Chevron notches key win in Ecuador pollution fight

SAN FRANCISCO Sat Feb 12, 2011 12:24am IST

The Chevron corporate logo is displayed at a Washington D.C. gas station January 11, 2010. REUTERS/Jason Reed/Files

The Chevron corporate logo is displayed at a Washington D.C. gas station January 11, 2010.

Credit: Reuters/Jason Reed/Files

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SAN FRANCISCO (Reuters) - International arbitrators ordered Ecuador to suspend enforcement of any judgment against Chevron Corp in its marathon rainforest pollution case, representing an important win for the U.S. oil company.

The order, dated Feb. 9 and posted on Chevron's website, came a day after a New York judge issued a temporary restraining order against the Ecuadorean plaintiffs to stop them going outside the United States to seek enforcement of any court ruling against the company.

The move to the arbitration tribunal in The Hague, made in September 2009 shortly after the appointment of Chevron General Counsel Hewitt Pate, was a key part of the company's containment strategy for litigation seeking billions of dollars in damages.

Chevron expects to lose the case being heard in the Ecuadorean jungle town of Lago Agrio, where a ruling is anticipated in the weeks or months ahead.

The tribunal, formed under the authority of a bilateral U.S.-Ecuador investment treaty, ordered the South American country to "take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment" against Chevron in the case.

The Ecuadorean plaintiffs, backed by U.S. lawyers, began their case against Texaco in 1993 in a Manhattan court. The case moved to Ecuador nearly a decade later, by which time Texaco had been bought by San Ramon, California-based Chevron.

The plaintiffs accused Texaco of dumping oil-drilling waste in unlined pits, contaminating the forest and causing illness and death among local people. They sought up to $27 billion in damages, which then rose to as much as $113 billion following further input from plaintiffs' experts.

While Chevron had pushed for moving the case to Ecuador, the company later said the judicial process had been corrupted. This month, it filed a civil racketeering lawsuit in New York against the plaintiffs, accusing them and their U.S. supporters of extortion.

A U.S.-based spokeswoman for the plaintiffs, Karen Hinton, said in an emailed statement that it was inappropriate for the tribunal "at the 11th hour" to ask a sovereign nation to interfere with an ongoing trial.

"We have confidence that the voluminous, scientific evidence before the court in Chevron's preferred forum of Ecuador will lead to a final judgment that will command international respect and will finally provide a remedy to the thousands of indigenous people and farmers who have suffered for decades because of contamination created by Chevron," Hinton added.

The tribunal involved three arbitrators, including one named by Chevron, one appointed by Ecuador and a third chosen by the other two. The U.S.-Ecuador treaty giving them authority was signed on Aug. 27, 1993 -- just over two months before the date of the plaintiffs' first case against Texaco in New York.

(Reporting by Braden Reddall; editing by Lisa Von Ahn; John Wallace and Andre Grenon)

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