LONDON, Aug 1 (Reuters) – A Luxembourg bailiff has ordered banks to seize assets held in Ecuador’s Luxembourg accounts in a dispute over a $391 million settlement award that Anglo-French oil company Perenco says remains unpaid, a document seen by Reuters shows.

The Ecuadorian government promised to honor the loan in June 2021, awarded to Perenco by the World Bank’s International Center for Investment Disputes (ICSID), which Ecuador illegally terminated a production-sharing agreement with the company.

Ecuador’s solicitor general said last year that the government had approached Perenco to discuss a payment plan because of tight finances. Read more

“Today, more than a year later, Perenco has still not received a single dollar from Ecuador,” Perenco said in a statement Monday, adding that it “will take steps to enforce its payment rights against Ecuador in Luxembourg and other jurisdictions.”

Ecuador’s Economy Ministry and Energy Ministry were not immediately available for comment. Global law firm Hogan Lovells, Ecuador’s legal adviser on US law, declined to comment.

Cleary Gottlieb Steen, legal adviser to Ecuador’s Eurobond dealer manager, and a spokeswoman for Hamilton LLP’s London office did not immediately respond to requests for comment.

Perenco now has eight days to initiate court proceedings to verify the attachments, and Ecuador has 50 days to instruct a law firm to represent them in Luxembourg, said Fabio Trevisan, partner and head of BSP’s dispute resolution practice, the law firm representing Perenco. Said

A document seen by Reuters shows that a Luxembourg bailiff, Pierre Biel and Geoffrey Galle, on July 28 ordered 122 banking entities operating in Luxembourg to seize assets in accounts used by Perenco in Ecuador.

A spokeswoman for European settlement house Clearstream confirmed that Luxembourg’s Clearstream Banking SA had received the bailiff note, although declined to provide further details.

An employee of Bailiff’s declined to comment when contacted by Reuters because they are not authorized to speak to parties not involved in the case.

Reuters could not immediately confirm what assets were in Ecuador’s Luxembourg account. Named banks include Deutsche Bank(DBKGn.DE)Credit Suisse(CSGN.S) and HSBC(HSBA.L).

Credit Suisse and Deutsche Bank declined to comment, while HSBC did not immediately respond to requests for comment.

Luxembourg Bonds

The Latin American country defaulted on $17.4 billion in foreign debt two years ago as the country hit the region’s worst coronavirus outbreak after years of economic stagnation.

As part of the subsequent debt restructuring, Ecuador sold new bonds maturing in 2030, 2035 and 2040 that are listed on the Luxembourg stock exchange. , ,

Many of these bonds have paid interest since July 31. Some bond holders received interest payments on the securities on July 31, sources familiar with the matter said.

Holders of Ecuador’s international bonds include major asset managers such as BlackRock, PIMCO and JPMorgan, according to data available on EMAXX, which provides details of fund holdings based on their public disclosures. PIMCO declined to comment, while BlackRock and JPMorgan were not immediately available for comment.

The case that led to the ICSID award stemmed from a 2007 decree issued by then-President Rafael Correa that increased the Ecuadorian state’s receipts from the sale of oil produced by private companies beyond a certain level. Read more

Perenco sued Ecuador in 2008 and was eventually awarded $412 million in May last year. Perenco is entitled to $391 million in damages after it was ordered to pay Ecuador for environmental damage in areas operated in Blocks 7 and 21.

President Guillermo Lasso, a conservative former banker who takes office in May 2021, has promised to revive Ecuador’s economy and attract investment – particularly in oil and mining. Read more

“Perenco is hopeful that the government of Ecuador will finally honor its international obligations, demonstrate its commitment to the rule of law and uphold its commitment to foreign investors, by immediately satisfying the award without further delay,” the company said in its statement.

Reporting by Rowena Edwards and Karin Strohecker in London; Additional reporting by Alexandra Valencia in Quito and Jorgelina do Rosario in London; Editing by Elisa Martinuzzi, Daniel Wallis and Louise Havens

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