Quito, Ecuador – Ecuador has rejected a demand for international arbitration by ChevronTexaco Corp. (NYSE:CVX – News) over costs the company has incurred in its defense of a lawsuit brought by Amazon jungle Indians, a document showed on Friday.
ChevronTexaco last month demanded U.S. arbitration over who should pay legal fees under an agreement that a Texaco subsidiary had signed with the country’s state oil firm Petroecuador to produce crude in the Amazon from 1972 to 1992.
The giant U.S. oil company wants the state oil firm to shoulder legal costs Texaco has incurred in a decade-old lawsuit filed by jungle dwellers over environmental damages, insisting the country should respond for its own role in oil operations.
But Ecuador has rejected this claim and argues that the South American country is not subject to foreign courts.
“Ecuador is a sovereign state and does not accept submission to the jurisdiction of U.S. courts or tribunals,” the nation’s attorney general said in a letter to the U.S. oil company. a copy of which was obtained by Reuters.
Plaintiffs representing 30,000 Amazon jungle dwellers, mostly Indians, celebrated the government’s decision.
“For us this is a big victory,” said Luis Yanza, a spokesman for plaintiffs. “This was a way to politically pressure the government to take Texaco’s side.”
In the lawsuit, plaintiffs accuse a subsidiary of Texaco Inc., which merged with Chevron Corp. in 2001, of dumping 18.5 billion gallons of oil-laden water into local rivers. They say environmental damages could require a $6 billion clean-up.
ChevronTexaco says Texaco took measures to keep water clean in accordance with accepted oil practices at the time and paid for a $40 million remediation project approved by Ecuador’s government that freed it of further responsibility.
ChevronTexaco contended that Petroecuador has not done its part in cleaning up oil pits scattered across the crude-rich jungle.
The suit was first filed in the United States in 1993 but returned to Ecuador last year due to issues of jurisdiction.
