Carstanjen v Ecuador

• Date: 05 December 1955
• Court: Corte Suprema (Ecuador)

Ecuador, Supreme Court.

Carstanjen

and

Government of Ecuador.

War — Effects of Outbreak of — On Property Rights — Sequestration of Enemy Property — Restoration after Termination of War — The Law of Ecuador.

The Facts.—Otto H. Carstanjen, acting as manager and authorized agent of “Ecuapetrol, Compañía Petrolera y Comercial, S.A.”, brought suit against the Government of Ecuador for the restitution of the property of the Company as well as for compensation for its seizure. The Company was one of those included in the Proclaimed Lists of Certain Blocked Nations which were issued by the Governments of Great Britain and the United States during the Second World War. Its property was blocked by Ecuador, in pursuance of recommendations made in the Final Act of the Inter-American Conference on Systems of Economic and Financial Control, held at Washington from June 30 to July 10, 1942. The Government, acting under authority of Executive Decree No. 854 of June 11, 1942, sold machinery, equipment, and other property belonging to Ecuapetrol to the “Shell Company of Ecuador”. By Executive Decree No. 290 of July 5, 1944, Ecuapetrol's forty-year Concession for petroleum exploration and exploitation was cancelled; the Concession was later sold to “Anglo-Ecuadorian Oil Fields, Ltd.”. On March 2, 1945, the National Assembly issued a Decree nullifying all judgments and transfers of blocked property made in pursuance of Decree No. 854 of June 11, 1943. In the present case, the Government challenged the competence of Carstanjen to initiate an action on behalf of the Company and moved the dismissal of the suit.

Held: that the claimant had standing to sue and that the claim must be allowed. Control of blocked property constituted suspension, not termination, of previous ownership. After the war such property must be restored or compensation paid to the rightful owner.

The Supreme Court said: “Democratic States, such as Ecuador, regard the Constitution as the foundation of public life. Our Constitution guarantees that every person in the Republic shall be protected under the law, that contracts shall be respected and acquired rights be inviolate. It follows, then, that the contract...