The Chevron Ecuador Lawsuit Trial | Chevron's Views & Opinions

This blog post discusses the role of Stratus Consulting in the Chevron Ecuador case. Stratus is a named defendant in the Racketeer Influenced and Corrupt Organizations Act (RICO) suit that Chevron filed earlier this year: (more…)

Chevron has filed in the U.S. District Court for the Southern District of New York a motion for attachment, seeking to prevent the Lago Agrio plaintiffs, lawyers, and financiers from collecting and dissipating monies based upon the fraudulent judgment that they have obtained through collusion with a corrupt Ecuadorian court. This motion relates to Chevron’s fraud and RICO claims against those pursuing sham environmental claims against it.

In a separate proceeding, Chevron awaits the opinion of the Court of Appeals for the Second Circuit with respect to its suit seeking a declaration that the fraudulent judgment is unenforceable.

The motion for attachment can be downloaded here.

In an arbitration Chevron initiated in 2009 under the U.S.-Ecuador Bilateral Investment Treaty (BIT), a Tribunal in The Hague issued an order in February 2011 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:

Arbitrators expect to rule as early as next month on whether they can hear a dispute between Chevron Corp and Ecuador related to a marathon pollution liability case, according to a letter to the lawyers involved.

The tribunal, working under The Hague’s Permanent Court of Arbitration (PCA), ordered the Republic of Ecuador in February to suspend enforcement of any judgment in the lawsuit filed by rainforest dwellers against Chevron.

Chevron lost that case a few days later, as the company had expected. A New York judge then sought to freeze the $18 billion judgment against the second-largest U.S. oil company, before he was overruled on appeal.

Chevron, arguing the judicial process in Ecuador was corrupted, is now banking on the arbitrators, who must first decide whether they will become the latest body to weigh in on what has become a landmark international legal battle.

“The current expectation is that the decision will be issued in the course of late December 2011 or early January 2012,” Martin Doe of the PCA wrote in a Nov. 11 letter, which wound up in the filings of related U.S. lawsuits.

“If that goes our way, we can begin arguments on the merits,” a Chevron spokesman said on Monday.

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This article explores the legal scenario in which, as a result of the fraud that has come to light among other things, arbitrators order Ecuador to make Chevron whole for $18 billion:

Two decades into the battle over Chevron’s environmental legacy in Ecuador, the stage finally seems to be set for the final act. With Chevron facing an $18 billion Ecuadorian judgment over pollution in Lago Agrio and arbitrators mulling whether to roll the judgment back, it’s time to predict how the play will end. In my last Global Lawyer column, I concluded that ordering Ecuador to indemnify Chevron is the least problematic relief available to the arbitrators. In this column, I will explain how I see the global dispute playing out. Hint: Before the curtain falls, the oil company wins. …

Assuming the arbitrators order Ecuador to indemnify Chevron, do you really think Ecuador will let that $18 billion judgment stand? Ecuador’s appeal courts can simply overturn the judgment. Or perhaps even likelier: the appeals courts can reduce the judgment to a relatively token amount. Curtailing damages would preserve a semblance of anti-gringo justice for the domestic audience in Ecuador, and a semblance of judicial independence for the international audience. You heard it here first.

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On October 7, 2011, Chevron submitted to the office of the New York State Comptroller a request under New York’s Freedom of Information Law (FOIL) for documents regarding connections between the Comptroller’s office and plaintiffs’ representatives. Chevron is seeking documents under FOIL in order to shed further light on the assistance provided by Comptroller DiNapoli and his predecessor, Alan Hevesi, to the plaintiffs’ lawyers and consultants involved in the fraudulent litigation against Chevron. Documentary evidence obtained through U.S. court-ordered discovery reveals a connection between financial contributions made by the Lago Agrio plaintiffs’ representatives and the Comptroller’s issuance of official public statements in support of the plaintiffs.

A copy of Chevron’s FOIL request may be downloaded here along with supporting documentation at here and here.

Additional documents from Chevron’s court filings that detail the relationship between New York elected officials and the plaintiffs’ representatives can be found here:

[FAC Ex. EW] WOODS-HDD-0091355.pdf
[FAC Ex. EX] DONZ-HDD-0099646.pdf
[FAC Ex. EY] DONZ00030903.pdf
[FAC EX. CZ] WOODS-HDD-0101539.pdf
[FAC Ex. DV] Tab – 14.pdf
[FAC Ex. DW] Tab – 17.pdf
[FAC Ex. EC] Tab – 13.pdf
[FAC Ex. ED] Tab – 01.pdf
[FAC Ex. EE] Tab – 02.pdf
[FAC Ex. EQ] DONZ00095954.pdf
[FAC Ex. EV] WOODS-HDD-0101564.pdf

This past weekend, Australia’s Channel 7 program Sunday Night ran a biased and misleading report on the long-running lawsuit against Chevron in Ecuador. The story was solicited by Zoe Tryon, an activist associated with the lawyers suing Chevron, who is featured prominently in the segment making a series of outright false statements. In email correspondence produced pursuant to a court-ordered subpoena, Ms. Tryon told the plaintiffs’ lead U.S. lawyer, Steven Donziger, that she had approached Channel 7 reporter Mike Munro to do the story because he was a “great friend” of her family, and that she could “vouch for [Munro and his producer] completely.” As might be expected under such circumstances, the report was sensationalized, biased, and factually inaccurate.

The Channel 7 program omitted key information that was made available to Channel 7. Texaco Petroleum Company held only a 37.5% interest in the consortium in Ecuador while state-owned Petroecuador owned 62.5%. At the end of its participation in 1992, Texaco Petroleum fully remediated its contractual share of environmental impacts in a program approved by all pertinent local, provincial and national authorities in Ecuador. All remaining impacts are the legal responsibility of Ecuador’s government and its national oil company, Petroecuador, which has been the sole owner and operator of greatly expanded operations in the region for the past two decades.

At Chevron’s request, many of the world’s top toxicologists, epidemiologists, ecologists, anthropologists and geoscientists have considered the evidence, including more than 1,500 environmental samples, and have concluded that there is no scientific support for plaintiffs’ claims of social, health and environmental harms caused by the operations in which Texaco Petroleum participated prior to 1992.

The program included only a highly edited and improperly juxtaposed interview with Chevron’s spokesman in Ecuador, and made no effort to fact check information supplied by Ms. Tryon or the plaintiffs’ lawyers with Chevron. On many occasions, Chevron attempted to convey the facts of the case [see here and here] and bring evidence of the plaintiffs’ lawyers’ fraud and misconduct to the attention of Channel 7, only to be rebuffed at every turn. There is overwhelming evidence that the plaintiffs’ lawyers have engaged in a fraudulent scheme in Ecuador. They ghostwrote the official damages report of a court-appointed expert who was supposedly neutral but actually was hand-selected by the plaintiffs’ lawyers and clandestinely paid from a “secret account,” and submitted other fraudulent expert reports presenting false findings of contamination that were contrary to those their expert testified he actually reached. Evidence showing that the plaintiffs’ attorneys went so far as to ghostwrite significant portions of the judgment issued by the Ecuadorian court in February remains undisputed by the plaintiffs and unmentioned by Channel 7. The facts uncovered regarding this massive litigation fraud have been covered by major media outlets for over a year, and U.S. federal courts have recognized the overwhelming evidence of fraud marring the case, remarking that “what has blatantly occurred in this matter would in fact be considered fraud by any court” and “there is ample evidence of fraud in the Ecuadorian proceedings.”

The network’s lack of interest in the facts of the case and in the fraud findings of court after court made sure that the program would not be objective, let alone accurate or even relevant to the ongoing dispute. A transcript of the questions posed to Chevron by Mr. Munro can be found here, together with a side-by-side presentation of information responding to his assertions. As one can see, the interviewer was poorly informed about the facts of the case and instead was simply repeating the plaintiffs’ lawyers’ baseless and fraudulent claims.

It is disappointing that Channel 7 failed to develop a basic understanding of the case and allowed misinformation to shape its reporting. We remain confident, however, that objective observers of the Ecuador litigation will come away with a different point of view. For instance, they may well be interested to know that eight different U.S. federal judges have found evidence of fraud by the plaintiffs’ lawyers in connection with the trial in Ecuador and that, after extensive hearings, an international tribunal presiding in the Permanent Court of Arbitration in The Hague ordered Ecuador to suspend any enforcement of the Lago Agrio judgment. It was facts like these that Sunday Night knowingly withheld from its viewers.

The Channel 7 story also ignored Chevron’s strong environmental record in Australia. Chevron is proud of its environmental record in Australia. We have demonstrated our commitment to environmental stewardship through our management of the Western Australia (WA) oil asset on Barrow Island for the past 45 years, and we will continue to do so with the Gorgon and Wheatstone projects.

Barrow Island has been recognized internationally as an outstanding example of the coexistence of industry and the environment on a Class A nature reserve while contributing to the economic well-being of the WA community. Our quarantine management system was acknowledged by the Western Australian Environmental Protection Authority as world class and was recently awarded a prestigious WA engineering award.

Chevron Australia is committed to maintaining the island’s biodiversity and conservation values while making an even bigger contribution to Western Australia’s economic growth and well-being in the future. For more information on Chevron in Australia, please visit: http://www.chevronaustralia.com/home.aspx

The United States Court of Appeals for the Second Circuit today issued an order denying the Ecuadorian plaintiffs’ attempt to recuse Judge Lewis Kaplan, vacating Judge Kaplan’s preliminary injunction against enforcement of the Ecuadorian judgment against Chevron, and staying Chevron’s claim for a declaratory judgment that the Ecuadorian judgment is unenforceable.

In denying the Ecuadorian plaintiffs’ mandamus petition, the Second Circuit rejected accusations that Judge Kaplan is biased and refused to recuse him or otherwise reassign the case. The Second Circuit vacated the preliminary injunction after receiving on September 16, 2011 a written representation from the Ecuadorian plaintiffs’ lawyers that they would not attempt to enforce the Ecuadorian judgment during the pendency of the first instance appeal in Ecuador — a promise the Ecuadorian plaintiffs repeatedly refused to make to the trial court before and since the preliminary injunction first issued. Chevron’s lawsuit against the Lago Agrio plaintiffs and their representatives for violations of the federal RICO statute, common law fraud, and other laws will continue. Chevron’s claims are supported by overwhelming evidence — documented in the Ecuadorian plaintiffs’ lawyers’ own documents and in their lawyers’ own statements caught on videotape — that the Lago Agrio plaintiffs’ lawyers made corrupt payments to an Ecuadorian court official from a secret bank account, forged expert reports that were submitted in the name of court experts and contained fraudulent data, and even participated in the fraudulent drafting of the Ecuadorian court’s judgment. There is no legitimate evidence supporting any finding of liability against Chevron because Texaco Petroleum Company cleaned up its share of environmental impacts in Ecuador and the remaining impacts are the responsibility of the government of Ecuador and its state-owned oil company, Petroecuador.

Chevron is disappointed that the trial scheduled for November has been stayed, but remains committed to its consistent goal — obtaining judicial review on the merits of the Ecuadorian plaintiffs’ lawyers’ fraud before they are allowed to attempt enforcement of the Ecuadorian judgment. Chevron remains confident that once the full facts are examined, the fraudulent judgment will be found unenforceable and those who procured it will be required to answer for their misconduct.

The Second Circuit’s order has no effect on the February 9, 2011 Order for Interim Measures issued by the Bilateral Investment Treaty Arbitration Tribunal presiding over Chevron’s claims against Ecuador in the Permanent Court of Arbitration in The Hague. The Treaty Arbitration Tribunal’s order continues to require Ecuador to 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 in the Lago Agrio case pending further order of the Tribunal.

International Tribunal Finds Ecuador Courts Failed to Administer Justice

An international arbitration tribunal has awarded Chevron Corporation and Texaco Petroleum Company $96 million in a claim against Ecuador related to past oil operations by Texaco Petroleum, which is now a Chevron subsidiary. The tribunal, administered by the Permanent Court of Arbitration in The Hague, found that Ecuador’s courts violated international law through their significant delays in ruling on certain commercial disputes between Texaco Petroleum and the Ecuadorian government. The final award also takes into account taxes, compound interest, and costs associated with the preliminary award announced in March 2010.

Chevron and Texaco Petroleum filed the international arbitration case in December 2006 under the Rules of the United Nations Commission on International Trade Law (UNCITRAL). The Permanent Court of Arbitration is an intergovernmental organization with over one hundred member countries established by international convention in 1899 to facilitate arbitration and other forms of dispute resolution. The United States acceded to the Court’s founding convention in 1900 and Ecuador acceded in 1907.

The decision by the arbitration tribunal resolves seven commercial claims that Texaco Petroleum filed in Ecuador between 1991 and 1993. Ecuadorian courts continually delayed and refused to rule on the seven cases, which the tribunal determined was a violation of Ecuador’s obligation under its Bilateral Investment Treaty with the United States to provide effective means for U.S. investors in Ecuador to assert claims and enforce their rights.

“This ruling confirms that Ecuador can be held accountable for its obligations under international law,” said Hewitt Pate, Chevron vice president and general counsel. “Since Ecuador’s politicized court system has failed to provide impartial tribunals and due process, Chevron has had to seek international remedies. Chevron will continue to pursue enforcement of the agreements entered into by Ecuador and its state-owned oil company, Petroecuador, when they were members of a producing consortium with Texaco Petroleum.”

The Treaty arbitration tribunal is not alone in highlighting the Ecuadorian courts’ failure to provide justice. In April 2011, the United States Department of State released its human rights report for Ecuador which states, “The media reported on the susceptibility of the judiciary to bribes for favorable decisions and resolution of legal cases and on judges parceling out cases to outside lawyers, who wrote the judicial sentences and sent them back to the presiding judge for signature.” Likewise, the World Bank’s latest Worldwide Governance Indicators ranked Ecuador below the 10th percentile of all countries surveyed with respect to the rule of law, placing it behind North Korea.

Recent events in Ecuador demonstrate the continuing deterioration and political subjugation of the justice system there:

• After a leading Ecuadorian newspaper, El Universo, ran an opinion column critical of President Rafael Correa, an Ecuadorian judge–at Correa’s insistence–sentenced three newspaper executives and the columnist to jail for three years and fined the newspaper $40 million.
• According to The Economist, “It took Juan Paredes, replacing the intended judge who was on holiday, less than two days to read through the case’s 5,000-page file” and issue the ruling. President Correa personally attended the hearing, “accompanied by a small crowd of supporters that pelted the defendants and their lawyers with eggs and bottles outside the courthouse. The media were barred from attending.” International observers, including Human Rights Watch, called the ruling “a major setback for free speech in Ecuador.”
• President Correa’s Legal Secretary, Alexis Mera, issued an official proclamation, “by order of the Constitutional President of the Republic,” requiring Ecuadorian Government ministries to immediately file suits for damages holding any judge who enjoins Government projects personally liable if their injunctions are subsequently overturned by a higher court.