NEW YORK – A U.S. appeals court has overturned an earlier ruling granting Chevron Corp. an injunction against future attempts by plaintiffs in an Ecuadorian pollution case to collect on a multi-billion-dollar damages award.
A three-judge panel of the 2nd U.S. Circuit Court of Appeals in New York unanimously ruled Thursday that U.S. Federal Judge Lewis Kaplan had erred last March when he blocked enforcement of an Ecuadorian court’s February 2011 $18 billion judgment against Chevron for environmental contamination.
That judgment in Ecuador, which was upheld this month on initial appeal, found Texaco, which Chevron acquired in 2001, responsible for causing irreversible environmental damage in the northeastern provinces of Sucumbios and Orellana between 1964 and 1992.
The plaintiffs in the Ecuadorian case represent 30,000 Amazon peasants and Indians who say Texaco spoiled their lands and damaged their health by dumping billions of gallons of toxic drilling waste.
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.
The 2nd Circuit judges said in their 30-page opinion, to which Efe gained access, that Chevron can only challenge the damages award if the Ecuadorian plaintiffs attempt to enforce the sentence and force the oil company to pay the sum, an action they “have not yet undertaken anywhere, and might never undertake in New York.”
“It is a particularly weighty matter for a court in one country to declare that another country’s legal system is so corrupt or unfair that its judgments are entitled to no respect from the courts of other nations,” Judge Gerard Lynch wrote on behalf of the panel.
“A grave injustice against the Ecuadorians has been set right by (Thursday’s) 2nd Circuit ruling,” Karen Hinton, a U.S. spokeswoman for the Ecuadorian plaintiffs, said in a statement. “It rebukes Chevron’s abusive legal tactics of the past two years.”
“Once Ecuadorean law allows enforcement of the judgment, it will become even more evident that the only fraud committed in Ecuador in the context of this historic environmental litigation was Chevron’s.”
Chevron, for its part, said in a statement that the 2nd Circuit’s ruling “may change the order in which courts address the fraud being perpetrated in the Lago Agrio (Sucumbios’ capital) case, but it will not affect the ultimate outcome.”
“In fact, the 2nd Circuit acknowledges the extensive evidence of fraud submitted” by the San Ramon, California-based company.
Chevron noted that it has appealed the Lago Agrio appellate court’s ruling to Ecuador’s National Court of Justice in Quito.
It also recalled that it has brought legal action against the Ecuadorian government before an arbitration tribunal in The Hague for violation of a bilateral investment treaty and against the Lago Agrio plaintiffs’ representatives for violations of the federal racketeering statute.
Among other accusations of fraud, Chevron alleges in the racketeering case that a court-appointed expert’s report, which estimated the cost of cleaning up the area affected by the dumping of toxic waste at $27 billion, was drawn up in conjunction with the plaintiffs and therefore corrupted.
It also noted that the arbitration tribunal has ordered the Ecuadorian government to halt enforcement of the judgment while the arbitration proceedings are ongoing.
“Chevron believes this corrupt judgment will be unenforceable in any country that adheres to the rule of law and we will continue to defend Chevron’s interests against any attempts to enforce the fraudulent judgment,” the company said Thursday.
The penalty handed down against Chevron, considered the largest ever awarded against an oil company for environmental pollution, includes $9.5 billion in remediation costs and plaintiff damages, as well as an additional $8.6 billion fine if it refuses to apologize for the pollution.
It 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.
But Chevron now says 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.”
The oil supermajor has no assets in Ecuador, but the 47 named plaintiffs in the case could seek to collect the damages award through courts in countries where it does have operations.