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U.S. Supreme Court Backs Chevron in Treaty Dispute with Ecuador

Chevron offices

The United States Supreme Court declined to hear an appeal lodged by the government of Ecuador that contested a $96 million arbitration settlement awarded to the American oil company Chevron.

Texaco, the company Chevron bought out in 2001, originally filed the suit against the Central American country for breaking from the terms of oilfield development contracts and international agreements.

In effect, the highest court in the U.S. upheld a ruling by the U.S. Court of Appeals for the District of Columbia Circuit, which favored Chevron in an arbitration deal issued by The Hague’s Permanent Council of Arbitration in the Netherlands.

Related: Saudi Arabia Raises Oil Prices to Asia But Cut Prices to Europe

The arbitration process started in The Hague in 2006 with Texaco claiming that Ecuador’s court system failed to resolve disputes in a timely manner, as the nation had agreed to in a 1997 investment treaty with the U.¬S. government.

The panel awarded the multimillion-dollar settlement to Chevron, which prompted it to file a federal suit with the U.S. government in order to collect the amount of the award. The year 2013 saw the approval of the deal under the gavel of a federal judge, but Ecuador lodged an appeal soon after, arguing that the arbitration tribunal did not have jurisdiction over the case since Texaco had ceased operations in Ecuadorian oilfields in 1992—five years before the treaty at play.

The amount of the award now stands at $106 million after the calculation of interest, according to company spokesperson Morgan Crinklaw, who also said the oil and gas major was “pleased” that Ecuador would be held accountable.

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Another lawsuit brought on by a group of Ecuadorian villagers claims that Texaco’s oil exploration efforts near their homeland caused billions of dollars in pollution-related damage in the 1960s.

The plaintiffs have lodged suits in Canada, Brazil and Argentina in order to force Chevron to payout a $9 billion judgement rendered at the hands of an Ecuadorian court against the foreign company.

Chevron has dedicated a web page to defending its stance against the pollution accusations, insisting that it held a minority stake in the ventures and had cleaned up its share of the damage. Petroecuador, the national oil company, owned a 62.5 percent stake in the operations, but still has not completed rehabilitation efforts, according to a video by The Amazon Post, Chevron’s private newspaper.

By Zainab Calcuttawala for Oilprice.com

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