Sept. 23 (Bloomberg) -- The Ecuadorean judge who stepped down from a $27 billion environmental lawsuit against Chevron Corp. after the company accused him of bias should remain in charge of the case, a court in Ecuador ruled.

A request by Judge Juan Nunez to recuse himself from the Chevron lawsuit was “unfounded,” Judge Nicolas Zambrano said in a ruling yesterday. Like Nunez, Zambrano sits on the Nueva Loja Superior Court in Ecuador’s northeastern Sucumbios province.

Nunez on Sept. 4 was asked by Ecuadorean authorities to recuse himself after Chevron released tapes allegedly showing that he had disclosed his intention to rule against the company to two businessmen before issuing a final decision and may have been involved in a bribery scheme. Nunez denied the allegation. Ecuador’s top prosecutor is investigating the matters.

“If Judge Nicolas Zambrano determined that there is no reason for the recusal, then Judge Nunez must stay on the case and make his decision, without any fear of pressures from one side or another,” said Benjamin Cevallos, president of Ecuador’s Judiciary Council.

Nunez, a former Ecuadorean Air Force officer and president of the Nueva Loja Superior Court, has been overseeing a lawsuit filed by Amazon Basin residents in Ecuador who claim Chevron is responsible for toxic waste from oil drilling in the jungle from 1964 to 1990 or later.

Additional Delays

The plaintiffs claim the pollution was left by Texaco Inc., which Chevron acquired in 2001. Chevron said Texaco cleaned up its share of the pollution at its former oil fields, which were taken over by Ecuador’s state-owned oil company. Chevron was released from any future liability in an agreement with PetroEcuador, the company says.

The case has been pending in a court in Lago Agrio, 20 miles south of the Colombian border, since 2003.

Ecuador Prosecutor General Washington Pesantez said Sept. 4 that Nunez was asked to step down to avoid additional delays in the case. Zambrano, the second highest-ranking judge in Nueva Loja Superior Court, took over the case and considered Nunez’s motion for recusal.

Nunez didn’t comply with an order to submit documents supporting his request to resign from the case, Zambrano’s ruling said.

“Considering the request was unfounded, I decide the process be returned to said employee,” Zambrano said, according to an excerpt of the ruling translated from Spanish.

‘Pressure and Bribes’

Nunez declined to comment on Zambrano’s ruling today.

Lawyers representing the Ecuadorean plaintiffs have said Chevron may have been behind the tape recordings to derail the lawsuit and a ruling, which was expected in November.

“The Nueva Loja Provincial Court was dangerously close to falling into a trap that was skillfully set up by the oil company, which wanted the case to be annulled,” Quito attorney Pablo Fajardo said in an e-mailed statement today.

Kent Robertson, a Chevron spokesman, said the U.S. State Department has found that Ecuador’s courts are often susceptible to “outside pressure and bribes.”

“With the decision to reinstate Judge Nunez, it would appear that Ecuador is doing everything within its abilities to validate this conclusion,” Robertson said in an e-mail.

Chevron today filed an international arbitration claim against Ecuador with the Permanent Court of Arbitration in The Hague. The company says Ecuador has violated protections of the U.S.-Ecuador Bilateral Investment Treaty by exploiting the lawsuit and failing to live up to an agreement releasing Chevron from liability for pollution in the Amazon.

To contact the reporters on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net; Adriana Brasileiro in Quito at abrasileiro@bloomberg.net.

Last Updated: September 23, 2009 22:30 EDT