement between the Republic of France and the Republic of Ecuador Concerning the Encouragement and Reciprocal Protection of Investment
Brattle ER II The Brattle Group Expert Report, prepared by James Dow and Richard Caldwell, dated 4 May 2015 (
Brattle ER III The Brattle Group Expert Report, prepared by James Dow and Richard Caldwell, dated 16 October 2015
Cl. PHB Q. Claimant's Post Hearing Brief on Quantum, dated 29 January 2016
Cl. Rep. M. Claimant's Reply to Respondent's Counter-Memorial, dated 12 April 2012
Cl. Rep. PHB Q. Claimant's Reply Post Hearing Brief on Quantum, dated 29 February 2016
Combe WS II Witness Statement of Laurent Combe, dated 19 December 2014
Combe WS III Witness Statement of Laurent Combe, dated 24 July 2015
Consolidated Expert Report Parties Annotated Comments on the Independent Expert Report
Resp. C-Mem. Q. Respondent's Counter-Memorial on Quantum, dated 4 May 2015
Crick WS II Witness Statement of John Crick, dated 19 December 2014
Crick WS III Witness Statement of John Crick, dated 24 July 2015
d'Argentré WS IV Witness Statement of Eric d'Argentré, dated 3 July 2013
d'Argentré WS V Witness Statement of Eric d'Argentré, dated 19 December 2014
d'Argentré WS VI Witness Statement of Eric d'Argentré, dated 24 July 2015
Decision on Jurisdiction Decision on Jurisdiction, dated 30 June 2011
Decision on Liability Decision on Remaining Issues on Jurisdiction and on Liability, dated 12 September 2014
Decision on Perenco's First Dismissal Application Decision on Perenco's Application for Dismissal of Ecuador's Counterclaims, dated 18 August 2017
Decision on Provisional Measures Decision on Provisional Measures, dated 8 May 2009
Decision on Reconsideration Decision on Ecuador's Reconsideration Motion, dated 10 April 2015
Ecuador or the Respondent Republic of Ecuador
First Dismissal Application Claimant's Application to Dismiss the Counterclaims, dated 18 April 2017
GSI ER I GSI Environmental Inc. Expert Report, dated 20 September 2012
GSI ER II GSI Environmental Inc. Expert Report, dated 12 July 2013
ICSID Convention Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, dated 18 March 1965
ICSID or the Centre International Centre for the Settlement of Investment Disputes
Independent Expert Mr. Scott MacDonald, from Ramboll, appointed as the Tribunal's independent expert by Procedural Order No. 16, dated 6 July 2016
Independent Expert Report or Report Mr. Scott MacDonald's Expert Report, dated 19 December 2018
Interim Decision on Counterclaim Interim Decision on the Environmental Counterclaim, dated 11 August 2015
Intertek I Expert Report of Geoffrey R. Egan, Intertek, dated 28 September 2012
Intertek II Expert Report of Geoffrey R. Egan, Intertek, dated 3 July 2013
JOAs Novation of Joint Operating Agreement in respect of Block 7, Oriente Basin, Ecuador, dated 12 December 2002 (Exhibit CE-31), and Novation of Joint Operating Agreement in respect of Block 21, Oriente Basin, Ecuador, dated 12 December 2002 (CE-32)
Kalt ER III Expert Report of Joseph P. Kalt, dated 19 December 2014
Kalt ER IV Expert Report of Joseph P. Kalt, dated 24 July 2015
Loose ER VI Expert Report of Hernan Perez Loose, dated 19 December 2014
Loose ER VII Expert Report of Hernan Perez Loose, dated 24 July 2015
Luna WS III Witness Statement of Pablo Luna, dated 22 February 2013
Memorial/Cl. Mem. Q Claimant's Memorial on Quantum, dated 19 December 2014
Palacios WS I Witness Statement of Derlis Palacios, dated 30 November 2011
Palacios WS III Witness Statement of Derlis Palacios, dated 23 July 2012
Participation Contracts/PSCs Participation Contracts for Blocks 7 and 21 (Exhibit CE-17/CE-CC-28: Block 7 and Exhibit CE-10/CE-CC-13: Block 21)
Parties Claimant and the Respondent
Perenco or the Claimant Perenco Ecuador Limited
Pinto WS I Witness Statement of Germánico Pinto, dated 28 November 2011
Pinto WS II Witness Statement of Germánico Pinto, dated 25 July 2012
Quantum Closing Quantum Closing hearing held in The Hague on 21 April 2016
Quantum Hearing Hearing on Quantum held in Paris from 9-13 November 2015
Quantum Rejoinder Respondent's Rejoinder on Quantum, dated 16 October 2015
Quantum Reply/Cl. Rep. Q. Claimant's Reply on Quantum, dated 24 July 2015
Rejoinder Ecuador's Rejoinder to Perenco's Second Application to Dismiss Ecuador's Counterclaims, dated 26 April 2018
Reply Perenco's Reply in Support of its Second Application to Dismiss Ecuador's Counterclaims, dated 5 April 2018
Request for Arbitration Claimant's Request for Arbitration, dated 30 April 2008
Resp. PHB Q. Respondent's Post Hearing Brief on Quantum, dated 29 January 2016
Resp. Rep. PHB Q. Respondent's Reply Post Hearing Brief on Quantum, dated 29 February 2016
Resp. PHB CC Respondent's Post-Hearing Brief on Counterclaims, dated 6 November 2013
Response Ecuador's Response to Perenco's Second Application to Dismiss Ecuador's Counterclaims, dated 15 March 2018
RPS ER IV Expert Report of RPS, dated 4 May 2015
RPS ER V Expert Report of RPS, dated 16 October 2015
Saltos WS I Witness Statement of Wilfrido Saltos, dated 28 September 2012
Second Dismissal Application Perenco's Second Application to Dismiss Ecuador's Counterclaims, dated 30 January 2018
Settlement Agreement Settlement agreement between Burlington and Ecuador, dated 1 December 2017
Strickland ER I Expert Report of Richard F. Strickland, dated 19 December 2014
Strickland ER II Expert Report of Richard F. Strickland, dated 24 July 2015
Tr. (day) (MacDonald) (date) [page:line] Transcript of the Independent Expert Hearing held in The Hague from 11-12 March 2019
Tr. [J.] [P.M.] [M.][page:line] Transcript of the hearing on jurisdiction / on provisional measures / hearing on merits
Tr. Q. (day) [page:line] Transcript of the Hearing on Quantum held in Paris from 9-13 November 2015
Tr. Q. (6) [page:line] Transcript of the Quantum Closing hearing held in The Hague on 21 April 2016

I. INTRODUCTION

A. Parties

1.
The Claimant is Perenco Ecuador Limited and is hereinafter referred to as "Perenco" or the "Claimant."
2.
The Respondent is the Republic of Ecuador and is hereinafter referred to as "Ecuador" or the "Respondent."
3.
The Claimant and the Respondent are hereinafter collectively referred to as the "Parties." The Parties' respective representatives and their addresses are listed above on page (i).

B. Procedural History

4.
On 30 June 2011, the Tribunal issued its Decision on Jurisdiction ("Decision on Jurisdiction").
5.
On 12 September 2014, the Tribunal issued its Decision on Remaining Issues on Jurisdiction and on Liability ("Decision on Liability").
6.
On 26 November 2014, the Tribunal issued Procedural Order No. 12 fixing the calendar for the quantum phase.
7.
In accordance with the calendar, on 19 December 2014, the Claimant filed its Memorial on Quantum ("Memorial"). It was accompanied by the witness statements of Messrs. Didier Lafont, Laurent Combe, John Crick, Rodrigo Márquez Pacanins, and François Perrodo (all second witness statements) and Mr. Eric d'Argentré (fifth witness statement); and the expert reports of Dr. Richard Strickland (first expert report), Professor Joseph P. Kalt (third expert report), and Dr. Hernán Perez Loose (sixth expert report).
8.
On 10 March 2015, the Tribunal issued Procedural Order No. 13 regarding the Respondent's request for production of documents.
9.
On 10 April 2015, the Tribunal issued its Decision on Ecuador's Reconsideration Motion ("Decision on Reconsideration").
10.
On 4 May 2015, the Respondent filed its Counter-Memorial on Quantum ("Counter - Memorial"). It was accompanied by the witness statements of Messrs. Christian Dávalos (fifth witness statement) and Gabriel Freire (first witness statement); and the expert reports of Professor Juan Pablo Aguilar (sixth expert report); The Brattle Group (second expert report); and RPS (fourth expert report).
11.
On 12 June 2015, the Tribunal issued Procedural Order No. 14 regarding the Claimant's request for production of documents.
12.
On 24 July 2015, the Claimant filed its Reply on Quantum ("Quantum Reply"). It was accompanied by the witness statements of Messrs. Laurent Combe, John Crick and Rodrigo Márquez Pacanins (all third witness statements), and Mr. Eric d'Argentré (sixth witness statement); and the expert reports of Dr. Richard Strickland (second expert report), Professor Joseph P. Kalt (fourth expert report), and Dr. Hernán Perez Loose (seventh expert report).
13.
On 11 August 2015, the Tribunal issued its Interim Decision on the Environmental Counterclaim ("Interim Decision on Counterclaim").
14.
On 16 October 2015, the Respondent filed its Rejoinder on Quantum ("Quantum Rejoinder"). It was accompanied by the expert reports of Professor Juan Pablo Aguilar (seventh expert report), The Brattle Group (third expert report), and RPS (fifth expert report).
15.
On 23 October 2015, the Tribunal issued Procedural Order No. 15 concerning the organization of the hearing on quantum.
16.
A hearing on quantum was held in Paris from 9-13 November 2015 ("Quantum Hearing"). Present at the hearing were:

Tribunal
H.E. Judge Peter Tomka President
Mr. Neil Kaplan CBE QC SBS Co-Arbitrator
Mr. J. Christopher Thomas QC Co-Arbitrator

Assistants to the Tribunal Members :
Ms. Lucille Kante Assistant to Mr. Neil Kaplan CBE QC SBS
Ms. Emily Choo Wan Ning Assistant to Mr. J. Christopher Thomas QC

ICSID Secretariat
Mr. Marco Tulio Montañés-Rumayor Secretary of the Tribunal

For the Claimant :

Counsel

Mr. Mark W. Friedman Debevoise & Plimpton LLP
Ms. Ina C. Popova Debevoise & Plimpton LLP
Mr. Thomas H. Norgaard Debevoise & Plimpton LLP
Ms. Terra L. Gearhart-Serna Debevoise & Plimpton LLP
Ms. Z.J. Jennifer Lim Debevoise & Plimpton LLP
Ms. Laura Sinisterra Debevoise & Plimpton LLP
Support Personnel
Ms. Prasheela Vara Debevoise & Plimpton LLP
Mr. Sébastien Darid Debevoise & Plimpton LLP
Mr. Gaspard de Monclin Debevoise & Plimpton LLP
Ms. Sarah Lee Harvard Law School
Parties
Mr. Roland Fox Perenco
Mr. François Hubert Marie Perrodo Perenco
Witnesses
Mr. Laurent Combe Perenco
Mr. John Crick Perenco
Mr. Eric d'Argentré Perenco
Mr. Didier Lafont Petroceltic
Mr. Rodrigo Márquez Pacanins MQZ Renewables
Mr. François Hubert Marie Perrodo Perenco
Experts
Prof. Joseph P. Kalt Compass Lexecon
Mr. Stephen Makowka Compass Lexecon
Dr. Hernán Pérez Loose Coronel y Pérez Abogados
Dr. Richard F. Strickland The Strickland Group

For the Respondent :
Parties
Dr. Procurador Diego Carrión García Procuraduría General del Estado
Dra. Blanca Gómez de la Torre Procuraduría General del Estado
Ms. Diana Moya Procuraduría General del Estado
Counsel
Prof. Eduardo Silva Romero Dechert (Paris) LLP
Prof. Pierre Mayer -
Mr. José Manuel García Represa Dechert (Paris) LLP
Mr. Timothy Lindsay Dechert (Paris) LLP
Ms. Maria Claudia Procopiak Dechert (Paris) LLP
Ms. Gabriela González Giráldez Dechert (Paris) LLP
Mr. David Attanasio Dechert (Paris) LLP
Ms. Mónica Garay Dechert (Paris) LLP
Mr. Antonio Gordillo Dechert (Paris) LLP
Ms. Ruxandra Esanu Dechert (Paris) LLP
Ms. Maria Quijada Dechert (Paris) LLP
Ms. Katherine Marami Dechert (Paris) LLP
Ms. Peggy Alvarez Varas Dechert (Paris) LLP
Ms. Djamila Rabhi Dechert (Paris) LLP
Ms. Sara María Moreno Sánchez Dechert (Paris) LLP
Ms. Verena Wieditz Dechert (Paris) LLP
Ms. Antonia Pascali
Witnesses
Mr. Christian Dávalos Witness
Mr. Gabriel Freire Witness
Experts
Mr. Juan Pablo Aguilar Universidad San Francisco de Quito
Mr. Gene Wiggins RPS Knowledge Reservoir
Mr. Sheldon Gorell RPS Knowledge Reservoir
Prof. James Dow The Brattle Group
Mr. Richard Caldwell The Brattle Group
Mr. Tom Dorrington Ward The Brattle Group

17.
Interpretation to and from English and Spanish was provided. The Quantum Hearing was also sound-recorded and transcribed verbatim, in real time, in both English and Spanish. Copies of the sound recordings and the transcripts were delivered to the Parties.
18.
At the end of the Quantum Hearing, the Tribunal and the Parties held a procedural discussion in relation to post-hearing matters. After consulting with the Parties, the Tribunal fixed a calendar for post-hearing submissions, including a hearing on closing arguments.
19.
On 29 January 2016, the Parties filed their Post-Hearing Briefs ("PHBs") pursuant to Procedural Order No. 15.
20.
On 29 February 2016, the Parties filed their Reply Post-Hearing Briefs ("Reply PHBs").
21.
A hearing on closing arguments was held at The Hague on 21 April 2016 ("Quantum Closing"). Present at the hearing were:

Tribunal
H.E. Judge Peter Tomka President
Mr. Neil Kaplan CBE QC SBS Co-Arbitrator
Mr. J. Christopher Thomas QC Co-Arbitrator

Assistants to the Tribunal Members :
Ms. Lucille Kante Assistant to Mr. Neil Kaplan CBE QC SBS
Ms. Emily Choo Wan Ning Assistant to Mr. J. Christopher Thomas QC

ICSID Secretariat
Mr. Marco Tulio Montañés-Rumayor Secretary of the Tribunal

For the Claimant :
Counsel
Mr. Mark W. Friedman Debevoise & Plimpton LLP
Ms. Ina C. Popova Debevoise & Plimpton LLP
Ms. Z.J. Jennifer Lim Debevoise & Plimpton LLP
Ms. Laura Sinisterra Debevoise & Plimpton LLP
Support Personnel
Ms. Mary Grace McEvoy Debevoise & Plimpton LLP
Parties
Mr. Roland Fox Perenco

For the Respondent :
Parties
Dr. Procurador Diego Carrión García Procuraduría General del Estado
Dra. Blanca Gómez de la Torre Procuraduría General del Estado
Ms. Diana Moya Procuraduría General del Estado
Counsel
Mr. Eduardo Silva Romero Dechert (Paris) LLP
Mr. Pierre Mayer
Mr. Philip Dunham Dechert (Paris) LLP
Mr. José Manuel García Represa Dechert (Paris) LLP
Ms. Maria Claudia Procopiak Dechert (Paris) LLP
Mr. David Attanasio Dechert (Paris) LLP
Ms. Ruxandra Esanu Dechert (Paris) LLP
Expert
Mr. Richard Caldwell The Brattle Group

22.
On 6 July 2016, the Tribunal issued Procedural Order No. 16 concerning the appointment of Mr. Scott MacDonald as the Tribunal's independent expert ("Independent Expert") pursuant to the Interim Decision on Counterclaim.
23.
From 1 November 2016 to 5 November 2016, the Parties and the Independent Expert visited the place connected with the dispute relating to the environmental counterclaim pursuant to ICSID Arbitration Rule 37(1).
24.
On 18 April 2017, Perenco filed an application to dismiss the environment and infrastructure counterclaims ("First Dismissal Application").
25.
On 23 May 2017, Ecuador filed its observations on Perenco's First Dismissal Application.
26.
On 12 June 2017, Perenco filed a reply on its First Dismissal Application.
27.
On 4 July 2017, Ecuador filed a rejoinder on Perenco's First Dismissal Application.
28.
On 18 August 2017, the Tribunal issued its Decision on Perenco's Application for Dismissal of Ecuador's Counterclaims ("Decision on Perenco's First Dismissal Application").
29.
On 30 January 2018, Perenco filed a second application to dismiss the counterclaims ("Second Dismissal Application").
30.
On 15 March 2018, Ecuador filed observations on Perenco's Second Dismissal Application ("Response").
31.
On 5 April 2018, Perenco filed a reply on its Second Dismissal Application ("Reply").
32.
On 27 April 2018, Ecuador filed a rejoinder on the Claimant's Second Dismissal Application ("Rejoinder").
33.
On 30 July 2018, the Tribunal informed the Parties of its decision, by a majority, to reject Perenco's Second Dismissal Application, with reasons to be given in the Award.
34.
On 19 December 2018, the Independent Expert issued his report ("Independent Expert Report" or "Report").
35.
On 20 December 2018, Perenco filed a request for the Tribunal to decide on production of documents.
36.
On 2 January 2019, Ecuador filed observations on Perenco's request for the Tribunal to decide on production of documents.
37.
On 15 January 2019, the Tribunal issued Procedural Order No. 17 concerning production of documents.
38.
On 6 February 2019, the Tribunal issued Procedural Order No. 18 concerning the organization of the hearing on the Independent Expert Report.
39.
On 23 February 2019, the Parties filed their observations on the Independent Expert Report.
40.
On 11 to 12 March 2019, a hearing on the Independent Expert Report was held in The Hague ("Expert Hearing"). Present at the hearing were:

Tribunal
H.E. Judge Peter Tomka President
Mr. Neil Kaplan CBE QC SBS Co-Arbitrator
Mr. J. Christopher Thomas QC Co-Arbitrator

Assistant :
Ms. Emily Choo Wan Ning Assistant to Mr. J. Christopher Thomas QC

Tribunal's Independent Expert
Mr. Scott MacDonald Tribunal's Expert, Ramboll
Mr. Jose Sananes Ramboll

ICSID Secretariat
Mr. Marco Tulio Montañés-Rumayor Secretary of the Tribunal

For the Claimant :
Counsel
Mr. Mark W. Friedman Debevoise & Plimpton LLP
Ms. Ina C. Popova Debevoise & Plimpton LLP
Ms. Laura Sinisterra Debevoise & Plimpton LLP
Ms. Sarah Lee Debevoise & Plimpton LLP
Ms. Mary Grace McEvoy Debevoise & Plimpton LLP
Ms. Anisha Sud King & Spalding LLP
Parties
Mr. Jonathan Parr Perenco
Ms. Josselyn Briceno Perenco
Ms. Samita Mehta ConocoPhillips
Experts
Mr. John Connor GSI
Mr. Gino Bianchi GSI

For the Respondent :
Counsel
Prof. Eduardo Silva Romero Dechert (Paris) LLP
Mr. José Manuel García Represa Dechert (Paris) LLP
Mr. Philip Dunham Dechert (Paris) LLP
Ms. Maria Claudia Procopiak Dechert (London) LLP
Ms. Gabriela González Giráldez Dechert (Paris) LLP
Support Personnel
Mr. Ricardo Montalvo Lara Dechert (Paris) LLP
Ms. Anne Driscoll Dechert (Paris) LLP
Parties
Dr. Iñigo Salvador Crespo Attorney General for the Republic of Ecuador
Dra. Claudia Salgado Levy National Director of International Litigation and Arbitration at Attorney General Office of Ecuador
Experts
Mr. José Francisco Alfaro Rodriguez IEMS
Mr. Scott Crouch DiSorbo (formerly at RPS)
Ms. Martha Pertusa TRC Environmental (formerly at RPS)

41.
On 19 April 2019, the Parties filed their submissions on costs.
42.
On 10 May 2019, the Parties filed their reply submissions on costs.
43.
The Tribunal deliberated in person at several meetings (held on the following dates: 24-26 April 2016, 26-27 November 2016, 10-11 June 2017, 25-26 November 2017, 27-28 January 2018, 13-15 March 2019, and 3 June 2019) as well as by other means.
44.
On 30 August 2019, the Tribunal declared the proceeding closed pursuant to ICSID Arbitration Rule 38(1).

C. General Remarks

45.
The Tribunal acknowledges at the outset that this arbitration has taken a very long time. However, there are many reasons for this which the Tribunal believes are worth noting at the outset.
46.
Two key reasons arose from the damages estimates in both the primary claim and in the environmental and infrastructure counterclaims. With respect to the former, the Tribunal concluded after the Quantum Hearing that consideration of the damages claimed by Perenco required further in-depth work and the adjustment of the financial models that had been used by the Parties' experts during the quantum phase.
47.
In the counterclaims proceedings, which continued separately, the Parties were requested to attempt to negotiate a settlement based on the findings of law and fact made in the Tribunal's Interim Decision on Counterclaim, failing which the Tribunal would appoint an independent expert to assist in evaluating Blocks 7 and 21 ("Blocks") and estimating any environmental damage assessed in accordance with the Interim Decision on Counterclaim. A negotiated settlement proved not to be possible. It took the Parties some time to jointly identify a suitable independent expert who could be appointed by the Tribunal, as contemplated in the Interim Decision on Counterclaim.
48.
This Independent Expert was to assess the work performed by the Parties' experts and to conduct further sampling in Ecuador in accordance with the Tribunal's findings set out in the Interim Decision on Counterclaim. This work was conducted from August to mid-December 2017 and the Independent Expert Report was not received until 19 December 2018. Thereafter, the Tribunal gave the Parties an opportunity to insert comments into the Independent Expert Report as well as to submit general comments on his work, and convened a two-day hearing in The Hague at which the Independent Expert provided a 90-minute presentation of his findings and responded to the Parties' written comments, after which the Parties were given opportunities to put questions to the Independent Expert. The Tribunal then deliberated in respect of the counterclaims, considered the Parties' submissions on costs, and finalised this Award.
49.
In light of the foregoing, in the Tribunal's view, it made sense to deal with all outstanding damages issues in a single Award.
50.
The Tribunal acknowledges that this has been too slow a process for at least one of the Parties, but when substantial amounts have been claimed (approximately US$1.5 billion in the principal claim and US$2.5 billion in the counterclaim), careful consideration and due deliberation is required.
51.
Relatedly, the Tribunal considers it appropriate to recount the principal steps taken in this long arbitration:

(a) The Request for Arbitration was filed on 30 April 2008.

(b) This was registered on 4 June 2008.

(c) An Amended Request for Arbitration was filed on 28 July 2008.

(d) The Tribunal was constituted on 21 November 2008.

(e) The first session was held on 7 February 2009.

(f) The Request for Provisional Measures was filed on 19 February 2009.

(g) A hearing on provisional measures was held in Paris on 19 March 2009 which resulted in a 41-page decision of the Tribunal on 8 May 2009 ("Decision on Provisional Measures").

(h) One arbitrator resigned on 16 December 2009 and the proceedings were suspended. The arbitrator was replaced by Mr. Neil Kaplan CBE QC SBS on 13 January 2010.

(i) The late Lord Bingham, who presided over the first phase of the arbitration, resigned due to ill health on 17 February 2010. H.E. Judge Peter Tomka was appointed by the Chairman of the Administrative Council on 6 May 2010.

(j) A hearing on jurisdiction was held in The Hague on 2-4 November 2010. The Tribunal rendered its first Decision on Jurisdiction, some 44 pages, on 30 June 2011.

(k) While the primary claim was in train, on 5 December 2011, Ecuador filed counterclaims for alleged environmental harm and infrastructure damages. This was fully briefed by the Parties and a hearing was held in The Hague commencing 9 September 2013 and concluding on 17 September 2013.

(l) After further briefing by the Parties, the hearing on the merits of the primary claim coupled with the remaining jurisdictional issues which had been set over to the merits phase, was heard in The Hague commencing on 8 November 2012 and concluding on 16 November 2012. The Decision on Liability, running to 234 pages, was dispatched to the Parties on 12 September 2014. Some delay in the rendering of this decision was occasioned by the translation of the English original into Spanish.

(m) On 19 December 2014, Ecuador sought a reconsideration of the Tribunal's Decision on Liability. After receiving submissions from the Parties, the request was considered and then dismissed in a 24-page decision on 10 April 2015.

(n) On 11 August 2015, an Interim Decision on Counterclaim running to 187 pages and which also had to be translated into Spanish running to 211 pages was dispatched to the Parties.

(o) As noted above, the Tribunal instructed the Parties to consider the findings of law and fact made in the Interim Decision on Counterclaim with a view to encouraging them to negotiate a settlement in light of the Tribunal's findings. The Parties agreed to do so but were unable to arrive at a settlement. As a result, the Tribunal proceeded to act in accordance with the alternative process envisaged in the Interim Decision on counterclaim, namely, that it would appoint its own expert to evaluate the environmental condition of the two Blocks.

(p) The damages phase of this arbitration was heard for one week in Paris commencing 9 November 2015.

(q) The oral closing submissions on damages was heard in The Hague on 21 April 2016.

(r) Immediately following the closing submissions on damages, the Tribunal conducted its first set of in-person deliberations on quantum. In the course of doing so, it concluded that having regard to the work undertaken by the Parties' quantum experts up to closing submissions, the further elaboration of that work was in order and correspondence on this matter with the Parties ensued.

(s) Shortly after the Quantum Hearing for the primary claim, having consulted on the matter, on 25 April 2016, the Parties jointly proposed to the Tribunal the appointment of Mr. Scott MacDonald of Ramboll as the Tribunal-appointed expert to conduct the sampling contemplated by the Tribunal in the event that the Parties could not agree on a settlement of the environmental counterclaim. The Tribunal conferred with Mr. MacDonald as to how he would approach the exercise in light of the Tribunal's instructions laid out in the Interim Decision on Counterclaim.

(t) On 6 July 2016, Mr. MacDonald was appointed as the Tribunal's Independent Expert by Procedural Order No. 16.

(u) From 1 November 2016 to 5 November 2016, Mr. MacDonald visited Ecuador to inspect the two Blocks for purposes of working out his subsequent work plan.

(v) The Tribunal continued its quantum deliberations at a meeting held on 25 and 26 November 2016 and further analytical work ensued.

(w) On 7 February 2017, the Burlington tribunal rendered its Decision on Reconsideration and Award.1 After reflection, the Tribunal decided to seek the Parties' views as to what, if anything, in that award was relevant to the Tribunal's consideration of the matters before it, given that Burlington and Perenco constituted the members of the Consortium which operated Blocks 7 and 21 and many of the facts are common to the two disputes. Submissions on the point were received from the Parties on 18 April 2017.

(x) Also on 18 April 2017, Perenco filed its First Dismissal Application. Perenco submitted with respect to the environmental and infrastructure counterclaim that the Burlington award was res judicata for the Parties to the present proceeding and thus the Tribunal's Interim Decision on Counterclaim had been overtaken by the Burlington tribunal's determinations of the Consortium's liability (as established in a claim brought by Ecuador against Perenco's fellow Consortium member and alleged privy, Burlington). It asserted that therefore the environmental expert's work should be terminated.

(y) The Tribunal laid down a schedule for further submissions on the point by both Parties, which was transmitted to the Parties on 3 May 2017, after the Parties failed to agree on a schedule.

(z) On 23 May 2017, Ecuador filed a response to Perenco's First Dismissal Application.

(aa) On 10 and 11 June 2017, the Tribunal held an in-person deliberation on quantum in The Hague.

(bb) On 13 June 2017, Perenco submitted a reply on Ecuador's response to Perenco's First Dismissal Application.

(cc) On 4 July 2017, Ecuador submitted a rejoinder thereto.

(dd) On 18 August 2017, the Tribunal dismissed Perenco's First Dismissal Application.

(ee) Meanwhile, starting on August 2017, Mr. MacDonald and his team began conducting field work at identified sites for the purpose of preparing the sampling activities.

(ff) On 30 January 2018, Perenco filed its Second Dismissal Application. This was on the basis that Burlington's settlement with Ecuador, and payment in full of Burlington and Perenco's joint debt on the counterclaims, extinguished whatever joint liability Perenco as well as Burlington had to Ecuador, and rendered Ecuador's further pursuit of the counterclaims moot.

(gg) On 5 February 2018, following the Tribunal's invitation, Ecuador provided its comments on the Second Dismissal Application and proposed an alternative briefing schedule following the Parties' failure to agree on a briefing schedule.

(hh) On 8 February 2018 and on 12 February 2018, the Parties provided further comments on the way forward with the Second Dismissal Application.

(ii) On 15 February 2018, the Tribunal laid down the briefing schedule after considering the Parties' comments and decided that Mr. MacDonald's work was to continue. There would be no disclosure in relation to the application nor an oral hearing.

(jj) Pursuant to this, on 15 March 2018, Ecuador filed its response to Perenco's Second Dismissal Application.

(kk) On 5 April 2018, Perenco filed its Reply.

(ll) On 26 April 2018, Ecuador filed its Rejoinder.

(mm) On 30 July 2018, the Tribunal issued its Decision on Perenco's Second Dismissal Application, deciding, by a majority, to reject the application.

(nn) On 19 December 2018, after receiving the Independent Expert Report, the Tribunal dispatched it to the Parties to seek their comments thereon. After receiving the Parties' comments thereon, and as requested by the Parties, the Tribunal held a hearing on the Independent Expert Report on 11-12 March 2019. The Tribunal also met on 13-15 March 2019 and 3 June 2019 for the final in-person meetings.

(oo) On 19 April and 10 May 2019, the Tribunal received the Parties' costs submissions and reply costs submissions in the form requested by the Tribunal.

52.
The following comments are apropos :

(a) There have been a total of 7 hearings in this case;

(b) The pleadings in this case have been voluminous and have run to not less than 3816 pages;

(c) There have been no less than 55 witness statements running to not less than 1028 pages excluding exhibits;

(d) The experts' reports in this case total 53. They run in total to no less than 2539 pages excluding exhibits;

(e) The evidential record in this arbitration, excluding the items listed above, exceeds 125,302 pages; and

(f) There have been numerous interlocutory skirmishes between the Parties, unfortunately caused by lack of agreement between them on a number of procedural issues, which have occupied the Tribunal's time.

53.
As recorded above, since the completion of the written and oral pleadings, the Tribunal has deliberated in-person as well as by electronic means. This has been a complex and hard-fought case. The Tribunal has considered all the points raised by the Parties even though it has only referred to the most important submissions and points for purposes of its Award.
54.
Part II of this Award contains the Tribunal's assessment of the damages due to Perenco for the breaches of Treaty and contract. Part III contains the Tribunal's assessment of the damages payable by Perenco to Ecuador for the environmental damage caused by the Consortium's operations. Part IV contains the Tribunal's consideration of the infrastructure counterclaim by Ecuador. Part V contains the Tribunal's decision on the Parties' respective claims and submissions on costs. This Award follows on from the Tribunal's 30 June 2011 Decision on Jurisdiction, the 12 September 2014 Decision on Liability, the 10 April 2015 Decision on Reconsideration, the 11 August 2015 Interim Decision on Counterclaim, the decisions on Perenco's two requests for dismissal of the Respondent's counterclaims of 18 August 2017 and of 30 July 2018, and all of them should be read with and taken as an integral part of this Award.

II. DAMAGES CLAIMED IN RELATION TO THE BREACH OF THE TREATY AND THE PARTICIPATION CONTRACTS

A. The Parties' Positions in the Damages Phase

1. The Claimant's Position

2. The Respondent's Position

B. The Main Issues that Separated the Parties

66.
At the Quantum Hearing and at the Quantum Closing, it became clear that the main issues that separated the Parties in relation to the estimation of damages are relatively few.
67.
The Respondent's Waterfall Chart (above) identified five main issues that divided the Parties:

1. The general approach to the valuation of damages: i.e., whether damages are to be assessed ex ante or ex post, and whether on a 'layering' basis;

2. Whether in the 'but for' world, there would have been an extension of the Block 7 Contract (which was due to expire in August 2010), and if so, the nature of such an extension and its terms;

3. Whether, in estimating the damages for expropriation, the Tribunal should accept Mr. Crick's 'but for' drilling programme for both Blocks 7 and Block 21 or RPS' more modest drilling programme;

4. Whether all, or just a portion, of the effects of Law 42 at 99% should be assumed away in the 'but for' analysis; and

5. Whether a 'true-up' in favour of Ecuador should be applied, the effect of which would be to adjust the damages owed to Perenco.

C. The Tribunal's Starting Point

69.
The Tribunal begins by recalling that it is well understood in the jurisprudence on damages generally, that the assessment of damages whether in contract, tort or under a treaty, is "not an exact science."18 Nor is it an exercise in economic theory to which the Tribunal was much subjected by the Parties in this case. The Tribunal did not find the extensive reference to economic theory developed principally in the analysis of U.S. judicial decisions to be helpful to it when estimating a reasonable figure to compensate Perenco for the damage which it has suffered as a result of Ecuador's breaches. The Tribunal found the debate over "opportunistic" and "efficient" breach, however interesting to economists, legal theorists and judges in the United States, to be of no real value to the Tribunal and irrelevant to its task of deciding the quantum of damages to which Perenco was entitled.19 That said, the Tribunal has profited from the experts' highly professional work on the key issues that the Tribunal has ultimately had to decide in arriving at this Award.
70.
The Tribunal will begin by setting out in general terms how it intends to deal with the principal issues identified by the Parties. In view of the various determinations made in this Award and the adjustments that had to be made to the financial models employed by the experts to incorporate such changes, the Tribunal considers it to be unnecessary to recite all of the arguments advanced by the Parties.
71.
Certain issues are addressed at the outset. These concern: (i) the date(s) of valuation of damages; (ii) the Tribunal's decision to employ two valuation dates; and (iii) the use of contemporaneous evidence. Having addressed these issues, the Tribunal will then summarise its general approach to the balance of the issues relating to the quantification of damages.

1. The Date of Valuation

72.
Perhaps the most significant issue that divided the Parties concerned the date(s) of valuation. Perenco and its expert (on instructions) chose a single date, namely, the date of the expropriation on 10 July 2010. Contending that the expropriation was unlawful and having regard to the restitutionary relief that it initially had sought, Perenco argued that it should be entitled to the higher of the value of Perenco's interests in the two Blocks: as of the date of the declaration of caducidad or as of the date of the Award.20 In this regard, Perenco's expert, Professor Kalt, described what he saw as the inter-related nature of the various breaches found by the Tribunal; this led him to aggregate the breaches and to treat them as culminating in the formal taking of Perenco's interests in the Participation Contracts effected by the declaration of caducidad.
73.
The valuation issue was bound up in the Parties' debate over so-called 'layering'. While Perenco argued for a single date (based on the expropriation), for its part, Ecuador and its experts (on instructions) asserted that Perenco and Professor Kalt had wrongly grouped together various independent breaches occurring over approximately two and a half years as if the Tribunal had found a creeping expropriation; this despite the Tribunal's having explicitly rejected Perenco's claim on that point and having held that the coactivas and Ecuador's taking over the operatorship of the Blocks after Perenco had suspended operations could not be counted towards a finding of indirect or creeping expropriation.21 As counsel for Ecuador put it in closing argument:

"…to be clear, Decree 662 was not enacted, as Perenco suggests implicitly in its arguments, with the intention of expropriating at some later point [,] here in 2010, Perenco's investments. This is not a case of creeping expropriation. What you need to do is calculate from October 2007 onwards and then, to avoid double-counting, calculate from July 2010 onwards without double-computing the impact of Decree 662."22

74.
In accordance with Article 36(1) of the ILC Articles on the Responsibility of States for Internationally Wrongful Acts (the "ILC Articles"), the Tribunal considers that it should award compensation insofar as such damage is not made good by restitution, which compensation should cover "financially assessable damages including loss of profits insofar as it is established." The Tribunal recalls that it is well-established that the burden of proving damages lies with the claiming party.23 In the absence of a creeping or indirect expropriation effected by a series of discrete measures, the orthodox approach is for a claimant to identify the damages caused by each breach at the time of its occurrence.24 It is moreover the case that the focus of the inquiry must be on damages proximately caused by the breaches found by the Tribunal.25
75.
The Tribunal thus does not consider Brattle's efforts to value the impact of Decree 662, the first unlawful act, on Perenco's interests in the Blocks to be wrong in principle. Quite the contrary. The Tribunal agrees with Ecuador as to the suitability, in the circumstances of the present case, of valuing the breaches as and when they occurred, rather than focusing exclusively on the last completed breach. The Tribunal considers that counsel for Ecuador's characterisation of the facts, quoted above at paragraph 73, is correct. Even during the provisional measures phase of this proceeding, counsel for Ecuador confirmed that their client had no intention at that time to expropriate Perenco's interests in the Blocks. The Tribunal adverted to this intention not to expropriate in the Decision on Liability when discussing whether the Ministry should have stayed its hand in declaring caducidad during the pendency of these arbitral proceedings.26
76.
As previously held by the Tribunal, Perenco failed to make out a creeping expropriation claim and its attempt now to employ in its stead what it called an "inter-linked course of conduct" is unavailing.27 The breaches are of course inter-linked in that each is a part of the dispute as it evolved, but each has to be examined at its own time and in its own context. This is particularly the case when it is recalled that certain acts claimed to be in breach of contract or of the Treaty were not accepted as such by the Tribunal. For example, while the Tribunal accepted that Perenco could lawfully suspend operations under the exceptio non adempleti contractus doctrine, it also accepted that the State could in such circumstances lawfully intervene in the Blocks so as to safeguard their operating continuity and productivity after the Consortium suspended operations.28 Similarly, the Tribunal held that the coactiva dispute, which arose when Perenco's decision not to pay Law 42 dues led Ecuador to seek to liquidate the claimed 2008 tax debt, resulted from the acts of both Parties. The Tribunal held that neither of these acts could be counted towards Perenco's theory of a creeping expropriation.29
78.
Not only did the Tribunal differentiate in its Decision on Liability between Decree 662, the first completed breach, and caducidad, the last completed breach, it also distinguished between Decree 662 and the other fair and equitable treatment breaches that followed before Perenco suspended operations. The Ministry declared caducidad a year later after requesting Perenco to return to the Blocks on four separate occasions, requests that Perenco refused to countenance unless Ecuador complied with the Tribunal's Decision on Provisional Measures. It was only after the Ministry gave these warnings and Perenco refused to resume operations that the Ministry made a declaration of caducidad.31 To point this out is not to excuse the Ministry – the Tribunal has agreed with Perenco that the caducidad amounted to an expropriation under Article 6 of the Treaty – but rather to make the point that Perenco's decision to suspend operations compelled the government to intervene to protect the Blocks and their production, and the warnings that Perenco should resume operations or face a declaration of caducidad were based on one of the grounds for termination listed in Article 74 of the Hydrocarbons Law.32
79.
Of specific relevance to the proposed single date of valuation based on the "inter-linked course of conduct" argument, the Tribunal notes that the fair and equitable treatment breaches themselves were not treated as all in one package in the Decision on Liability. In addition to rejecting the creeping expropriation contention, the Tribunal differentiated between the offending measures as follows:

"606….Decree 662 marked the beginning of a series of other measures in breach of Article 4 taken in relation to the Participation Contracts, namely: (i) demanding that the contractors agree to surrender their rights under their participation contracts and migrate to what for a considerable period of time was an unspecified model, such that the contractors were unable to discern precisely what they were being asked to move to; (ii) escalating negotiating demands, in particular in April 2008 when the President unexpectedly suspended the negotiations and rejected what had recently been achieved in a Partial Agreement in respect of one of the blocks; (iii) making coercive and threatening statements, including threats of expulsion from Ecuador; and (iv) taking steps to enforce Law 42 against Perenco (and Burlington) for non-payment of dues claimed to be owing, a portion of which has been held to be in breach of Article 4, and when no payments were made, forcibly seizing and selling the oil produced in Blocks 7 and 21 in order to realise the claimed Law 42 debt. This set the stage for the Consortium's suspension of operations and ultimately the declaration of caducidad which formally terminated the Consortium's rights in the two blocks.

607. The Tribunal has already noted that Ecuador has not contested the Claimant's assertion that Decree 662 was intended to force a renegotiation of the participation contracts in order to migrate Petroecuador's counterparties to service contracts. In the Tribunal's view, moving beyond 50% to 99% with the application of Decree 662 amounted to a breach of Article 4 of the Treaty and the measures, taken collectively, just listed also constituted breaches of Article 4." [Double emphasis added.]

80.
As the underlined and italicised passages indicate, the Tribunal distinguished between Decree 662 and the measures that followed. This is not to suggest that none of these were related to the others, but the Tribunal was alive to the fact that some of the breaches (and other alleged breaches which were not accepted as such) arose out of complex interactions between the Consortium and/or the individual acts of its members, Perenco and Burlington, and the State.33
81.
The facts and the findings were thus somewhat more complicated than the way in which they have sometimes been treated in the course of the quantum pleadings. The Tribunal has accordingly found it necessary to revert to specific prior findings from time to time so as to provide context for certain findings made in this Award.
82.
Quite apart from the issues of context and timing, the Tribunal considers that Decree 662 had the effect of converting the Participation Contracts into de facto service contracts (and, as Perenco pointed out during the quantum phase, imperfect ones at that, because they provided no protection against lower oil prices34), but the decree did not purport to interfere with the Contracts' operation below the reference price.35 Perenco continued to both hold and exercise those contractual rights up to the date of its decision to suspend operations (and thereafter, in that Ecuador credited Perenco's account with revenues derived from sales of crude oil while it operated the Blocks after the Consortium suspended operations and up to the declaration of caducidad).36
83.
Thus, the Tribunal did not see a set of inter-linked measures so closely connected in time as to convince it to aggregate them and employ the single valuation date for which Perenco contended. Nor did it consider that the challenges of valuing the breaches individually was of such complexity as to require the damages estimation exercise to default to a single date of valuation.
84.
Tribunals are not bound to accept a party's proposed date of valuation. In Sempra, for example, while the tribunal ultimately agreed with the claimant's proposed date, it observed:

"209. The Tribunal will accordingly use December 31, 2001 as the proper valuation date. This is not because it believes that the Claimant's argument should be given any deference, but simply because the explanation given shows that there was an investment decision made in good faith. Neither does the Tribunal share the interpretation which the Claimant has given to CMS with regard to the payment of certain deference in the choice of a valuation date. It is apparent that in CMS no acts or decisions taken by the claimant after the injunction raised any doubt about the date which triggered the events complained of."37

85.
Having regard to all of the circumstances and to its prior findings, the Tribunal therefore prefers the kind of 'layering' analysis proposed by Ecuador's experts, albeit with important modifications to Brattle's approach. The Tribunal intends to value the first completed breach and then adjust it in certain ways for reasons explained below. It will then turn to the subsequent breaches and do the same (if there is evidence of financially assessable damage proximately caused by each breach). It considers that this approach is consonant with international law and legal practice.
86.
The Tribunal notes that bound up in the Parties' debate over 'layering' were arguments as to whether Brattle acted consistently with their declared intention to value the breaches separately on an ex ante basis. Perenco criticised Brattle for its having focused on the two breaches of Decree 662 and caducidad specified in the Decision on Liability's dispositif without estimating the economic effects of the intervening breaches (demanding that contracts migrate to services contracts, making escalating contractual demands, and making coercive and threatening statements).38 Yet, the Tribunal would note that this criticism overlooks the point noted above at paragraph 74 that it is not incumbent upon a respondent to make a claimant's case on damages; that burden is the claimant's.39 Indeed, a respondent is entitled to simply challenge the claimant's approach if it sees fit to do so without proffering an alternative estimation of the damages that might be payable. Perenco was put on notice of the 'layering' approach by the Respondent's first responsive pleading in the damages phase.40 The fact that Brattle did not attempt to value escalating contract demands, for example, did not preclude Perenco from seeking to do so.41 However, while it criticised Brattle's approach in its Quantum Reply, Perenco continued to base its damages case on a single valuation date, thus running the risk that the Tribunal might be persuaded by Brattle's approach and thus be presented with no attempt to value the breaches arising between Decree 662 and caducidad.
87.
As for certain other criticisms of Brattle's 'layering' approach, such as Perenco's observation that Brattle's avowed ex ante approach to valuing the impact of Decree 662 on Perenco was not adhered to when Brattle used ex post information to make its 'true-up' argument, these are addressed below.
88.
For its part, Ecuador maintained that the dispute between the Parties evolved over time. Therefore, it argued that its experts were right to estimate the effects of separate breaches occurring at different times in order to avoid double counting. Brattle estimated the impact of Decree 662 as of 4 October 2007, then estimated the impact of caducidad on the already diminished (but also already compensated) value of Perenco's interests in the Blocks.
89.
Ecuador observed in this respect that Brattle's valuation as of the date of Decree 662 accorded with Perenco's contemporaneous calculations performed in October 2007, just days after Decree 662 was promulgated. With regard to Law 42 at 50%, Perenco calculated that the NPV for its interests in the two Blocks through to their date of expiry amounted to US$239.4 million42; Brattle's initial NPV calculation of the interests was US$265.7 million43 but this was later adjusted upwards in its Reply Report to either US$282.2 million (using RPS' capital costs) or US$295.8 million (using Professor Kalt's costs). With regard to Decree 662, Perenco's contemporaneous NPV calculation for its interests in the two Blocks was US$154.6 million44; Brattle's initial values were US$107.7 million45 and this was later updated by Brattle to come to US$127.6 million (using RPS's costs) or US$127.5 million (using Professor Kalt's costs).
90.
In disputing Ecuador's attempt to use an earlier date in assessing damages, Perenco argued that 'layering' was conceptually flawed in this case because Ecuador's breaches were inter-related. Such inter-related breaches led to layering being rejected in SAUR.46 Here, each of Ecuador's breaches was inextricably linked to the others (and it was irrelevant, in Perenco's view, that the Tribunal did not find a creeping expropriation).47 The principle of full reparation warranted the use of a single valuation date in order to capture the cumulative effect of the breaches and thereby grant Perenco proper restitution. Brattle's approach was inconsistent with the principle that a breaching State could not be given credit for actions that depressed the value of the investment prior to expropriation (as recognised in Occidental II).48
91.
Perenco argued further that Brattle admitted that they applied 'layering' in a way that reduced Perenco's damages at every turn. Professor Dow conceded that if 'layering' were done in a different order, Perenco's damages would be higher.49 Perenco contended that Professor Dow and Mr. Caldwell also admitted on cross-examination that they had essentially transferred only the "good" risk and imposed on Perenco the "bad" risk: they had ignored actual high oil prices after Decree 662 in estimating Perenco's anticipated revenues, but reduced Perenco's damages by offsetting the actual Decree 662 payments based on those higher oil prices, and then deprived Perenco of the coactiva -seized oil's actual market price.50 Brattle's approach also presumed that in setting an ex ante price, a willing buyer would have foreseen the whole sequence of later events —including, ultimately, oil seizure— yet Mr. Caldwell admitted that "nobody standing in October '07 would have predicted all the set of the chain of events that would actually occur."51
92.
Perenco added that Brattle's various 'stabilisation' scenarios made no sense. Professor Dow and Mr. Caldwell admitted that their lump-sum 'side payment' for Decree 662 amounted to continuing to apply Decree 662 to Perenco, even though the purpose of damages was to wipe out the effects of Decree 662.52 It could not be assumed that Perenco would have ceded all of its future upside for a single payment in October 2007. In addition, the notion that Perenco's expectations were immutable as of October 2007 was inconsistent with the fact that Perenco continued to operate in Ecuador after Decree 662.
94.
Ecuador responded to Perenco's contentions as follows.
95.
First, at the Quantum Hearing, Ecuador presented the Waterfall Chart showing the different components of damages claimed by Perenco and illustrating the impact of correcting each component.54 Perenco did not challenge the figures in the Waterfall Chart.55
96.
Second, in response to Perenco's criticism that 'layering' was invalid because of the inter-related nature of Ecuador's breaches, Perenco did not explain why the breaches were inter-related and why interrelation would matter at all to 'layering'.56 Professor Kalt acknowledged for the first time at the Quantum Hearing that he himself had done a monthly layering in his ex ante analysis, which stood in contradiction to his and Perenco's criticism on 'layering'.57 Professor Kalt's 'mark-to-market' contingent contract justification for his ex ante calculation was entirely new at the Quantum Hearing and entirely different from the logic advanced in his Fourth Expert Report.58
97.
In respect of Perenco's criticism that neither Ecuador nor Brattle addressed the fact that the Tribunal found other breaches apart from Decree 662 and caducidad, Ecuador asserted that Brattle's 16 October 2015 Expert Report (at paragraphs 88 to 90) addressed this at length and it was Perenco who chose not to cross-examine Brattle's experts on this point during the Quantum Hearing.59
98.
In respect of SAUR 's rejection of 'layering', Ecuador explained that that tribunal rejected 'layering' because in that case the first-in-time breach had already deprived the investment of all value, which was not the case here.60 In Occidental II, the two breaches found by that tribunal were only weeks apart and hence the issue was not even discussed.61 In contrast, in the present case the two principal breaches occurred in 2007 and 2010.
99.
Finally, in respect of Perenco's claim that Brattle had admitted that they applied 'layering' in a way that reduced Perenco's damages at every turn, Ecuador argued that this illustrated Perenco's confusion of rather simple economics. Perenco's sole criticism was directed at Brattle's calculation of the 'true-up', which was ex post (i.e., considering actual prices) while calculating damages to Perenco ex ante. As Brattle explained, "the true up adopts an ex-post perspective inherently, since it must look back and assess what Law 42 amounts were actually paid by the Consortium and which levies remain outstanding."62 There was nothing unsound in this calculation and Professor Kalt never took issue with it. Brattle further explained that imposing on Perenco the change in oil prices when it chose to withhold taxes was appropriate, while also acknowledging that the allocation of risks was ultimately an issue for the Tribunal (hence the sensitivity calculations of the 'true-up').
101.
Having concluded thus, the Tribunal would also note at this point that Perenco had also contended, in tandem with its single valuation date approach, that an ex post approach should be taken where there is an unlawful expropriation and the value of the investment had increased.63 Ecuador disagreed. In light of the Tribunal's analysis above, and its layering / "clean sheet" approach (discussed below), the Tribunal does not consider it necessary to delve into the arguments on this point.

2. Has Perenco demonstrated any loss or damage proximately caused by the post-Decree 662 fair and equitable treatment breaches?

103.
To reiterate, these breaches are: "(i) demanding that the contractors agree to surrender their rights under their participation contracts and migrate to what for a considerable period of time was an unspecified model, such that the contractors were unable to discern precisely what they were being asked to move to; (ii) escalating negotiating demands, in particular in April 2008 when the President unexpectedly suspended the negotiations and rejected what had recently been achieved in a Partial Agreement in respect of one of the blocks; (iii) making coercive and threatening statements, including threats of expulsion from Ecuador; and (iv) taking steps to enforce Law 42 against Perenco (and Burlington) for non-payment of dues claimed to be owing, a portion of which has been held to be in breach of Article 4, and when no payments were made, forcibly seizing and selling the oil produced in Blocks 7 and 21 in order to realise the claimed Law 42 debt."64
104.
However, with the exception of the sales of oil seized and sold pursuant to the coactivas, which must be adjusted in the 'true-up' exercise to be consistent with the Tribunal's finding on Decree 662, it appears that neither Party's experts undertook the exercise of quantifying damages attributable to those breaches during the pleadings phase. Therefore, it might be that these are breaches for which proximate damage has not been estimated and therefore no damages can be awarded.65 This is the position taken by Brattle.66
105.
The Tribunal understands that Professor Kalt's view was that breaches (i) and (iii) listed above "would be expected to adversely affect Perenco's investment and production decisions."67 The Tribunal agrees, but it also considers that this already occurred when Decree 662 took effect and Perenco stopped drilling in both Blocks (except for Oso 23). Since the Tribunal has found that wells would have been drilled in both Blocks after Decree 662 and Perenco will be compensated for the cash flows associated with those 'but for' wells as well as for the loss of the opportunity to negotiate the extension of Block 7 (see Sections II.D.3 and II.F below), in the Tribunal's view, Professor Kalt's concerns on these particular points are met.
106.
As for the coactivas issue, the Tribunal will reflect in the Award a sum of damages flowing from Perenco's being credited for the depressed auction price received for the seized oil rather than the market value. The Parties spent considerable time over the course of this proceeding addressing the impact of the coactivas. There is record evidence on the amounts of oil seized, the prices at which it was sold and the amounts that were credited to Perenco. However, the analysis is complicated by the fact that after submitting its claim to arbitration, Perenco (and Burlington) stopped paying Law 42 dues and instead began to deposit them in an account located outside of Ecuador. Given that Perenco failed in its attempt to prove a breach of contract and Treaty for Law 42 at 50%, the Tribunal considers that there is some merit to Ecuador's 'true-up' claim. It follows that some accounting for Perenco's non-compliance with Law 42 must be performed. In the Tribunal's view, this issue is best addressed as part of its discussion of Ecuador's 'true-up' claim below.

3. Use of a 'clean sheet' for the valuation of the expropriation damages

4. The Role of Contemporaneous Evidence of Value

120.
In its Reply Post-Hearing Brief, Perenco downplayed the significance of its NPV calculations, describing them as "back-of-the-envelope, hurried calculations to understand Decree 662's immediate impact."75
121.
Ecuador had addressed this contention in its closing submissions at the Quantum Closing. Slides 122 and 123 of Ecuador's presentation showed that the calculations were closely comparable to Perenco's other valuations, made prior to Decree 662's coming into effect, as to the Blocks' value and indeed in one case what Perenco – acting as a possible willing purchaser – might be willing to pay Burlington for the latter's interests in the Blocks just one month before Decree 662's promulgation.76 In counsel's submission:

"This confirms that the allegedly hurried calculation of BR-26 is not such hurried valuation. It actually follows from a September 2007 valuation, that's consistent, and then it's much higher than the March 2007 valuation. These were prepared with plenty of time, not in a hurry. And as you can see at the bottom of the table, we have put Brattle's valuation. Brattle's valuation of Block 7, 111.3 million, is within 10 percent of Perenco's own valuations in October and September 2007 and higher than their earlier valuation of March 2007.
The same happens with Block 21."77

122.
The Tribunal considers that Perenco's analysts would have had a good preliminary understanding of Decree 662's impact on the company's interests in the Blocks. The email chain's distribution list contains the names of seven Perenco employees who were involved in analysing Decree 662, including Eric d'Argentré, Perenco's Country Manager for Ecuador. Obviously, the calculations were based on the information available to the company at the time. This necessarily has to be the case when projecting into the future with a new factor added into the mix. But the projections were being made by employees with knowledge of (i) the Participation Contracts' terms; (ii) the Blocks' performance to date and their characteristics and potential; (iii) Perenco's and the Consortium's intentions; and (iv) wider industry market expectations at the time.

5. Summary of the Tribunal's General Approach

D. The Quantum of Damages for Decree 662, the First Completed Breach

1. Economy of the contracts – Whether Law 42 would have been completely absorbed

(a) Perenco's Position

(b) Ecuador's Position

(c) The Tribunal's Decision

2. Estimating the Direct Financial Impact of Law 42 at 99%

3. Decree 662's Impact on Perenco's Drilling Plans for Block 7 and Block 21

(a) The question of an extension of the Block 7 Contract after August 2010

(i) Perenco's Position

[1] Ecuador did not have unfettered discretion whether or not to grant an extension

[2] The Parties could have agreed to extend on different terms

[3] Extension would have been in Ecuador's best interests

[4] Perenco had met the conditions for extension under Clause 6.2

[5] Perenco would have drilled 70 new wells in the event of an extension to 2018

[6] Form and value of an extension

(ii) Ecuador's Position

[1] Ecuador enjoyed ample discretion to grant or not an extension of the Block 7 Participation Contract

[2] An extension of the Block 7 Participation Contract would not have been in the State's best interest

[3] Perenco did not meet the technical requirements under Clause 6.2

[4] Even in a hypothetical extension scenario, Mr. Crick's drilling programme would not have occurred

[5] Form and value of an extension

(iii)The Tribunal's Decision

(b) Block 7 'but for' drilling programme from Decree 662 to August 2010

(i) Perenco's position

(ii) Ecuador's Position

(iii)Perenco's response

(iv) The Tribunal's decision

(v) Conclusion on the estimation of how many Block 7 wells would have been drilled up to August 2009

(c) Block 21 'but for' drilling programme up to caducidad

(i) Perenco's Position

(ii) Ecuador's Position

(iii)The Tribunal's Decision

E. The impact of caducidad's termination of the balance of Perenco's contractual rights

F. Valuation of Perenco's loss of opportunity to operate Block 7

1. Perenco's Position

2. Ecuador's Position

3. The Tribunal's Decision

G. Contributory Negligence

1. Ecuador's Position

2. Perenco's Position