The Analysis Of Case Burlington Resources?inc. V. Ecuador About Oil Windfall Profit Tax

In the context of rising international oil prices,Ecuador amended its oil bill in April 2006,introducing a 50% "windfall profit tax" on oil to all private oil companies and boosting it to 99% by October 2007,leaving only 1% of oil premium income to private oil companies.This move has seriously affected the interests of foreign oil companies investing in Ecuador,and several oil companies sued Ecuador in the International Center for Settlement of Investment Disputes(referred to as “ICSID”)on the basis of a bilateral investment treaty(referred to as “BIT”)signed by their home country and Ecuador or their own investment agreement with Ecuador.Then Ecuador became the second largest respondent in the ICSID outstanding case after Argentina.In the above case,most investors think the "windfall profit tax" measures imposed by the host country constitute an indirect expropriation.Based on the case Burlington Resources,Inc.v.Ecuador and by analyzing the focus of the case and ICSID's judgment on the case,this paper focuses on the relationship between the “windfall profit tax” and indirect expropriation.Combining with the current situation of bilateral investment in our country and relevant international practice,this paper also discusses how China should deal with the problem of "windfall profit tax" in oil investment and improve its own relevant legislation.This article consists of four parts:The first part is the overview of this case,including the background reason of Burlington case and the development process of the whole case.The second part is the focus of dispute of the case and its legal analysis.This paper analyzes the arbitration tribunal's jurisdiction issues through discussing whether the oil "windfall profit tax" in Ecuador belongs to taxation or not and the relationship between expropriation and tax issue.It also analyzes the relationship between oil "windfall profit tax" and indirect expropriation through whether the oil “windfall profit tax” imposed in Ecuador constitutes indirect expropriation and such aspect as the fact-finding of the tribunal.The concepts and standards of indirect expropriation involved in this paper are briefly analyzed.The third part is the comment on focus of the case.Through the analysis of the facts of the case,combined with the relevant evidence and laws and regulations,the arbitration tribunal on the legitimacy of jurisdiction is elaborated,and the tribunal's ruling results are analyzed and commented,and various methods of determining the indirect expropriation are compared.The fourth part is the enlightenment of this case to China.By introducing the current situation of petroleum investment in our country and combining with the experience of this case,we can learn some experience as how to deal with the problem of "windfall profits tax" in our country and consummate the related legislation.