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Report: Argentina SC sides with Chevron, suspends freeze of company's assets

By Jessica M. Karmasek | Jun 5, 2013

BUENOS AIRES, Argentina (Legal Newsline) -- Argentina's Supreme Court on Tuesday ruled in favor of Chevron Corp., suspending a freeze on its assets in the country.

According to The Associated Press, the country's highest court accepted an appeal by the company and one of its subsidiaries of a November ruling.

Last year, in a lawsuit filed in response to a $19 billion judgment against the company in Ecuador, Judge Adrian Elkuj ordered that Chevron's Argentine assets be frozen.

Because Chevron has no assets in Ecuador, the Ecuadorian plaintiffs filed suits in Brazil, Argentina and Canada in an effort to enforce the judgment.

"The appealing parties have not participated in the case against Chevron Corporation (in Ecuador) and are legally distinct units," the court said in its ruling, the AP reported.

A Canadian judge dismissed a similar attempt by the Ecuadorians last month.

Judge David M. Brown of the Superior Court of Justice in Ontario wrote in his May 1 ruling that the plaintiffs "have no hope of success in their assertion that the corporate veil of Chevron Canada should be pierced and ignored so that its assets become exigible to satisfy a judgment against its ultimate parent."

Brown said there is "no basis in law or fact for such a claim."

"Ontario courts should be reluctant to dedicate their resources to disputes where, in dollar and cents terms, there is nothing to fight over," he wrote.

"In my view, the parties should take their fight elsewhere to some jurisdiction where any ultimate recognition of the Ecuadorian judgment will have a practical effect."

The Ecuadorians have argued they were forced to file the enforcement actions because Chevron refuses to pay the judgment imposed by an Ecuadorian court in February 2011.

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

In January 2012, an appellate court in Ecuador upheld the $19 billion judgment for Chevron's "intentional contamination" of the country's rainforest.

The adverse ruling was issued by a panel of three temporary judges presiding over the proceedings in the Provincial Court of Justice of Sucumbios in Lago Agrio.

The ruling stems from an environmental lawsuit involving Texaco Petroleum Company, which merged with Chevron more than 10 years ago.

Chevron, which has vowed never to pay the hefty judgment, filed a racketeering lawsuit in a New York federal court in 2011 in response.

The company alleges 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.

Chevron maintains that the $19 billion judgment is a product of "bribery" and "fraud," and is "illegitimate."

"The decision from Argentina's Supreme Court confirms that the Ecuadorian embargo should not have been issued in the first place," the company said in a statement Wednesday.

"This is a significant development further demonstrating the illegitimacy of the Lago Agrio plaintiffs' attempt to enforce their fraudulent judgment. The Lago Agrio plaintiffs' corrupt judgment will not be enforced by any legal system that observes the Rule of Law."

A spokesman for the Ecuadorian plaintiffs, in a statement Wednesday, called the court's decision a "temporary setback."

"Their Supreme Court ruled last night, in essence, that the embargo there was premature because the subsidiaries of Chevron in Argentina were not heard in the action in Ecuador that held that the subsidiaries were subject to the embargo, and thus were denied due process -- a principle that triggers public policy concerns in Argentina," spokesman Bill Hamilton said. "This view is consistent with the argument by the Procuradora (Attorney General) in her opinion last week."

Hamilton contends that the ruling does not mean the company's assets cannot eventually be attached to resolve the trial judgment in Ecuador.

"Rather, the court is saying that, thus far at least, the affected Chevron holdings in Argentina were not heard in Ecuador prior to being affected by the embargo that issued out of Ecuador," he said. "So it slows the process down somewhat in Argentina, releasing the embargoed assets until there is 'due process' for the interests affected by the attachment. It is a complication but not a defeat."

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

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