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  HOME | Ecuador (Click here for more)

Ecuador Appeals U.S. Court Ruling in Dispute with Chevron

QUITO – Ecuador’s Attorney General’s Office said it has appealed a U.S. court’s ruling allowing Chevron to seek international arbitration over alleged violation of due process in a massive environmental lawsuit.

According to the AG’s office, Chevron filed its arbitration claim in an attempt to “transfer responsibility to Ecuador for the potential result” of the environmental case.

Ecuador had petitioned the U.S. District Court in Manhattan to stay the arbitration. But Judge Leonard Sand ruled March 11 that a tribunal in the Netherlands can hear Chevron’s claim that the Ecuadorian government’s “exploitation” of an ongoing $27 billion 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 case involving alleged environmental damage by Texaco, acquired by Chevron in 2001, dates back 16 years and pits the U.S. oil company against a coalition of grassroots groups representing some 30,000 Indians and peasants allegedly harmed by the dumping of toxic wastewater in the Amazon region.

The AG’s office noted in its statement on Monday that the case originated in the U.S. court system but that Chevron successfully argued that it be transferred to Ecuador, adding that the U.S. company “agreed to submit to Ecuadorian jurisdiction and comply with any sentence handed down.”

The Ecuadorian government, it said, “is not a part and never has been a part either of the original suit in New York or the legal action” in Ecuador, and therefore sought a stay of arbitration to ensure “compliance with the promises that Chevron made to the New York court.”

With the appeal, Ecuador hopes that “after a more thorough analysis of Ecuador’s arguments, the appellate court will review Judge Sand’s ruling and stay the arbitration commenced by Chevron,” the statement read.

In a statement after commencing arbitration proceedings before the Permanent Court of Arbitration in The Hague, Chevron cited the Ecuadorian government’s “failure to uphold its duties under decade-old contracts.”

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 in 1998 by the Ecuadorian government of the time 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 in Ecuador.

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. EFE
 

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