In Chevron versus Ecuador, the Decisions (and the Ironies) Multiply

John Knox

Jan. 9, 2012

If environmental cases had their own Olympics, the dispute between Chevron and Ecuador would be a contender for multiple gold medals.  It seems to have a shot not only at winning the award for the largest damages, but also for running the longest and appearing in the most courtrooms. 

To recap:  Residents of the Amazon have been trying for nearly 20 years to receive compensation for massive environmental damage Chevron’s predecessor, Texaco, allegedly caused in Ecuador in what’s been called the “Rainforest Chernobyl.” In February, their efforts culminated in an $8.6 billion judgment by an Ecuadorian court against Chevron.  Chevron attacked the decision on several fronts, including by appealing to a higher Ecuadorian court and by suing the plaintiffs in U.S. federal court to stop them from enforcing the judgment.   

Last week, Chevron suffered setbacks in both courts.  On Tuesday, the Ecuadorian appellate court affirmed the judgment.  If Chevron doesn’t publicly apologize to Ecuador, the award will be doubled, to nearly $18 billion.  Chevron responded by saying that the decision “is another glaring example of the politicization and corruption of Ecuador's judiciary that has plagued this fraudulent case from the start.”  As I’ve noted before, this is ironic.  The plaintiffs originally sued in U.S. federal court, and it was Chevron (still Texaco at the time) that persuaded the court to dismiss the case in favor of the Ecuadorian judicial system.  In response to the plaintiffs’ warnings that Ecuadorian courts were “subject to corrupt influences” and “incapable of acting impartially,” Chevron persuaded Judge Rakoff in the Southern District of New York and, on appeal, the Second Circuit, that Ecuadorian courts would be just fine.  Chevron had argued (among other things) that “because these cases will be the subject of close public and political scrutiny, as confirmed by the Republic’s involvement in the litigation, there is little chance of undue influence being applied.” Oh well, Chevron might add today, we were mistaken about that.  Oops. 

Chevron isn’t just claiming that the Ecuadorian court system is corrupt – in its suit against the plaintiffs’ representatives (and their attorneys), it’s claiming that they are the corruptors, engaged in a criminal conspiracy to extort money from Chevron.  In March, Chevron convinced Judge Kaplan, also in the Southern District of New York, to enjoin the plaintiffs from trying to enforce their judgment anywhere in the world – a remarkably far-reaching decision that the Second Circuit vacated in September.  Chevron also tried to stymie the plaintiffs by asking Judge Kaplan to freeze the plaintiffs’ assets, but – perhaps chastened by the Second Circuit decision – last Friday he denied Chevron’s motion.  (Not feeling chastened itself, Chevron filed another motion on Thursday with the Second Circuit, asking it to reverse its earlier decision on the ground that the Ecuadorian appellate judgment “decisively alters the posture of this case.”)

Neither of these decisions brings the end of this dispute within sight.  On the contrary, years of litigation loom ahead, as the plaintiffs seek to enforce their judgment in courts around the world and Chevron continues to try  to forestall them.

Read More by John Knox
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