Latham & Watkins' International Dispute Resolution Practice Group in London has successfully defended a claim of almost $2 billion brought against the Republic of Ecuador for an alleged violation of the US-Ecuador bilateral investment treaty (BIT).

The arbitration was brought by Empresa Eléctricia del Ecuador, a foreign investor who held a long-term electricity concession in the country, for a purported expropriation of the electricity supply to Ecuador. The claimant alleged that it was controlled by a complex series of trusts based in The Bahamas and, as a result, its claim fell under the US-Ecuador bilateral investment treaty. However, following a series of cross-examinations at the jurisdictional hearing in Washington, D.C. by Latham & Watkins, the Tribunal concluded that the claimant had failed to prove that it actually owned the company. As such, the nationality requirement under the treaty had not been met and, in its decision on Ecuador's objections to jurisdiction, the Tribunal held that it did not have jurisdiction to hear the case. The Tribunal dismissed the claim with prejudice.

"This was a critical case for the Government of Ecuador," commented London partner Robert Volterra, who led the Latham & Watkins team. "In deciding the case, the Tribunal dealt with a number of new and cutting-edge international law arguments. As the Award shows, this was a resounding win for Ecuador with significant implications for the structuring and treatment of foreign investments in Latin America and around the world."

The arbitration was held before a tribunal composed of public international law experts at the World Bank's ICSID facility in Washington, D.C.