Ecuadorian Court Confirms $18 Billion Chevron Damage Award

LAGO AGRIO, Ecuador, January 4, 2012 (ENS) – A court of appeals in Ecuador has upheld an $18 billion damage award issued by a lower court in February against U.S. oil giant Chevron for contamination of the Ecuadorian rainforest by its subsidiary Texaco Petroleum.

After reviewing the 220,000 page trial record for 11 months, the three-member appellate panel in the Provincial Court of Justice of Sucumbios in Lago Agrio ruled Tuesday that laboratory results confirm that pollution existed at Texaco’s former well sites hundreds of times higher than permissible norms in Ecuador.

Chevron purchased Texaco in 2001, so the plaintiffs consider Chevron responsible for Texaco’s liabilities incurred prior to the purchase.

“This decision confirms what we have been saying for years,” said Pablo Fajardo, the lead Ecuadorian lawyer. “Chevron is guilty of extraordinary greed and criminal misconduct that has created a humanitarian crisis in Ecuador that puts thousands of people at risk.”

Gas is flared off over an oil pool left by Texaco in Oriente Province, Ecuador, October 2006 (Photo by Michael Dorsey)

The 30,000 plaintiffs, who are Ecuadorian indigenous people and farmers, said in a statement Tuesday, “The decision by an independent appellate court is yet further confirmation of Chevron’s extraordinary greed and criminal misconduct in Ecuador. The decision is based on overwhelming scientific evidence presented at trial that proved Chevron deliberately dumped billions of gallons of toxic waste that poisoned the water supply of the Amazon rainforest, decimating indigenous groups and causing an outbreak of cancers and other diseases that continue to threaten thousands of innocent lives.”

The decision is the largest environmental award in history and is the latest development in an 18-year legal battle to win cleanup of contaminated sites, clean drinking water, and health care.

Texaco is alleged to have caused hundreds of oil spills in Ecuador, many of which were “remediated” by setting them on fire and to have poured sludge from the oil waste pits along dirt roads.

“The judges found ample scientific basis to uphold the damages award, including devastating evidence provided the court by Chevron’s own team of technical experts that proved levels of pollution hundreds of times higher than permitted by law,” said Karen Hinton the Washington, DC-based spokesperson for the Amazon Defense Coalition, the plaintiffs’ organization.

But, citing a lack of evidence, the appellate panel rejected efforts by the indigenous communities to seek additional damages for the loss of their ancestral lands and for the spreading of oily waste on the dirt roads of the region.

The case was heard in Ecuador at the request of Chevron, which fought for almost a decade to shift the venue away from the U.S. federal court where it was originally filed in 1993.

Chevron states that the company “has never conducted oil production operations in Ecuador, and its subsidiary, Texaco Petroleum (TexPet), fully remediated its share of environmental impacts arising from its participation in an oil producing consortium with Petroecuador prior to 1992. After the remediation work was certified by all agencies of the Ecuadorian government responsible for oversight, TexPet received a complete release from Ecuador’s national, provincial and municipal governments prior to being acquired by Chevron in 2001.”

Drums containing waste beside a pool of oily waste near Lago Agrio, Ecuador, November 2007 (Photo by Julien Gomba)

“Petroecuador was the majority owner of the consortium in which TexPet participated until 1992 and has been the sole owner of greatly expanded oil operations in the former concession area over the past two decades,” Chevron says, pointing out that in December 2011 Petroecuador announced it will complete its remediation of the sites it is responsible for at a cost of $70 million.

Each side is accusing the other of fraud and misconduct during the trial.

The plaintiffs have long alleged that Chevron has tried to undermine the trial by filing frivolous motions and attempting to intimidate judges.

In their decision, the judges agreed, noting that Chevron had “staged incidents that encumbered the process of the trial” and that the company dumped 20,000 pages of largely redundant evidence on the appellate court to delay consideration of the case.

In response to Chevron’s complaints that it was “denied justice” in Ecuador, the appellate court noted on the second page of its decision that the only filings from the oil giant that were denied were those that were “abusive” and “clearly designed to obstruct the administration of justice.”

Referencing Article 283 of Ecuador’s Civil Code, and citing examples of Chevron’s malfeasance during the trial, the appellate panel upheld a decision that Chevron should pay the plaintiffs’ legal costs due to the “flagrant bad faith it exhibited in the case.”

An elder of the indigenous Cofan people protests in front of the Lago Agrio courthouse holding a bag of oily waste, July 2007. (Photo by Firgs)

The judges wrote, “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.”

The appellate panel also criticized Chevron for continuing to challenge the jurisdiction of Ecuador’s courts, even though the oil giant voluntarily agreed to litigate the case in Ecuador to induce a U.S. federal judge to shift the venue to the South American country.

“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,” the panel wrote in its decision.

Chevron said in a statement Tuesday, “Today’s decision is another glaring example of the politicization and corruption of Ecuador’s judiciary that has plagued this fraudulent case from the start. The Lago Agrio judgment was procured through a corrupt and fraudulent scheme, much of which was captured on film and memorialized in the plaintiffs’ representatives’ own emails and correspondence. Their misconduct includes fabricating expert reports, manufacturing evidence, bribing and colluding with court officials, waging a campaign of intimidation against judges, and even ghostwriting parts of the verdict itself.”

“Evidence of these crimes has been provided to Ecuador’s courts and prosecutors, but authorities there have taken no corrective actions,” Chevron stated. “In the United States, however, no less than eight federal judges have found that the trial in Ecuador has been marred by the fraud and misconduct of the plaintiffs’ representatives. And an international Tribunal presiding in the Permanent Court of Arbitration in The Hague has ordered Ecuador to take all measures at its disposal to suspend enforcement of the Lago Agrio judgment within and without Ecuador.”

“Chevron does not believe that the Ecuador ruling is enforceable in any court that observes the rule of law,” the company said.

The plaintiffs said Tuesday, “Because Chevron’s current management team continues to mislead its own shareholders and disobey the law in Ecuador, the rainforest communities are being forced to consider standard judgment enforcement actions against Chevron in other countries to protect their legal right to funds necessary to restore their ancestral lands and save lives.”

“We note Chevron grossed $240 billion in 2011 and reported profits of roughly $8 billion in the most recent quarter,” the plaintiffs said.

“Whether people live or die depends largely on whether Chevron meets its responsibility to remediate a problem it created,” said the plaintiff’s lawyer Fajardo. “Chevron broke the rainforest. It now must fix it.”

Copyright Environment News Service (ENS) 2012. All rights reserved.