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Chevron, Ecuador and the forever lawsuit

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Back in May I wrote about Chevron’s stubborn refusal to settle an $18 billion lawsuit over oil pollution in Ecuador.

Chevron is on trial in Ecuador for widespread contamination of Amazonian land and water resources in the 1970s by Texaco, which Chevron purchased in 2001. Plaintiffs suing Chevron are challenging the adequacy of a $40 million remediation effort that Texaco completed in 1998. A court-appointed expert in the Ecuadorian litigation has recommended that Chevron be held liable for up to $27.3 billion in damages. In February, an Ecuadoran judge fined the San Ramon oil major $9.5 billion over oil-field contamination in a portion of the Amazon rain forest where Texaco used to drill, working as a partner with the government-run Petroecuador. The fine could increase to $18 billion.The case is a sad saga of legal delay and obfuscation stretching for decades.

But wait is there light at the end of the tunnel, some balm in Gilead despite the best efforts of Chevron’s stable of lawyers and lobbyists?

Last month the Second Circuit of Appeals in New York City removed the injunction against enforcement of the $18 billion judgment against Chevron, and indefinitely stayed the trial over the racketeering charges Chevron filed against the Ecuadoreans and their lawyers.

“This is a major rebuke of Chevron’s abusive legal tactics and US Federal Judge Lewis Kaplan’s handling of the case,” said Mike Gaworecki, Online Campaigner for the Rainforest Action Network, Change Chevron.

It means that Chevron’s legal strategy is derailed for the moment, or at best sidetracked. Several reports said the decision came after a hearing in which Chevron’s lawyers were all but laughed out of a New York courtroom while attempting to defend the “worldwide injunction” that barred enforcement of the judgment.

Here the legal details, provided by RAN: “The Second Circuit Court of Appeals reversed the preliminary injunction ordered by US Federal Judge Lewis Kaplan, which would have prohibited the Ecuadorean plaintiffs from enforcing the $18 billion judgment outside of Ecuador. This is a major victory for the 30,000 Ecuadoreans affected by Chevron’s oil pollution in the Amazon. It’s unusual for a court of appeals to completely reverse a lower court’s decision, but in this case it was obvious that Chevron and their legal hacks have continued to abuse the law and that Judge Kaplan rushed to implement a judgment without considering the overwhelming evidence against Chevron.”

Jim Tyrrell, the attorney who argued for the Ecuadoreans before the Second Circuit, said of the court’s ruling: “We are very excited that the court has reached this decision,” calling it “a triumph of the rule of law over the sensationalism created by Chevron’s PR department.”

RAN continued: “The preliminary injunction was probably futile and potentially illegal anyway, according to several international law scholars who reviewed the case. Why Judge Kaplan issued an injunction so far outside of his jurisdiction is anyone’s guess. He continually refers to the plaintiffs as the ‘so-called Ecuadorean plaintiffs,’ as if their existence or the horrifying conditions they live in is somehow in question. He even allegedly suggested to Chevron’s lawyers that they should file racketeering charges against the Ecuadoreans and their US lawyers – which Chevron did.

In its decision, the Second Circuit also indefinitely stayed the trial over the racketeering charges.

Yes, a victory for the Ecuadorean plaintiffs, will Chevron have to honor the multi-billion dollar verdict anytime soon? That is unlikely as Chevron views the decision as a setback and will fight on.

The plaintiffs “certainly believe that they are much closer to ultimately collecting on a final Ecuadorean judgment than they would be if an injunction had persisted,” said Tyrrell. However, they promised, the U.S. appeals court that they wouldn’t seek payment from Chevron before an Ecuadorean appeals court renders a decision on the original ruling. That decision could come within six months, Tyrrell said.

But that wouldn’t be the end of the road for the plaintiffs either, because Chevron has geared up for a protracted fight and is still protected by an injunction granted in February by an international arbitration tribunal in The Hague.

“A rapid decision from the Ecuadorean appellate court could put some pressure on Chevron,” said James Loftis, chairman of the international dispute-resolution practice at the law firm Vinson & Elkins LLC. “But it probably will be a long time before the plaintiffs see any money out of Chevron, if ever.”

The injunction at The Hague, which prohibits the Ecuadorean government from enforcing the ruling, could be a powerful tool in the hands of Chevron.

Chevron could also fight plaintiffs in the same courts where they are planning to seek international enforcement, which will prolong the legal fight for years. And if Chevron loses the Ecuadorean appeal, it still has two other appeal opportunities in the country that it could use.

The company has created a veritable lobbying and public relations empire around the lawsuit. For a list of the lobbyists, please see this link http://disclosures.house.gov/ld/ldsearch.aspx.

Chevron’s Political Action Committee also has contributed $10 million to 60 House candidates and 11 Senatorial candidates, 75 percent of whom were Republican, according to Open Secrets.

So as the sage said, “It’s not over til it’s over.” Will this one ever be over?

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Written by William DiBenedetto

October 13, 2011 at 2:15 am

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