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  HOME | Ecuador (Click here for more)

Ecuador Ordered to Prevent Enforcement of Verdict Against Chevron

QUITO – An international arbitration court in The Hague has ordered Ecuador to prevent “recognition and enforcement” of an $18.2 billion judgment against Chevron Corp. for environmental damage in the Amazon, the U.S. oil company said.

The ruling, issued by a panel of three judges, orders Ecuador’s executive, legislative and judicial branches to “take all measures necessary to suspend or cause to be suspended the enforcement and recognition within and without Ecuador,” the company said in a press release Friday.

Chevron, which took the case to the Permanent Court of Arbitration at The Hague, Netherlands, under the terms of the U.S.-Ecuador bilateral investment treaty, had already secured earlier rulings from the same arbitration panel ordering Ecuador to prevent enforcement until further notice.

Hewitt Pate, the company’s vice president, was quoted as saying in the release that Chevron is open to “constructive discussion” with the Ecuadorian government to resolve the arbitration proceedings, adding that “rejecting the fraudulent claims and misconduct of the corrupt American plaintiffs’ lawyers is the best way to end the harm they are causing to the people and reputation of Ecuador.”

Chevron also said it “welcomes the constructive steps that Ecuador has recently taken, such as the announcement that (state oil company) Petroecuador will remediate sites impacted by oil production” and the acknowledgement that The Hague tribunal’s award applies to all branches of the Ecuadorian government.

The plaintiffs’ attorneys, meanwhile, released their own statement Friday saying the ruling “violates international law and will have little or no impact on any potential enforcement action against the oil giant in countries around the world.”

“This arbitration panel has just lost the last remnants of its legitimacy by trying to order a sovereign nation to violate its own constitution and quash the legal claims of citizens who are literally dying off in the rainforest due to Chevron’s pollution,” Karen Hinton, the U.S. spokesperson for plaintiffs who have won two judgments against the company in Ecuador, said.

“The latest order will have no legal impact in Ecuador or in any country around the world that observes the rule of law,” Hinton added. “The United States would never abide by such a ruling, nor will Ecuador or any other country that has a system based on due process of law.”

Ecuador’s Attorney General’s Office said in a statement that the arbitration panel ordered Chevron to deposit a $50 million bond to cover the costs Ecuador may incur in fulfilling its obligations under the arbitration ruling.

Attorney General Diego Garcia, for his part, said the “interim award is a procedural measure” that has no bearing on the fundamental issues in the case.

It is therefore up to Ecuador’s “judicial branch and the various organs of the Ecuadorian government to determine their respective obligations under international law.”

Because Chevron has no assets in Ecuador, the 47 named plaintiffs in the case, representing some 30,000 Amazon peasants and Indians. Indians affected by oil pollution in northeastern Ecuador, will seek to collect damages in countries where the company does have operations, plaintiffs’ attorney Pablo Fajardo said.

A court in the northeastern Ecuadorian city of Lago Agrio last year found Texaco, which Chevron acquired in 2001, guilty of causing irreversible environmental damage in a 480,000-hectare (1,850-sq.-mile) area of the Amazon rainforest and blamed it for serious illnesses and deaths suffered by local inhabitants from toxic waste.

An appeals court in that same province upheld the verdict earlier this year, ordering Chevron to pay $9.5 billion in remediation costs and plaintiff damages and an additional $8.6 billion for refusing to apologize to the affected communities.

Chevron has since appealed the case to the National Court of Justice in Quito – Ecuador’s highest tribunal.

It also is attempting to block plaintiffs’ attempts to collect on the damages award with the proceedings in The Hague and has brought legal action in a U.S. federal court in New York against the Lago Agrio plaintiffs’ representatives for violations of the federal racketeering statute.

Chevron maintains that the adverse rulings in Ecuador were marred by fraud and that they ignored the fact that a previous government in the late 1990s had certified Texaco’s clean-up efforts and released it from liability from any future claims.

Among other accusations of fraud, Chevron alleges in the racketeering case in New York that a court-appointed expert’s report, which estimated the cost of cleaning up the area of northeastern Ecuador affected by the dumping of toxic waste at $27 billion, was drawn up in conjunction with the plaintiffs and therefore corrupted.

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 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.

But Chevron has maintained in recent years that the case has become politicized under the leftist Correa and that it cannot receive a fair trial.

Although the oil company maintains that Texaco was cleared of any liability for damages after remediating its share of environmental impacts, plaintiffs say that agreement with the government of the time 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 Ecuadorian courts.

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

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