Tribunal finds Chevron not liable for environmental claims in Ecuador

SAN RAMON, Calif. (Legal Newsline) -- Chevron Corp. announced Wednesday that an international arbitration tribunal has found the company not liable for environmental claims in Ecuador.

The tribunal is convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty, also known as the BIT, and administered by the Permanent Court of Arbitration.

The PCA, located in The Hague, Netherlands, administers cases arising out of international treaties and other agreements to arbitrate.

On Tuesday, the tribunal issued a partial award in favor of Chevron and its subsidiary, Texaco Petroleum Company, or TexPet.

The tribunal found that the settlement and release agreements that the government of Ecuador entered into with TexPet released TexPet and its affiliates of any liability for all public interest or collective environmental claims.

The arbitration stems from Ecuador's interference in the ongoing environmental lawsuit against the company.

"The game is up. This award by an eminent international tribunal confirms that the fraudulent claims against Chevron should not have been brought in the first place," Hewitt Pate, Chevron's vice president and general counsel, said in a statement. "It is now beyond question that efforts by American plaintiffs lawyers and the government of Ecuador to enforce this fraudulent judgment violate Ecuadorian, U.S. and international law.

"Continuing to support this fraud only increases the government of Ecuador's growing liability to Chevron and we urge Ecuador to reconsider its position and pursue a more responsible course."

This week's award comes after the tribunal's finding in February that Ecuador is in breach of its obligation to "take all measures necessary to suspend or cause to be suspended the enforcement" of the Lago Agrio judgment.

In prior rulings, the tribunal put Ecuador on notice that if Chevron's arbitration ultimately prevails, "any loss arising from the enforcement of (the judgment) may be losses for which the (Republic) would be responsible to (Chevron) under international law."

Chevron claims that Ecuador has breached its obligations under the BIT and international law through the Lago Agrio litigation, the resulting judgment and an appellate decision upholding the judgment.

The appellate court's ruling, issued last year by a panel of three temporary judges in the Provincial Court of Justice of Sucumbios in Lago Agrio, upheld the $19 billion judgment against the company for its alleged contamination of the country's rainforest.

The ruling, which stems from an environmental lawsuit involving Texaco Petroleum, confirmed a lower court's ruling in February 2011.

The lower court had found the company liable for dumping billions of gallons of toxic waste into the Amazon, causing an outbreak of disease and decimating indigenous groups.

The next arbitration hearing is scheduled for January 2014.

Through the arbitration, Chevron seeks to hold Ecuador accountable for the denial of justice that occurred through the Lago Agrio court's actions during the litigation and the issuance of what it says is a "fraudulent" judgment.

The oil giant, which has vowed never to pay the $19 billion judgment, filed a racketeering lawsuit in the U.S. District Court for the Southern District of New York in 2011, alleging that the Ecuador suit has been used to threaten the oil company, mislead U.S. government officials, and harass and intimidate its employees -- all to extort a financial settlement from the company.

That trial is set to begin next month.

From Legal Newsline: Reach Jessica Karmasek by email at

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