Ecuador Seeks Damages from Chevron for Oil Spill

Chevron Corp. (CVX) is facing its first test of whether farmers and fishermen from the Amazon rainforest will collect $19 billion in environmental damages from the world’s fourth-largest oil company.

A group of 47 Ecuadoreans have asked Ontario’s Superior Court of Justice to seize Chevron assets in Canada, ranging from an oil sands project to offshore wells, to satisfy a 2011 court ruling in the Latin American nation that ordered the company to pay for oil pollution dating to the 1960s. Chevron said the Ecuadorean judgment is outside Ontario’s jurisdiction and that the ruling resulted from bribery and fraud.

A hearing in Toronto today marks the Ecuadoreans’ inaugural step in a global collection effort that includes seizure attempts in Argentina and Brazil. The Ecuadoreans estimated Chevron has $12 billion in Canadian assets, a figure that equates to almost half of the company’s 2011 profit. An adverse Ontario ruling for Chevron would put at risk fuel-manufacturing and oil-production operations across Canada.

Robert Sweet, who helps manage $150 million at Horizon Investment Services in Hammond, Indiana, said it is a cause for concern, and as with all ecological disasters will take a long time to resolve.

The company’s presence in Canada dates back to the 1930s and includes an oil-refining complex in British Columbia, an Alberta oil-sands venture, offshore wells in the Atlantic Ocean, and cash held in Canadian bank accounts.

Every Strategy

San Ramon, California-based Chevron was on the losing side of last year’s ruling by a provincial Ecuadorean court that blamed decades of toxic soil and water contamination on Texaco Inc., which Chevron acquired in 2001. Texaco was found to have discharged into the environment saltwater and other byproducts of oil drilling. Texaco quit the country and its equipment was taken over by the Ecuadorean state oil company in 1992.

The $19 billion ruling handed down last year by a court in Lago Agrio, a town near Ecuador’s border with Colombia, held Chevron accountable for health and environmental damages resulting from chemical-laden wastewater dumped from 1964 to 1992.

The Ecuadorean plaintiffs, from the remote northern Amazon River basin, are seeking enforcement of the judgment outside their home country because Chevron has no refineries, oil wells, storage terminals or other properties in the nation. Pablo Fajardo, their lead lawyer in Ecuador, said during a February 2011 conference call with reporters he would use every strategy and manner at his disposal to collect the award.

Corporate Veil

In a Nov. 23 filing, Chevron argued the Ontario court has no jurisdiction to grant the Ecuadorean judgment because the company’s Canadian units are indirect subsidiaries with independent boards separated from the U.S. parent by several levels of ownership.

The Ecuadoreans face an “uphill battle” because they must convince the court that Chevron and its Canadian operations should be treated as one entity rather than separate companies, said Barry Leon, a partner and head of the international arbitration group at Perley-Robertson, Hill & McDougall LLP in Ottawa.

Chevron rose 0.8 percent to $106.35 at 9:35 a.m. in New York today. The shares have increased 9.1 percent in the past year.

Pending Arbitration

According to Chevron Chairman and Chief Executive Officer John Watson, the Ecuadoreans’ lawyers have blackmailed judges, bribed judges, falsified evidence, falsified expert witnesses, ghostwritten expert opinions and ghostwritten court judgments. If the plaintiffs were confident in the “integrity” of the ruling, they would seek enforcement in U.S. courts with jurisdiction over the parent company, Kent Robertson, a company spokesman, said in an e-mailed statement.

Alan Lenczner, the Toronto attorney from the firm Lenczner Slaght Royce Smith Griffin LP representing the Ecuadoreans, when reached by phone declined to comment on the case.

Leon said  it is likely that the initial decisions will be appealed.

Chevron doesn’t disclose how much it spends on legal fees.

The Hague

Chevron is awaiting a ruling in a related case before the Permanent Court of Arbitration, the 113-year-old panel based in The Hague that handles trade disputes between corporations and nations. Chevron filed the arbitration claim in 2009, accusing the government of Ecuador of reneging on a 1998 contract that absolved Texaco of Amazonian pollution claims. Three days of hearings in the case concluded yesterday, Robertson said.

Chevron’s campaign to avoid payment suffered a setback last month when the U.S. Supreme Court upheld a lower-court decision that rejected the company’s request for a pre-emptive block on collection efforts in Chevron’s home country. The lower court had ruled that it didn’t have authority to thwart payment when the Ecuadoreans hadn’t yet filed such a claim in the U.S.

Unfair Influence

Following the filing of their Canadian seizure request in May, the Ecuadoreans sought similar forfeitures in a Brazilian tribunal in June and in Argentina earlier this month. A judge in Buenos Aires ordered some Chevron bank deposits held in escrow while the case is pending, Enrique Bruchou, a lawyer for the Ecuadoreans, said in an interview on Nov. 7.

Today, in paid statements published in two Argentine newspapers, Chevron urged the local court to release its money from escrow and indicated the company intends to pursue a legal defense identical to that employed in Canada. “Chevron Argentina has never had operations in Ecuador and has no relation with the fraudulent trial in Ecuador,” the company said in the newspapers Clarin and La Nacion.

Transparency International

Chevron has accused the Ecuadorean government of unfairly influencing court proceedings that led to the $19 billion ruling and alleged that a damage assessment provided by a court- appointed expert was ghostwritten by consultants and lawyers hired by the plaintiffs.

Lawyers for the Ecuadoreans including Stephen Donzinger have accused Chevron of engaging in a campaign to discredit them, entrap an Ecuadorean judge that presided over the case and set up dummy corporations in Ecuador to hide Chevron’s alleged role in testing soil samples from the pollution sites.

Ecuador ranked 120th out of 183 nations in Transparency International’s 2011 corruption-perception index, where No. 1 New Zealand is perceived to be the most honest. Albania, Liberia and Lesotho were perceived as less corrupt than Ecuador, according to the index.

US gulf coast officials have yet to comment, while companies like Sarasota Condo Rentals continue their best efforts at business since the 2010 spill.

In February 2011, Chevron filed a racketeering lawsuit that’s ongoing against the Ecuadoreans and their lawyers in New York for “leading a fraudulent litigation and PR campaign against the company.”

Exxon Mobil Corp. (XOM) is the world’s biggest oil company by market value, followed by PetroChina Company Ltd. and Royal Dutch Shell Plc (RDSA), according to data compiled by Bloomberg.

Chevron Facing Criminal Charges in Brazil

First USA Today

Reuters is reporting that a November oil spill off Brazil will likely result in criminal charges "within weeks" against Chevron Corp., its top local executive and some employees of Transocean Ltd., the drilling rig firm involved in the Gulf of Mexico disaster. A West Hollywood Environmental Lawyer watched closely.

Three Brazilian government officials involved in the case told Reuters that a federal court filing "will likely include a request for criminal indictment" of George Buck, chief executive of Chevron's Brazil unit, along with other staff members.

The case has not yet been presented to a judge, who would decide "whether to accept the charges and proceed with indictments," Reuters writes.

Chevron spokesman Kurt Glaubitz told Reuters the California-based oil giant "believes that the charges are without merit" and that "Chevron is confident that once all the facts are fully examined, they will demonstrate that Chevron responded appropriately and responsibly to the incident."

A Transocean spokesman declined to comment. A Portland Environmental Lawyer was interested in the non-comment.

Federal prosecutors have already filed a civil lawsuit that seeks $11 billion for the 2,400-barrel spill about 75 miles off the southeastern coast of Brazil.

A Federal Police report has accused Chevron and Transocean of taking "unacceptable" risks and concluded that the 4,000-foot-deep well "could not and should not have been drilled." Police recommended that 17 individuals be indicted, including as many as 12 from Chevron, Reuters says, citing legal documents

A pressure "kick" from natural gas occurred Nov. 7 after the well was tapped in the Fade oil field, triggering an emergency blowout preventer. But days later, oil was found leaking from the ocean floor several hundred feet from the plugged well.

The failure of a blowout preventer triggered the April 2010 explosion and fire that destroyed a Transocean rig drilling for BP and resulted in the historic Gulf disaster. No criminal charges were ever filed. Although, a Salt Lake City Environmental Lawyer was curious about the situation.

Today in New Orleans, a federal judge ruled that Transocean's contract with BP shielded it from paying many pollution claims but that the rig owner is not exempt from punitive damages and civil penalties.

In his ruling, U.S. District Judge Carl Barbier said Transocean is responsible for claims directly related to pollution caused by its Deepwater Horizon rig.

Chevron Doesn't Want to Pay Damages

First appeared on Yahoo! News
Chevron Corp has filed an appeal with Ecuador's Supreme Court to review a judgment that the U.S. oil company pay $18 billion in damages for polluting the Amazon jungle.

An Ecuadorian judge ordered the U.S. major to pay the damages after a fraught legal battle that has lasted nearly two decades and looks like it will run even longer.

The California oil company inherited the case when it bought Texaco a decade ago. Its appeal on Friday argued that the lower courts violated Ecuador's constitution by refusing to take corrective action in response to what Chevron calls "extensive fraud and corruption" committed by the plaintiffs' lawyers and representatives.

Chevron said the original judgment, delivered last February by an Ecuadorian court in the jungle city of Lago Agrio, was based on faulty evidence and retroactive application of a law, while ignoring releases of liability granted to Texaco by Ecuador in the 1990s.

"Today's appeal gives (the Supreme Court) an opportunity to correct the grave injustices that have occurred in this case," Hewitt Pate, Chevron's general counsel, said in a statement.

The case is being watched closely by the oil industry for precedents that could influence other claims against companies accused of pollution in the countries where they operate.

Plaintiffs have responded to the accusations by citing Chevron's own test data in documenting the pollution and arguing that Ecuador's release for Texaco did not prevent third parties from suing for damages.

In related litigation in New York, the plaintiffs also accuse the company of mishandling soil and water samples during the Lago Agrio trial by maintaining two different laboratories, based on testimony from a Chevron expert.

Along with the appeal in Ecuador, Chevron asked that it not be required to post a bond to prevent enforcement of the judgment during the appeal process, arguing that such a payment would violate Ecuador's obligations under an order issued last February by an international arbitration tribunal.

Pablo Fajardo, a lawyer for the plaintiffs, said the next step would be to see whether the Lago Agrio appeals court requires Chevron to pay.

"If it asks (Chevron) to pay a bond, and if it pays the bond, then only the bond can stop us from carrying out the sentence," Fajardo told Reuters.

Asked if the plaintiffs were looking at any country in particular where it could seek to collect the damages, he said they would first await the decision on the bond. "We haven't done anything, we don't have any plans yet," Fajardo said.

Chevron no longer has assets in Ecuador, so questions surround the enforcement of the original ruling. A lawyer for the company accused the plaintiffs last May of planning to seek enforcement in countries hostile to Chevron.

The entire case may be reheard far from both Ecuador and the United States. The arbitration tribunal in The Hague, operating under a U.S.-Ecuador treaty, ordered Ecuador to take all measures at its disposal to suspend enforcement of the Lago Agrio judgment until the arbitrators have their say.

The tribunal is expected to rule any day on the question of whether or not it has jurisdiction in the case.