Chevron
unaccredited laboratories in Ecuador. Chevron moved to expunge this evidence on several dif- ferent occasions, but the Court failed to conduct any hearings on the matter, as required by Ecua- dor’s Civil Code.
In July 2006, the plaintiffs obtained a court or- der that waived further inspections by experts appointed by both parties and instead appointed a single expert, chosen by the Court, to conduct inspections and issue reports. Chevron argued that the order violated the earlier agreed-upon procedures, as well as Ecuador’s Civil Code. Nev- ertheless, the Court’s appointed expert, Richard Cabrera, proceeded with his investigation, and in November 2008, he calculated the damages, including environmental remediation and health- Loycare costs, and determined that the plaintiffs were owed approximately $27.3 billion.
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Chevron immediately took issue with Cabrera’s methodology and accused him of fraud and gross misconduct. Chevron also accused the plaintiff’s attorneys of manipulating evidence and influenc- ing expert witnesses. In September 2009, Judge Juan Nunez recused himself after a tape was re- leased purportedly showing his role in a bribery scheme that benefitted the plaintiffs. That same month, Chevron asked the Permanent Court of Arbitration at The Hague (PCA) to intervene in the matter under the authority of the 1993 U.S.- Ecuador Bilateral Investment Treaty (BIT).
Specifically, Chevron asked the PCA to recog- nize that Ecuador had breached their prior agree- ments absolving Texaco for any liability related to the consortium’s prior operations, and that Ecuador had violated provisions of BIT and the Ecuadorian Constitution that require fair and eq- uitable proceedings. Ecuador argued that their release of Texaco from liability did not prevent third parties from suing for damages, and that the PCA did not have jurisdiction over the matter since Chevron had previously elected to pursue claims in an alternative forum and because the
PCA’s involvement would require the tribunal to determine rights of individuals not party to the arbitration proceedings.
In February 2011, Ecuadorian Judge Nicolas Zam- brano awarded the plaintiffs $18 billion in dam- ages. Judge Zambrano originally awarded $9.5 billion dollars in remediation costs and plaintiff damages, but another $8.6 billion was added for Chevron’s failure to apologize for the alleged en- vironmental damage. Chevron immediately filed for an anti-enforcement injunction in the U.S. Dis- trict Court for the Southern District of New York against any judgments entered against them by an Ecuadorian court. The District Court granted the injunction in March 2011 under New York’s Uniform Foreign Country Money-Judgments Recognition Act (Foreign Judgments Act), which grants putative judgment-debtors a cause of ac- tion to challenge a foreign judgment’s validity.
In early January 2012, a three-judge appellate panel from the Provincial Court of Justice of Sucumbios upheld Judge Zambrano’s decision, and on January 26, 2012, the U.S. Court of Ap- peals for the Second Circuit lifted the injunc- tion initially awarded to Chevron by the District Court. U.S. Appellate Judge Kaplan concluded that judgment-debtors like Chevron could chal- lenge a foreign judgment’s validity under the For- eign Judgments Act only defensively and in re- sponse to an attempted enforcement, and since the plaintiffs had not yet sought enforcement in New York, the injunction was impermissible.
Chevron does not have assets in Ecuador, but the Second Circuit’s decision to lift the injunction now gives the plaintiffs the ability to try to en- force the judgment in New York and other Latin American countries where Chevron does have assets, including Argentina, Venezuela and Bra- zil. The plaintiffs have expressed their intention to begin confiscating Chevron’s company assets and freezing their international accounts soon, however, the legal battle is likely far from over.
ILSA Quarterly » volume 20 » issue 4 » May 2012
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