Chevron Battles Record Ruling In Ecuador Environmental Law Case

In what may be considered to be the largest environmental law judgment of all time, an Ecuadorian judge ordered Chevron Corp. to pay $8.6 billion to clean up oil pollution in the country's rain forest.

The judge added an additional claim that if Chevron fails to publicly apologize within the next two weeks, the U.S. oil company must payout twice that amount.

The recent decision marks a significant point in a twenty year legal dilemma between Ecuador and the U.S.

The oil suit has been a hard fought battle by both sides, with each country accusing the other of improprieties. In recent months, Chevron discovered a memo disposing of the plaintiffs' strategy for enforcing any environmental law or regulation in the world that favors an Ecuadorian victory. That implies that the oil giant could be forced to defend itself in virtually any of the countries where it conducts business.

Chevron Corp, which claims to have no assets in Ecuador, denies responsibility for the pollution and put up a stand against any efforts of the courts to seize its property overseas.

The plaintiffs of the case are the current Ecuador residents living in the oil-rich Amazon rain forest. They are seeking to hold Chevron responsible for damages they say was caused by Texaco Inc., a company that operated in the region from 1965 to 1992. After Chevron acquired Texaco in 2001, they company inherited the accountability.

For more over a year, Chevron has said that it expected to lose the battle against Ecuador. The company said that the collusion between the government and the plaintiffs in the country created grounds for an unfair judgment. On Monday, Chevron confirmed its plans to appeal the ruling, adding that it won't pay the fine or apologize for the mess.

The ruling is "illegitimate and unenforceable," said a Chevron spokesman. "It's the product of fraud, and it's contrary to the legitimate scientific evidence."

Ecuadorian plaintiffs disagree by arguing that scientific evidence backs up their claims of environmental damage. Such a ruling was uplifting news for the plaintiffs who experienced many setbacks in U.S. courts that left them strapped for financial support.

However the win for Ecuador could be short-lived. A panel of international arbitrators last week granted Chevron a preliminary injunction that could put a hold on the plaintiffs' ability to enforce the ruling.

The judgment raising many questions of international interests, said an Augusta business lawyer following the case. This only marks a new beginning in this long dispute.

"We believe today's judgment affirms what the plaintiffs have contended for the past 18 years about Chevron's intentional and unlawful contamination of Ecuador's rain forest," said the lawyer who led the plaintiffs' side of the case for years until Chevron's attacks influenced him to step down.

Under Ecuadorian law, Chevron is not responsible for paying any fines until after an attempted appeal, which could take months.

Meanwhile, the oil company is using the power behind U.S. courts in an effort to eliminate all payments due. The company sued the plaintiffs and their top lawyers in the U.S., where a federal judge recently issued a temporary stay blocking the plaintiffs' American lawyers from seeking to enforce any judgment.

Chevron has also sued Ecuador for a sketch trade agreement between the country and the U.S. The panel of arbitrators in The Hague ruled Ecuador to take "all measures at its disposal" to prevent any ruling until the panel contributes to the case's final judgment. That could bottleneck the plaintiff's attempts to convince a foreign court to seize Chevron's assets.

The country of Ecuador has asked a U.S. court to put a hold on a Chevron's trade suit, challenging the panel's legal jurisdiction.

Even if the oil provider never has to pay, the ruling could make matters worse publicly for Chevron as all oil companies are already under scrutiny from last year's major oil spill in the Gulf.

As for the fines due to Chevron, the judge determined it must pay $5.4 billion to restore polluted soil and $1.4 billion to create a health system for the community, in addition to many other penalties. The court also ruled that Chevron owes the Amazon Defense Front an extra 10% in damage fines, factoring to be about $860 million. That could bring the total judgment to $9.5 billion.

During the judgment, the Ecuadorian judge claimed that Texaco had the awareness and ability to prevent such a mess and that the damages were also foreseeable.

The plaintiffs first sued Texaco back in 1993. Texaco, and later Chevron, successfully countered the claim, arguing that it should instead be heard in Ecuador, which at the time was run by a government viewed as friendly to American commercial interests.

However, Ecuador's president Rafael Correa has publicly supported the plaintiffs' cause. The oil giant accuses the country's government of interference of the case.

The plaintiffs in the case have made an effort to better prepare themselves for the next stage of the trial by securing millions of dollars, some of it from a London-based hedge fund that focuses on supporting class-action suits. In addition, they have considered hired new Boise business lawyers to improve their legal approach.