Ecuadorian panel again squashes Chevron motion to block judgment

Jessica M. Karmasek Apr. 2, 2012, 10:35am


LAGO AGRIO, Ecuador (Legal Newsline) - A three-judge appellate panel has again denied -- for the fourth time -- a motion by Chevron Corp. to block the Republic of Ecuador from enforcing an $18 billion judgment against the company.

In a decision released last week, the Ecuadorian panel ruled that the oil giant was not entitled to use an order from an international arbitration tribunal, which asked Ecuador's government to suspend the litigation, to block the rainforest communities from enforcing the judgment.

Chevron has asked the panel four separate times to block enforcement of the judgment based on the arbitration. Each time, the panel has found that the company, by refusing to post a bond, was not entitled under Ecuador law to suspend enforcement of the judgment.

"From the beginning, we have ruled that the failure of Chevron to avoid execution of the judgment is the direct and exclusive result of its failure to utilize the legal mechanism available" to post a bond, the panel wrote Wednesday.

The panel, in its three-page order, also ruled that the rainforest communities are not a party to the arbitration and, therefore, not subject to its orders. The arbitration is between Ecuador's government and Chevron, it noted.

Last month, the international arbitration tribunal ruled it has jurisdiction to hear the oil giant's claims against 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.

In February, the tribunal issued a second interim award, ordering Ecuador to prevent enforcement and recognition of the $18 billion judgment.

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

The appellate court's ruling, issued in January 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 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.

"As part of its abusive campaign of never-ending litigation, Chevron continues to bring up the same tired issues with the Ecuador court and suffer the same tired defeats," Karen Hinton, spokeswoman for the Ecuadorians, said Friday.

Meanwhile, Chevron is pursuing an appeal to Ecuador's National Court of Justice, which is similar to the Supreme Court in the U.S. and is located in the capital of Quito.

The National Court of Justice has yet to decide if it will take the case.

On Friday, the trial record was transferred from the appellate court in Lago Agrio to Quito.

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

In February, Judge Lewis Kaplan lifted a stay of proceedings in the civil lawsuit, which is still ongoing.

From Legal Newsline: Reach Jessica Karmasek by email at

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