Chevron sued in Canada over $18 billion judgment

By Jessica M. Karmasek | May 31, 2012


TORONTO (Legal Newsline) - A group of Ecuadorians on Wednesday hit Chevron Corp. with another lawsuit, this time in Canada, in hopes the company will comply with an $18 billion judgment against it.

The lawsuit, filed in the Superior Court of Justice in Ontario, targets the oil giant and various subsidiaries, of which hold significant assets in the country, over its damage to the Amazon rainforest.

In addition, Canada has a law that allows interest to run on a foreign judgment during the enforcement process, potentially adding to the judgment already facing the company.

The Ecuadorians say they were forced to file the enforcement action 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.

Pablo Fajardo, the lead attorney for the Ecuadorians, says his clients are set on collecting the entire $18 billion judgment.

"The time for delay is over," he said in a statement Wednesday. "For decades Chevron refused to address the contamination that has devastated our ancestral lands.

"While Chevron might think it can ignore court orders in Ecuador, it will be impossible to ignore a court order in Canada where a court may seize the company's assets if necessary to secure payment."

Fajardo says his clients will exercise their legal rights to "collect every penny" of the judgment, "even if we have to drag Chevron kicking and screaming into courts around the world."

In January, an appellate court in Ecuador upheld the $18 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 judgment, filed a racketeering lawsuit in a New York federal court last year 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 $18 billion judgment is a product of "bribery" and "fraud," and is "illegitimate."

"The company does not believe that the Ecuador judgment is enforceable in any court that observes the rule of law," it said in a statement released late Wednesday.

"If the plaintiffs' lawyers believed in the integrity of their judgment, they would be seeking enforcement in the United States -- where Chevron Corporation resides.

"In the U.S., however, the plaintiffs' lawyers would be confronted by the fact that seven federal courts have already made findings under the crime/fraud doctrine about this scheme."

The company says it plans to "vigorously defend" against any enforcement action, including Wednesday's filing in Canada.

"Chevron will also continue to pursue relief against Ecuador in our pending arbitration and against the plaintiffs' representatives in our RICO action pending in New York," it said.

Canada is one of the top 10 markets in the world for Chevron's capital spending in 2012, according to the company's filings with the U.S. Securities and Exchange Commission.

Also Wednesday, Chevron CEO John Watson was reprimanded by a group of shareholders for his handling of the Ecuador case.

More than 38 percent of shareholders, representing more than $70 billion worth of the company's stock, supported a resolution to separate Watson's dual role of board chairman and CEO due to his "mismanagement" of the lawsuit.

Last week, a group of institutional shareholders also expressed their dismay over the ongoing dispute.

On Friday, 40 investors from the United States, Canada and Europe -- with a combined total of $580 billion in assets under management -- sent a letter to the company, asking it to settle.

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

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