Chevron appealing Ecuadorian appellate court's judgment

Jessica M. Karmasek Jan. 23, 2012, 12:33pm


QUITO, Ecuador (Legal Newsline) - Chevron Corp. has filed an appeal, seeking review by Ecuador's National Court of Justice, of the adverse judgment issued by an appellate court earlier this month.

The filing was made to the Provincial Court of Justice of Sucumbios on Friday, said Justin L. Higgs, a spokesman for Chevron. The National Court of Justice is similar to the Supreme Court in the U.S. and is located in the capital of Quito.

The oil giant's appeal, called a petition for cassation, details multiple legal grounds for reversal of the Jan. 3 appellate court decision.

First, the appeal argues that the lower courts violated the Ecuadorian constitution by refusing to take any corrective action in response to the "extensive fraud and corruption" committed by the Ecuadorian plaintiffs' lawyers and their representatives.

The filing goes on to outline several other points, including that: the lower court's judgment is "unlawfully premised" on "fraudulent and scientifically baseless" evidence; the judgment is illegally based upon the retroactive application of law; it ignores the releases of liability granted to Texaco Petroleum Co. by the Ecuadorian government following a cleanup of its share of remediation sites in the 1990s; and the judgment awarded punitive and other damages never requested in plaintiffs' complaint and not allowed under Ecuadorian law.

"Throughout the course of this litigation, judges corruptly operating in concert with the plaintiffs' lawyers have created, rather than corrected, injustice," Hewitt Pate, Chevron vice president and general counsel, said in a statement.

"Today's appeal gives the National Court of Justice an opportunity to correct the grave injustices that have occurred in this case," he said Friday.

The appellate court's ruling earlier this month, issued by a panel of three temporary judges in the Provincial Court of Justice of Sucumbios in Lago Agrio, upheld the $18 billion judgment against the company for its alleged contamination of the country's rain forest.

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

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.

Chevron, which has vowed never to pay the $18 billion judgment, subsequently filed a racketeering lawsuit in the Southern District of New York, 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.

On Jan. 9, Judge Lewis Kaplan denied the company's motion to attach the assets of the Ecuadorian plaintiffs in the RICO case.

In addition to its filing Friday, Chevron also has asked that the appellate court take all steps to suspend enforcement of the $18 billion judgment until further order, including suspension of any requirement that Chevron post a bond to prevent enforcement of the judgement during the cassation appeal.

The appellate court has the discretion to set a bond before sending the case to the National Court of Justice.

Karen Hinton, spokeswoman for the Ecuadorians, said last week that Chevron must request the bond as a way to suspend enforcement of the judgment pending further appeal.

Such a bond is typically set by the appellate court at about 8 percent of the amount of the judgment, or in this case about $1.6 billion.

"Any demand that Chevron post a bond in this case would be a violation of Ecuador's international obligations under the order of the (U.S.-Ecuador Bilateral Investment Treaty) Tribunal, and Chevron has no obligation to post such a bond," the company said Friday.

Last February, the Tribunal issued an order requiring Ecuador to take all measures at its disposal to suspend enforcement of the judgment.

"The plaintiffs have indicated that they will seek to have Ecuador defy the BIT Tribunal's order by pursuing enforcement of the corrupt judgment outside of Ecuador before the BIT Tribunal has an opportunity to review the merits of the case," Chevron said.

"In the event the plaintiffs carry through on their threats to file enforcement actions against Chevron affiliates in other countries, Chevron will take appropriate steps to defend against this fraud."

Hinton, in a statement Friday, said the company is again seeking special treatment.

"Chevron's request that a bond requirement be waived would force the Ecuador appellate court to violate laws protecting the winning side in any litigation from further attempts by the loser to delay the proceedings and cause further harm -- which in this case includes a grave risk of illness and death to thousands of people from indigenous groups and farmer communities sickened by the company's toxic dumping," she said.

"By seeking a special waiver of the bond requirement that applies to all litigants in Ecuador, Chevron is playing high-stakes poker by counting on Ecuadorian courts to violate the law just so Chevron can delay the enforcement of the Ecuadorian judgment as allowed by law."

She added, "We want to reiterate that Chevron has every right to appeal to Ecuador's National Court of Justice to seek review of the trial and appellate court decisions, but it has no right to special treatment during the pendency of the appeal."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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