Interim measures refused as no right to specific performance on termination of oil concession

An ICSID tribunal has refused the claimants' request for provisional measures in arbitration proceedings between Occidental Petroleum Corporation and Occidental Exploration and Production Company v The Republic of Ecuador (ICSID Case No ARB/06/11). The claimants alleged various breaches of domestic and international law, and under the US/Ecuador BIT, in respect of the oil concession granted to them by Ecuador in 1999. The claimants issued a request for provisional measures which was, in essence, intended to preserve their alleged right to specific performance of the underlying contract.

The tribunal rejected the application, finding unanimously that the claimants had failed to demonstrate that an order for provisional measures was justified in the circumstances. The claimants had to establish a right to be protected, which in this case would be the right to specific performance of the underlying contract and the right to non-aggravation of the dispute. However, they failed to establish a "strongly arguable" case that a right to specific performance exists where a natural resources concession agreement has been terminated by a State. The tribunal proceeded on the basis that "full reparation", rather than restitution, is the appropriate remedy where a party is injured by an alleged illegal act. This can be achieved by restitution in kind (synonymous with specific performance) but where that is not possible, monetary compensation is the remedy. Specific performance is "legally impossible" in cases where a investor's contract, licence or other entitlements have been put to an end by the host State.

The award provides useful clarification of the "rights" that can be protected by way of provisional measures and an interesting analysis of the availability of non-pecuniary remedies in international investment arbitration.