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Ecuadorians Challenge Chevron Over $9.5B Award In Canadian Court

Ecuadorian farmers and indigenous people will seek to show an Ontario Court of Appeal this week that Chevron Canada is legally liable for a US$9.5-billion award that the Ecuadorians won against the U.S. parent Chevron Corp in Ecuador over past environmental pollution.

The Ecuadorian plaintiffs will be asking Ontario’s top court at the hearings on Tuesday and Wednesday to overturn a previous ruling that prohibits them from going after Chevron Canada for the award they won in Ecuador against Chevron Corporation.

In early 2017, a Canadian court ruled that “Chevron [Corporation] and Chevron Canada are separate legal entities with separate rights and obligations,” Chevron said back then.

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 has said.

The case of the Ecuadorian pollution has been dragging through courts all over the world for more than two decades. The court saga started in 1993 when American lawyers, including Steven Donziger, sued over the 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.

Related: IEA: U.S.-China Trade Row Could Dampen Oil Demand Growth

In August 2016, a U.S. appeals court blocked the enforcement of a US$9.5-billion judgment against Chevron, upholding a lower court ruling that had found that the pollution judgment against the U.S. oil major in Ecuador was the product of fraud and racketeering, and therefore, unenforceable in the United Sates.

In June last year, the U.S. Supreme Court refused to hear the appeal by the American lawyer.

Ecuadorian farmers and villages have pressed appeals cases in various jurisdictions, including Canada, Brazil, and Argentina, with no luck yet.

Chevron claims that the Ecuadorian court award against it was obtained through fraud and racketeering and therefore, it can’t be honored and enforced in any circumstances in any jurisdiction. The Ecuadorian plaintiffs, on the other hand, pursue the award in various jurisdictions, claiming that Chevron subsidiaries should be held liable for the award against their parent company.

By Tsvetana Paraskova for Oilprice.com

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