International oil firm Chevron has now been thoroughly vindicated in a decades-long battle over oil pollution in the Ecuadoran rainforest, which resulted in a 2011 $9.5 billion judgment against the California-based company. A federal appeals court in August and an international arbitration court Sept. 7 ruled for Chevron in the case.
Both the U.S. Court of Appeals for the Second Circuit in New York City and the international arbitration court in The Hague upheld lower court rulings that the judgment by the courts in Ecuador against Chevron is invalid. The court in The Hague found that the judgment against Chevron was, as the Wall Street Journal reported, “tainted by fraud and corruption….” The arbitration judge called the Ecuadoran court ruling “grossly improper by any moral, professional and legal standards.”
It is a tawdry tale, dating back to 1972, when Texaco, which Chevron bought in 2000 for $45 billion, was operating the Lago Agrio oil field in the Amazon rain forest. Texaco ran the operation until 1993, when Ecuador’s state-owned oil company took over. Texaco was found to be responsible for pollution at the oil field and spent $40 million cleaning it up. Ecuador in 1998 agreed that the site had been remediated and said Texaco had no further responsibilities.
In 2003, a group of native tribes, with the support of U.S. lawyer Steven Donziger, sued Texaco and Chevron in Ecuadoran court for $28 billion, claiming the cleanup was a sham. Chevron countered that it had completed the work, and any further pollution was the result of the operation of the Ecuadoran oil company EP Petroecuador.
A series of legal and lobbying maneuvers resulted, with the case moving from Ecuador to the U.S. to Ecuador, as the parties attempted to find venue that best suited their case. A Wall Street Journal editorial commented this summer that “the plaintiff attorney exploited the left’s loathing of Big Oil and Ecuador’s shaky legal system. Many in the American media fell for it too.”
An Ecuadoran court in 2011 found for Donziger’s plaintiffs with the multi-billion-dollar judgment, but Chevron fought back ($9.5 billion dollars at risk will pay for a lot of attorneys). A federal judge in 2014 found that Donziger had engaged in bribery, witness tampering and falsifying expert reports, and that he was guilty of a violation of the Racketeer Influenced and Corruption Act (RICO), and Foreign Corrupt Practices Act, including a promised $500,000 bribe to the Ecuadoran judge in the case.
After the U.S. appeals court upheld that judgment, a New York court suspended Donziger’s license to practice, declaring that the lower court’s findings “constitute uncontroverted evidence of serious professional misconduct which immediately threatens the public interest.”
Failing to make his case in U.S. courts and internationally, Donziger, according to the New York Law Journal, continues to push his case in the courts in Ecuador and Canada, arguing that the judgment against Chevron is now $12 billion, due to accrued interest. The law journal said that two Canadian courts “have found that Chevron’s Canadian subsidiary cannot be held liable for the pollution in South America, and the plaintiffs are appealing to Canada’s high court.”
Commenting after the international tribunal ruled in Chevron’s favor, R. Hewitt Pate, the company’s general counsel said, “Following years of litigation, including visits to the former area of operations by the tribunal, the tribunal found that Ecuador violated the final release agreement that had certified the successful completion of [Texaco’s] remediation.”
Pate added, “The tribunal found extensive evidence of fraud and corruption by members of the Ecuadorian judiciary acting in collusion with American and Ecuadorian lawyers. This award is consistent with rulings by courts in the United States, Argentina, Brazil, Canada and Gibraltar confirming that the Ecuadorian judgment is unenforceable in any country that respects the rule of law.”
— Kennedy Maize