THE PINK DOLPHIN: Ecuador Ends One Chevron Battle
Ecuador Ends One Chevron Battle. What Does It Mean for the War?
Low oil prices and a $112 million accord may make settlements in a host of other cases more likely.
By Paul Barrett
Ecuador last week paid Chevron Corp. $112 million in an arbitration case dating back to the 1970s. The accord, while dealing with obscure contractual matters, could have ramifications for bigger court fights between the two fierce adversaries.
The government of Ecuadorian President Rafael Correa has taken an extremely hostile stance in other, pricier legal battles with the U.S. energy company. The natural question to ask is whether the payment signals a softening of the Ecuadorian position in the larger standoffs.
First, some background on a ridiculously convoluted legal scene: An international arbitration panel based in the Hague, Netherlands, awarded San Ramon, Calif.-based Chevron $96 million in 2011 in a case concerning a four-decade-old arrangement under which Texaco (later acquired by Chevron) developed oil fields in the Amazon. The deal allowed Ecuador to obtain oil at below-market rates. The tiny Latin American nation appealed its arbitration defeat but without success. With interest accumulating, the judgment increased to $112 million.
Both sides confirmed Ecuador paid the full amount. “Chevron is pleased that the Republic of Ecuador has met its international obligation by paying this award,” the company said in an e-mailed statement. Diego Martinez, head of Ecuador’s central bank, said in a local radio interview: “We don’t agree with how these international mechanisms work.” But, he added, “we are respectful and we fulfill out international obligations.”
Let’s call this first Case A. Ecuador’s payment to Chevron comes at a time when the Andean oil-producing nation faces a drain on revenue because of lower world crude prices. The payment is almost certainly intended as a message to outside investors that Ecuador wants to be business-friendly. (In a separate dispute, which we can call Case B, Ecuador earlier this year agreed to pay Occidental Petroleum Corp. almost $1 billion to compensate it for seizing an oil field in 2006.)
Now let’s move on to Case C—yet another legal fight in which thousands of Ecuadorian villagers and tribe members accuse Texaco of having left behind massive amounts of oil pollution from the late 1960s through the early 1990s. Case C led to a 2011 trial judgment in Ecuador holding Chevron liable for damages that now amount to more than $9 billion. The Correa government has been strongly supportive of the plaintiffs and vociferously critical of Chevron in Case C.
Chevron, for its part, has refused to pay the pollution judgment, claiming that Case C was tainted by fraud, coercion, and fabricated evidence. In 2014 in the U.S., the energy company won a racketeering lawsuit against the main lawyer for the Ecuadorian plaintiffs, Steven Donziger. Call that one Case D. Donziger denies the Chevron allegations and has appealed the verdict.
To make matters even more complicated, Chevron has filed Case E: a separate arbitration claim against the government of Ecuador. Still pending, Case E contends, among other things, that the country denied Chevron justice in Case C, the long-running pollution case.
So back to the question suggested by the $112 million payment in Case A: Does Ecuador’s action suggest the possibility of some kind of global settlement of the other pending disputes tied to Chevron and oil pollution?
I’d say maybe, but not necessarily. In part that’s because Donziger and his allies still want Chevron to pay up in full.
Karen Hinton, the U.S. spokeswoman for Donziger and his clients, indicated in an e-mail that, whatever the Ecuadorian government may have in mind, her team isn’t prepared to settle. “If Ecuador is following the ‘rule of law’ as described by the arbitration panel, then Chevron should do the same and pay the $9 billion environmental damage award, as upheld by Ecuador’s highest court,” she said. “The Ecuadorians deserve the same treatment but, so far, they have been treated as if their suffering and loss is of no concern, legally or morally.”
To get what they believe is theirs, Donziger’s clients are seeking the assistance of the Canadian judicial system. They’ve asked Canada to force Chevron to comply with the Ecuadorian judgment by selling off the company’s Canadian assets and paying the proceeds to the Ecuadorians. For those scoring at home, that would be Case F.
In Chevron’s Ecuador Case, Justice Delayed Is Justice Denied But, Hey, Football Season’s About To Begin
What does superstar quarterback Tom Brady and a group of Ecuadorian indigenous tribes suing Chevron for massive oil contamination have in common?
They both had lawsuits heard in U.S. federal trial court and appealed to the Second Circuit Court of Appeals in Manhattan. That, however, is where any similarity ends.
Brady — who only wants to play football — got his decision from the appellate court only 4 weeks after oral argument.
The Ecuadorians, who only want to survive on their ancestral lands without being poisoned by oil waste?
They are still waiting, 64 weeks after their oral argument.
A ruling on whether a superstar football player, married to a superstar model, gets to play football appears to be more important than cleaning up toxic waste in the Ecuador rainforest.
The Ecuadorians’ quest for justice began over 23 years ago when they sued Chevron for intentionally contaminating the Amazon rainforest where they literally live off the land.
Chevron and its legions of law firms have done everything in their power to smother the lawsuit in legal delays to block a $9.5 billion Ecuador judgment against the oil giant. The country’s highest court upheld the judgment in a unanimous decision, in the forum where Chevron insisted the trial be held — in Ecuador. In all, 18 consecutive appellate judges in Ecuador and Canada have ruled in favor of the villagers and against Chevron.
With the writing on the wall, Chevron still refuses to pay the judgment, which serves to further delay the case and force the Ecuadorians to try to seize the company’s assets in other countries.
Justice delayed is justice denied but, hey, football season is about to begin.
I’m not so presumptuous to think this blog will have any impact on the timing of the 2nd Circuit ruling in the Ecuadorians’ case. I also recognize legal arguments vary in complexity, but it’s important for environmental advocates to take note of the difference in treatment. A valid argument can be made that a U.S. courtroom is the last place to look for justice when trying to hold a U.S. corporation accountable for environmental misdeeds in other countries.
For example, the Southern District Court of New York (the federal trial court in Manhattan) is largely responsible for making a legal mess of the original lawsuit against Chevron filed before U.S. Judge Jed Rakoff in 1993. In 2001, he ordered the case returned to Ecuador, over the objections of the indigenous groups. (Yes, it took eight years just to dismiss and move it to Ecuador.) The Ecuadorians argued their country’s courtroom could not handle a mass tort case this complicated.
Since then six top-shelf corporate law firms, at the direction of Chevron, have used every legal trick in the book to slow down the case in Ecuador and grind it into quicksand.
This includes drowning the country’s under-funded court system with motions, some of which were duplicates of earlier motions already ruled on, and bankrupting the Ecuadorians by filing related lawsuits against them in over two dozen jurisdictions across the U.S. See here and here. Finally in 2011 — eight years later — an Ecuador court ruled against Chevron.
Enter Gibson Dunn’s Randy Mastro.
Leading the legal hordes is Mastro, now infamous for having been paid $8 million of taxpayer money to do a bogus “study” supposedly “exonerating” Governor Chris Christie in the Bridgegate scandal. Mastro and his team destroyed notes from his own investigation that produced no negative findings against Christie. Watchdog groups and some New Jersey electeds have questioned whether the cover-up of Bridgegate should be treated as a criminal conspiracy, involving the Governor, his staff, Gibson Dunn and specifically Mastro. (Gibson Dunn is earning quite a reputation; the High Court of England last year ruled the corporate law firm falsified evidence in another case.)
Mastro – who with great rhetorical flair accused poor Ecuadorian villagers and indigenous peoples living in the rainforest of a “criminal conspiracy” to shake down Chevron — also was the man responsible for prepping the main witness in the U.S. “fraud” lawsuit against the Ecuadorians and their attorneys.
That witness, Alberto Guerra, spent a whopping 53 days being coached by Mastro and Gibson Dunn lawyer Avi Weitzman to get his story straight in federal court.
We know this because Guerra recently admitted under oath in a separate but related case that he lied about major portions of his testimony during the lower court trial in the Southern District, heard by U.S. Judge Lewis Kaplan.
In April 2015, Guerra admitted before an international arbitration panel he changed his story not once, but three times. These are Guerra’s three stories:
Story No. 1: Guerra alleged the Ecuadorians’ attorneys “ghostwrote” the Ecuador judgment and hired Guerra to edit it, which he said he did on his home computer. But when Chevron couldn’t find the judgment on his computer, Guerra recanted.
Story No. 2: Actually, Guerra said, the verdict was on a flash drive that the Ecuador judge hearing the case gave him at the Quito airport. But when Chevron couldn’t find the judgment on any flash drives, Guerra changed his story yet again.
Story No. 3: Actually, Guerra said, he traveled to the jungle on a bus and edited the judgment there on a laptop owned by one of the Ecuadorian attorneys.
As each story unraveled and evolved, Chevron agreed to pay Guerra more money for testimony the company desperately needed to hold up its “fraud” allegations. To date, Chevron has paid him at least $2 million in cash and benefits and moved him and his family to the U.S., in exchange for his testimony. He also is an admitted criminal, testifying under oath to taking numerous bribes in other cases before he was removed from the bench. Read this Courthouse News article for more background.
This information is in front of the 2nd Circuit, including an argument that a recent Supreme Court decision essentially nullifies Chevron’s entire case.
Chevron and Mastro put many, if not all of their eggs, in the Guerra basket that now has large holes in it, threatening to sink Chevron’s entire retaliation strategy.
Perhaps like Brady’s football, Mastro’s argument has been deflated. The Second Circuit should take note. Hopefully, soon.
Source: The Huffington Post
Gustavo López Ospina
Pieter Jan Brouwer
Assistant: Emilia Romero
SELVA Vida Sin Fronteras acknowledges Kevin Schafer’s important contribution towards protecting the highly endangered Amazon pink fresh water dolphin. Title photographs of our “The Pink Dolphin” were taken by Mr. Schafer.