In the Republic of Ecuador v. Chevron Corp., No. 09-cv-9958 (S.D.N.Y. Mar. 10, 2010), the District Court for the Southern District of New York denied Ecuador's motion to stay an UNCITRAL arbitration brought by Chevron, the latest stage in a 17-year-old dispute. In the arbitration, Chevron alleges that Ecuador violated the Ecuador-US bilateral investment treaty by interfering on behalf of class-action plaintiffs in a pending lawsuit in an Ecuadorean court. The plaintiffs in that high-profile lawsuit seek US$ 27 billion as compensation for environmental damage caused by oil drilling and production by Texaco, which Chevron bought in 2001, in the Lago Argrio region of the Ecuadorean Amazon.

Judge Leonard Sand issued his opinion from the bench. As a threshold matter, Judge Sand assumed without deciding that the District Court has the authority under New York law to stay an international arbitration. That authority, the judge noted, was uncertain in light of two conflicting decisions rendered by the District Court in 2008 and 2009 respectively. On the merits of the motion, Judge Sand held that an application for a stay of arbitration must not be granted under New York law where there is "at least one arbitral issue." The judge ruled that Chevron's request for arbitration presented at least one arbitral issue, namely whether Ecuador had frustrated Chevron's right to due process in the Ecuadorean proceedings. The due process claims "were neither waived through litigation not could have been waived through any representations made to this Court."

On 18 March 2010, Ecuador filed a notice to appeal the District Court's decision. The appellate court will have the opportunity to revisit the authority of the federal court to stay an international arbitration. In the District Court proceedings, two prominent arbitration experts, W. Michael Reisman and Hans Smit, submitted declarations on the issue in support of Chevron and Ecuador, respectively.