Pursuant to Article 19 of the UNCITRAL Arbitration Rules (1976), and in accordance with the Tribunal's Final Draft Procedural Order No. 1 dated March 29, 2012, the United States of America respectfully submits this Statement of Defense.

PRELIMINARY STATEMENT

This arbitration does not fall within the scope of Article VII of the U.S.-Ecuador Bilateral Investment Treaty ("Treaty"). Ecuador has initiated this arbitration by asserting that it is necessary to resolve a "dispute" between Ecuador and the United States "concerning the interpretation or application" of Article II(7) of the Treaty. In fact, there is no such dispute. Rather, this arbitration reflects Ecuador's unilateral attempt to secure a new interpretation of that Article in order to counter an interpretation rendered by another arbitral tribunal, which had issued an award in an investment dispute brought by two U.S. investors against Ecuador. The United States was not a party to the underlying arbitration.

Unhappy with the outcome of that arbitration, Ecuador now seeks to compel the United States to re-arbitrate the meaning of Article II(7) before a different tribunal. After the investor-State tribunal issued its partial award on the merits, Ecuador sent the United States a diplomatic note containing Ecuador's unilateral statement of the meaning of Article II(7) and requesting confirmation of Ecuador's views. The diplomatic note stated that if the United States failed to confirm Ecuador's views, "an unresolved dispute must be considered to exist" between Ecuador and the United States under the Treaty. Without ever formally requesting consultations with the United States, Ecuador then commenced these proceedings, seeking an "authoritative" interpretation of Article 11(7).

This Tribunal lacks jurisdiction to grant Ecuador the relief it seeks, for three principal reasons.