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  HOME | Ecuador (Click here for more)

Ecuador May Appeal U.S. Court’s Decision in Legal Battle with Chevron

QUITO – The Ecuadorian government may appeal a U.S. court’s decision not to block Chevron from pursuing an arbitration claim against Quito related to a massive environmental lawsuit.

Ecuador’s Attorney General’s Office responded after U.S. District Court Judge Leonard Sand in Manhattan ruled Thursday that an arbitration tribunal in the Netherlands can hear Chevron’s claim that Ecuador’s “exploitation” of an ongoing multi-billion-dollar lawsuit in the Andean nation violated its obligations under a bilateral treaty.

Sand said in his ruling that a “stay of arbitration (requested by Quito) is inappropriate.”

The Ecuadorian government “is considering the possibility of appealing the U.S. court’s decision, clear in the knowledge that Thursday’s decision does not affect Ecuador’s defense in the arbitration proceedings nor amount to a pronouncement on the fundamental issues of the dispute,” the AG office’s statement said.

It added that Ecuador is convinced that “Chevron will continue to lose any (case) involving allegations of misconduct by the government in any forum it chooses to air its claims.”

Chevron said last September that it filed an international arbitration claim against the Ecuadorian government at the Permanent Court of Arbitration in The Hague.

It claimed violations of the country’s obligations under a bilateral U.S.-Ecuador investment treaty in connection with an ongoing $27 billion lawsuit that Amazonian inhabitants have filed against the oil giant for environmental damage.

A lawsuit was first brought against Texaco – which Chevron acquired in 2001 – in a New York court in the early 1990s on behalf of 30,000 Amazon Indians and peasants.

The plaintiffs accused the company of contaminating the ecosystem by dumping billions of gallons of toxic waste from oil-drilling operations, damaging the health of area residents and causing the disappearance of indigenous peoples during the close to 30 years it operated in Ecuador.

A New York court ruled in 2002 that the case should be tried in Ecuador, acting upon a request by Chevron, which said it would abide by any decision handed down in the South American country.

Texaco operated in the Ecuadorian Amazon from 1964 to 1992 as a minority partner in a consortium and was released from any liability for damage by the Ecuadorian government after carrying out clean-up operations.

Chevron accuses state-owned Petroecuador, which took over Texaco’s operations after it left the country in 1992, of responsibility for the environmental damage.

Plaintiffs, however, say that that Texaco’s agreement with the government did not release the company from third-party claims and that Chevron is reneging on its pledge to abide by whatever decision is handed down by a court in the Amazonian town of Lago Agrio.

Chevron says now that the case has become politicized under leftist President Rafael Correa and that the company cannot receive a fair trial.

The company has slammed a report by court-appointed expert Richard Cabrera that Texaco – and Texaco alone – was responsible for all of the environmental damage in the Amazon even though Petroecuador was the majority owner of the Petroecuador-Texaco Petroleum consortium.

Chevron also says that Cabrera went far beyond the scope of his mandate in coming up with the $27 billion figure and that he actively collaborated with the plaintiffs in drawing up the report.

It also claims that he has ties with Petroecuador as the member of an oilfield-remediation company and would stand to gain financially from a ruling against Chevron, yet failed to disclose this information to the court.

Commenting on the Manhattan court’s decision, Chevron’s general counsel, R. Hewitt Pate, said that “only the international arbitration panel can bring Ecuador to the table and compel Petroecuador to do the right thing and clean up its oil fields.”

“With today’s decision, we are one step closer to making that a reality.”

But an attorney for the plaintiffs, American Steven Donziger, said that Chevron’s move to force Ecuador into arbitration was just the last chapter in a series of abuses against the indigenous people of Ecuador.

“Chevron acts like a fugitive from justice in Ecuador because the evidence establishing the company’s misconduct is overwhelming,” Jonathan Abady, another U.S. attorney representing the Amazon communities, said prior to Sand’s ruling. EFE
 

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