Chevron Wins Bid to Extend Order Blocking Ecuador Judgment

Chevron Corp. (CVX) won a bid to extend a court order barring Ecuadorean residents from enforcing an $18 billion judgment against the oil company until its racketeering case against the villagers and their lawyers is decided.

U.S. District Judge Lewis Kaplan in Manhattan said in a ruling today that Chevron faced “imminent” and “irreparable” harm to its business relationships and reputation.

“There is a significant risk that assets would be seized or attached, thus disrupting Chevron’s supply chain, causing it to miss critical deliveries to business partners,” Kaplan said.

Kaplan granted a temporary restraining order Feb. 8 barring residents of the Amazon River basin who have sued Chevron in Ecuador and their U.S. lawyers from enforcing the judgment awarded by a court there. The company made the request in a U.S. racketeering lawsuit in which it accused the Ecuadoreans’ lawyers of conspiring to fabricate evidence. The attorneys said the lawsuit is unjustified and the claims an attempt to derail the pollution lawsuit damages.

Lawyers for the Ecuadoreans have argued that Kaplan can’t prevent the plaintiffs from enforcing the judgment outside the U.S. said Karen Hinton, a spokeswoman for the plaintiffs.

“This decision is a slap in the face to the democratic nation of Ecuador and the thousands of Ecuadorian citizens who have courageously fought for 18 years to hold Chevron accountable for committing the world’s worst environmental disaster,” Hinton said. “The trampling of due process in the court’s refusal to consider key evidence or hold a hearing to determine the facts is an inappropriate exercise of judicial power.”

Pollution Claims

Chevron says it cleaned up its portion of the oil fields and was released from pollution claims against Texaco Inc. in an agreement with the government of Ecuador. Chevron acquired Texaco in 2001.

Chevron, the second-largest U.S. oil company, was ordered Feb. 14 to pay as much as $18 billion in compensatory and punitive damages for Texaco’s alleged dumping of toxic drilling wastes in the Ecuadorean jungle from 1964 to about 1992. The ruling came in an 18-year-old lawsuit decided by a judge in Lago Agrio, a provincial capital near the Colombian border.

Chevron and the plaintiffs have said they will appeal the decision.

Bond, Deposit

Kaplan ordered Chevron to post a $21.8 million bond or deposit that sum with the court to ensure payment of any damages caused by the delay in enforcement of the judgment, if his injunction turns out to be inappropriate, according to the filing.

Chevron had $17.1 billion in cash and near-cash equivalents at the end of December, the San Ramon, California-based company said in a Jan. 28 statement.

“Chevron welcomes the order of the Southern District of New York,” Kent Robertson, a Chevron spokesman, said in an e-mail. “The Lago Agrio plaintiffs’ lawyers should not be allowed to benefit from an Ecuadorean judicial system that does not provide due process and from a judgment that they have procured through fraud and corruption.”

The racketeering case is Chevron v. Donziger, 11-00691, U.S. District Court, District of New York (Manhattan). The case in Ecuador is Maria Aquinda v. Chevron, 002-2003, Superior Court of Nueva Loja, Lago Agrio, Ecuador.

To contact the reporters on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net; Patricia Hurtado in New York at pathurtado@bloomberg.net; Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editor responsible for this story: John Pickering at pickering@bloomberg.net

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