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Chevron appeals Ecuador judgment

Chevron Corporation has appealed the judgment entered last month against the company by the Provincial Court of Justice of Sucumbíos in Lago Agrio, Ecuador in a lawsuit alleging that Texaco Petroleum Company’s participation in a state-controlled oil consortium prior to 1990 makes Chevron responsible for environmental impacts in the area. In the filing, Chevron details the pattern of fraud by the plaintiffs’ lawyers, supporters and others that it believes has corrupted the trial.

In addition to its appeal in Ecuador, Chevron continues to seek recourse through legal proceedings outside of Ecuador. In an arbitration Chevron initiated in 2009 under the US-Ecuador Bilateral Investment Treaty (BIT), a Tribunal in The Hague issued an order on February 9 requiring Ecuador to take all measures at its disposal to prevent enforcement of the Lago Agrio judgment until further order of the Tribunal, including the Tribunal’s final award on the merits. On March 7, the US District Court for the Southern District of New York issued a preliminary injunction against the Lago Agrio plaintiffs, their lawyers, and those in concert with them, barring them from attempting to enforce the Lago Agrio judgment pending resolution by the US court of Chevron’s claims that the Lago Agrio judgment is unenforceable.

Through discovery proceedings in the United States, Chevron obtained thousands of documents that memorialise the plaintiffs’ lawyers’ efforts to pressure judges to rule in their favour, corrupt expert reports, and manufacture evidence.

Chevron’s appeal points to evidence that the plaintiffs’ lawyers falsified data and pressured scientific experts to “find contamination” where none existed. Chevron also attest that the plaintiffs’ lawyers also procured the appointment of a supposedly neutral “global expert” who was recruited and paid by the plaintiffs’ lawyers to pass off as his own a damages report ghost-written by the plaintiffs’ other consultants.

Besides the proposed evidence of fraud and corruption, Chevron’s appeal sets forth numerous additional grounds for reversal, establishing that the judgment is contrary to the facts and law, including:

  • The court disregarded the effect of prior settlement agreements between Texaco’s subsidiary, Texaco Petroleum Company and the national, provincial and municipal governments of Ecuador, which released Texaco Petroleum Company and its affiliates, including Chevron, from all further environmental liability.
  • The court based its judgment on an unlawful, retroactive application of Ecuador’s Environmental Management Act, which was enacted in 1999, after Texaco Petroleum Company ceased operations in Ecuador and after it was released from all potential liability for environmental impact.
  • The court refused to consider Petroecuador’s responsibility for environmental impacts as the majority owner of the consortium from 1976 to 1992, and as the sole and exclusive owner and operator of greatly expanded operations in the area from 1992 to the present.
  • Disregarding evidence submitted by Chevron, the court instead relied on biased and unreliable evidence submitted by the plaintiffs’ nominated experts - evidence the plaintiffs themselves have admitted is deficient.
  • The court awarded US$ 5.396 billion for soil remediation, nearly double the grossly inflated amount in the “global expert” report, five to eleven times greater than what plaintiffs’ own specialist proposed, and 171 times higher than the amount Petroecuador estimated was necessary to remediate a larger area.
  • The court awarded US$ 600 million for remediation of claimed groundwater contamination without citing a single sample of groundwater showing oil-related contamination.
  • The court awarded US$ 1.4 billion for “mitigation measures” to address public health - despite the court’s admission that no individual health problems had been identified, and without providing any basis for the amount of the award. Indeed, the court added an equally arbitrary US$ 800 million for alleged “excess” cases of cancer, even though the court admitted that no individual claims of cancer had been made, and there is no proof in the record of the case showing a cause-and-effect relationship between proximity to oil-producing activities and an increased risk of cancer.
  • The court’s additional award of US$ 8.646 billion unless Chevron issues a public apology is an award of punitive damages, in violation of Ecuadorian law, which does not recognise such damages. By imposing this award, the court, in effect, penalised Chevron billions of dollars for exercising its fundamental right to defend itself.

Published on 14/03/2011


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