Ecuadorian court upholds $18B judgment against Chevron

Jessica M. Karmasek Jan. 5, 2012, 9:33am

QUITO, Ecuador (Legal Newsline) - An Ecuadorian appellate court has upheld an $18 billion judgment against Chevron Corp. for the company's "intentional contamination" of the country's rainforest.

The "adverse ruling" was issued earlier this week by a panel of three temporary judges presiding over appellate proceedings in the Provincial Court of Justice of Sucumbios in Lago Agrio, Chevron said in a statement Tuesday.

The ruling, which stems from an environmental lawsuit involving Texaco Petroleum Company, confirms a lower court's ruling last February.

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

Chevron, which has vowed never to pay the $18 billion judgment, subsequently filed a racketeering lawsuit in U.S. federal court, 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 lawsuit remains tied up in a U.S. federal appeals court.

In a statement Tuesday, the Ecuadorian plaintiffs suing Chevron said the appellate court's decision is "further confirmation" of the company's "extraordinary greed" and "criminal misconduct" in Ecuador.

"The decision is based on overwhelming scientific evidence presented at trial that proved Chevron deliberately dumped billions of gallons of toxic waste that poisoned the water supply of the Amazon rainforest, decimating indigenous groups and causing an outbreak of cancers and other diseases that continue to threaten thousands of innocent lives," they said.

"The appellate court relied on a record that proved that Chevron has violated the rights of the communities where it operates, disrespected local laws, intimidated community leaders and judges, lied about basic evidence, tried to defraud the court with junk science, and launched an international lobbying campaign to taint the reputation of Ecuador's government for allowing its citizens to use their legally-protected right to seek accountability in their own courts."

The plaintiffs said Chevron now has the opportunity to show the world, in particular Latin America, that it respects the laws and courts of other countries.

If it does not, they said they will take "all measures allowed by law" to secure their legally entitled right to a clean-up.

"This decision confirms what we have been saying for years," Pablo Fajardo, the lead Ecuadorian lawyer, said in a statement. "Chevron is guilty of extraordinary greed and criminal misconduct that has created a humanitarian crisis in Ecuador that puts thousands of people at risk.

"Whether people live or die depends largely on whether Chevron meets its responsibility to remediate a problem it created. Chevron broke the rainforest. It now must fix it."

The three Ecuadorian judges, in their 16-page decision, noted that the company had "staged incidents that encumbered the process of the trial" and that it dumped 20,000 pages of largely redundant evidence on the appellate court to delay consideration of the case.

While Chevron has a right to appeal to Ecuador's National Court of Justice in Quito, it might first be required to post a bond, Fajardo said.

But the right to appeal to the NCJ -- considered the nation's highest judicial authority -- will not kick in until the appellate panel has a chance to respond to requests by the parties for clarification, which must be submitted by the end of the week, he explained.

Meanwhile, Chevron called the appellate court's decision "another glaring example" of the politicization and corruption of Ecuador's judiciary that has plagued the case from the start.

"The Lago Agrio judgment was procured through a corrupt and fraudulent scheme, much of which was captured on film and memorialized in the plaintiffs' representatives' own emails and correspondence. Their misconduct includes fabricating expert reports, manufacturing evidence, bribing and colluding with court officials, waging a campaign of intimidation against judges, and even ghostwriting parts of the verdict itself," the company said in a statement Tuesday.

"Evidence of these crimes has been provided to Ecuador's courts and prosecutors, but authorities there have taken no corrective actions. In the United States, however, no less than eight federal judges have found that the trial in Ecuador has been marred by the fraud and misconduct of the plaintiffs' representatives. And an international Tribunal presiding in the Permanent Court of Arbitration in The Hague has ordered Ecuador to take all measures at its disposal to suspend enforcement of the Lago Agrio judgment within and without Ecuador."

Chevron said it does not believe the Ecuador ruling is enforceable in any court that observes the rule of law.

"The company will continue to seek to hold accountable the perpetrators of this fraud," it said.

From Legal Newsline: Reach Jessica Karmasek by email at

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