Wednesday, April 4, 2012

High Court Has Dismissed Key Chevron Arguments Against Ecuadorians

See excerpts below from two separate U.S. Second Circuit Court of Appeals rulings concerning the Ecuadorians' lawsuit against Chevron. They counter Chevron's arguments that the $18 billion judgment should not be enforced and that its arbitration claim is binding upon the Ecuadorians.

On enforcement:
"The LAPs hold a judgment from an Ecuadorian court. They may seek to enforce that judgment in any country in the world where Chevron has assets."

Cite: United States Court of Appeals for the Second Circuit in Chevron Corporation v. Naranjo, Docket Nos. 11-1150-cv (L) 11-1264 (Con), (2d Cir. January 26, 2012), at 27. (emphasis added).

On Chevron's international arbitration claim:
“[Ecuadorian] Plaintiffs are not parties to the [Bilateral Investment Treaty], and that treaty has no application to their claims, their dispute with Chevron therefore cannot be settled through [Bilateral Investment Treaty] arbitration.

Cite: United States Court of Appeals for the Second Circuit in Republic of Ecuador v. Chevron Corporation, Docket Nos. 10-1020-cv (L) 10-1026 (Con), (2d Cir. March 17, 2011), at 21. (emphasis added).

On Chevron's liability of Texaco's misconduct:

"Chevron Corporation claims, without citation to relevant case law, that it is not bound by the promises made by its predecessors in interest Texaco and ChevronTexaco, Inc. However, in seeking affirmance of the district court’s forum non conveniens dismissal, lawyers from ChevronTexaco appeared in this Court and reaffirmed the concessions that Texaco had made in order to secure dismissal of Plaintiffs’ complaint. In so doing, ChevronTexaco bound itself to those concessions. In 2005, ChevronTexaco dropped the name “Texaco” and reverted to its original name, Chevron Corporation. There is no indication in the record before us that shortening its name had any effect on ChevronTexaco’s legal obligations. Chevron Corporation therefore remains accountable for the promises upon which we and the district court relied in dismissing Plaintiffs’ action. Throughout this Opinion, we use the various corporate names that Chevron Corporation has employed during the course of this litigation only for purposes of clarity. In so doing, we do not attribute any legal significance to the nomenclature used. While the district court did not include Texaco’s promise to satisfy any Ecuadorian judgment in its stipulation and order, an express adoption of the prior inconsistent position is not required. The court need only adopt the position “in some manner, such as by rendering a favorable judgment.” Mitchell v. Washingtonville Cent. Sch. Dist., 190 F.3d 1. (2d Cir. 1999) (internal citation omitted); see also Maharaj v. Bankamerica Corp., 128 F.3d 2 94, 98 (2d Cir. 1997).

"Here, Texaco had been trying to convince the district court that Ecuador would serve as an adequate alternative forum for resolution of its dispute with Plaintiffs. As part of those efforts, Texaco assured the district court that it would recognize the binding nature of any judgment issued in Ecuador. Doing so displayed Texaco’s well-founded belief that such a promise would make the district court more likely to grant its motion to dismiss. Had Texaco taken a different approach and agreed to participate in the Ecuadorian litigation, but announced an intention to disregard any judgment the Ecuadorian courts might issue, dismissal would have been (to say the least) less likely. We therefore conclude that the district court adopted Texaco’s promise to satisfy any judgment issued by the Ecuadorian courts, subject to its rights under New York’s Recognition of Foreign Country Money Judgments Act, in awarding Texaco the relief it sought in its motion to dismiss. As a result, that promise, along with Texaco’s more general promises to submit to Ecuadorian jurisdiction, is enforceable against Chevron in this action and any future proceedings between the parties, including enforcement actions, contempt proceedings, and attempts to confirm arbitral awards.

"Chevron’s contention that the Lago Agrio litigation is not the refiled Aguinda action is without merit. The Lago Agrio plaintiffs are substantially the same as those who brought suit in the Southern District of New York, and the claims now being asserted in Lago Agrio are the Ecuadorian equivalent of those dismissed on forum non conveniens grounds."

Cite: United States Court of Appeals for the Second Circuit in Republic of Ecuador v. Chevron Corporation, Docket Nos. 10-1020-cv (L) 10-1026 (Con), (2d Cir. March 17, 2011), at footnotes 3,4 and 5. (emphasis added).

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