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  HOME | Ecuador (Click here for more)

Chevron Suffers New Setback in Ecuador Pollution Case

NEW YORK – A federal judge in New York delivered a new setback to Chevron Corp. in a decades-old pollution case, refusing to halt collection of an Ecuadorian court’s multi-billion-dollar judgment against the U.S. oil supermajor for the dumping of toxic drilling waste in the Amazon.

U.S. District Judge Lewis Kaplan on Friday rejected a Chevron motion that sought to prevent the plaintiffs from seizing its assets in different parts of the world to collect on the verdict, although he left the door open for the company to issue a new petition for an order that would essentially block the damages award.

The company alleged in its motion that it would suffer serious harm if the availability of its assets were not guaranteed but Kaplan ruled against Chevron Friday, saying it had not shown that it had made any damages payment to the plaintiffs to date.

The judge also said Chevron had not proven its claims that the Ecuador verdict was the result of a scheme by 47 named plaintiffs – seeking damages on behalf of tens of thousands of Amazon peasants and Indians – and their attorneys to manufacture evidence and pressure judges in the Amazon province of Sucumbios, where two judgments against the oil company have been handed down.

On Tuesday, an appeals court in the provincial capital of Lago Agrio upheld a lower-court’s ruling last February ordering Chevron to pay $8.2 billion in environmental and punitive damages and an additional 10 percent fine.

That amount could rise, however, to up to $18 billion if the company does not apologize for environmental damage caused between 1964 and 1990 by Texaco, which Chevron acquired in 2001.

“This decision is another rebuke for Chevron and it comes on the heels of a devastating defeat in the appellate court of Ecuador,” said Karen Hinton, the U.S. spokesperson for the Amazon Defense Coalition, a group representing some 30,000 Ecuadorians who say Texaco spoiled their lands and damaged their health by dumping billions of gallons of toxic drilling waste.

“Chevron’s motion was nothing more than an attempt to dry up support for (the plaintiffs’) 18-year case, thereby denying them legal counsel and the ability to enforce the Ecuador judgment,” the Amazon Defense Council said.

Chevron, meanwhile, said in response to the ruling that the judge “decided the motion on very narrow grounds and did not question the strength of Chevron’s fraud evidence” submitted in a suit filed in the United States last year against some of the Ecuadorian plaintiffs and their attorneys for fraud, conspiracy and extortion.

Company spokesman Kent Robertson added that the judge left open the door for “a future attachment filing,” referring to a legal instrument whereby Chevron is seeking to block the plaintiffs in the pollution case from diverting assets they may be able to seize from Chevron in other countries to offshore accounts.

“We look forward to the balance of our racketeering case proceeding and remain committed to holding the plaintiffs’ lawyers accountable for their misconduct,” Robertson said.

In March of last year, Kaplan barred enforcement of the February verdict against Chevron in Ecuador, but the New York-based U.S. Court of Appeals for the Second Circuit – in a victory for the Ecuadorian plaintiffs – subsequently lifted that preliminary injunction.

The penalty handed down against Chevron, considered the largest ever awarded against an oil company for environmental pollution, was imposed for irreversible damage to the ecosystem in a 480,000-hectare (1,850-sq.-mile) area of the Amazon jungle and serious illnesses and deaths suffered by local inhabitants from toxic waste.

During much of the period from 1964-1990, Texaco was the operator of a consortium that drilled in that area of Ecuador’s northeast and which also included state-owned oil company Petroecuador as majority owner.

The pollution case was initially filed in New York in 1993, but Chevron succeeded in having it moved from the United States to Ecuador in 2003, four years before President Rafael Correa came to power amid voter anger at corruption and traditional politicians.

The oil company has argued in court that in the late 1990s Texaco was released from any liability for damage by the Ecuadorian government of the time after carrying out clean-up operations.

Plaintiffs, however, say that Texaco’s agreement with the government did not release it from third-party claims and that Chevron is reneging on its pledge to abide by whatever decision was handed down by the courts in Sucumbios.

Chevron, which can still appeal to Ecuador’s National Court of Justice in Quito, says now that the case has become politicized under the leftist Correa and that the company cannot receive a fair trial.

The company says on its Web site that Petroecuador should be the target of local communities’ legal action, noting that the state oil firm has been “the sole and exclusive owner and operator of greatly expanded operations in the area from 1992 to the present.”

Chevron has never operated in Ecuador and has no assets there that can be seized, but the plaintiffs could file suit in other countries in an attempt to collect damages.

Chevron in 2009 filed an international arbitration claim against the Ecuadorian government at the Permanent Court of Arbitration in The Hague, claiming violations of the country’s obligations under a bilateral U.S.-Ecuador investment treaty.

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