Eye on the Amazon

Ecuador Appeals Court Affirms $18 Billion Pollution Judgment Against Chevron: Time to Pay Up!

Secoya elders march to the Superior Court of Justice Courthouse in Lago Agrio at the start of the trial against Chevron Texaco. Photo Credit: Lou Dematteis from Crude Reflections

An appeals court ruling on Tuesday brings justice one significant step closer for the communities of the Ecuadorean Amazon who have suffered for decades from Chevron's callousness. A three-judge panel in the Provincial Court of Justice of Sucumbios upheld the historic $18 billion judgment against the oil giant issued in February.

The verdict from the appeals panel cites Chevron's own scientific evidence and blasts the company's conduct during the trial, calling it "abusive" and "clearly designed to obstruct the administration of justice."

"Chevron was condemned to pay trial costs for manifest bad faith... so much so that now suffice it to say that the procedural conduct of the defendant, few times seen in the annals of the administration of justice in Ecuador, were abusive to the point that... the Court will not even dedicate any more writings to this portion of the decision."

In the seething 16-page verdict, the judges conclude that Chevron "staged incidents that encumbered the process of the trial." They also scold the company for burying the appellate court with 20,000 pages of redundant evidence, and note that during the trial, "hundreds of thousands of documents submitted by Chevron bloated the trial record with everything it considered relevant."

Predictably, Chevron condemned the ruling as illegitimate and painted the courts as corrupt.

...which the appeals panel addressed in its verdict: "From the [initial hearing] up to the present appeal, it can be said that ... Chevron has failed to recognize the authority, jurisdiction, and competence of Ecuadorian courts."

As The Miami Herald reports, attorney for the Ecuadorian plaintiffs Pablo Fajardo says "the company has been resorting to the same tactics in Ecuador"

"Chevron doesn't want to acknowledge that indigenous communities and poor people have a right to access justice," Fajardo said. "Chevron wants to avoid a precedent that could serve for other communities around the world."

Indeed, some analysts have argued that Chevron has fought this case so aggressively – and earned the support of "greed is good" allies like the Chamber of Commerce for doing so – exactly because they fear a precedent that would embolden communities to fight to hold more companies accountable for their environmental and human rights abuse.

But others, including my friend Paul Paz y Miño, writing in the Huffington Post yesterday, point to the fact that Chevron's legal strategy in this case is being driven – faster and nearer to the cliff-edge each day – by corporate behemoth law firm Gibson, Dunn & Crutcher which likes to brag about its "innovative rescues" of "clients in deep trouble." Gibson Dunn has turned this case, and the oil giant, into a major money machine, with its lawyers billing perhpas hundreds of millions a year.

And one can't count out the utter imperialistic audacity of entitled greed summed up beautifully by the Chevron lobbyist who told a reporter, "We can't let little countries screw around with big companies like this." For CEO John Watson and the one-percenters who are also the one-percenters at Chevron, it must gall them to think that they could be brought to justice by a bunch of indigenous people and campesinos, their grassroots supporters around the world, and the tenacious human rights lawyers they've brought on to fight their case.

But whatever the thinking behind Chevron's dead-end strategy, their options are quickly running out.

As Patrick Radden Keefe writes in The New Yorker:

In theory, Chevron has one final appeal in Ecuador, to the country's Supreme Court. But to proceed with that appeal and stop the plaintiffs from trying to collect on the judgment in the meantime, Chevron would have to post a multi-billion-dollar bond, which, given its jaundiced view of the rule of law in Ecuador, it seems unlikely to do. So for all intents and purposes, yesterday's decision amounts to a green light for the plaintiffs to start collecting.

And by "collecting," he means that with the $18 billion judgment now affirmed on appeal, the plaintiffs can take that judgment to dozens of countries around the world where Chevron operates – Ecuador no longer being among them – and take legal action to force Chevron to pay up, or seize their assets.

As Quito-based Amazon Watch activist Kevin Koenig told The Financial Times:

"Chevron has to win every one of those cases. The plaintiffs will only need to win one."

Chevron has significant assets convenient to the plaintiffs' base in Latin America, including Argentina, Venezuela and Brazil, where prosecutors are suing the oil giant and oil rig multinational Transocean for $10.85 billion in damages for a large oil spill off the coast of Rio.

Many news reports will note that Chevron continues to pursue international arbitration against the government of Ecuador under the provisions of the Bilateral Investment Treaty (BIT) between the U.S. and Ecuador. Corporate manipulation of and collusion with unaccountable tribunals against the interests of sovereign nations and their citizens outraged people who took the streets around the world, grabbing the world's attention during massive protetsts that shut down the World Trade Organization in Seattle in 1999. The 9-11 terror attacks unraveled that nascent movement but with a resurgent Occupy Wall Street movement today, use of the international arbitration system by deep-pocketed multinationals to defend against liability in countries where they do business will be getting more and more scrutiny. In the Ecuador case, a closed-door tribunal with a panel of international jurists accountable to no one, could conceivably order the Ecuadorian government to mandate that its independent courts release Chevron of liability. But even there, a decision from the tribunal is likely years away, and the plaintiffs have an enforceable multi-billion dollar judgment today.

Returning to The New Yorker's News Desk article by Patrick Keefe, he mentions early settlement talks between Chevron and the plaintiffs, writing that the parties first discussed as little as $140 million. Of course, the plaintiffs walked away from that. He continues:

Since then, each settlement conversation has entertained higher numbers than the last. Chevron once promised the plaintiffs "a lifetime of litigation,” and the sheer acrimony that has marked the case might yet goad both sides to continue the fight. But at some point, they will be forced to bargain, and yesterday's decision in Ecuador could help bring that about.

And a respected oil sector financial analyst seems to think that's exactly what Chevron should do. As The Guardian (UK) reported:

"The wise thing to do is to settle. But they should make sure the money goes to the people who suffered, not the lawyers," said Fadel Gheit, an oil analyst at Oppenheimer. Gheit expects Chevron will try to settle for $2bn-$3bn.

Whether the plaintiffs would ever consider settling for two or three billion dollars is anyone's guess. We're talking about poor farmers whose children have died of cancer and indigenous people who have faced genocide at the hands of oil companies, with ChevronTexaco carving into their rainforest lands, introducing the abuses that still haunt the communities.

As The Miami Herald's Jim Wyss reports, he spoke to my friend Humberto Piaguaje yesterday, who had been trying to reach people in his remote village all day to share the news of the appeals court verdict:

"We've lost so many people in the community," he said, "and it's a shame they couldn't be with us to hear the good news."

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