U.S. court rules against Chevron in Ecuador case


David R. Baker, Chronicle Staff Writer – http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/09/19/BU5B1L6N82.DTL

Date of publication: 
20 September 2011

Ecuadorans suing Chevron Corp. over pollution in the Amazon rain forest are one step closer to collecting a $9.5 billion judgment against the San Ramon company.

A U.S. appeals court on Monday lifted a lower court’s order that had blocked the Ecuadorans from collecting money in the long-running lawsuit.

In February, a judge in Ecuador ruled that Chevron should pay to clean up contamination in the oil fields where Texaco, bought by Chevron in 2001, once worked. But the company persuaded a U.S. judge to block enforcement, arguing that the verdict was the result of fraud. Chevron even filed a criminal conspiracy case against the Ecuadorans.

Monday’s order by the Second U.S. Circuit Court of Appeals in New York put that case on hold. It also lifted the injunction, issued by U.S. District Court Judge Lewis Kaplan, that had prevented the Ecuadorans from collecting the massive judgment against Chevron.

“We are very excited that the court has reached this decision,” said Jim Tyrrell, an attorney representing the Ecuadorans. “It represents a triumph of the rule of law over the sensationalism created by Chevron’s PR department.”

The appeals court, however, denied the Ecuadorans’ request to remove Kaplan from the case. They consider him biased, based on comments he has made in court.

Chevron released a statement late Monday saying the company would continue to press its claims.

“Chevron remains confident that once the full facts are examined, the fraudulent judgment will be found unenforceable and those who procured it will be required to answer for their misconduct,” the statement read.

Monday’s order does not mark the end of the marathon lawsuit. Nor does it mean that the Ecuadorans can immediately try to collect on the verdict against the oil company.

Chevron has appealed the case in Ecuador, and under that country’s legal code, the plaintiffs can’t enforce the judgment until the appeals run their course, said Karen Hinton, a spokeswoman for the Ecuadorans and their legal team. It’s impossible to know, she said, just when the appeals will wrap up.

“It could be tomorrow, it could be 2012,” Hinton said.

In addition, Chevron took its grievances to an international arbitration tribunal in The Hague, Netherlands, arguing that courthouse corruption in Ecuador had denied the company due process. The tribunal issued an order instructing the Ecuadoran government to suspend enforcement of the judgment, although the people suing Chevron insist that as private citizens, the order does not apply to them.

Texaco drilled for oil in northeastern Ecuador from 1964 to 1992, working in partnership with the state-owned oil company, Petroecuador. When Texaco pulled out of the country, it reached an agreement with the government to clean up a portion of the area, leaving the rest to Petroecuador, which continued operating there. Chevron blames Petroecuador for the area’s current pollution.

Chevron no longer has any assets in Ecuador. As a result, the Ecuadoran plaintiffs must try to enforce the judgment in other countries and have drafted detailed plans to do so.

The first version of the lawsuit was filed in 1993. In February, a judge in the oil-patch town of Lago Agrio fined the company $9.5 billion. The fine will jump to $18 billion if Chevron doesn’t publicly apologize for its actions within 15 days after the end of the first appeal in the case.

E-mail David R. Baker at dbaker [at] sfchronicle [dot] com.

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