Chevron Appeals Ecuador Judgment
SAN RAMON, Calif., Mar. 11, 2011 -- Chevron Corporation (NYSE: CVX) has appealed the judgment entered last month against the company by the Provincial Court of Justice of Sucumbíos in Lago Agrio, Ecuador in a lawsuit alleging that Texaco Petroleum Company’s participation in a state-controlled oil consortium prior to 1990 makes Chevron responsible for environmental impacts in the area. In the filing, Chevron details the pattern of fraud by the plaintiffs’ lawyers, supporters and others that has corrupted the trial, as well as the numerous legal and factual defects in the judgment.
In addition to its appeal in Ecuador, Chevron continues to seek recourse through legal proceedings outside of Ecuador. In an arbitration Chevron initiated in 2009 under the U.S.-Ecuador Bilateral Investment Treaty (BIT), a Tribunal in The Hague issued an order on Feb. 9 requiring Ecuador to take all measures at its disposal to prevent enforcement of the Lago Agrio judgment until further order of the Tribunal, including the Tribunal’s final award on the merits. On Mar. 7, the U.S. District Court for the Southern District of New York issued a preliminary injunction against the Lago Agrio plaintiffs, their lawyers, and those in concert with them, barring them from attempting to enforce the Lago Agrio judgment pending resolution by the U.S. court of Chevron’s claims that the Lago Agrio judgment is unenforceable.
Through discovery proceedings in the United States, Chevron obtained thousands of documents that memorialize the plaintiffs’ lawyers’ efforts to pressure judges to rule in their favor, corrupt expert reports, and manufacture evidence.
Chevron’s appeal points to evidence that the plaintiffs’ lawyers falsified data and pressured scientific experts to “find contamination” where none existed. The plaintiffs’ lawyers also procured the appointment of a supposedly neutral “global expert” who was recruited and paid by the plaintiffs’ lawyers to pass off as his own a damages report ghostwritten by Stratus and plaintiffs’ other consultants. As this scheme was being exposed through discovery proceedings in U.S courts, the plaintiffs’ lawyers later attempted to conceal the fraud by hiring another U.S. firm to repackage the data and conclusions under new names. Even though the court claims that it cured this misconduct by not considering the fraudulent “global expert” report, the judgment relies on data and conclusions produced in that report.
As the company states in its appeal, the court ignored the valid scientific evidence. All legitimate expert reports in the case concluded that the areas remediated by Texaco Petroleum Company pose no significant risk of harm to human health or the environment. Besides the evidence of fraud and corruption, Chevron’s appeal sets forth numerous additional grounds for reversal, establishing that the judgment is contrary to the facts and law, including:
- The court disregarded the effect of prior settlement agreements between Texaco’s subsidiary, Texaco Petroleum Company and the national, provincial and municipal governments of Ecuador, which released Texaco Petroleum Company and its affiliates, including Chevron, from all further environmental liability.
- The court based its judgment on an unlawful, retroactive application of Ecuador’s Environmental Management Act, which was enacted in 1999, after Texaco Petroleum Company ceased operations in Ecuador and after it was released from all potential liability for environmental impact.
- The court refused to consider Petroecuador’s responsibility for environmental impacts as the majority owner of the consortium from 1976 to 1992, and as the sole and exclusive owner and operator of greatly expanded operations in the area from 1992 to the present.
- Disregarding evidence submitted by Chevron, the court instead relied on biased and unreliable evidence submitted by the plaintiffs’ nominated experts — evidence the plaintiffs themselves have admitted is deficient. On multiple occasions, the court claimed that samples showing no contamination provided evidence of contamination, reporting, for example, “alarming levels” of mercury where the cited test results show no mercury was detected.
- The court awarded $5.396 billion for soil remediation, nearly double the grossly inflated amount in the fraudulent “global expert” report, five to eleven times greater than what plaintiffs’ own specialist proposed, and 171 times higher than the amount Petroecuador estimated was necessary to remediate a larger area.
- The court awarded $600 million for remediation of claimed groundwater contamination without citing a single sample of groundwater showing oil-related contamination, and ignoring plaintiffs’ repeated admissions that there is no such evidence.
- The court awarded $1.4 billion for “mitigation measures” to address public health — despite the court’s admission that no individual health problems had been identified, and without providing any basis for the amount of the award. Indeed, the court added an equally arbitrary $800 million for alleged “excess” cases of cancer, even though the court admitted that no individual claims of cancer had been made, and there is no proof in the record of the case showing a cause-and-effect relationship between proximity to oil-producing activities and an increased risk of cancer.
- The court’s additional award of $8.646 billion unless Chevron issues a public apology is an award of punitive damages, in violation of Ecuadorian law which does not recognize such damages. By imposing this award, the court, in effect, penalized Chevron billions of dollars for exercising its fundamental right to defend itself.
Chevron is one of the world’s leading integrated energy companies, with subsidiaries that conduct business worldwide. The company’s success is driven by the ingenuity and commitment of its employees and their application of the most innovative technologies in the world. Chevron is involved in virtually every facet of the energy industry. The company explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.
Updated: March 2011