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Chevron claims small victory in Amazon oil battle

Toronto lawyer Alan Lenczner, with the law firm Lenczner Slaght, is handling a case against oil giant Chevron, which bought Texaco, in a case that goes back to 1993 when the suit was filed. Residents of eastern Ecuador accused Texaco of contaminating the Amazon beginning in the late 1960s.

Fred Lum/The Globe and Mail

Chevron Corp. claims it has scored a small victory in its sprawling battle against a $19-billion (U.S.) court judgment levelled against it by an Ecuadorean court for decades of oil pollution in the Amazon.

An arbitration panel in The Hague has ruled that Ecuador violated international law by failing to stop lawyers for the plaintiffs, a group of villagers from Ecuador's Lago Agrio region, from filing actions against Chevron in courts in Canada, Brazil and Argentina to try to collect on the Ecuadorean judgment.

Ecuador's government, which calls the proceedings an "abuse of legal process," has argued that ordering its courts to suspend a judgment would violate its constitution. It has also argued that it cannot tell the plaintiffs, private citizens, what to do.

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For years, Chevron has been waging a legal and public-relations battle against the villagers and their U.S. and Ecuadorean lawyers, in one of the longest and largest environmental legal disputes in world history.

In 2011, the plaintiffs won an $18.3-billion judgment against Chevron, an amount later increased to $19-billion. But Chevron, which has long since pulled its assets out of Ecuador, has refused to pay, calling the ruling a fraud.

Chevron has launched a fraud lawsuit in New York against some of the plaintiffs' lawyers and supporters. And the company launched an international arbitration proceeding against Ecuador, under the terms of a treaty between the country and the United States.

Last year, the plaintiffs sought to enforce their Ecuadorean judgment in other countries where Chevron has assets, including in Canada, where they hired Toronto litigator Alan Lenczner and filed an action in Ontario Superior Court.

They also filed actions in Brazil and in Argentina, where an appeal court recently upheld the freezing of $2-billion in Chevron assets.

But in a Feb. 7 ruling, an arbitration tribunal scolded Ecuador for failing to stop attempts to enforce the $19-billion judgment while the tribunal considers the country's dispute with Chevron. The panel warned it could order Ecuador to compensate Chevron for any losses.

However, the panel declined Chevron's request to have the entire $19-billion judgment declared void, and said it had not decided on the merits of the case.

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The stakes are potentially high for Ecuador, which could see its trade with the U.S. harmed by a ruling against it.

Chevron inherited this battle over the oil pollution left in the Amazon when the company acquired Texaco in 2001. When Texaco pulled out of a joint venture in Ecuador in 1993, it agreed to pay $40-million for environmental cleanup in a deal Chevron claims absolves it of any further costs.

"The Tribunal's decision confirms that the enforcement actions being pursued against Chevron in Argentina, Brazil and Canada fly in the face of international law," said Hewitt Pate, Chevron's vice-president and general counsel, in a press release.

Karen Hinton, a U.S. spokeswoman for the plaintiffs, said in a statement that the panel's ruling is itself a violation of international law and will be ignored by other courts: "The spin in Chevron's press release reveals the company's increasing desperation to find good news in what is otherwise a rapidly deteriorating global legal situation for its shareholders."

The 20-year legal fight has produced countless plot twists, with alleged bribes, secretly taped "sting operations" and allegations of false evidence. Last week, Chevron unveiled an affidavit from a former Ecuadorean judge who claimed to have been bribed by the plaintiffs – allegations the plaintiffs deny.

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About the Author
Toronto City Hall Reporter

Jeff Gray is The Globe and Mail’s Toronto City Hall reporter. He has worked at The Globe since 1998. From 2010 to 2016, he was the law reporter in Report on Business, covering Bay Street law firms and white-collar crime. He won an honourable mention at the National Magazine Awards for investigative journalism in 2010. More

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