Arbitrators Press Ecuador to Halt Chevron Judgment Enforcement

By | February 11, 2013

An international tribunal weighing in on Chevron Corp’s long-running legal dispute over pollution in Ecuador has found the country in violation of past orders to try to prevent enforcement of a contested $19 billion judgment against the company.

Formed via The Hague’s Permanent Court of Arbitration under the United Nations Commission on International Trade Law, the panel is hearing a case brought by Chevron to determine whether Ecuador violated a treaty with the United States requiring it to ensure the company gets a fair trial.

The ruling – posted online by Chevron on Friday – comes a year after the tribunal reinforced its 2011 finding on enforcement suspension. The panel will consider all the case’s issues next year.

An Ecuadorean court first ruled against Chevron in February 2011. That was a decade after Chevron bought Texaco, and 18 years after Texaco was accused in a New York court of polluting the Ecuadorean rain forest and sickening people there. After Texaco argued for it, the case was moved to Ecuador.

Ecuador’s attorney general contends the three-person arbitration tribunal has no jurisdiction because the bilateral trade agreement went into effect five years after Texaco ended operations in Ecuador in 1992. The attorney general was not available for comment on Friday.

In its Feb. 7 ruling, the tribunal cited the legal actions of the rain forest plaintiffs in Argentina, Canada and Brazil to collect on the $19 billion award made by the Lago Agrio court in Ecuador, or the “Respondent.” These actions were made because Chevron – the “Claimants” – no longer has assets in the country.

“From its perspective under international law, this Tribunal is the only tribunal with the power to restrain the Respondent generally from aggravating the Parties’ dispute and causing irreparable harm to the Claimants in regard to the enforcement and execution of the Lago Agrio Judgment,” the panel said.

Chevron said in a statement that the tribunal would next consider compensation and whether Ecuador should pay for any enforcement-related damages that the company has incurred.

The case has many strands. Chevron says it uncovered through U.S. courts evidence of fraud by lawyers for the Ecuadorean plaintiffs, which the lawyers deny. The second-largest U.S. oil company is pursuing racketeering and fraud charges against them, in a case due to go to trial in New York in October.

But at a day-long symposium on the two decades of litigation hosted by Stanford Law School, Graham Erion, who works for the plaintiffs on the enforcement action, said the case had entered a new and decisive phase. He cited an infamous Chevron statement about fighting the case “until Hell freezes over.”

“I’m from Canada. I know what ice looks like,” he said. “We’re on the ice right now, and that’s where this case is being fought.”

A court in Argentina last week upheld a freeze on Chevron assets there related to the enforcement efforts.

In expectation of this global battle, Chevron filed for the arbitration in September 2009. The panel includes a Chevron-named member, Horacio Grigera Naon of the American University law college, one named by Ecuador, Oxford Professor Vaughan Lowe, and London lawyer V.V. Veeder, chosen by the other two.

The U.S. fraud and racketeering case is Chevron Corp v. Steven Donziger et al, U.S. District Court for the Southern District of New York, No. 11-0691.

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