Chevron Notches Key Win In Ecuador Pollution Fight
Author: Braden Reddall and Dan Levine in San Francisco
International arbitrators ordered Ecuador to suspend enforcement of any judgment against Chevron Corp in its marathon rainforest pollution case, representing another important win for the U.S. oil company.
The order, dated February 9 and posted on Chevron's website, came a day after a New York judge issued a temporary restraining order against the Ecuadorean plaintiffs to stop them going outside the United States to seek enforcement of any court ruling against the company.
The move to the arbitration tribunal in The Hague, made in September 2009 shortly after the appointment of Chevron General Counsel Hewitt Pate, was a key part of the company's containment strategy for litigation seeking billions of dollars in damages.
Chevron expects to lose the case being heard in the Ecuadorean jungle town of Lago Agrio, where a ruling is anticipated in the weeks or months ahead.
The tribunal, formed under the authority of a bilateral U.S.-Ecuador investment treaty, ordered the South American country to "take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment" against Chevron in the case.
The Ecuadorean plaintiffs, backed by U.S. lawyers, began their case against Texaco in 1993 in a Manhattan court. The case moved to Ecuador nearly a decade later, by which time Texaco had been bought by San Ramon, California-based Chevron.
BILLIONS IN DAMAGES SOUGHT
The plaintiffs accused Texaco, which left the country in 1992, of dumping oil-drilling waste in unlined pits, polluting the forest and causing illness and death among local people. They sought up to $27 billion in damages, which rose to as much as $113 billion after further input from plaintiffs' experts.
While Texaco lawyers had long pushed to move the case to Ecuador, Chevron later argued that the judicial process had been corrupted. This month, it filed a civil racketeering lawsuit in New York against the plaintiffs, accusing them and their U.S. supporters of extortion.
Chevron also says that, in 1998, Ecuador and state-owned Petroecuador released Texaco from further liability after Texaco's remediation work was done. But plaintiffs argue that the release did not deal with private claims against Chevron.
Karen Hinton, a U.S.-based plaintiffs spokeswoman, said the tribunal's "11th hour" ruling, by asking a sovereign nation to interfere with an ongoing trial, was "inappropriate."
"We have confidence that the voluminous, scientific evidence before the court in Chevron's preferred forum of Ecuador will lead to a final judgment that will command international respect and will finally provide a remedy to the thousands of indigenous people and farmers who have suffered for decades because of contamination created by Chevron," Hinton added in an emailed statement.
Steven Donziger, who until recently was lead lawyer for the plaintiffs, believes the tribunal may not have the final word on enforcement of any Ecuadorean judgment.
"There is no basis to conclude that an arbitral order in favor of Chevron would have a preclusive effect on the enforcement of any adverse judgment in another country," he wrote recently in the Human Rights Brief, a student publication at the college of law at the American University, Washington.
The tribunal had three arbitrators, including one named by Chevron, Horacio Grigera Naon of the American University law college, and one by Ecuador, Oxford Professor Vaughan Lowe. Naon and Lowe agreed on a third, London-based V.V. Veeder.
The U.S.-Ecuador treaty giving them their authority was signed on August 27, 1993 -- just over two months before the date of the plaintiffs' first case against Texaco in New York.
(Editing by Lisa Von Ahn; John Wallace and Andre Grenon)