Ecuadoreans Win Round in Drawn-out Chevron Battle

By Basil Katz, Reuters
12 May 2011

New York, NY – A U.S. appeals court on Thursday modified a lower court order that barred Ecuadorean villagers from collecting an $8.6 billion award against Chevron Corp for polluting the Amazon rain forest.

A three-judge panel of the U.S. Court of Appeals for the 2nd Circuit in New York, in a terse ruling, relaxed rules in the order to allow plaintiffs' lawyers to meet with their clients and raise funds to fight Chevron in court.

The order, issued in March by U.S. District Judge Lewis Kaplan in New York, was just one development in a 17-year legal battle in which rain forest residents say Texaco, bought by Chevron in 2001, is responsible for hazardous oil-drilling waste dumped on their land in the 1970s and 1980s.

Chevron says Texaco cleaned up all waste pits for which it was responsible before turning the sites over to state-owned oil company Petroecuador, which still operates in the area.

Plaintiff lawyer James Tyrrell had asked the judges to narrow the order to allow "legal advice and funding."

While the appeals court panel on Thursday denied a request to immediately freeze Kaplan's order, it did approve the Ecuadorean's request to fast-track the appeals process.

"We were very pleased with the ruling today," Tyrrell said.

The appeals court ruling added that the Ecuadoreans and their lawyers were still barred from seeking to enforce the damages award or obtain any proceeds from seizing assets.

Chevron attorney Randy Mastro said that aspect of the appeals court ruling was a victory for the oil company.

"We're very gratified that we'll have the chance to expose the travesty of justice that occurred in Ecuador at trial in the Southern District of New York later this year," Mastro said.

An Ecuadorean court in February ruled against Chevron, but enforcement of the damage claim was stopped by Kaplan, who issued a preliminary injunction preventing the plaintiffs from trying to collect on the judgment outside Ecuador.

In his March 7 ruling, Kaplan noted that the damages had more than doubled from $8.6 billion originally to about $18 billion because Chevron failed to make a public apology and when a payment to the Amazon Defense Front is included.

Chevron has no assets in Ecuador, but the second-largest U.S. oil company worries that the plaintiffs will try to collect on the judgment in other countries.

So in anticipation of a judgment in Ecuador in favor of the Ecuadorean farmers, Chevron asked Kaplan to step in.