Defining Investor Confidence: Avoiding Interpretive Uncertainty in Chevron Corp. v. Ecuador

Abstract

In an increasingly globalized world, foreign direct investment is becoming an incredibly important tool for investors in developed nations and the developed nations in which they are investing. Investors have increasingly been seeking protections for their investments in foreign nations. This is why approximately 2400 bilateral investment treaties were signed between various nations between 1994 and 2006. When conflicts arise, the job of interpreting these treaties often falls to investment arbitration tribunals. Indeed, in 2010, an arbitration tribunal (Tribunal) operating under the United Nations Commission on International Trade Law (UNCITRAL) rules adjudicated a dispute between Chevron and the Republic of Ecuador (Ecuador) and interpreted the bilateral investment treaty between the U.S. and Ecuador (BIT). This Comment argues that the Tribunal’s interpretation of the BIT was the most reflective of the investor’s expectations and thus encouraged further investment. As incentivizing this investment is the very purpose of the BIT, the Tribunal reached the best possible conclusion as to its meaning.