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Decision on Ecuador's Reconsideration Motion

I. Introduction

A. Procedural History

1.
On 12 September 2014, the Tribunal issued its Decision on Remaining Issues of Jurisdiction and on Liability (the "Decision").1
2.
By letters dated 22 October and 7 November 2014, Ecuador indicated its intent to submit a Motion for Reconsideration (the "Motion") of the Decision. By letters dated 29 October and 11 November 2014, Perenco opposed any such motion, arguing that the Decision had decided the issues in dispute addressed within it and that the Tribunal lacked any power under the ICSID Convention to reopen what it had previously decided.
3.
In Procedural Order No. 11 dated 14 November 2014, the Tribunal allowed Ecuador's request for leave to file a Motion for Reconsideration, subject to the following:

a) Ecuador's Motion was to be filed no later than 15 December 2014;

b) The Tribunal would not, at that stage, fix a subsequent briefing schedule on the Motion;

c) The Tribunal emphasised that it had already issued a reasoned Decision; that under the ICSID Convention and the Arbitration Rules no appeal is provided for, and that only in exceptional circumstances would it be open for the Tribunal to reconsider its prior reasoned decisions;

d) Ecuador was directed to focus its Motion on the existence of those exceptional circumstances which would justify the reconsideration of the Tribunal's Decision.

4.
By agreement of the Parties, notified to the Tribunal on 11 December 2014, the deadline for the filing of Ecuador's Motion for Reconsideration was extended to 19 December 2014. Ecuador duly submitted its Motion on 19 December 2014, accompanied by the fifth Expert Report of Juan Pablo Aguilar Andrade and its annexes, 1 factual exhibit (E-376) and 60 legal authorities (EL-204 to EL-264).

B. Summary of the Motion

5.
In its Motion, Ecuador submits that the Tribunal has the power to reopen and amend its Decision and that it must exercise this power in the present case because of the "repeated instances of the [Tribunal's] omitting to determine issues put to it, violating fundamental rules of procedure, manifestly exceeding its powers and failing to state the reasons on which the [Decision] is based."1 In its view, this renders the Tribunal's findings as to its jurisdiction over the treaty and contract claims, and its findings as to Ecuador's breaches of the Participation Contracts and of the Treaty "fundamentally and fatally flawed."2 It seeks from the Tribunal a decision amending the Decision's findings on jurisdiction and the merits, and an order bifurcating the Motion and staying the Quantum phase of the arbitration during the pendency of the Tribunal's consideration of its application.3
6.
At paragraph 3(c) and (d) of Procedural Order No. 11, the Tribunal noted that "only in exceptional circumstances would it be open for the Tribunal to reconsider its prior reasoned decisions" and it accordingly directed Ecuador to focus its Motion "on the existence of those exceptional circumstances which would justify reconsideration" of the Decision. Ecuador submits that those "exceptional circumstances" exist where it can establish any of the grounds for reversal found in the ICSID Convention and the ICSID Arbitration Rules or when it is otherwise in the interests of justice.4 Ecuador submits that in each instance under the Convention and Rules, "the power to reopen and amend and/or reverse an extant decision is exercised exceptionally."5
7.
Ecuador submits further that, contrary to the majority's holding in ConocoPhillips v. Venezuela in a similar request for reconsideration, decisions preceding what Ecuador calls a "Convention award" do not have res judicata effect and the legal consequences that ensue from such status.6 It cites in support of this position a statement made by Professor Schreuer with respect to Article 51 of the Convention, which addresses a tribunal's power of revision, and where he states that while the procedure for revision was designed for situations in which the tribunal has terminated its activity and issued a final award, "[a] tribunal that is still in session can always revise its preliminary decisions informally."7
8.
As shall be seen in further detail below, Ecuador also relies upon certain Convention and Arbitration Rules provisions that permit tribunals to take certain steps in relation to their awards as well as the provisions of Article 52 which allow a party to seek the annulment of an award.8 Amongst the grounds of annulment contained in Article 52, the Motion relies principally on three grounds: manifest excess of powers, serious departure from a fundamental rule of procedure and failure by a tribunal to state the reasons upon which its award is based.9 Ecuador submits in relation to the three grounds that the standard of review that the Tribunal ought to apply to its Motion "is not the post-award annulment standard" but a lesser standard that should be applicable to the grounds of review before proceedings are closed:

"Pre-award, the error identified need not be to the heightened 'manifest', 'gross', 'egregious' or 'obvious' standard. Rather, it is appropriate, and the purposes of the Convention require at this earlier stage, that a showing of any error is sufficient, in order that a tribunal 'achieve its fundamental task of arriving at a correct decision."10 [Underlining added, italics in original.]

9.
In sum, Ecuador submits that the Tribunal can and ought to reopen and amend and/or reverse the Decision if it establishes that the Motion meets any of the grounds for reopening an Award or reviewing a decision prior to the making of an Award as set out in the Convention and/or the Arbitration Rules or where it is otherwise in the interests of justice to do so.11
10.
Turning to the findings of the Decision that Ecuador submits should be reconsidered, Ecuador contends in turn:
11.
First, that the Tribunal should reconsider its finding of jurisdiction over Perenco's claim that Ecuador breached the Block 21 Participation Contract when it declared caducidad because its holding allegedly contradicts its Decision on Jurisdiction and in so doing amounts to a manifest excess of power, a serious departure from a fundamental rule of procedure, and a failure to satisfy the requirement to state the reasons on which the Decision is based.12
12.
Second, the Tribunal should reconsider its finding that Perenco was controlled by French nationals at the material time and that the Tribunal accordingly has jurisdiction over Perenco's treaty claims, because it was allegedly arrived at in violation of Ecuador's right to fair and equal treatment, due to the Tribunal's committing a serious departure from a fundamental rule of procedure.13
13.
Third, the Tribunal should reconsider its finding that Ecuador's non-compliance with its prior Decision on Provisional Measures amounted to a breach of contract because the Tribunal allegedly omitted to decide the question of whether its recommendations in that Decision were decisions for the purposes of Clause 22.2.2 of the Participation Contract, failed to state the reasons upon which its finding was based, and its finding contradicts its Decision on Provisional Measures.14
14.
Fourth, that the Tribunal should reconsider its interpretation of the exceptio non adimpleti contractus defence as a result of which it found that defence was open to Perenco in order to suspend operations in the Blocks. In this regard, this decision was said to have been arrived at as a result of the Tribunal's having committed a manifest excess of powers, a serious departure from a fundamental rule of procedure, and a failure to state the reasons on which the Decision was based.15
15.
Fifth, the Tribunal should reconsider its finding that Decree 662 breached the Participation Contracts because the finding allegedly discloses a manifest excess of powers in the interpretation and application of the jus variandi power, is contradictory to the Tribunal's previous finding in the Decision that Law 42 at 50% did not amount to a breach of the Participation Contracts, and that Law 42 at 99% did not amount to an expropriation in breach of the Treaty, and it was arrived at arbitrarily.16
16.
Sixth, that the Tribunal should reconsider its finding that the application of Decree 662 to Perenco as well as the ensuing measures breached Article 4 of the Treaty because, in Ecuador's view, Decree 662 did not breach the Participation Contracts, the finding is contradicted by the Tribunal's earlier finding in the Decision that Law 42 at 50% did not amount to a breach of the Treaty, and it was arrived at arbitrarily.17
17.
Seventh, the Tribunal's finding that Ecuador's declaration of caducidad breached the Block 21 Participation Contract and affected an expropriation of Perenco's contractual rights should be reconsidered because it allegedly contains a serious departure from a fundamental rule of procedure and was arrived at by the Tribunal having manifestly exceeded its powers.18

II. The provisions of the ICSID Convention, the ICSID Arbitration Rules and other authorities invoked by Ecuador

18.
Ecuador refers to the following provisions of the ICSID Convention and the ICSID Arbitration Rules in support of its Motion. They are listed in the order of their citation by Ecuador:

(i) Article 49(2), which permits a tribunal to, at the request of a party, decide any question which it had omitted to decide in its award or rectify any clerical, arithmetical or similar error in the award;19

(ii) Article 51, which permits a tribunal to revise its award on the ground of the discovery of some fact of such a nature as decisively to affect the award;20

(iii) Article 52, which permits a party to request the establishment of an ad hoc Annulment Committee to seek annulment of an award under one or more of five grounds;21

(iv) Arbitration Rule 38(2), which permits a tribunal, after closure of the proceedings but before the rendering of the award, to reopen the proceeding on the ground that new evidence is forthcoming of such a nature as to constitute a decisive factor, or that there is a vital need for clarification on certain specific points;22

(v) Arbitration Rule 25, which provides that any accidental error in any instrument or supporting document may with the consent of the other party or by leave of the tribunal, be corrected at any time before the award is rendered;23 and

(vi) Article 44, which provides that if any question of procedure arises which is not covered by Section 3 of the Convention and, except as the parties otherwise agree, in accordance with the Arbitration Rules in effect, the tribunal shall decide the question.24

19.
Ecuador submits that "[i]n each case, the power to reopen and amend and/or reverse an extant decision is exercised exceptionally, in order to ensure the validity and legitimacy of the ICSID arbitration process and, ultimately, the finality of Convention awards."25 Ecuador asserts further that whilst Article 44 provides a "textual foothold" for the tribunal's power "to take measures to preserve the integrity of its proceedings", as noted by the Hrvatska tribunal in its ruling regarding the participation of David Mildon QC in further stages of the proceedings, "that power is in fact inherent."26 Ecuador submits that this "inherent power most obviously and profoundly manifests itself in an overarching exceptional circumstance in which it is not only appropriate but necessary for a tribunal to reverse its decision: where such action is in the 'interest of justice'. "27 Jurisprudence of the European Court of Human Rights is cited in support of the proposition that even if the applicable convention or court rules do not provide for the reopening of a court's decision, this may be done in the interests of justice.28
20.
Other cases, in particular Abaclat v. Argentine Republic and Churchill Mining v. Indonesia, are cited as examples of where tribunals have exercised their powers under Article 44 to tailor the proceeding to special circumstances; in the former case the tribunal was said to have "used its Article 44 powers in a profoundly important way so as to affect the rights of 60,000 investors and Argentina"29, and in the latter case the tribunal found that "Article 44 permitted it to reopen and reverse an earlier procedural order denying bifurcation of a preliminary issue."30
21.
Finally, Ecuador attaches particular significance to the "powerful dissenting opinion" of Professor Georges Abi-Saab in the case of ConocoPhillips v. Venezuela.31 In that case, the Tribunal was also presented with a request for reconsideration of its earlier decision. The majority denied the request on two bases, the first being that there was no power under the ICSID Convention to entertain such a request and the second being that the findings made by the tribunal in its prior decision were res judicata.32 Professor Abi-Saab disagreed.33

III. The legal framework governing the Motion

A. Article 52 of the Convention

B. The other provisions of the Convention and Arbitration Rules

(i) Post-award procedures open to a tribunal upon the application of a party

(ii) Article 51 of the Convention

(iii) Article 49 of the Convention

(iv) Article 49(2) of the Convention, first limb

(v) Article 49(2) of the Convention, second limb

(vi) Arbitration Rule 38

(vii) Arbitration Rule 25

(viii) Article 44 of the Convention

IV. The "serious departure from a fundamental rule of procedure" complaints

V. Conclusion

VI. Decision

98.
Accordingly, Ecuador's Motion is dismissed, as are its consequent requests to bifurcate the proceedings and stay the Quantum phase of this arbitration.
99.
Costs are reserved for future determination.
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