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Supreme Court will hear Chevron appeal in Ecuador environmental damages case

A Chevron sign is seen at a gas station in Los Angeles, Oct. 9, 2012.

MARIO ANZUONI/REUTERS

The Supreme Court of Canada has agreed to hear an oil company's appeal of a lower court decision that allowed a group of Ecuadorian villagers to seek billions in damages for environmental pollution.

The Ontario Court of Appeal ruled in December that the group, which wants Chevron Canada to be held responsible for a multi-billion-dollar judgment awarded in Ecuador, can have their case heard in Ontario.

The appeal judges overturned a lower court, which found that the company's Canadian arm should not be on the hook for the judgment because their assets are not directly owned by the California-based multinational.

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The villagers had argued Chevron Canada has billions of dollars in assets it could use to pay the judgment, but the lower court ruled the long-standing legal battle did not belong in Ontario.

"In my view, the parties should take their fight elsewhere to some jurisdiction where any ultimate recognition of the Ecuadorian judgment will have a practical effect," Justice David Brown wrote in the decision overturned by the appeal court.

The appeal court ruled the villagers deserve to have their day in court, even if their chances of winning may be small.

"A party may bring an action for all kinds of strategic reasons, recognizing that their chances of collection on the judgment are minimal," the judges wrote.

In 2011, an Ecuadorian judge ordered Chevron Corp. to pay US$19-billion for contamination of an Amazon rainforest by Texaco, which Chevron bought in 2001.

In November, Ecuador's highest court upheld the judgment but lowered the amount to US$9.51-billion.

Chevron maintains it won't pay because it contends that Texaco had signed an agreement with Ecuador in 1998 and paid $40-million to clean the pollution, and was absolved of any future liability. But the villagers argue that the agreement does not exempt the company from third-party claims.

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