WSL July 31, 2008,
Jungle Litigation: A Look at Chevron’s Ecuadorian Court Battle . . .
By Dan Slater
Since we’ve been doing so much globe-trotting today, let’s keep it going and pay a visit to South America. TheAmerican Lawyer just put out a story that takes us “20 miles south of the jungle territory patrolled by Colombian leftist guerrillas” to the “ramshackle” Ecuadorean city ofLago Agrio. It is there, reports AmLaw, “in a dilapidated courthouse,” that a Jones Day team led by Thomas Cullen Jr. is representing Chevron in its battle with 30,000 residents of Ecuador’s Amazon Basin, known as theAmazon Defense Coalition, whose Web address is “www.texacotoxico.org.”
The ADC is represented by by Philadelphia plaintiffs firmKohn Swift & Graf, and a solo practitioner in Ecuador, Pablo Fajardo, who was profiled in this Vanity Fair article.
The group reportedly hopes to hold Chevron accountable for alleged environmental abuses committed by Texaco, which Chevron bought for $35 billion in 2001. Texaco spent 30 years in the region, pumping billions of gallons of oil hundreds of miles west over the Andes to Ecuador’s port cities for shipment to the U.S. (Click here for a past AmLaw feature on the case — Aguinda v. Texaco.)
But the reason for AmLaw’s follow-up, apparently, is a recent Newsweek piece about the case entitled “A $16 Billion Problem.” (That’s how much Chevron might have to cough up.) “The ultimate issue here is Ecuador has mistreated a U.S. company,” Newsweek quotes one unidentified Chevron lobbyist as saying. “We can’t let little countries screw around with big companies like this — companies that have made big investments around the world.”
Newsweek reports that after plaintiffs attorney Steven Donziger, of counsel at New York’sPerlmutter & Gimpel, made a presentation to Barack Obama several years ago, the senator co-wrote a letter with Democratic senator Patrick Leahy to U.S. Trade Representative Rob Portman, urging Portman to allow the plaintiffs to have “their day in court.” An Obama spokesperson confirmed to Newsweek that Obama’s position on the matter remains the same
WSJ , SEPTEMBER 15, 2008 ,
Chevron Lawyers Indicted in Connection with Ecuador Case
By Dan Slater
In July we told you about some jungle litigation in Ecuador that takes us, according to an AmLaw report, “20 miles south of the jungle territory patrolled by Colombian leftist guerrillas” to the “ramshackle” city of Lago Agrio. Some 30,000 residents of Ecuador’s Amazon Basin, known collectively as the Amazon Defense Coalition, hopes to hold Chevron accountable for alleged environmental abuses committed by Texaco, which Chevron bought in 2001.
On Friday, reports AmLaw, Chevron’s legal worries in Ecuador grew when in-house lawyer Ricardo Reis Veiga and outside counsel Rodrigo Perez Pallares were accused of being part of a conspiracy to fraudulently certify that Texaco had completed the cleanup of more than 100 mines in the Ecuadorean rainforest in the 1990s. The government released Chevron from liability on the basis of those certifications.
“The politically motivated indictments mark a renewal of the Ecuadorean state’s attempts to disavow contractual obligations owed to Chevron from contracts signed in 1995 and 1998,” Chevron said in a statement. “Recent events in Ecuador leave no doubt that there is improper collaboration between the government and plaintiffs lawyers [in the civil case]. ”
A lawyer for the Republic of Ecuador, C. MacNeil Mitchell of Winston & Strawn, told The Am Law Daily that the government is not involved in the environmental tort litigation — and that Chevron’s attempt to link the indictments to the environmental suit is part of the company’s strategy to discredit the Ecuadorean courts.
“Chevron isn’t stupid,” said Mitchell. “We may look at individual things they do and say, ‘That doesn’t make sense.’ But they have an overall game plan. They know there’s going to be a big judgment against them in Ecuador. They want to avoid paying it. One way to do that is by saying the Ecuadorean system is corrupt and their rights were trampled.”
New York lawyer Stephen Donziger and Philadelphia plaintiffs firm Kohn Swift & Graf are handling the litigation for the ADC. A Jones Day team led by Thomas Cullen Jr. is repping Chevron in Ecuador.
WSJ , JULY 20, 2009 ,
Chevron Looks For Home-Field Advantage In Ecuador Fight
By Amir Efrati
What’s the strategy of a company when it’s pretty sure it’s going to lose a high-profile lawsuit overseas? That’s the dilemma facing Chevron in its long-running legal battle in Ecuador, where residents of the country’s oil-producing Amazonian rainforest are suing the oil giant for environmental contamination of their land. (LB coverage here and here.)
An expert appointed by the Ecuadorian court has recommended the judge award the plaintiffs, who filed suit in 1993, $27 billion in damages. That would be the biggest environment judgment against an oil firm to date. Of course, after judgment comes the hard part: collection.
However, according to today’s WSJ, the Ecuadorians can’t seize any assets from Chevron in their country because the original defendant in the case, Texaco, which Chevron bought in 2001, stopped doing business there in 1990. So they’ll have to take the fight to the U.S.
Chevron, which expects to lose the case in Ecuador, has been telling its shareholders it doesn’t expect to be forced to pay any judgment. “We’re not paying and we’re going to fight this for years if not decades into the future,” the company told WSJ.
The company’s legal strategy: convince a U.S. judge it didn’t get a fair trial in Ecuador, where the country’s president supported the plaintiffs. Legal experts say that won’t be easy, according to WSJ. Complicating matters is the fact that the suit was initially filed in the U.S. and Texaco fought hard to move it to Ecuador.
Some shareholders have urged the company to settle, but the company told WSJ it won’t be “bullied.”
WSJ , SEPTEMBER 1, 2009 ,
Chevron, Through Videos, Alleges Corruption in Ecuador Case
When Chevron Corp. landed videos purportedly showing an Ecuadorean judge saying he’d already decided to rule against the company in a long-running environmental legal battle, it didn’t just use the videos to try to disqualify the judge, it went viral. The company recently put the videos up on its Web site, on YouTube, and made them the centerpiece of a public-relations push.
Will it pay off? Hard to tell. But for now, the videos have put the judge and the plaintiffs on the defensive. In an interview with the WSJ, Judge Juan Núñez denied making the statements but said he had met with the two businessmen who appear in the video. “I have never said that I will dictate a ruling in favor nor against Chevron nor the plaintiffs,” Núñez said. “What I have said is that the sentence could be released in October or November or as late as January 2010.” Click here for a story from the American Lawyer; here for a story from the Washington Post.
The backstory: A group of indigenous residents of the country’s Amazon basin claims that Chevron should pay for pollution caused by the oil operations of Texaco, which Chevron acquired in 2001. Chevron says Ecuador released it from liabilities after a clean-up by the company.
The company claims the two recordings of a total of three meetings show an alleged representative of the country’s ruling party seeking $3 million in bribes in return for handing out “environmental remediation contracts” to two businessmen after a verdict is handed down by Judge Núñez later this year. Of that sum, one million would go to Núñez, one million to “the presidency” and another one million to plaintiffs in the case.
According to Chevron, the recordings were made between May and June of this year. The judge’s statements show bias and he should be “disqualified from the case,” Charles James, a Chevron executive vice president, said in an interview.
The judge is still accepting evidence in the case. On the video, he agrees with the two men when they state Chevron is culpable and he will act in October or November.
Alexis Mera, subsecretary for judicial affairs in the office of President Rafael Correa, raised questions about Chevron’s role in the videos, and said the government has asked the office of the prosecutor to review them. “Chevron, through its lawyers, is benefiting from a crime of intercepting conversations without authorization, with the aim of damaging Ecuador,” Mr. Mera said.
“The lawyers don’t have anything to do with the alleged video or bribe,” said Julio Prieto, a lawyer for the plaintiffs in Ecuador. “I believe that it is a forged video and also fabricated to seek to implicate the government in acts against the law.”
The company said it has taken “reasonable steps” to verify the videos are legitimate.
The Wall Street Journal , September 24, 2009 Thursday ,
Corporate News: Chevron Files Suit Against Ecuador --- Looking to Protect Itself in Longtime Battle, Oil Giant Seeks Aid Through Trade Pact
By Ben Casselman and Angel Gonzalez
Chevron Corp. is stepping up its offensive in its long-running legal battle in Ecuador, suing Ecuador's government under international trade law.
Chevron is the defendant in a multibillion-dollar lawsuit that seeks to hold the company responsible for environmental damage allegedly caused by Texaco Inc., which Chevron bought in 2001. Chevron has denied the allegations.
Seeking to protect itself from what it says is likely to be an adverse ruling in Ecuador, the California-based oil giant said Wednesday it had filed suit under the terms of a 1997 trade pact between the U.S. and Ecuador. The suit amounts to a request for arbitration through a process set up by the United Nations Commission on International Trade Law to adjudicate disagreements.
The arbitration process is separate from the original lawsuit, which will continue. But under its pact with the U.S., Ecuador must accept the arbitrators' rulings as binding under international law.
In its filing, Chevron argues Ecuador's government is responsible for any environmental damage and should pay any penalties assessed in the lawsuit, which could total $27 billion, according to a court-appointed expert. Chevron also asks that arbitrators force Ecuador's government to pay the company's legal fees and to award "moral damages" due to the government's alleged interference in the case, intimidation of Chevron representatives and other "outrageous and illegal conduct."
The move seeks to capitalize on the release last month of videos that Chevron says reveal a bribery scheme possibly involving the Ecuadorean judge who has been overseeing the lawsuit. Ecuador says it is investigating Chevron's allegations, as well as any potential involvement by Chevron in the scheme. The judge, who has sought to recuse himself from the case, has denied any wrongdoing, and the videos don't show him accepting or soliciting a bribe. On Tuesday, a local court ruled that the judge's withdrawal petition was "unfounded" and ordered him to stay in the case.
Chevron believes the controversy has given new weight to its claim that it cannot get a fair trial in Ecuador.
"We have believed for some time that it would be impossible for Chevron to get a fair hearing in Ecuador," Chevron General Counsel R. Hewitt Pate said.
Eric Bloom, a U.S. attorney representing Ecuador in the dispute, said Chevron has been trying to discredit Ecuador's judicial system for years, and he questioned the videos' authenticity.
"Chevron either got very, very lucky on the eve of a verdict and actually tripped across a legitimate concern, or they helped to stage-manage a fictitious event," Mr. Bloom said. "Both possibilities have to be investigated."
Chevron has denied doctoring the videos or participating in the scheme and has said it took steps to verify the videos' authenticity.
Steven Donziger, an attorney for the plaintiffs in the original lawsuit, said the filing will have "minimal impact" on his case, but he said it is a sign Chevron is becoming desperate.
The plaintiffs in the lawsuit couldn't immediately be reached for comment.
Chevron's decision to seek international arbitration is the latest example of the company's increasingly aggressive strategy in the case, which includes a Web site to rebut plaintiffs' claims and an effort to lobby Congress to revoke Ecuador's trade privileges because of the government's alleged interference in the dispute.
Since Chevron has almost no assets in Ecuador, the plaintiffs will have to seek enforcement of any ruling in their favor in the U.S. or another country where Chevron operates.
Separately, the international arbitration process could take years. In its arbitration filing, Chevron claims that by allowing the lawsuit to go forward, the Ecuadorean government is violating a 1998 agreement that released the U.S. company from environmental liability in return for a $40 million cleanup paid for by Texaco.
The plaintiffs, a group of Ecuadorean residents, argue their case has nothing to do with the Ecuadorean government, so the agreement doesn't apply to their lawsuit. Ecuador's government says it has no control over the judicial process, although Chevron has argued the Ecuadorean judiciary is heavily influenced by President Rafael Correa.
If arbitrators reject Chevron's argument, it could make it harder for the company to fight enforcement of an adverse ruling. But if arbitrators agree that Chevron has no liability, legal experts said, it will be very difficult for plaintiffs to collect on any damages outside Ecuador.
Corporations have increasingly turned to international arbitrators in recent years to resolve disputes with governments. Companies often see the arbitration process as fairer than local courts.
Opinio Juris, September 25th, 2009 ,
Chevron Strikes Back Against Ecuador
by Julian Ku
I’ve only been vaguely aware of the ongoing battle between Chevron and Ecuador. Ecuador courts are currently entertaining an enormous lawsuit against Chevron, but Chevron has really taken the offensive by releasing videos suggesting that the Ecuadorian judge has been accepting bribes. And in its latest salvo, Chevron has filed an investor-state claim under the United States- Ecuador Bilateral Investment Treaty (I think it is 1993 but the WSJ says there is a 1997 one). In any event, it is a novel claim since it seeks to flip all liability for damages back to the government of Ecuador, and even seeks moral damages.
This could be a tremendous case, given its unusual facts. Offhand, it actually resembles Loewen, which challenged a domestic court proceeding (in the United States) as an effective expropriation and unfair and inequitable treatment. It seems like a good move by Chevron, in any event, since it keeps Ecuador on the defensive.
Luke Peterson offers a detailed analysis of Chevron’s request for arbitration here: http://kluwerarbitrationblog.com/
Thanks for the link Roger. Perhaps the most interesting thing about the Chevron claim (as well as another massive arbitration recently threatened by Cemex against the USA) is that, contrary to the Loewen case, the claimants are not even waiting for domestic legal proceedings to be resolved. Rather, the claimants are going to international arbitration in a proactive attempt to get indemnification against any unfavourable results in lower courts. As someone who makes his living tracking and reporting on these cases, this seems like a relatively brave new world to me.
Also, on the date of the US-Ecuador BIT, the confusion arises because the treaty was signed in 1993, but ratified in 1997.
Luke Eric Peterson, Editor
InvestmentArbitrationReporter.com
Opinio Juris , April 1, 2010 -- Ecuador Rejects Arbitration Award
Chevron Wins Round One Against Ecuador
by Julian Ku
This is just the first round of a potentially huge investor-state arbitration claim filed by Chevron against Ecuador. $700 million now, but up to $27 billion later. (For some background, see here and here about a federal court’s refusal to stay one of the arbitration proceedings.).
Chevron Corp (CVX.N) won a three-year-old arbitration fight against Ecuador over a commercial dispute as it battles the country separately over an environmental claim that may result in $27 billion in damages against the company.
An arbitration panel ruled on Tuesday that Ecuador’s courts violated international law by delaying rulings on commercial disputes between the U.S. oil company and Ecuador’s government, and awarded Chevron $700 million.
The arbitration panel partially resolved seven claims that Texaco, bought by Chevron in 2001, filed in Ecuador from 1991 to 1993, Chevron said. The panel found that the courts had breached a U.S.-Ecuador treaty by not ruling on the cases.
WSJ , APRIL 5, 2010,
Misspelling Leads to Big Discovery in Chevron/Ecuador Case
By Ashby Jones
Note to expert witnesses: If someone else is going to file allegedly fraudulent reports in a lawsuit in your name, for heaven’s sake, make sure they spell your name right.
It might sound like common sense. But the misspelling of an expert’s name in a multibillion-dollar environmental lawsuit filed against Chevron is what tipped off Chevron’s lawyers to the fact that the reports may have been fudged, a fact that has now been conceded by the expert himself. Click here for the WSJ story, by Ben Casselman and Angel Gonzalez. Click here, here andhere for earlier LB posts on the Chevron case.
The disclosure comes in the midst of a huge lawsuit accusing Chevron of causing widespread environmental damage in the Ecuadorean rain forest. In 2004, the plaintiffs hired an American biologist named Charles Calmbacher to help oversee soil and water tests in Ecuador.
Reports signed by Calmbacher showed high levels of toxins at two sites and estimated the contamination would cost more than $40 million to clean up at these sites alone.
But in a sworn deposition last week, Calmbacher said he didn’t write the reports submitted over his signature, which said the sites were highly polluted and needed remediation.
“I concluded that I did not see significant contamination that posed immediate threat to the environment or to humans or wildlife around it,” Calmbacher said, according to a transcript provided by Chevron.
Steven Donziger, a New York-based attorney for the plaintiffs said Calmbacher’s reports were only a small part of the overall case, and that other tests have shown contamination at dozens of sites. (Click here for a story about Donziger and the case published last September, from the American Lawyer.)
Chevron has said it expects to lose the case in Ecuador but plans to challenge enforcement of any ruling in the U.S., where it is the second-largest oil company by revenue.
Now, back to the allegedly forged signature. Gibson Dunn’s Andrea Neuman, the Chevron lawyer who conducted the deposition, said Chevron became suspicious after Calmbacher apparently misspelled his own name in letters to the Ecuadorean court asking for an extension in filing his reports.
In his deposition, Calmbacher said he had flown back to the U.S. early due to illness, and had therefore sent pre-signed pages back to Ecuador with the understanding his findings would be printed over his signature. But he said the reports that were filed didn’t reflect his conclusions.
He said he never saw the final version of the reports that were submitted to the court until he was shown them during the deposition.
“I did not reach these conclusions and I did not write this report,” he said in the deposition
