Chevron Again Claims Special Treatment Under Ecuadorian Law

By 31 January, 2012

After being found liable in Ecuador for creating one of the world’s worst oil disasters, Chevron filed a notice of appeal to Ecuador’s highest court where it seeks special treatment not afforded any other litigant under the nation’s laws – the waiver of a bond required to suspend enforcement of a judgment during the pendency of any appeal.

It would be illegal under Ecuadorian law for the appellate court to grant Chevron’s unusual and unprecedented request to waive the bond requirement, said Pablo Fajardo, the lead attorney for the indigenous and farmer communities who brought suit against the oil giant for the dumping of billions of gallons of toxic waste into the waterways used by several indigenous groups and farmer communities.

“Chevron has every right under the law to seek an extraordinary appeal to the highest court as long as it can cite a proper legal basis,” said Fajardo. “But Chevron is yet again seeking a special exemption under Ecuadorian law when it claims the bond requirement should not apply to it, while it applies to every other litigant in the country.”

“Chevron behaves in Ecuador as if it is above the law while thousands of people continue to suffer the devastating effects of the company’s toxic contamination,” said Fajardo. “This abuse of the judicial process must end.”

For execution of a court judgment in Ecuador to be suspended pending appeal to the highest court – called the National Court of Justice – the losing party must post a bond that is usually calculated at roughly 8% of the amount of damages awarded (roughly $1.5 billion in this case). Chevron is seeking to have enforcement suspended even without posting a bond even though the indigenous and farmer communities continue to suffer grave health effects engendered by the company’s delaying tactics, said Fajardo.

Karen Hinton, the US spokesperson for the Ecuadorians, said in a statement that “for almost two decades, Chevron has stood in the way of a comprehensive cleanup of billions of gallons of crude oil and toxic waste water it deliberately dumped into the pristine rainforest of Ecuador.”

“Thousands of people have died or suffered from illnesses as Chevron and its army of lawyers have waged a campaign to distract attention from the overwhelming scientific evidence against the company,” said Hinton. “Chevron has always believed that Ecuador’s many laws prohibiting environmental contamination should not apply to its misconduct.”

The bond requirement, typical in countries around the world including the US, is intended to protect the winning side from unnecessary delays during appellate review. Ecuador’s first-level appellate court already affirmed the trial court judgment that the company is required to pay $18 billion for a clean-up, a relatively modest amount compared to BP’s estimated $60 billion liability for the smaller Deepwater Horizon spill in the Gulf of Mexico.

Fajardo also said that an arbitral order cited by Chevron as justification for its request for a bond waiver is not binding on the rainforest communities as they are not a party to that proceeding, which is held in secret pursuant to a US-Ecuador investment treaty.

In any event, the arbitral panel never ordered- and under the law cannot order – that Ecuador’s courts take steps that would “clearly violate” Ecuador’s Constitution and international treaties binding the government to protect the fundamental human rights of its citizens, including the right to life and the right to seek legal redress in national courts, said Fajardo. Further, the arbitral panel has never even held an evidentiary hearing on Chevron’s claims that a remediation contract with Ecuador’s government released it from liability.

“We believe Chevron clearly is misinterpreting the scope of authority of the arbitration,” he added.

“We want to reiterate that Chevron has every right to appeal to Ecuador’s National Court of Justice, but it has no right to special treatment during the pendency of the appeal,” Fajardo added.

The trial court decision, issued in February 2011, found that Chevron systematically dumped billions of gallons of toxic waste into the Amazon, poisoning waterways that local inhabitants use for drinking water and causing increased cancer rates. Damages were set at $18 billion. In 2002, the case was shifted from US federal court to Ecuador at Chevron’s request.

The trial court in Ecuador also repeatedly sanctioned Chevron’s legal team for filing frivolous motions intended to delay the proceedings, and for threatening a judge with jail if he did not rule in favour of the company. These actions led to a punitive damages award that accounts for roughly half of the total judgment.

Chevron has roughly two more weeks under Ecuadorian law to determine if it will publicly apologize for its misconduct, which would allow it to eliminate the punitive damages component of the award.

As support for the contention that Chevron believes it does have to adhere to the law in Ecuador, Hinton cited a comment in a 60 Minutes interview where Chevron attorney Silvia Garrigo – pressed as to why the company said it would never pay any adverse judgment in Ecuador – said: “We don’t believe we should be in any court, much less the courts of Ecuador.”

The 188-page trial court judgment is undergirded by a wide body of scientific and testimonial evidence submitted during eight years of proceedings that prove Chevron designed a system of oil extraction that deliberately discharged toxic oil waste into the environment to keep production costs to a minimum.

Chevron also has been heavily criticised for trying to defraud the Ecuador court and sabotage the proceedings.

In briefs submitted to US and Ecuadorian courts, the rainforest communities submitted evidence that Chevron technicians staked out “clean” spots at contaminated well sites to test prior to court-supervised judicial inspections; sent dirty soil samples to a secret lab to prevent their disclosure to the court; and doctored a “judicial playbook” document so two academic experts in the US would endorse the company’s misleading sampling protocol, among other charges.

A separate ruling by a New York federal appellate court marks Chevron’s third consecutive legal setback in its effort to block enforcement of the Ecuador judgment.

In September, a federal appellate panel blocked Chevron’s attempt to seek an unprecedented worldwide injunction blocking enforcement. In January, a federal district court judge denied Chevron’s illegal attempt to freeze the assets of the plaintiffs. And on January 3rd, Ecuador’s first-level appellate court confirmed the validity of the trial court judgment.

Follow Sounds and Colours: Facebook / Twitter / Instagram / Mixcloud / Soundcloud / Bandcamp

Subscribe to the Sounds and Colours Newsletter for regular updates, news and competitions bringing the best of Latin American culture direct to your Inbox.