After 18 years of litigation in both the U.S. and in Ecuador, a court of law has found Chevron accountable for the massive contamination of the Ecuadorian rainforest. Below is a statement from the Ecuadorians who have lived with Chevron’s pollution for five decades. Also below is the front page article that appeared today in the Wall Street Journal.
Amazon Defense Coalition
14 February, 2011 – FOR IMMEDIATE RELEASE
Contact: Karen Hinton at 703-798-3109 or Karen@hintoncommunications.com
Pablo Fajardo, the lead Ecuadorian attorneys representing the indigenous tribes suing Chevron for oil contamination, released this statement today about the judgment against Chevron, issued by the Provincial Court of Justice of Sucumbíos in Lago Agrio, Ecuador:
“We believe today’s judgment affirms what the plaintiffs have contended for the past 18 years about Chevron’s intentional and unlawful contamination of Ecuador’s rainforest. Until we have had a chance to review the lengthy decision, we will not be able to comment in detail.
“As a general matter, the plaintiffs provided the court with a great quantum of scientific and documentary evidence that Chevron deliberately and in violation of all industry norms discharged billions of gallons of toxic waste into the rainforest and into the water supply relied on by thousands of Ecuadorian citizens.
“Rather than accept that responsibility, Chevron has launched a campaign of warfare against the Ecuadorian courts and the impoverished victims of its unfortunate practices. We call on the company to end its polemical attacks and search jointly with the plaintiffs for common solutions. We believe the evidence before the court deserves international respect and the plaintiffs will take whatever actions are appropriate consistent with the law to press the claims to a final conclusion.”
Chevron Hit With Record Judgment
By BEN CASSELMAN, ISABEL ORDONEZ and ANGEL GONZALEZ
An Ecuadorian judge on Monday ordered Chevron Corp. to pay $8.6 billion to clean up oil pollution in the country's rain forest in what is believed to be the largest-ever judgment in an environmental case.
And if the U.S. oil giant doesn't publicly apologize in the next 15 days, the judge ordered the company to pay twice that amount.
The ruling brings to an end one chapter of a legal drama that has played out in courtrooms in Ecuador and the U.S. for nearly two decades.
The case has been bitterly fought by both sides, with each accusing the other of improprieties. In recent months, Chevron uncovered a secret memo revealing the plaintiffs' strategy for enforcing any favorable Ecuadorian ruling around the world. That means that Chevron could be forced to defend itself in any of the dozens of countries where it does business.
The oil company, which denies responsibility for the pollution, has no assets in Ecuador and has vowed to fight any efforts to seize its property overseas. Other multinational corporations are closely watching the case.
The plaintiffs, residents of Ecuador's oil-rich Amazon rain forest, are seeking to hold Chevron accountable for environmental damage they say was caused by Texaco Inc., which operated in the country from 1965 to 1992. Chevron inherited the case when it acquired Texaco in 2001.
Chevron has said for more than a year that it expected to lose the case in Ecuador, where it says collusion between the government and the plaintiffs have made a fair ruling impossible. On Monday, the company vowed to appeal and said it won't pay the fine or apologize as the judge demanded.
"We believe it to be illegitimate and unenforceable," Chevron spokesman Kent Robertson said. "It's the product of fraud, and it's contrary to the legitimate scientific evidence."
The plaintiffs deny Chevron's fraud allegations and say scientific evidence backs up their claims of environmental damage.
The ruling was a rare piece of good news for the plaintiffs after months of setbacks in U.S. courts that left their team divided and scrambling for cash.
But the victory could be short-lived. Last week a panel of international arbitrators in The Hague granted Chevron a preliminary injunction that could block the plaintiffs' efforts to enforce the judgment.
Steven Donziger, a New York lawyer who led the case for years until Chevron's continued attacks caused him to step down as lead plaintiffs' attorney, declined to comment. Instead, the plaintiffs released a statement from their Ecuador-based attorney Pablo Fajardo.
"We believe today's judgment affirms what the plaintiffs have contended for the past 18 years about Chevron's intentional and unlawful contamination of Ecuador's rain forest," he said.
Under Ecuadorian law, Chevron doesn't have to pay any judgment until after an initial appeal, which could take months.
Meanwhile, Chevron is using the U.S. courts, in hopes of never paying anything at all. The company sued the plaintiffs and their lawyers in the U.S., where a federal judge recently issued a temporary stay blocking the plaintiffs' American lawyers from seeking to enforce any judgment.
Chevron has also sued the country of Ecuador under the terms of a trade agreement between it and the U.S. Last week, a panel of arbitrators in The Hague ordered Ecuador to take "all measures at its disposal" to block enforcement of any ruling, both in Ecuador and overseas, until the panel rules on the case. That could make it much more difficult for the plaintiffs to convince a foreign court to seize Chevron's assets.
Ecuador has asked a U.S. court to block Chevron's trade suit and has challenged the panel's jurisdiction.
Even if Chevron never has to pay, the ruling could worsen what has already been a public relations nightmare for the oil giant when all oil companies are under added scrutiny in the wake of last year's oil spill in the Gulf of Mexico.
Investors, however, shrugged off the ruling Monday. Chevron's shares rose 1.3% to $96.95 in 4 p.m. composite trading on the New York Stock Exchange.
The judge ruled Chevron must pay $5.4 billion to restore polluted soil and $1.4 billion to create a health system for the community, among other penalties. The court also ruled that Chevron should pay the Amazon Defense Front, a coalition formed by the plaintiffs, an additional 10% in damages, or about $860 million. That could bring the total judgment to $9.5 billion.
In the ruling, Judge Nicolas Zambrano said that Texaco had the knowledge and technical ability to avoid damages; the damages "were not only foreseeable, but also preventable."
Few legal experts expected the case to get this far. The plaintiffs first sued Texaco in New York in 1993. Texaco, and later Chevron, successfully argued that the case should instead be heard in Ecuador, which was then run by a government seen as friendly to American business interests.
In 2007, however, Ecuador elected as president Rafael Correa, who has publicly supported the plaintiffs' cause. Chevron accuses the left-leaning government of interfering in the case, a charge the government denies.
Many of Chevron's fraud allegations involve a report from a court-appointed expert, Richard Cabrera, who in 2008 estimated Chevron's liability at more than $27 billion. Chevron said the report was actually written by experts hired by the plaintiffs, who then sought to cover up their involvement. In his ruling, however, the judge said he didn't base his opinion on the evidence presented by Mr. Cabrera, because of the fraud allegations.
The plaintiffs have taken steps that may leave them better prepared for the next phase of the case. They have secured millions of dollars in new financing, some of it from a London-based hedge fund that specializes in backing class-action suits. And they have hired new lawyers, led by Washington law firm Patton Boggs.