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Chevron Corporation’s (NYSE:CVX) stock fell sharply on Wednesday as an Ecuadorian court upheld a multi-billion dollar judgement against the oil giant.
Since then the U.S. oil major saw its stock rebound slightly despite the plunge in oil prices on Wednesday.
The ruling comes a bit over a year after the U.S. Supreme Court refused to hear an appeal from an American lawyer who was trying to collect $8.65 billion in pollution damages from Chevron. Prior to that, a lower U.S. court had ruled that the original judgement issued in Ecuador had been the product of fraud and racketeering. But the history of the lawsuit goes back more than two decades.
The convoluted tale began in 1993 when American lawyers—ostensibly on behalf of Ecuadorian villagers—sued then-Texaco over what the plaintiffs claimed was pollution that affected tens of thousands of indigenous villagers in Ecuador. In the first leg of the lawsuit, an Ecuadorian court ordered Chevron in 2011 to pay $19 billion—an amount that was later halved. Chevron countersued.
Chevron has long insisted that it is not responsible for any Ecuadorian pollution stemming from spills that took place under the former Texaco moniker before Chevron bought it out in 2001 for nearly $40 billion. Prior to being bought out, Texaco had relinquished its stake in the oil operations in Ecuador. In exchange, Ecuador released Texaco of any further liability in the matter, according to documents supplied by Chevron.
While Tuesday’s ruling was in favor of the plaintiffs in the case, it unlikely to ever bite Chevron, who no longer operates in the country: The Ecuadorian court simply has no way to enforce a judgement in the United States.
Still, the matter is far from over. The lawsuit will likely be drug through foreign courts, as it has already done so in some countries, including in Canada, Brazil, and Argentina.
In the latest example, Ontario’s top court ruled in May that Chevon’s Canadian subsidiary, Chevron Canada, could not be held liable for the $9.5 billion that the earlier Ecuadorian court ordered.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.