Showing posts with label extractive industry. Show all posts
Showing posts with label extractive industry. Show all posts
The Issues of Contention in Interpreting and Implementing Section 1504 of Dodd-Frank Act
The Issues of Contention in Interpreting and Implementing Section 1504 of Dodd-Frank Act That Would Have an Impact on Transparency Law in the Pipeline in Foreign Countries
https://docs.google.com/document/d/1Z2QD2UVcek0c_QWwHSQxjSZ50nUg-zSb0ZaJvs9SVcw/edit?usp=sharing
Rejection of oil industry delay tactics signals new SEC commitment to transparency rules
Rejection of oil industry delay tactics signals new SEC commitment to
transparency rules
Posted Sun, 2012-11-11
15:33 by Jonathan Kaufman
I was thrilled last
Thursday afternoon to hear that the SEC has blocked the oil industry’s first
move in its attempt to undermine new transparency requirements. The
American Petroleum Institute (API) and other industry representatives
petitioned the SEC to stay new disclosure requirements until the court’s decide
on their lawsuit to overturn the law, but the SEC denied the request in no
uncertain terms.
We've written in previous posts about
Section 1504 of the Dodd-Frank Act, which directs oil, gas, and mining
companies to publish the payments they make to the governments of the countries
where they operate. The SEC issued regulations for Section 1504 in late
August, requiring companies to publicly disclose their payments for every project
in each country where they operate, with no exceptions.
API sued
the SEC, complaining that the law would be costly to comply with and would
harm covered oil companies’ ability to compete for business abroad. They
claimed that at least four countries prohibit disclosure and predicted that
they might have to withdraw from those countries, incurring tremendous
financial losses, rather than violate their laws. (ERI and others had previously
refuted each of these claims.) Oxfam America – represented
by ERI and two law firms – is currently defending the rules against API’s challenge
to ensure that they go into effect as planned.
API asked the SEC to
stay the rules and postpone the compliance date until after the legal challenge
is concluded – which could take anywhere from five months to two years.
ERI and its co-counsel forcefully opposed a suspension, but convincing the SEC
was an uphill battle. The Commission had granted industry a suspension in
the Business Roundtable litigation – an earlier case in which
industry successfully overturned business regulations – and seemed inclined to
do the same for API.
In the end, the
SEC’s decision turned largely on the question of “irreparable injury.”
API had to show that it would suffer incompensable harms that would be certain,
substantial, and imminent if a stay were not granted.
Oxfam argued that the oil companies’ claimed costs of compliance were minuscule
compared to their overall assets. The doomsday scenarios they constructed
were completely speculative, since they hadn’t proved that any country actually
prohibits disclosures or that they would be forced to withdraw from those
countries even if there were a disclosure prohibition law. And none of
the supposed harms were imminent, since companies won’t have to start reporting
until March 2014 at the earliest.
The SEC agreed with
Oxfam in a well-reasoned, muscular decision.
Thursday’s order concludes that API failed to show that it was likely to
succeed in its legal challenge, and that it was unable to demonstrate
irreparable injury absent a stay. Importantly, it firmly rejected API’s
claim on foreign disclosure prohibition laws, concluding that the evidence for
these laws was “both unpersuasive and vigorously contested by other commentators.”
SEC was also convinced by the fact that the courts have set a brisk schedule
for resolving the lawsuit, suggesting that the case may be over long before
companies are required to start disclosing any information at all.
The SEC’s decision is
significant for a number of reasons. First, it suggests that the SEC is
prepared to fight to defend the rule, which was the product of over two years
of hard work by Commission staff and leadership. Second, it includes the
Commission’s strongest yet conclusions on the misleading claims of the oil
industry; essentially, the SEC has called API’s bluff and insisted on actual
evidence, rather than innuendo. And finally, it embodies a message to the
European Union, which is currently considering similar disclosure rules, that
the U.S. is moving ahead and is committed to transparency. Most observers
think that Europe will go at least as far as the U.S. in requiring disclosure,
but a stay could have undermined that momentum.
Shell faces Dutch court over Nigeria spills
Shell faces Dutch
court over Nigeria spills
11 Oct 2012
Activists and Nigerian
plaintiffs hope case will bring "an end to the corporate crimes committed
by oil giants".
Shell broke the law by not repairing leaks
that destroyed the lands of Niger Delta farmers, a Dutch court heard
in a case that could set a precedent for global environmental responsibility.
The four Nigerian
farmers, backed by lobby
group Friends of the Earth, have brought the Anglo-Dutch oil giant into
court thousands of miles away from their homes with a civil suit that
could open the door for hundreds of similar cases.
"Shell knew for a
long time that the pipeline was damaged but didn't do anything: they
could have stopped the leaks," lawyer Channa Samkalden told the court on
Thursday, accusing Shell of having "violated its legal obligations".
The case relates to damage
caused in 2005 and was initially filed in 2008, demanding that Royal
Dutch Shell clean up the mess, repair and maintain defective pipelines to
prevent further damage and pay out compensation.
In a landmark ruling, the
Dutch judiciary in 2009 declared itself competent to try the case despite
protests from Shell that its Nigerian subsidiary was solely legally responsible
for any damage.
"The spills that
happened in the years between 2004 and 2007 all happened as the consequence of
illegal theft and sabotage."
"We say there was
a spill, it wasn't our fault, we cleaned up nevertheless and that's what
happened," Castelein said.
Environmental groups
accuse Shell of double standards and treating spills in Nigeria differently
from pollution in Europe or North America.
Friends of the Earth
however said the scale of Nigeria's oil pollution was twice that of the five
million barrels dumped in the Gulf of Mexico after the explosion on BP's
Deepwater Horizon rig in 2010, in the biggest ever marine spill. Shell however
disputes the Nigerian figure and puts it much lower.
Al Jazeera's Yvonne
Ndege, reporting from Abuja, said the court proceedings are taking place in the
Hague because the plaintiffs have "failed to get their case heard
within the Nigerian judicial system".
(DO- forum non
convenience; exhaustion of domestic remedies)
Co-plaintiff, Friends
of the Earth, blames endemic corruption for the lack of legal action in Nigeria
itself.
Al Jazeera's Ndege
said if the court rules in favour of the plaintiffs it would be a historic step
that "basically means the parent companies, often based in the West, in
Europe or the United States, will be held responsible for any oil damage and
pollution caused by their subsidiaries, wherever they may be".
Chevron Turns Tables on Ecuador Plaintiffs; Sues Them - Law Blog - WSJ
By Ashby Jones
The crazed litigation between Chevron Corp. and plaintiffs over alleged oil pollution in Ecuador on Monday got just a little bit crazier.
The oil giant turned the litigation upside-down by filing suit against the plaintiffs.
The suit, filed in Manhattan federal court, accuses the plaintiffs, their lawyers and other members of their legal team of conspiring to manufacture evidence, intimidate Ecuadorian court officials and withhold evidence from U.S. courts. Clickhere for the story, from the WSJ’s Ben Casselman; here for the complaint; here for Chevron’s press release. Click here, here, here, here, here, and here for previous LB posts on the case.
The suit is yet another twist in an epic 18-year-old legal battle that pits one of the world’s biggest oil companies against residents of Ecuador’s Amazon region. Those residents are suing Chevron in Ecuador, seeking to hold the company responsible for billions of dollars of environmental damage they say was caused by Texaco Inc. Chevron, which inherited the lawsuit when it bought Texaco in 2001, says the suit is little more than an elaborate shakedown attempt.
“The intent of the misconduct has been to extort a multi-billion dollar payment from Chevron through fabricated evidence and a campaign to incite public outrage,” the company said in a statement Tuesday.
The plaintiffs, however, said Chevron’s suit was an attempt to distract attention from the evidence of oil pollution in Ecuador. A ruling in that case is expected sometime this year.
“Chevron’s latest action in this 18-year-old litigation is nothing short of legal intimidation by a reckless corporation,” plaintiffs’ spokeswoman Karen Hinton said in a statement.
The suit is just the latest in a series of aggressive legal maneuvers by Chevron. At the company’s request, judges across the U.S. have ordered the plaintiffs to turn over a trove of emails, internal memos, videos and even the private diaries of their former lead U.S. attorney, Steven Donziger.
In a statement Tuesday, Donziger’s attorney, Gerald Lefcourt, called the suit “a cynical bid to buy cover.”
Chevron’s lawsuit was filed under the Racketeering Influenced and Corrupt Organizations act, known as RICO. Although best known for its criminal provisions used to take down Mafia kingpins, RICO also allows individuals and companies to pursue civil suits if they can prove they have been harmed by a “criminal enterprise.”
The suit names as defendants Donziger and the 47 named plaintiffs, as well as their Ecuadorian attorneys and several scientific experts that have worked on the plaintiffs’ behalf.
mining project in Guatemala
The Washington Post , August 14, 2005 Sunday
HEADLINE: A Toxic Trade-off , BYLINE: Daphne Eviatar ,
Pressing for passage of the Central American Free Trade Agreement at a White House news conference in May, President Bush made the case that a vote for CAFTA was a vote for democracy.
But lawmakers who voted to pass CAFTA in late July may not have realized that a part of the trade agreement threatens to do just the opposite. That's because of a little-understood legal clause included in CAFTA, the North American Free Trade Agreement (NAFTA), and other, already existing bilateral investment treaties (BIT). Designed to protect foreign investors against unfair treatment by a signatory state, these "investor-state arbitration" provisions actually hand foreign businesses powerful rights that trump the interests or desires of local citizens.
Take the example of the current bid by U.S.-Canadian corporation “Glamis Gold Ltd.” (later acquired by “Goldcorp”) to mine the ore in Guatemala's Western highlands. Local community and church leaders have vigorously protested the company's plans to dig an open-pit gold and silver mine in the department of San Marcos. They contend that the mining process, which uses cyanide to extract gold from ore, could leach deadly toxins into the surrounding water supply. After construction began in 2004, the indigenous poor -- who make up most of the region's population and depend on scarce local water -- began protesting the mine. They continued for months into this year, even though the government dispatched the military to quell the protests and local leaders reportedly received death threats. .
In response to these health and safety concerns, the government of Guatemala could decide either to ban the cyanide process or to require the company to compensate surrounding communities for their risk. But stopping the Glamis project now could be costly: Under CAFTA, the government of Guatemala could be liable for tens of millions of dollars.
How can a multinational corporation that objects to local environmental, health or safety regulations sue a national government? That license is provided under NAFTA. Once CAFTA is signed, it will provide the same right. In each case, a provision of the agreement allows a foreign corporation to sue a national government for money damages if it believes that the actions of the federal, state or local government in a given country are discriminatory, violate international law or can be considered -- directly or indirectly -- an expropriation of the company's investment. If complying with an environmental regulation makes a project no longer worth the cost, a company can claim that its investment has been expropriated by the state.
(è. Inject human rights consideration into BIT. E.g. when corporation sue government, government can defend indigenous people by invoking HRIA: “did you (corporation) conduct HRIA before commencing a project?” )
Whether the company is in the right won't be decided by an independent judge, however. Rather, it will be decided by a panel of three private international arbitrators chosen by the parties involved. These arbitrators are often corporate lawyers, who, in another suit, could be representing the investor. Affected citizens are not parties to the case. The government's right to protect the water supply in Guatemala, then, could be decided by British or American lawyers, for instance.
(è. affected citizens are not party to the, case because technically speaking subject of the arbitration is governmental activity toward corporation.)
And it's not just a matter of a powerful multinational corporation challenging a struggling Central American country. In fact, Glamis, the company that's digging the mine in Guatemala, has already brought a similar legal action against the United States. In 2003, Glamis filed for arbitration under NAFTA, claiming that environmental and historic preservation regulations passed in California after the company had received a federal permit to dig there amount to an expropriation. The regulations, championed by then-governor Gray Davis in response to strong local protests, require that open-pit gold mines be backfilled and returned to their pre-mined condition after the ore has been depleted. Claiming that the cost of backfilling would destroy the future economic value of its project, Glamis brought a $50 million claim against the United States. (The matter hasn't been resolved yet.)
Defenders of arbitration provisions claim that critics' concerns are overblown, and emphasize that, unlike Canada and Mexico, the United States has yet to lose one of these cases. Still, many legal experts argue that the provisions violate state and national sovereignty: They allow foreign investors to make an end-run around the federal courts, which usually rule on the legitimacy of public laws. As Justice Sandra Day O'Connor wrote after NAFTA's adoption: "Article III of our Constitution reserves to federal courts the power to decide cases and controversies, and the U.S. Congress may not delegate to another tribunal 'the essential attributes of judicial power.' Whether our Congress has done so with respect to tribunals (created by different treaties and agreements) is a critical question." John Echeverria, executive director of Georgetown University's Environmental Law and Policy Institute, puts it more starkly: "Congress is virtually sleepwalking through a revolutionary, and likely highly destructive, alteration of the American constitutional system of government."
(è. Objection! , then, signing on optional clause in art. 36 of ICJ Statute is likely against US Constitution? As much as Article III of US Constitution empowers judiciary hear the case, US Constitution empower President to make treaty, which includes a provision whereby the US delegates an authority to adjudicate to a treaty body. And also the decision of whether to make a decision handed down by the treaty body self-executing is also left with President and/or Congress. ISD (investor –state dispute system) is revolutionary and could be destructive yet is not inherently unconstitutional, I guess. See Medellin, the US Supreme Court acknowledged that the US has obligation to execute the decision by ICJ with split over branch for the execution. The Court did not state compromissory clause is unconstitutional.)
Echeverria is referring to the threat to U.S. sovereignty when, for example, the Canadian division of Glamis challenges the legitimacy of a California law by suing the United States. With agreements like CAFTA between rich and poor countries, the sovereignty question also has another, more sinister twist: Although these treaties protect corporations against the vagaries of unpredictable governments, they can also make it easier for corrupt national leaders to ignore the interests of their own populations and sign lucrative contracts with foreign corporations. This is a longstanding problem with extractive industries like mining and the countries that depend on them. And this sort of corruption is one reason why poverty in those countries has soared in recent decades. According to the United Nations, in 1981, 61 percent of people in mineral and energy exporting countries were living on less than $1 per day; by 1999, that number was 82 percent.
Of course, companies need some protections when they invest. If Guatemala suddenly nationalized its mining industry, for example, seizing all foreign-owned mines, foreign corporations would understandably be aggrieved. But enacting environmental, health or safety regulations is a different matter. The United States Supreme Court has made clear that even if a regulation significantly reduces the value of a company's investment, the government needn't compensate that loss. Environmental regulations are part of the cost of doing business. It's far cheaper to dump toxic waste into a river than to dispose of it safely, but we still want our government to impose the cost of safe disposal on companies creating the hazard.
(è. Rationale of ISD)
"The mining industry spews almost half of all toxic emissions in some countries, in the process ruining local agriculture and causing a substantial boost in respiratory disorders and raising cancer rates," according to a recent, critical report on investor arbitration rights written by Oxfam America and Friends of the Earth. Mining will only encourage real development, they conclude, if it's properly regulated.
Increasingly, people in developing countries are demanding just that. And it's a sign of progress. If democratically elected governments enacted laws in response to these legitimate concerns, that would be another important step; in fact, it'd be exactly what we want "developing" countries to do. And it's what the United States government claims to be encouraging.
è. ISD should serve as a hurdle to such laws
Unfortunately, with the proliferation of trade and investment agreements that hand foreign investors surprisingly broad rights, local governments are losing the power to protect their people, environment and economy. Investor protection clauses "essentially restrict the ability of governments to impose public interest or environmental regulations on corporate operations," says Keith Slack, an extractive industries expert for Oxfam America. And this hinders the very sort of development that would, in the long run, make poor countries not only better places for people to live, but far better places for American corporations to do business.
These arbitration provisions also highlight the inconsistency of the Bush administration's approach to sovereignty under international law. According to many legal experts (including lawyers now bringing these claims), the significance of investor-state arbitration provisions, which wasn't clear at the time NAFTA was enacted under the Clinton administration, in the last few years has become so. The Bush administration has refused to sign the Kyoto Protocol to reduce greenhouse gases and the treaty creating the International Criminal Court on the grounds that these treaties threaten U.S. sovereignty. But when it came time to push for Congressional support of CAFTA and other trade pacts that compromise U.S. sovereignty for the benefit of big business, the administration's concerns about the integrity of our legislative and judicial system had disappeared.
The debate over these sorts of agreements isn't over whether or not to have "free trade." All trade is regulated -- just a quick glance at the 22 chapters of CAFTA alone makes that plain. The conflict is over which rules will make the liberalization of trade benefit both foreign investors and local villagers. A trade agreement that binds the hands of local governments for the benefit of foreign corporations will only undermine democracy -- and in the long run, global development itself.
The Washington Post , August 20, 2005 Saturday
HEADLINE: Judging the Quality of Oversight
Regarding Daphne Eviatar's Aug. 14 Outlook article, "A Toxic Trade-Off": I have come to expect twisted reasoning and half-truths from Oxfam America and Keith Slack, but I expected your paper to be more discerning.
Mining is indeed regulated, quite intensely so, from exploration through reclamation.
Experience shows that Oxfam has instigated many of the protests of mining operations that more than meet international environmental and social standards while building infrastructure and generating employment. In the case of Glamis Gold Ltd.'s Marlin project in western Guatemala, half of the annual $5 million payroll goes to local employees and another third to Guatemalans from other parts of the country. The company, directly and through the Sierra Madre Foundation, which it established, has been engaged in forestry and reforestation, health care and community development even before mine production begins.
Inconsistent, non-timely application of environmental regulation, as occurs occasionally in the United States, is very costly to companies, which is why Glamis Gold has sued on behalf of its California operation, although I think Glamis should have just set aside more funds for reclamation and not sued. Bilateral trade agreements can address settlements, litigated or arbitrated, of cross-border environmental disputes and can attempt to address poor regulatory practices. These agreements can do little or nothing to overcome the weaknesses of local and national administrations in Latin American countries. Nor can mining companies or foreign nongovernmental organizations.
-- Leni S. Berliner , Washington
The writer chairs M3 Investment Group, a private group providing advisory and financial services to the global mining industry. M3 is not an investor in Glamis Gold
The Washington Post , August 23, 2005 Tuesday ,
HEADLINE: Mining Under CAFTA
Daphne Eviatar [Outlook, Aug. 14] should have contacted Glamis Gold Ltd. before printing incorrect accusations relating to the company's project in Guatemala.
Glamis, as structured, could not bring the sort of claim under the Central American Free Trade Agreement that the article suggested it might.
Canada is not a signatory to CAFTA, and Glamis is a Canadian corporation; its American subsidiaries do not have any investment in the Guatemala project.
Contrary to the assertions that critics made in the article, the project meets all environmental, health and safety regulations and complies with North American and World Bank environmental standards. The article also seemed to imply that industry and host countries are engaged in corruption, which is false and offensive. Equally offensive was the linkage of mineral development to poverty.
Further, it was misleading to say "local community and church leaders" oppose our project. The reality is that there are many views, including significant project support from indigenous communities and leaders.
Ms. Eviatar cited a report by Oxfam America and Friends of the Earth that she said had concluded, "Mining will only encourage real development . . . if it's properly regulated." I agree. Glamis, the Guatemalan government, the World Bank/International Finance Corporation, local communities and a number of nongovernmental organizations will make certain that the Guatemala project is so regulated. This is the reality of a modern, responsible mining industry.
KEVIN McARTHUR
President and Chief Executive
Glamis Gold Ltd.
Reno, Nev.
..
States News Service , June 24, 2010 Thursday ,
CIEL: Guatemala suspends marlin mine - human rights and environmental organizations applaud the decision, urge president Colom's government to protect communities against retaliation
.
The following information was released by the Center for International Environmental Law: (CIEL)
..
Guatemala's President Alvaro Colom announced yesterday that he is suspending operations at the Marlin mine, which is operated by Vancouver-based Goldcorp, Inc. According to the Guatemalan government, the process to shut down the mine might take months. The Center for International Environmental Law and MiningWatch Canada are calling on the government to complete the administrative process in a timely fashion.
.
The decision comes amid intense criticism that the mine has caused widespread human rights violations and endangered the health of the surrounding indigenous communities. Last month the Inter-American Commission on Human Rights (IACHR), an independent body of the Organization of American States (OAS), called on the Guatemalan government to suspend operations at the mine.
(= = did IACHR take into consideration the HRIA? E.g. by amicus brief )
.
"We applaud the decision of the Government of Guatemala to honor its international human rights obligations and suspend operations at the Marlin mine," said Kristen Genovese, senior attorney at the Center for International Environmental Law. "The Marlin mine has always been the source of conflict in the communities. At this critical time when tensions are running high, we urge the government to take appropriate measures to ensure the safety of all involved."
.
The Marlin gold mine in San Miguel Ixtahuacn, Guatemala has been plagued by controversy ever since it began operating in 2005. The Mayan communities affected by the mine have asserted that they never gave their consent to the mine, a right protected under international law. Precautionary measures included in the IACHR's May 20 decision requested the Government of Guatemala to suspend operations at the Marlin mine until the commission could consider the complaints by the communities. A delegation from the IACHR is expected to visit Guatemala in July.
(= = injunction by IACHR)
.
Evidence of the harmful impacts of the mine has mounted over the last several months. Just last week, the United Nations Special Rapporteur on the situation of human rights and fundamental freedoms of indigenous people, James Anaya, visited the Marlin mine and urged the government to comply with the IACHR decision.
(= = interplay between HRIA and indigenous people)
.
In March, the International Labor Organization (ILO), called for suspension of mining activities at the Marlin mine until the consultation and studies required by ILO Convention No. 169 were conducted. Last month, a study released by Physicians for Human Rights and scientists at the University of Michigan found that a sample of residents living near the mine have higher levels of mercury, copper, arsenic and zinc in their urine, and of lead in their blood, than a sample of persons living seven kilometers away.
.
"We are encouraged that the Guatemalan government is taking the Commission's decision seriously," said Jamie Kneen of MiningWatch Canada. "We also ask that the government acknowledge the communities' concerns and investigate, for example, where exactly the contamination is coming from and what can be done to improve the current situation."
..
Goldcorp's own Human Rights Impact Assessment (HRIA) released last month recommended that Goldcorp "[h]alt all land acquisition, exploration activities, mine expansion projects, or conversion of exploration to exploitation licenses." The HRIA, which was conducted without the widespread support or participation of the communities affected by the Marlin mine, found widespread human rights abuses at the mine, including the right to consultation, right to property, right to freedom of association and collective bargaining, and failure to create effective grievance mechanisms for its employees and community members.
(= = IACHR’s opinion seem to have preceded HRIA)
i) Human rights abuse, ii) right to consultation, iii) right to property, iv) right to freedom of association and collective bargaining (ILO), v) failure to create effective grievance mechanisms (remedy)
.
"The communities affected by the Marlin mine applaud the Government's decision to comply with the Precautionary Measures of the IACHR," said Javier de Leon, President of the Association of the Integral Development of San Miguel (ADISMI). "Nevertheless, we are worried about the threats that we have received. We have been told that there will be consequences for defending our rights. We call upon the international community to monitor the situation."
..
.
MiningWatch Canada (MWC) is a pan-Canadian initiative supported by environmental, social justice, Aboriginal and labour organisations from across the country. It addresses the urgent need for a co-ordinated public interest response to the threats to public health, water and air quality, fish and wildlife habitat and community interests posed by irresponsible mineral policies and practices in Canada and around the world.
.
Chevron v. Ecuador
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
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