Ecuador remains in full default on its US$412m debt to Perenco
LONDON, Aug. 1, 2022 /PRNewswire/ -- Perenco has today successfully frozen all Luxembourg bank accounts used by the Republic of Ecuador to make coupon payments in respect of its 2030, 2035 and 2040 sovereign bonds, raising the possibility of the country defaulting on its bond coupon payments and its obligations to bondholders and creditors.
Perenco's action arises from the non-payment by Ecuador of a US$412m debt, the revised amount awarded to Perenco in May 2021 by the International Centre for Settlement of Investment Disputes ("ICSID") Committee following Ecuador's unsuccessful attempts to have the final arbitration Award of September 2019 annulled.
Despite Ecuador's solemn and written undertaking given by its Minister of Finance to pay the Award voluntarily, unconditionally and in full, within 60 days of the ICSID Committee's decision on annulment (namely 27 July 2021) Perenco has to date, more than one year later, still not received a single dollar from Ecuador.
Perenco remains hopeful that Ecuador's Government will finally honour its international obligations, demonstrate its commitment to the rule of law, and uphold its promises to foreign investors, by promptly satisfying the Award without further delay.
The freezing of bank accounts in Luxembourg from which payments are made on Ecuador's bond coupons serves to highlight the risks the international investment community faces in any dealings with Ecuador, and sees the country put its own creditworthiness at risk. Unless and until Ecuador fulfils its obligations under the Washington Convention and its express undertaking to pay Perenco in full, Perenco has been left with no choice but to take steps to enforce its payments rights against Ecuador in Luxembourg and other jurisdictions.
Perenco's long-running dispute against the Republic of Ecuador arises from Ecuador's imposition of Law 42, which unilaterally and illegally increased the State's take in Perenco's participation contracts for Blocks 7 and 21. In September 2019, Perenco had secured a final Award with an ICSID Tribunal awarding it damages of US$448 million on its principal claims plus post-award interest and almost 80% of its costs.
On 28 May 2021, an ICSID Committee comprehensively rejected Ecuador's attempts to annul the final Award in its entirety. The ICSID Committee instead reduced the total amount of the Award due to Perenco to US$412 million on its principal claims plus post-award interest and costs and upheld the remainder of the Award.
Perenco is an independent hydrocarbons producer. Founded in 1992, the Group is involved in the entire life cycle of projects, from exploration to decommissioning. Its strength lies in the ingenuity and versatility of its 6,800 employees, who allow the Group to develop a fully sustainable, optimised and integrated business. By enhancing and developing local resources, Perenco supports the economic growth and human development in each of the 15 partner countries where it operates.
Mark Antelme, Celicourt Communications
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