Posted by manolo On October - 2 - 2012

QUITO, Ecuador–The World Bank’s International Center for Settlement of Investment Disputes is expected to rule this week on a case brought by U.S. oil company Occidental Petroleum Corp. (OXY) against Ecuador, Ecuador’s Attorney General Diego Garcia said Monday.

“We are arriving at the final stage of the process,” Mr. Garcia told reporters in Quito. “The ruling will come by Friday.”

Occidental filed the lawsuit with the Icsid for damages for Ecuador’s May 2006 decision to cancel the company’s operating contract.

According to Mr. Garcia, the company is seeking about $3.4 billion in damages.

Ecuador alleged that Occidental broke several terms of its contract by transferring a 40% stake in its Ecuadorean projects to Canada’s Encana Corp. (ECA, ECA.T) without the approval of Ecuador’s Energy Ministry.

Occidental has said that the Ecuadorean government violated the U.S.-Ecuador bilateral investment treaty by illegally nullifying its rights and by expropriating its assets.

The Ecuadorean government, meanwhile, said it has followed the law and all contracts with the U.S company.

Ecuador is hoping that the court ruling recognizes the Ecuadorean government acted in accordance with the laws and rejects the company’s claims for compensation.

Mr. Garcia said on Monday that if the Icsid ruling is unfavorable for the Andean country, it may initiate a process to annul the decision, which could take between one and 1 1/2 years before a final ruling.

“When we have the ruling, we will decide whether or not to start a process to annul it,” Mr. Garcia said.