A Huge Loss at the Second Circuit for Chevron

by Kevin Jon Heller

Fantastic news:

New York – A federal appeals court vacated an order Monday by a New York judge that barred an $18 billion judgment in Ecuador against Chevron Inc. for contaminating the Amazon.

The three-judge panel of the 2nd U.S. Circuit Court of Appeals had previously expressed skepticism that a New York judge could wield jurisdiction outside the U.S.

The lead lawyer for the plaintiffs, Pablo Fajardo, told The Associated Press by phone on Monday that they expected to be able to begin to collect by the first quarter of 2012 the damages that a Lago Agrio, Ecuador, court ordered Chevron to pay.

“We can now at least dream there will be justice and compensation for the damage, the environmental crime, committed by Chevron in Ecuador,” he said, adding that the decision “lets the world see that we are right, not just in Ecuador but in any court in the world.”

Representatives for the oil company did not immediately respond to requests for comment Monday.

Chevron has appealed the Lago Agrio decision, which was issued in February, and Fajardo said he expects an appeals court ruling in Ecuador in the next few months.

In New York, U.S. District Judge Lewis A. Kaplan had barred collection of the award, after determining that Chevron could prove that lawyers had manipulated a corrupt legal system in Ecuador to secure the judgment. The company had argued that the plaintiffs would collect the judgment before an appeals process was completed in Ecuador.

But a lawyer for the Ecuadorean plaintiffs told the appeals court in oral arguments Friday that they would not attempt to recover damages until the appeals process in Ecuador was completed.

The award followed nearly two decades of litigation.

When Kaplan issued his bizarre decision, I wondered what authority a U.S. judge had to interfere with Ecuador’s judicial process.  (Can you imagine what the reaction would have been if the situation was reversed?)  Apparently I wasn’t the only one who was skeptical.

There is still a long way to go legally, but this is an important step in holding Chevron accountable for the massive environmental damage it has caused to the Amazon rainforest.

For more information about what is referred to as Chevron’s “Rainforest Chernobyl” — the company deliberately dumped more than 18 billion gallons of toxic waste-water and spilled approximately 17 million gallons of crude oil in the area — see the ChevronToxico website here.

http://opiniojuris.org/2011/09/21/a-huge-loss-at-the-second-circuit-for-chevron/

7 Responses

  1. Kevin,

    I’ve been following the case closely and I don’t view that Second Circuit’s order as negatively for Chevron as you do.  The Second Circuit secured a written commitment from the Ecuador Plaintiffs that “the Ecuadorian
    Plaintiffs will stipulate not to commence pre-judgment attachment or enforcement proceedings anywhere in the world prior to entry of a ruling by the Provincial Court of Sucumbíos on the de novo appeal currently pending before that court in Ecuador.”

    Moreover, in oral argument the Ecuador plaintiffs told the Second Circuit panel “that the $18 billion judgment can’t be enforced until the Ecuadorean high court has reviewed the award, so there’s not even a legitimate question for Kaplan to decide at the November trial, nor any final judgment whose enforcement needs to be enjoined.”

    Thus, the Ecuador Plaintiffs have backtracked significantly from their earlier position in February, where they stated to the press that they would begin enforcement proceedings as soon as possible.  The threat of an antisuit injunction succeeded in securing representations from the Ecuador Plaintiffs that they could not and would not pursue enforcement actions abroad until the appeals process in Ecuador is complete.

    Roger Alford

  2. I have no problem with anything you’ve written — but I somehow doubt that Chevron sees things as you do.  It wants to be able to extract massive amount of profit from Ecuador but not be subject to Ecuador’s legal system. The point of the Second Circuit’s ruling is that, despite Chevron’s offensive assertions about corruption, the issue will be decided by Ecuadorian courts, not American ones.  Which is exactly as it should be.

  3. The Ecuadorian plaintiffs never had any intention of trying to collect this judgement before the final ruling in Ecuador. Both Chevron and they are appealing it there, and it would not be legal for them (as Ecuadorian lawyers and citizens) to begin collection before the appeals are done. Chevron created a fantasy threat that they would begin collection internationally immediately in order to justify fast-tracking their case with Kaplan, and all this letter does is show that bugaboo to be a figment of their own wild imagination.

  4. me,

    Until the Second Circuit hearing on Friday, the Ecuador plaintiffs categorically refused to stipulate in court that they would not proceed with any enforcement action abroad.  As Judge Kaplan said in his September 19 order, “from the very outset, a more extended schedule has been available to the LAP Representatives essentially for the asking, provided only that they and the other Ecuadorian plaintiffs … give sufficient assurance that nothing will be done to attempt [to] enforce the Ecuadorian judgment anywhere outside Ecuador pending the outcome of this case. They consistently have refused to give any such assurance.”

    The antisuit injunction and expedited pace of the New York RICO action were the result of the Ecuador plaintiffs refusal to give appropriate assurances that they would not seek enforcement actions abroad.

    Roger Alford

     

  5. Hogwash. Kaplan never offered to stay the proceedings in exchange for such an assurance, and the Ecuadorians had no reason to trust in the good faith of anything that Kaplan dangled in front of them anyway. You note that Kaplan says “pending the outcome of THIS case” (meaning his sham case in New York – not the Lago Agrio appeals). Asking them to agree to be beholden to his jurisdiction, authority, and ultimately his decision on the case is essentially demanding a preemptive surrender. Of course they were not willing to do that after 18 years of fighting for their clients’ lives and future.

  6. Roger,

    I take it you weren’t at the hearing? Stipulation came up late and was marginal. Focus was all on subj matter jurisdiction (using recognition statute “offensively”) and larger comity issues. The whole damn thing blew up like the Hindenburg and is on its way down.

    And “me” is correct that enforcement pre appeal has never been a bona fide threat. Ec plfs have said over and over again they would wait for the appeal. Kaplan used lack of coordination amongst the RICO dfds (including absence of 45 of them) to suggest they were refusing to stip and thus there was a real threat. Nobody really bought it, as we saw last Friday.

    Happy to send a copy of the transcript if you haven’t gone through it yet.

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