Chevron Loses Appeal, Must Pay $18 Billion for Amazon Pollution

on January 04 2012 11:59 AM
Ecuadorean Workers Clean Up and Oil Waste Pit
Ecuadorean workers clean up an oil waste pit owned by state petroleum company Petroecuador in Shushufindi, some 410 km (254 mi) east of Quito Dec. 8, 2009. Reuters

Chevron Corp. Tuesday night lost a judicial appeal against $18 billion in fines the company is being asked to pay by authorities in Ecuador.

The case could still go to a higher Ecuadorian court and is being further argued in front of an international arbitration court in the Netherlands.

Three judges in the Provincial Court of Justice of Sucumbrios in Lago Agrio overturned the company's appeal, reinforcing a February 2011 ruling that fined Chevron for alleged pollution by its Texaco subsidiary, which engaged in over three decades of operation, beginning from the 1960s.

The lawsuits that led to that ruling allege Texaco failed to properly clean up various tracts of Amazonian jungle, prompting health problems in the indigenous population.

Chevron, which bought Texaco in 2001, has contested both the lawsuits and every subsequent court decision out of Ecuador, claiming the rulings are a product of fraud and corruption, and that Chevron has never damaged the Amazon. In a statement Tuesday night, Chevron officials said the appeal's refusal is yet another example of the country's corrupt judicial system.

Chevron does not believe that the Ecuador ruling is enforceable in any court that observes the rule of law, read the company's statement. The company will continue to seek to hold accountable the perpetrators of this fraud.

In September 2011, a U.S. appeals court determined Ecuador had the right to collect on the multi-billion dollar ruling. Whether or not the company will have to pay will depend largely on further proceedings now taking place in the Netherlands.

Following Ecuador's February ruling, the Permanent Court of Arbitration in The Hague issued an injuction based on Chevron's appeal to that international body, which instructed Ecuador to wait before enforcing any judgements. It specifically told that sovereign to use all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment against the [company], court documents read.

Last month, Petroecuador announced it will spend $70 million to clean up tracts of the Amazon it assumed control over after Texaco's 1992 withdraw from the country, but Petroecuador's general manager said his company was not taking responsibility for the allegations. Chevron, however, is blaming the country's oil company for any further environmental and social disruptions, maintaining Texaco fulfilled its obligatory clean-up operations in the country before leaving.