Ecuadorians: Chevron decision not to reconsider ruling unusual

By Jessica M. Karmasek | Jan 19, 2012

QUITO, Ecuador (Legal Newsline) - The Ecuadorian plaintiffs suing Chevron Corp. say they find it unusual that the oil giant did not ask an Ecuador appellate court to reconsider or clarify its recent decision against the company.

Earlier this month, the appellate court upheld an $18 billion judgment against Chevron for the company's "intentional contamination" of the Ecuadorian rain forest.

The adverse ruling was issued Jan. 3 by a panel of three temporary judges presiding over appellate proceedings in the Provincial Court of Justice of Sucumbios in Lago Agrio.

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.

Lawyers for the Ecuadorian plaintiffs said Wednesday that Chevron let pass an important deadline that allowed either party to contest or clarify the appellate court's decision.

On Friday, the court reaffirmed its original decision in response to 10 separate clarification requests submitted by lawyers for the rain forest communities.

Normally, in Ecuador, the losing party in an appeal seeks clarification of an appellate court decision unless it decides it is withdrawing from the litigation or accepts the result.

Pablo Fajardo, lawyer for the Ecuadorian communities, was puzzled by Chevron's move, or lack thereof.

Fajardo said Chevron's failure to seek clarification could prove to be a disadvantage for the company.

"By not contesting the appellate court decision, Chevron is essentially conceding that it has no problem with the court's reasoning or logic," he said in a statement.

"Chevron also is effectively abandoning its argument that it exhausted all legal remedies in the courts of Ecuador before it tries to block any possible enforcement actions."

Karen Hinton, spokeswoman for the Ecuadorians, agreed, noting that the company usually "litigates to the hilt" in Ecuador.

"Failing to take advantage of every right afforded it by procedural law is a real departure from the Chevron's normal litigation practice in courts around the world," she said in a statement.

"It might reflect a new strategy, or it might reflect simple confusion as the company's legal options narrow."

Chevron spokesman Kent Robertson could not be reached for comment.

In its second opinion last week, the appellate court rejected several arguments by the company but noted Chevron could stop enforcement of the judgment if it posts a bond during the pendency of any appeal to the nation's highest court.

That court, called the National Court of Justice, is similar to the Supreme Court in the U.S. and is located in the capital of Quito.

Chevron must decide by this Friday if it will file a notice of appeal to the higher court, which has the discretion to accept or reject it, Hinton explained.

The request for the appeal must be made to the appellate court that affirmed the trial court decision, which then has the discretion to set a bond before sending the case to the National Court of Justice for consideration.

Chevron must request the bond as a way to suspend enforcement of the judgment pending further appeal, Hinton said.

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

The appellate court, in its second ruling, also said Chevron has 15 business days from Jan. 16 to eliminate a punitive damages component of the award by issuing a public apology.

Among other things, the court said the company must admit that it used unacceptable waste disposal practices in Ecuador that caused harm to the rain forest and its inhabitants.

Such an apology -- which the court said must be published in newspapers in Ecuador and the U.S. -- could cut the $18 billion judgment in half.

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

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