Documents show that Luxembourg’s private banks have asked to freeze their assets in Ecuador amid a dispute between Perenco

  • Bailiff has ordered 122 banking entities operating in Luxembourg to freeze Ecuadorian assets.
  • Ecuador issued bonds listed in Luxembourg in 2020 to fix debt
  • Some bondholders received interest payments due on July 31

LONDON (Reuters) – Minutes in Luxembourg have ordered banks to freeze assets Ecuadorean holds in Luxembourg accounts as a result of a dispute over a $391 million settlement that Anglo-French oil company Perenco says has yet to be paid, a document it has seen. Reuters show.

Ecuador’s government pledged in June 2021 to honor the debt, granted to Perenco by the World Bank’s International Center for Investment Disputes (ICSID), which ruled that Ecuador had unlawfully terminated a production sharing agreement with the company.

Ecuador’s attorney general said last year that due to a lack of finances, the government had approached Perenco to negotiate a payment plan. Read more

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“To date, over a year later, Perenco has not received a single dollar from Ecuador,” Perenco said in a statement Monday, adding that it would “take steps to enforce its rights to payments against Ecuador in Luxembourg and other jurisdictions.”

Ecuador’s Ministry of Economy and the Ministry of Energy could not be reached for comment. Global law firm Hogan Lovells, Ecuadorean’s legal advisors on US law, declined to comment.

A spokesman in the London office of Cleary Gottlieb Steen & Hamilton LLP’s, the legal advisors to Dealer Manager Eurobonds in Ecuador, did not immediately respond to a request for comment.

Fabio Trevisan, Partner and Head of Dispute Resolution Practices at BSP, the law firm representing Perenco, said Perenco now has eight days to start court proceedings to validate attachments, and Ecuador has 50 days to direct a law firm to represent it in Luxembourg.

A document seen by Reuters shows that on July 28 Luxembourg’s warden, Pierre Bell and Geoffrey Galle, ordered 122 banking entities operating in Luxembourg to freeze assets in accounts used by Ecuador on behalf of Perenco.

A spokesperson for European settlement house Clearstream confirmed that Clearstream Banking SA in Luxembourg had received the minutes note, but declined to give further details.

A Hajeeb employee declined to comment when contacted by Reuters because he was not authorized to speak to parties not involved in the case.

Reuters was unable to determine which assets Ecuador held in Luxembourg’s accounts. Among the banks mentioned are 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

Two years ago, the Latin American country defaulted on $17.4 billion in foreign debt, as the country collapsed amid one of the region’s worst coronavirus outbreaks after years of economic stagnation.

As part of the debt restructuring that followed, Ecuador sold new bonds that mature in 2030, 2035 and 2040 and are listed on the Luxembourg Stock Exchange. and

Many of these bonds had interest payments due on July 31. Informed sources said that some bond holders received interest payments that were due on the securities on July 31.

Ecuador’s international bond holders include major asset managers such as BlackRock, PIMCO and JPMorgan, according to data available on EMAXX, which provides details of the funds’ holdings based on their public disclosures. Pimco declined to comment, while BlackRock and JPMorgan could not be reached for comment.

The issue that led to the ICSID award arose from a 2007 decree by then-President Rafael Correa that boosted the Ecuadorean state’s influence from oil sales produced by private companies that exceed a certain level. Read more

Perenco sued Ecuador in 2008 and eventually received $412 million in May last year. Perenco is entitled to $391 million after taking into account the damages it has been ordered to pay to Ecuador for environmental damages in the areas in which it operates in blocks 7 and 21.

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

“Pirenco remains hopeful that the government of Ecuador will finally fulfill its international obligations, demonstrate its commitment to the rule of law, and fulfill its promises to foreign investors, by fulfilling the award immediately without further delay,” the company said in its statement.

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Additional reporting by Rowena Edwards and Karen Stroecker in London; Additional reporting by Alexandra Valencia in Quito and Giorgina do Rosario in London. Editing by Elisa Martinozzi, Daniel Wallis and Louise Heavens

Our Standards: Thomson Reuters Trust Principles.

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