Ecuador: Chevron Strikes Back

By Luis Ángel Saavedra

The lawsuit against oil giant Chevron, has hit a turning point. The sentence handed down on Feb. 14 by Judge Nicolás Zambrano of the Superior Court of Sucumbíos, in the Amazon town of Lago Agrio, fined the oil company for approximately US$9.5 billion for environmental damage caused in the Ecuadorian Amazon basin between 1964 and 1992 during Texaco´s operations there. California-based Chevron acquired Texaco in 2001.

Although the ruling sets payment at $8.6 billion, Ecuador’s Environmental Management Act obliges the responsible party to pay an additional 10 percent of the value of compensation to claimants.

In environmental terms, the trial against Chevron in Ecuador is the largest environmental damage verdict, a list that includes the 1989 oil spill in Alaska by the Exxon Valdez tanker. Its owner, US firm ExxonMobil, was sentenced to pay $4 billion in compensation for the largest environmental catastrophe in US history; another runner-up was the case against British Petroleum, which has paid about $3.5 billion so far for the environmental damage caused by an accident at one of its drilling rigs in the Gulf of Mexico.

“This trial is not about accidental damages. We´re talking about harm to people and the environment that was done in a deliberate manner,” says Luis Yanza, president of the Amazon Defense Front, an umbrella organization for the indigenous and campesino communities that are suing Chevron.

A long dispute
After 28 years of operation, with 339 wells punched into 15 oil fields, Texaco left the country in 1992 — but not before releasing about 18 billion barrels of contaminated water into the Ecuadorian jungle and leaving behind 627 pools of toxic waste, which affected about 30,000 people, including campesinos and indigenous populations from five indigenous peoples: the Siona, Secoya, Cofán, Waorani and Quichwa.

In 1993, they filed suit in a New York federal court, accusing the company of polluting the environment and negatively impacting their health by using outdated technology. Ten years later, in 2003, the New York Court of Appeals transferred to case to Ecuador and ordered Chevron—which by then had acquired Texaco—to file the case in Ecuador.

Chevron had sought to avoid prosecution in the United States because laws are less stringent in Ecuador and the courts can be more receptive to pressure from big business.

In 2003, the lawsuit against Chevron began in the Superior Court of Nueva Loja, in the eastern province of Sucumbios. Since then, numerous surveys and inspections ordered by the court in the fields where Texaco operated, including expert opinions requested by the company itself, proved the damage that had been done.

Backed into a corner, Chevron bogged down the trial by demanding unnecessary expert evaluations and threatening the plaintiffs with criminal prosecution for alleged fraud, and even forging military intelligence reports to present the plaintiffs as alleged terrorists.

“Texaco did everything to delay the case, taking advantage of allowances with the Ecuadorian judicial system. There were times when [the company] submitted 40 legal briefs in half an hour,” said Yanza.

The oil company´s legal maneuvers came to an end when, on Dec.16, 2010, Judge Zambrano terminated the investigation stage and requested the 215,000 pages of documents from the case to analyze them and make a decision.
Chevron responded on three fronts: the first at the Permanent Court of Arbitration at The Hague, Netherlands, succeeded in early February with gaining a temporary ban on the enforcement of any sentence issued against the company in Ecuador. The Court´s decision ordered that Ecuador “take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment” against Chevron.

A similar injunction was achieved by a New York federal court. On Feb. 8 a week before Judge Zambrano handed down the sentence, Judge Lewis Kaplan ruled that for the following two weeks no ruling on the case could be made in Ecuador. After hearing Zambrano´s verdict, Kaplan decided to extend the ban until March 8. Meanwhile, he will analyze the case to assess whether he will extend the scope of this ruling and make it permanent.

But Chevron decided to push further. On Feb. 1 the company filed a lawsuit in New York against 47 Amazon residents involved in the suit. In addition,it initiated proceedings against the plaintiffs´ legal team, their advisers and scientific experts, technicians and others who collaborated in the trial, including environmental non-governmental organizations, laboratories, law firms, the producer of the documentary “Crude”, Joe Berlinger, who showed the world the harm caused by Texaco, and even the Provincial Court of Sucumbíos.

The oil company is basing its case on the Racketeer Influenced and Corrupt Organizations Act, or RICO, to argue that everyone involved in the trial is conspiring to extort and defraud Chevron in the Lago Agrio case.

RICO is used in the United States to prosecute crime syndicates like the mafia. According to Chevron, all parties to the suit, as well as lawyers and organizations involved in the trial and the court in Sucumbíos, are part of a criminal conspiracy that deliberately seeks to extort money for a large payout from the company by abusing the judicial process, falsifying scientific reports and seeking to manipulate the company´s share price.

The battle is not yet won

Pablo Fajardo, a lawyer for the plaintiffs, is undaunted by the lawsuit filed by Chevron in the United States and considers it one more failed attempt by the company to avoid paying damages. Now his focus is on how to enforce the 188-page ruling Zambrano issued.

“While the fine is insignificant compared to the damage caused by Texaco, this ruling includes advanced case law on environmental rights and corporate responsibility with respect to nature; this is what makes the decision a historic step in defense of life,” said Fajardo.

In addition to the $9.5 billion to be paid by Chevron, the Sucumbíos judge ordered that the company apologize publicly to its victims. If Chevron refuses to do so, the company will be required to pay an additional sum twice the original amount specified, that is, in excess of $19.2 billion.

Although both parties have appealed the court ruling, it has already set a precedent for new environmental damage claims worldwide.

“Nigeria was waiting for this ruling because they have a similar situation,” says Fajardo. Diocles Zambrano, leader of the Angel Shingre Network of Community Leaders, or RLCAS, adds that European multinational oil companies Repsol and Perenco “should already be concerned.”

The RLCAS —named for Angel Shingre, the Ecuadorian environmental leader assassinated in November 2003 — has monitored the damage caused by these two companies in the Amazonian province of Orellana and is gearing up to follow the trail blazed by the Amazon Defense Front.