Ecuador again faces arbitration award against; this time as a result of the unilateral termination of the contract with the Russian company InteRao, which was carried out in December 2016 by the then President of the Republic, Rafael Correa.

The Arbitration Court of the Santiago de Chile Chamber of Commerce ruled in favor of InterRao and ordered Ecuador to pay the company $45 million. The arbitration proceedings began due to the unilateral termination of the contract for the procurement of equipment for the Toachi Pilatón hydroelectric power plant project, which has been under construction for thirteen years and has not yet been concluded. At the time, the argument of the Ecuadorian state was that the Russian company had delays and non-payments.

Now, with a partial judgment against issued on August 29, the Office of the Attorney General reported that “in defense of the interests of the Ecuadorian State, with the contribution of the Ecuadorian Electric Corporation (Celec EP)” it presented to the Court of Appeals of Santiago de Chile an appeal to annul the arbitration award .

The State Attorney’s Office believes that there is a cause of serious omissions, which is why it deserves to be cited and must be seriously considered by the Court of Appeal, hoping for a favorable result for the State of Ecuador. In this sense, the answer of this judicial entity has not yet arrived.

According to what is known, prior to the filing of the arbitration request, a conciliation phase began between InteRao and the State of Ecuador, during which InteRao’s goal was to have the Government remove it from the list of ineligible suppliers because they were an obstacle to re-contracting with the state; however, no agreement was reached and the Russian company was allowed to initiate the arbitration process on December 14, 2018.

While the Celec EP and the Attorney General’s Office present appropriate defenses to the arbitration process in question, on February 26, 2019, the Ecuadorian government decided to declare the Toachi-Pilatón project urgent, which will allow it to contract directly with the Russian company Tyazhmash to fulfill the original InteRao contract.