Chevron Victory Blocking $18 Billion Verdict Is Thrown Out in U.S.

A U.S. court ruling blocking enforcement of an Ecuadorean court’s $18 billion environmental damages verdict against Chevron Corp. (CVX) was thrown out by a federal appeals panel in New York.

“The preliminary injunction issued by the district court on March 7, 2011, is vacated in its entirety,” the U.S. Court of Appeals in New York wrote in an order issued yesterday.

In March, U.S. District Judge Lewis Kaplan in Manhattan issued a ruling that barred Ecuadorean residents in the Amazon River Basin from enforcing an $18 billion judgment awarded by a court in their country until Chevron’s case against the villagers and their lawyers is decided.

The company alleged in a U.S. racketeering lawsuit that lawyers for the Ecuadoreans conspired to fabricate evidence. Attorneys for the Latin American plaintiffs said the lawsuit is an unjustified attempt to derail the pollution lawsuit damages.

At a Sept. 16 argument before the appeals court in New York, a lawyer for the Ecuadoreans said his clients agreed not to enforce the judgment in New York until Ecuador’s top court rules on it.

Chevron, based in San Ramon, California, said in a statement that it was disappointed that a trial set for November has been stayed.

“Chevron remains confident that once the full facts are examined, the fraudulent judgment will be found unenforceable and those who procured it will be required to answer for their misconduct,” the company said in the statement.

In his March order, Kaplan said Chevron faced “imminent” and “irreparable” harm to its business relationships and reputation if the Ecuadorean judgment was enforced.

“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.

Pollution Claims

“This ruling is affirmation of what we have said all along,” Karen Hinton, a spokeswoman for the plaintiffs, said in an e-mailed statement. “Chevron abused the law, and Judge Kaplan rushed to judgment without considering the overwhelming evidence against the oil giant.”

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

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: 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: Michael Hytha at mhytha@bloomberg.net.

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