Chevron’s Buyers Remorse

by Kevin Jon Heller

I am not going to respond in depth to Professor Cassel’s recent post on Chevron’s responsibility for the “rainforest Chernobyl” caused by its predecessor’s dumping of million gallons of crude oil and billion gallons of toxic waste into the Ecuadorian rainforest.  The plaintiffs’ attorneys have prepared a lengthy and thoroughly footnoted reply to his open letter; interested readers can find it here. I do, however, want to mention a couple of things.

First, I want to apologize for describing Professor Cassel as an “advocate for Chevron,” which he considers an ad hominem attack.  I have to admit, I don’t understand what is ad hominem about the description; after all, Black’s Law Dictionary defines an advocate as “a person who assists, defends, pleads, or prosecutors for another.”  Personally, I don’t consider “advocate” to be an epithet; I regularly referred to myself as an advocate for Radovan Karadzic, and all of my work was pro bono.  But my goal was not to offend Professor Cassel.

Second, I want to thank Professor Cassel for acknowledging his relationship with Chevron in the body of his post on Opinio Juris.  As I said before, I do not think that we should disregard his opinions on the case simply because he received money from Chevron to write a brief on its behalf.  I was simply concerned that less-interested readers might not find Professor Cassel’s disclosure on their own, given that it came on page four of a letter to which he linked in the post.

Third, I also want to thank Professor Cassel for providing links to material supporting the majority of his claims.  Unlike his previous post, which did not contain any such links, readers can now look at the underlying material and judge for themselves which of us has the better of the argument.  I would note, though, that many of the links are to Chevron’s own materials and legal briefs, which is no different than what I did in my post — a practice that Professor Cassel found objectionable when I did it. I would also note that the “press statements by plaintiffs’ PR operatives” to which I linked each contained extensive links to the primary material relied upon by the plaintiffs, which allowed readers to judge the merits of the plaintiffs’ claims for themselves.

Finally, I think it’s important to remind readers that there is one reason, and one reason only, that this case was heard before an Ecuadorian court: because that is what Chevron wanted.  Indeed, the company filed numerous different affidavits in U.S. federal court attesting to the fairness of the Ecuadorian court system — a system in which Chevron had often won lawsuits.  Now that it has lost the case and suffered a large but eminently fair judgment against it, Chevron has suddenly discovered that the Ecuadorian court system is somehow hopelessly corrupt.  A clearer case of buyers remorse is difficult to imagine.  Unfortunately for Chevron, buyers remorse is not a legal defense.

Make no mistake: this is a case that pits David against Goliath.  Only now Goliath is claiming that he is actually smaller than David and that David stole the slingshot he used during the fight.

http://opiniojuris.org/2012/03/28/chevrons-buyers-remorse/

4 Responses

  1. Professor Heller,

    The slower, open duologue between you and Professor Cassel is appreciated. Thank you for such an investment.

    Would the biblical David and Goliath characterization that was selected as a possible frame for the conflict between relevant, concerned citizens be well-fitted here?  My understanding is that this international conflict is driven, potentially at least, by a robust, open conversation and concern that is more akin to a globally-informed dialogue and commitment among numerous mutually-respecting peers and experts.  I see no sling-shot driven battle between a perceived or described victor and vanquished. I see a possible communal pursuit toward authentic reconciliation and resolution in the midst of a highly complex, shared global conflict that involves and includes many concerned neighbors.

  2. While I appreciate the exchanges – I do not think this is a game of Buyer’s remorse.  Rather I think Chevron’s strategy was to make sure the SDNY was not the decider as that would be something difficult to fight.  So it pushes for the forum in Ecuador under the low bar and then seeks to block an Ecuadorian judgment from prospering in the US under the higher bar of relevant New York law.  SDNY does not decide the merits but is used for these non-merit battles.  I think that is the heart of this thing.
    Best,
    Ben 

  3. Mr. Heller wrote “A clearer case of buyers remorse is difficult to imagine.” However, Texaco in fact expressly reserved the right back in 2001 to contest any resulting Ecuadorian judgment if the judgment “was obtained by fraud.”  The SDNY and the Second Circuit approved the terms of the forum non-conveniens dismissal in 2001, including Texaco’s conditional assurances to the court (which were, as experienced NY lawyers know, perfectly standard conditions in an FCN case).

    Below is what the Second Circuit said 10 years later when they rejected Ecuador’s effort to make Mr. Heller’s “buyer’s remorse” argument.

    Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 396-397, 397-398 (2d Cir. March 17, 2011, As Amended March 28, 2011)

    “There is also no conflict between Texaco’s promises to the district court and Chevron’s initiation of a contemporaneous challenge to Ecuador’s conduct with respect to the Lago Agrio litigation. Texaco expressly conditioned its promises on a reservation of its under New York’s Recognition of Foreign Country Money Judgments Act. See N.Y. C.P.L.R. 5304. 8 Chevron has thus reserved its right to challenge any judgment issued in Lago Agrio on the grounds that the Ecuadorian judicial system “does not provide impartial tribunals or procedures compatible with the requirements of due process of law,” that the judgment itself “was obtained by fraud,” or that “the proceeding in [Lago Agrio] was contrary to an agreement between the parties.” Id. Nothing in that reservation of rights purports to restrict the kind of forum or type of proceeding in which Chevron can raise those defenses. Nor did Texaco promise to wait until after a judgment was issued to challenge the fairness of the Lago Agrio litigation. Having reserved the rights conferred by N.Y. C.P.L.R. 5304, Chevron remains free to enforce them whenever and wherever it chooses, limited only by the scope of the statute and the availability of a forum prepared to address its claims. It is against that backdrop that we consider Plaintiffs’ estoppel claims.

    8 N.Y. C.P.L.R. 5304 provides, in pertinent part:

    (a) . . . A foreign country judgment is not conclusive if . . . the judgment was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law . . . .
    (b) . . . A foreign country judgment need not be recognized if . . .
    3. the judgment was obtained by fraud . . . [or]
    6. the proceeding in the foreign court was contrary to an agreement between the parties under which the dispute in question was to be settled otherwise than by proceedings in that court. . . .
    ****
    Texaco, however, reserved its right to challenge any judgment as “rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law.” N.Y. C.P.L.R. 5304(a)(1). Therefore, Chevron can raise its due process claims in BIT arbitration without contravening Texaco’s prior positions in the district court.”
     

  4. Yup Chevron worked to set it up so it could play this way.  Great lawyering by no doubt highly paid lawyers.  International trade space is a very cruel place.  One can never be too cynical about the motives in that battle space.
    Best,
    Ben

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