Chevron Ecuador Case | The Chevron Ecuador Lawsuit Trial & Chevron's Views & Opinions | The Amazon Post

“In a lawsuit filed Thursday, the plaintiffs say Chevron broke a promise Texaco Inc. made in 1999 to a New York federal court to abide by the Ecuadorean legal system if the court dismissed the environmental case.” – Wall Street Journal, 1/14/10

Chevron has never operated in Ecuador, a fact that cannot be disputed. Texaco’s role in oil operations in the country ended in 1992. Since then, Ecuador’s government owned oil company, Petroecuador, has been the exclusive operator of the oil fields and has amassed a deplorable environmental record.

The claim filed against Chevron on January 14 is erroneous and subsequent media statements by the plaintiffs are incorrect and misleading. Chevron did not agree to any stipulation concerning jurisdiction in Ecuador. In fact, Chevron was not a party to the prior New York action. American trial lawyers are once again distorting the record. To clarify, the case that was brought against Texaco in New York is totally different than what has been brought against Chevron in Ecuador. The case against Chevron in Ecuador does not seek an award for the 48 named plaintiffs. Rather, it seeks to force Chevron to pay for the remaining remediation work that the government of Ecuador has never performed. Under an agreement with the government of Ecuador, Texaco spent $40 million performing its agreed-upon share of the clean-up work. Texaco obtained full and complete releases after meeting all the requirements placed upon it by the government of Ecuador.  The remaining remediation work required is the exclusive responsibility of the government of Ecuador. The case against Texaco in New York was dismissed. Period.  It was not moved, transferred, or refilled. A brand new and totally different case was brought against Chevron in Ecuador. There are no stipulations from the New York action that cover a different claim against a different party in Ecuador. Texaco never waived its rights to seek the enforcement of valid agreements and contracts with the government of Ecuador. Texaco has never waived its rights to resist a verdict that is the product of fraud and a broken legal system.

It is important to understand that the two cases are very different. The case brought against Texaco in New York was about alleged personal injuries and alleged personal damages. The case against Chevron in Ecuador is exclusively about alleged damages to public lands. Of the 48 plaintiffs in the Ecuador case, there are no claims for personal injury or personal damages of any kind.

In 1993 Ecuador and United States inked a bilateral investment treaty (BIT) designed to encourage private sector development in Ecuador and to protect U.S. investment in the country.

But the government of Ecuador has long sought to evade its BIT obligations. In fact, Ecuador clearly broke this treaty when the country pursued a bad-faith, coordinated strategy with the Lago Agrio plaintiffs to use them as “stalking horses” in an attempt to avoid its own remediation responsibilities and contractual obligations, and instead to impose public environmental liabilities on Chevron only a few years after having settled and released Chevron from such liabilities. Chevron was therefore compelled to file an international arbitration claim against Ecuador under the BIT.

This filing likely came as no surprise to Ecuador. In fact, the government of Ecuador is notorious for unilaterally breaking contracts and evading its obligations. It was not until 2001 that the country of Ecuador was sued for the first time by a foreign company. However, since 2008, the year after President Rafael Correa took office, a large number of foreign companies began to file lawsuits. Currently, Ecuador is 2nd in the world in terms of pending international arbitration claims against the country; so much so that the cumulative sum of the 11 pending lawsuits would now equal nearly one-half of the country’s annual budget.

Desperate to avoid arbitration, Ecuador petitioned to have a U.S. court halt Chevron’s BIT claim. In doing so, Ecuador is seeking to delay arbitration and avoid ever having to own up to its treaty obligations. Further, it has become clear that Ecuador is aware that the country’s  repudiation of its contractual obligations — combined with its denial of due process to foreign investors litigating in its courts — will not stand up to international scrutiny. Given the volume of international arbitration currently pending against the government of Ecuador, its action was unsurprising and suggests that the government must recognize that it will lose if this case proceeds before a legitimate and impartial forum.

There is no basis in fact or law for Ecuador to get a federal judge to stay arbitration that Ecuador agreed to by treaty with the United States. For that reason, on Jan 19th, Chevron filed a motion to dismiss the government of Ecuador’s opposition to international arbitration. More importantly, Chevron’s arbitration claim should proceed and the government of Ecuador should abide by its treaty and contractual obligations.

Chevron’s high-profile defense against a lawsuit seeking $27bn for environmental damages in Ecuador has ranged from YouTube postings to secretly-taped videos of the judge discussing the case in what it claims is evidence of political interference and corruption in the country. The nature of Chevron’s defence, which has included keeping those who did the secret taping away from media and the authorities, certainly is uncharacteristic of an oil major.

Typically these companies settle cases or do whatever else they can to avoid drawing negative attention to themselves. But, then again, this is no ordinary lawsuit. The damages being sought are extremely high – roughly a quarter of Chevron’s market capitalisation of $140bn or a fifth of its $160bn in assets.

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