Ecuador: Chevron Continues To Lose Legal Battles

By Luis Ángel Saavedra

US oil company Chevron is finding itself increasingly backed into a corner. After 19 years of legal proceedings, the firm is running short on options to evade the responsibility for environmental damage caused in the Ecuadoran Amazon by Texaco, which Chevron acquired in 2001. Now even a US court has turned its back on the company by rejecting a motion to dismiss, in any country where Chevron has assets, the judgment handed down in Ecuador that requires the firm to pay US$9.5 billion in damages — a figure that could double if Chevron does not issue a public apology to the affected communities.

Texaco left the country in 1992, after 28 years and 339 oil wells drilled in 15 oil blocks — but not before dumping 18 billion barrels of toxic water into the Ecuadoran jungle and leaving behind 627 pools of toxic waste. This affected 30,000 people, including campesinos and indigenous populations from five nations: the Siona, Secoya, Cofán, Huaorani, and Kichwa.

In 1993, indigenous communities in northern Ecuador sued Texaco in US courts for contaminating the environment and affecting the population’s health by using obsolete technologies while operating oil fields there from 1970 to 1980. Ten years later, the US court system declared it did not have jurisdiction to proceed in the case and determined the suit needed to be filed in Ecuador, on the grounds that the damages were carried out in that country.

During the eight years the lawsuit went on in Ecuador, Chevron put up a series of obstacles, including the recusal of judges, with the intent to postpone the ruling. Then, on Feb. 14, 2011, a district court in Lago Agrio, in the province of Sucumbíos, fined the oil company $8.6 billion to rehabilitate the contaminated areas — plus an additional 10% as established by the Environmental Management Act in favor of the plaintiffs, which would mean $860 million for the communities directly affected.

For Pablo Fajardo, attorney for the plaintiffs, the judgment set a precedent. It not only requires a payment for damages, but also establishes moral reparation to those affected by providing that the penalty can be doubled if no apology is made.

“If Chevron does not apologize, the only thing that will show is their arrogance, and it will demonstrate a deep racism against indigenous peoples, toward Latin America, because they believe we have no rights here”, Fajardo said.

Chevron appealed the district court’s judgment, but on Jan. 3, 2012, the provincial court in Sucumbíos upheld the ruling, leaving the multinational corporation with only one remaining option: Ecuador’s National Court of Justice. And the company did, seeking for the top court to overturn the provincial court’s decision, a difficult task since in the third instance the court only reviews whether the trial proceedings adhered to due process.

Looking to change the playing field

Chevron has done everything to ensure that no ruling is carried out or, if it is, that the payment for damages be made by the government of Ecuador. To this end, the company has filed a claim against Ecuador in The Hague, arguing that the responsibility for the environmental remediation belongs to Ecuador.

The US company maintains that the government and the state firm Petroecuador, which took over Texaco’s operations in 1992, approved the clean-up allegedly conducted by Texaco in the area, and that Petroecuador should take over the rest of the remediation and, therefore, also is responsible.

Similarly, between 2010 and 2011, Chevron accused on several occasions the plaintiff communities and their lawyers of fraud to “get rich illegally”, using the Ecuadoran courts. The company also argued that expert reports were also fraudulent, and even accused President Rafael Correa’s administration of “influencing justice in favor of the plaintiffs.”

In parallel, and fearing a judgment against it in Ecuador, the company filed a motion in a New York circuit court to prevent the execution of the judgment in countries where Chevron has assets, including the United States. Judge Lewis Kaplan, who on several occasions has ruled in Chevron’s favor, issued an order blocking any attempt to carry out a ruling against the oil company, but later suspended that decision, saying it was not feasible to take a measure of this nature without a judgment having been issued.

When the decision finally came down in the court of second instance, the Provincial Court of Sucumbíos, Chevron again suffered a setback on its home turf. The Court of Appeals for the Second Circuit in New York, which acts as a court of second instance, dismissed Chevron’s motion, expressing concern about US judges interfering with the justice systems in other countries.

“Every time it loses, Chevron looks to change the playing field to where it can win”, Fajardo said. “First, it didn’t want the US courts [involved], now it’s the Ecuadoran courts, but in the end, Chevron can’t win.”

Meanwhile, Chevron insists it will oppose efforts to carry out the judgment. “We reject any attempt to enforce a judgment that is the product of fraud”, said James Craig, spokesman for Chevron in Latin America.

“Chevron thinks the opinion of the Court for the Second Circuit in New York could change by showing there was fraud in the trial that took place in Lago Agrio; however, we’ve shown that there wasn’t and we’ve practically won in the United States as well,” Fajardo said.

Seeking to enforce the ruling

For their part, plaintiffs’ lawyers decided not to seek any further recourse and wait for the National Court of Justice to ratify the ruling. For the time being, the ways in which the fine can be paid are being determined.

“It’s complicated, but it’s possible. We are researching where Chevron has assets and what are the legal instruments of these countries, or of international law, which will allow us to enforce the judgment”, Fajardo said.

The communities take the continued successes they have over Chevron as a vindication of their rights; more than money, they want it known that multinationals cannot violate the rights of indigenous peoples or contaminate their lands.

“It’s not about money, it’s about getting respect”, said Humberto Piaguaje, a leader of the Secoya nation in Sucumbíos.
Fajardo, meanwhile, reasserts that now there is hope.

“On Jan. 28 of this year, I met with 40 communities, and what I saw was a revival of hope, that what seemed impossible is actually happening, that the millions of dollars and armies of attorneys weren’t able to defeat our determination to have our rights respected. We will keep fighting until [the fine] is paid,” he said. “There is no other way.”