Chevron Loses Another Bid to Block $18 Billion Ecuador Award

Chevron Corp. (CVX) lost another bid before a U.S appeals court for an order blocking enforcement of an Ecuadorean court’s $18 billion environmental damages verdict.

Chevron, the second-largest U.S. oil company, had asked a panel of judges at the U.S. Court of Appeals in New York to set aside its Sept. 19 ruling rejecting a trial judge’s decision in March that blocked collection of the Ecuadorean judgment. The company also asked for a rehearing on the merits of its appeal.

In a related decision, U.S. District Judge Lewis Kaplan this month refused Chevron’s request to restrain Ecuadorean assets that could be seized as part of the Ecuadorean judgment.

Chevron was ordered on 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.

‘Dumped’

Karen Hinton, a spokeswoman for the plaintiffs, said that Ecuadorean communities affected by the contamination “are one step closer to justice as a result of today’s ruling.”

“For almost two decades, Chevron has stood in the way of a comprehensive cleanup of billions of gallons of crude oil and toxic waste water it deliberately dumped into the pristine rainforest,” Hinton said in an e-mailed statement. “Thousands of people have died or suffered as the oil giant and its legions of lawyers have fought to distract attention from the overwhelming evidence against the company.”

On Jan. 3, an Ecuadorean appeals court upheld the February ruling “in all of its parts, including the conviction for moral reparation or its alternative and costs,” according to the decision. Chevron can appeal the decision to the next level of Ecuador’s judiciary, a company spokesman said at the time.

Full Opinion

The U.S. appeals panel in September rejected Kaplan’s March decision blocking collection of the Ecuadorean judgment pending resolution of a lawsuit alleging that the plaintiffs engaged in fraud to win the case. The appeals court hasn’t issued a full opinion in the matter.

Chevron denies wrongdoing in the Lago Agrio lawsuit. The company says Texaco cleaned up its share of the pollution at its former oil fields, which were taken over by PetroEcuador, Ecuador’s state-owned oil company. Chevron says it was released from any future liability by an agreement between Texaco and Ecuador. Chevron acquired Texaco in 2001.

Chevron filed a claim in 2009 against Ecuador in the Permanent Court of Arbitration in The Hague seeking orders that it has no liability for the environmental pollution and that PetroEcuador should pay the damage award. In those proceedings, Ecuador was told in February to prevent enforcement of the judgment until further order by the tribunal, Chevron said on Jan. 3.

Chevron Disappointed

Chevron said it is disappointed with today’s decision and awaits the court’s final ruling.

“Chevron will also continue to prepare to resist any efforts by the plaintiffs to enforce the judgment in other countries in the event Ecuador chooses to defy the tribunal’s order,” the company said in a statement. “Chevron has uncovered overwhelming evidence of fraud and does not believe that the Ecuador ruling is enforceable in any court that observes the rule of law.”

The San Ramon, California-based company alleged in a U.S. suit before Kaplan 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.

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 reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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