A US appeals court may decide fate of a $9.5 billion fine imposed on the company for environmental damage
By Miguel Tinker Salas, Al Jazeera America
24 April 2015
On Monday, judges in New York began hearing arguments in one of the biggest and longest-running environmental justice cases of all time. At stake is whether a developing country that happens to have oil can enforce its judgments against a multinational company. The results may tell Americans something about what the rule of law is worth in their own country.
In 1993 a group of public interest lawyers, working on behalf of indigenous people in eastern Ecuador filed a class action lawsuit against Texaco over millions of gallons of oil and toxic wastewater that it released into groundwater, rivers and streams. Texaco (which was acquired by Chevron in 2001) fought for nearly a decade to have the case tried in Ecuador, probably thinking that it would be easier to influence the outcome in a developing country. It was mistaken: In 2011 an Ecuadorean court found that Chevron was responsible for the pollution, and after appeals, the company was found liable for $9.5 billion in damages. Since Chevron has no assets in Ecuador, the plaintiffs were forced to sue in the United States and other countries with a Chevron presence to collect the judgment.
The case had enormous implications for the global oil industry. If poor, indigenous people could team up with environmental activist lawyers and win a legal judgment against a multinational corporation, the balance of power between Big Oil and its normally powerless victims might change forever. Although Chevron, valued at over $200 billion, didn't need any help with legal expenses, it probably could have raised hundreds of millions from other oil companies hoping to maintain corporate dominance over local populations and national governments.
Having lost in Ecuador, Chevron brought the case to the U.S., where it went on the offensive and sued the plaintiff's lead attorney, Steven Donzinger, and his legal team. Invoking the Racketeer Influenced and Corrupt Organizations Act – a statute designed to prosecute organized crime – the corporation accused the indigenous plaintiffs and their lawyers of bribing an Ecuadorean judge.
Donzinger and his team have made some mistakes, including allowing an executive summary from an expert witness to be drafted by others. But they categorically deny other charges. In addition, the idea that they had prevailed through illegal means is highly implausible. If the judges in the case in Ecuador were for sale, who would be the highest bidder – Chevron, whose annual revenue is more than double Ecuador's national income, or a handful of environmental lawyers backed by a few donors and activist organizations? As it is, Chevron admitted paying $326,000 for the cooperation of its star witness, former Ecuadorean Judge Alberto Guerra.
But the corporation found a remarkable friendly federal judge in Lewis A. Kaplan of the Southern District of New York. Kaplan's 485-page decision in March 2014 blocked the enforcement of the Ecuadorean court's judgment against Chevron in the United States. On April 20, the U.S. Court of Appeals for the 2nd Circuit heard arguments on whether to let Kaplan's decision stand. There are any number of legal reasons to reverse it, including the way in which he was allowed to decide the case without a jury trial.
Chevron has another tactic up its sleeve. Under the provision of an investment treaty between the U.S. and Ecuador, Chevron claims that it is allowed to convene a panel of lawyers with the power to override Ecuador's judicial system and constitution and throw out the judgment awarded in the original case. This is an example of why these trade agreements – including the proposed Trans-Pacific Partnership, which includes a similar investor-state enforcement mechanism – are so toxic. The lawyers who decide these cases are typically biased toward the investors. But the panel of lawyers has already rejected one of Chevron's main arguments, that Ecuadorean citizens lost their right to sue when the government agreed to a settlement with Texaco in 1995.
Chevron's fundamental strategy is intimidation and delay. In 2010 the company promised to "fight this case until hell freezes over" and then "fight it out on the ice." Faced with endless legal costs, one of the plaintiffs' funders, a lobbying firm and a technical consulting firm have jumped ship.
The government of Ecuador has not, despite the fact that Chevron reportedly lobbied successfully to terminate valuable trade preferences the country had in U.S. markets. Donzinger, who has devoted 20 years to this case, has been demonized in the media by Chevron's unrelenting and lavishly financed public relations campaign. But he's not giving up, nor are Amazon Watch, the Amazon Defense Coalition and other environmental groups that know that Chevron is guilty of a major environmental crime.
Justice delayed is justice denied. Chevron has the money to keep this case in the courts until many of the victims and maybe even their lawyers are dead. But can it do that without hurting its reputation? And what if it loses court cases in other countries, such as Canada, where it also has assets? We can only hope such pressure will force Chevron to abandon its interminable litigation and intimidation tactics and compensate the suffering people of eastern Ecuador.