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Chevron Vindicated On $9.5B lawsuit by Ecuador… Again

Judge Hammer

A U.S. appeals court blocked on Monday the enforcement of a US$9.5-billion judgment against Chevron Corporation (NYSE:CVX), upholding a lower court ruling that had found that a pollution judgment against the U.S. oil major in Ecuador was the product of fraud and racketeering, and therefore, unenforceable in the U.S.

In March 2014, U.S. District Judge Lewis Kaplan ruled that the case against Chevron in an Ecuadorean court was the product of fraud and racketeering orchestrated by a New York lawyer, concluding that the judgment should not be enforced. Judge Kaplan said the case had been corrupted by American lawyer Steven Donziger and Ecuadorean lawyers, who allegedly submitted fraudulent evidence and coerced and bribed an Ecuadorean judge to rule in their favor in 2011.

The 2014 court ruling found Donziger to have violated the federal Racketeer Influence and Corrupt Organizations Act (RICO) in the lawsuit in Ecuador, committing money laundering, extortion, wire fraud, witness tampering, and obstruction of justice.

The ruling was appealed, but on Monday, the United States Court of Appeals for the Second Circuit upheld unanimously this verdict, thus awarding victory to Chevron, which is still being sued in several courts over water and soil pollution in Ecuador’s rainforest as Ecuador tries to take yet another bite at the apple.

Although Chevron has never operated in Ecuador, it bought in 2001 Texaco Petroleum (TexPet), which was a minority shareholder, together with Ecuador’s state-owned Petroecuador, in an oil-production consortium in Lago Agrio between 1964 and 1992. After returning its share to Petroecuador in 1992, Texaco remedied the areas and was fully released from further environmental liability, Chevron said in its statement on the latest court ruling.

The court saga started in 1993 when American lawyers sued over pollution, which they claimed affected around 30,000 indigenous villagers in Ecuador’s Lago Agrio region. A court in Ecuador initially ordered Chevron in 2011 to pay US$19 billion, but later halved the judgment. Chevron refused to pay and sued Donziger to challenge the award.

In May 2015, Brazil’s Deputy Prosecutor General also recommended that the Ecuadorian judgment not be recognized for enforcement.

By Tsvetana Paraskova for Oilprice.com

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