Second Circuit allows Ecuador court's $18 billion judgment against Chevron
The US Court of Appeals for the Second Circuit in Manhattan on Jan. 26 overturned an injunction won by Chevon Corporation to block enforcement of what the US oil company claims is a fraudulent, multibillion-dollar judgment in Ecuador for polluting the Amazon rainforest. In reversing the decision made by the US District Court for the Southern District of New York, the Second Circuit held that Chevron may not challenge the approximately $18 billion Ecuadoran judgment before enforcement of that judgment has actually been sought by the Ecuadoran plaintiffs. In its interpretation of the Uniform Foreign Money-Judgments Recognition Act, the court concluded that judgment-debtors like Chevron can challenge a foreign judgment's validity under the Act only defensively and in response to an attempted enforcement. The court found that an effort of enforcement by the Ecuadoran plaintiffs had not yet been undertaken anywhere, and might never be undertaken in New York. While both Chevron and the Ecuadorian plaintiffs have yet to comment on the decision, Chevron has long contended (press release, PDF) that it has never conducted oil operations in Ecuador and that the allegations of environmental and social harm in the Amazon are therefore false.
Just last week, Chevron filed a similar appeal with Ecuador's National Court of Justice to reconsider the original decision by an Ecuadoran judge requiring the oil company to pay roughly $18 billion in damages for its role in polluting the Amazon. Specifically, Chevron argued that the judge's decision violated Ecuador's constitution because the court failed to correct or punish the alleged fraud and corruption committed by plaintiffs' attorneys. Chevron also contended that because it inherited the case from Texaco, an oil company that was released from such liability by Ecuador in the 1990s, it too should be released from liability.
The judgment was originally upheld in January by a three-judge panel of the Provincial Court of Justice of Sucumbios in Lago Agrio, Ecuador. Though the fine was initially set at $8.6 billion, it was later more than doubled for Chevron's refusal to pay "moral reparations" to the Ecuadoran government, as required by the original ruling. The Amazon Defense Coalition, the Ecuadoran plaintiffs, have said that the first judgment was a reaffirmation of how Chevron's greed and criminal misconduct in polluting the region has led to death and disease. Damages were initially awarded last February by the Provincial Court of Justice of Sucumbios which found that Texaco, acquired by Chevron in 2001, polluted large areas of the country's rainforest.
From Jurist, Jan. 26. Used with permission.