Chevron's Efforts to Undermine the Rule of Law

Chevron has been in court since 1993 over oil contamination in Ecuador. Not only has the oil company managed to delay a resolution in the case for nearly two decades, while innocent people continue to suffer, but the company has shown its disregard for the judicial process throughout by using a formidable array of legal and extrajudicial tactics to try to have the case dismissed or, barring that, to engineer a favorable outcome.

These tactics include spurious lawsuits in the U.S. and international courts intended as distractions from the Lago Agrio trial; brazen attempts to use political and even military pressure to Chevron's advantage; and a highly misleading public relations campaign intended to spread the view that Chevron is not getting a fair trial in Ecuador.

Chevron would like to be seen as the victim of a "shakedown" by opportunistic trial lawyers. The reality is that Chevron is responsible for decades of contamination and disease in the Amazon, and does a great disservice to the rule of law and to basic standards of moral responsibility as long as it refuses to own up to that.

Legal Efforts to Block the Case

Chevron has repeatedly tried to argue before Ecuadorian, U.S. and international courts that the lawsuit it faces in Ecuador is invalid. The basis of Chevron's argument is a specious claim that the Ecuadorian government released the company in 1998 from all liability for environmental damage in the Ecuadorian Amazon. This is false, and no court has ever sided with Chevron on the issue.

In fact, the release signed by Texaco (now Chevron) and the Government of Ecuador in 1998 explicitly excludes private claims against the company from its scope. Private citizens such as the plaintiffs in the Lago Agrio trial are entirely within their right to sue Chevron for monetary damages.

Chevron has sued in U.S. Appeals Court to force Ecuador into binding arbitration, claiming the 1998 release obligates Ecuador to indemnify the company. In 2008, Chevron lost this appeal. Chevron, looking for other options, has been testing the waters of international law; the company has sued Ecuador for $1.6 billion at the Permanent Court of Arbitration in The Hague, Netherlands, for alleged breach of contract.

The case in The Hague is ongoing, but in February 2011 the Arbitration court ordered Ecuador to temporarily block any enforcement of the Lago Agrio judgment against Chevron. Chevron is attempting to use international arbitration to force Ecuador's government to foot the bill for cleanup and bypass the plaintiffs and the civil court system entirely.

Political Pressure

Chevron paints itself as a victim of extrajudicial pressure in Ecuador. The company condemns Ecuadorian President Rafael Correa for making public statements in sympathy with the plaintiffs, arguing that this constitutes executive branch interference in the judicial process and renders it impossible for the company to get a fair trial.

What Chevron will not tell you is that the company itself has tried numerous times to persuade the executive to interfere in the case, on its behalf. In 2003, before the trial even began in Lago Agrio, Chevron's local lawyers were visiting Ecuador's attorney general and urging him to persuade the judge to drop the case. Chevron also attempted in 2006 to secure the support of President Alfredo Palacio, and more recently appealed to current officials, including Security Minister Gustavo Larrea, to undermine the civil trial.

Chevron has also flexed its political muscle in the United States. The company hired well-connected lobbyists, including former Senate Majority Leader Trent Lott, to urge the U.S. Trade Representative to withhold special trade privileges for Ecuador unless the case against it were dropped. This would have amounted to holding Ecuador's economy hostage in exchange for favorable treatment of a U.S. corporation accused of wrongdoing.

The USTR lobbying effort did not go well for Chevron. It attracted criticism from prominent senators, including now-President Barack Obama, and unflattering media attention, particularly in a 2008 Newsweek story which quoted a Chevron lobbyist as saying, "We can't allow little countries to screw around with big companies like this." Nonetheless, Chevron's lobbying activities reveal how far the company will go to avoid the judgment of the courts.

Military Ties in Ecuador

If Chevron's willingness to use its political influence in the United States is not threatening enough, the company's close ties to the Ecuadorian military in Lago Agrio are far more worrisome. Chevron lawyers and executives were formerly housed on the base of Special Forces Division "Rayo 24" in Lago Agrio during the course of the trial, and Chevron is known to have paid the military to provide security. The Ecuadorian Armed Forces also provided private security to Texaco during the years of its operation in the country.

Irregularities in the trial process seem to have arisen from this cozy relationship. For example, an inspection of the Guanta petroleum separation station was cancelled in October 2005, on account of a supposed plan by local Cofán indigenous people to disrupt the inspection and take Chevron personnel hostage. In reality, the one page document alleging the existence of such a security threat seems to have been fabricated by military officials on behalf of Chevron, as there is no credible evidence that such a plan ever existed.

Most worrisome is a series of threats and attacks against people connected to the plaintiffs in the case in 2005 and 2006. Multiple plaintiffs' lawyers received death threats, and one spokeswoman was ambushed while driving by a truck without license plates, which attempted to force her car off the road and into a ditch. A community organizer's daughter was the victim of a failed kidnapping attempt. One plaintiffs' lawyer found his office burglarized - documents were taken, while money and valuables were not.

Chevron has never been tied to this apparent intimidation campaign, but those involved in at least two instances appear to have had military connections. Chevron refused to condemn the pattern of illegal acts, despite that the perpetrators seem to have intended to act on Chevron's behalf.

Dishonest Public Relations Campaign

Chevron uses a smoke-and-mirrors approach to try to convince the public, government officials, and even international courts, that it's not getting a fair trial in Ecuador. To hear Chevron tell it, the trial is a farce, a "shakedown" of a profitable company over pollution for which it is not responsible. Unfortunately for Chevron, tens of thousands of scientific tests, and the experiences of thousands of people who have lived with contamination for decades, tell a different story.

The fundamental issue is that Ecuador's Oriente suffers pervasive contamination from oil operations, and that this problem dates very clearly to Texaco's negligient operations. Chevron's effort at an end run around the courts depends on a public relations campaign designed to obfuscate that fundamental issue as much as possible, in order to convince the public (and its political leaders) to see the oil major as victim instead of aggressor.

Smear Campaigns and Counter-suits

Chevron has targeted individuals associated with the case in order to attack their credibility. After plaintiffs' lawyer Pablo Fajardo and community organizer Luis Yanza won the Goldman Environmental Prize in 2008, Chevron took out full-page newspaper ads accusing the two of fabricating their story and being con artists. (See Fajardo and Yanza's response to this ad here.)

Chevron has also aggressively attacked the credentials and impartiality of Richard Cabrera, a court-appointed independent expert in the case. Chevron claims that the plaintiffs conspired with Cabrera to ensure his report was favorable to their case, and has gone so far as to argue in U.S. courts that plaintiffs' lawyers committed fraud by meeting with Cabrera in private and submitting materials to him that he used in his expert report. This argument by Chevron is a misleading effort to take advantage of U.S. judges' unfamiliarity with the Ecuadorian legal system. The fact is that in Ecuador, so-called ex parte contacts between parties to a case and a court-appointed expert are completely allowed, and both sides were invited to submit documents to Cabrera for his consideration. Chevron chose instead to attack Cabrera's impartiality and refuse to assist him in much of his investigation, a disingenous strategy that allowed them later to claim that Cabrera's report was biased and should be thrown out, along with the thousands of valid contamination samples it was based on.

In February 2011, just two weeks before the judge in Lago Agrio released his verdict against Chevron, the company threw a desperate "Hail Mary pass;" it filed a lawsuit in the Second District Court of New York under the RICO (Racketeering Influence and Corrupt Organizations) Act, a law written to prosecute the Mafia, which breathlessly accuses nearly every named Ecuadorian plaintiff, plaintiffs' lawyer, scientific consultant and allied activist organization involved in the Lago Agrio lawsuit, including Amazon Watch, of perpetrating an enormous fraud solely in order to extort billions of dollars from Chevron. Chevron's evidence comes largely from hundreds of hours of outtakes from the documentary Crude that Chevron obtained through a court-ordered subpoena. The outtakes show plaintiffs' lawyers making candid, tongue-in-cheek and exaggerated statements that, taken completely out of context (as Chevron has done) suggest an effort to intimidate and manipulate the court. Taken in their proper context, and in light of the abundance of scientific evidence proving Chevron's liability for contamination, these allegations just look like a desperate attempt to avoid justice and shift the focus away from the suffering of impoverished Ecuadorian people and toward the behavior of a few lawyers who dared to defend those people.

Attacks on Ecuadorian Court System

Chevron claims that the Ecuadorian judicial system is fundamentally corrupt, and that pressure from the executive branch has caused the trial to degenerate into a farce. This stance is a shocking 180 degree reversal from ten years ago, when Texaco submitted no less than ten affidavits to U.S. district court in New York praising the fairness of the Ecuadorian courts. Chevron petitioned aggressively to have the case sent to Ecuador, and was granted its wish on the condition that it accept whatever judgment was handed down in Ecuador. Only now that the trial is going badly does Chevron complain that the deck is hopelessly stacked against it. The reality is that the trial is proceeding fairly, the evidence collected is clear, and Chevron is responsible for an environmental disaster.

Faux Bribery Scandal

In 2009, an Ecuadorian former Chevron consultant, Diego Borja, and an American con man, Wayne Hansen, filmed themselves in private meetings with the then-judge in the case, discussing a supposed bribe for remediation contracts. They then handed over the videos to Chevron, which used them to claim that the judge, Juan Nuñez, was accepting bribes and had already decided to rule against Chevron. In fact, the videos show no evidence of wrongdoing on Nuñez's part, and appear to have been a set-up intended to discredit him. In the aftermath of this supposed "scandal" which Chevron aggressively trumpeted, Nuñez recused himself from the case and a verdict was delayed by possibly over a year.

More on the phony bribery scandal and Diego Borja's past as a "dirty tricks" operative for Chevron here.

Sham Science

Chevron's scientists use methods designed to minimize evidence of contamination at the company's former production sites and waste pits. These methods include tests considered by authorities such as the U.S. EPA to be utterly inappropriate for measuring this kind of oil pollution. To learn more about these deceptive methods, click here.

Chevron also pays consultants to produce studies that cast doubt on plaintiffs' claims about the health impacts of oil pollution. These studies are often given directly to the media, without being subject to academic peer review. This is part of a strategy, famously employed by tobacco companies as well, to manufacture the appearance of greater scientific uncertainty than actually exists. There is in fact compelling evidence of a health crisis linked to oil activities in the region, despite that it is of course impossible to prove that any one specific cancer case or miscarriage was caused by oil pollution.

Chevron Suffers Historic Defeats – and Fights Back

On February 14, 2011, the Provincial Court of Justice of Sucumbíos issued a judgment in which it found Chevron liable for damages (primarily for the remediation of contaminated soils). On January 3, 2012, the Ecuadorian appeals court confirmed an $18 billion judgment, and two months later, on March 12, an appellate court declared that the judgment is final and enforceable. On July 31, the court increased the total judgment to $19 billion.

Chevron has appealed these rulings to the National Court of Justice in Quito, Ecuador's highest court. However, Chevron refused to post a bond that would be required to stop international enforceability of the judgment, and the National Court has not yet indicated whether it will accept the case on appeal. In the meantime, the case now has an internationally valid judgment that can be enforced in Ecuador (where Chevron has no assets) or any other nation.

However, in the Second District Court of New York, Chevron sued the Ecuadorian plaintiffs, their lawyers, and consultants under the RICO (Racketeering Influence and Corrupt Organizations) law, alleging that they colluded with Ecuadorian officials to extort a judgment from Chevron.

At first, Chevron's gambit seemed to work spectacularly. On March 7, 2011, Judge Lewis Kaplan issued a preliminary injunction that purported to bar the Ecuadorian plaintiffs and their legal representatives from pursuing enforcement of any Ecuadorian court judgment outside the country of Ecuador.

But the Ecuadorians appealed, and Kaplan's judicial overreach was soon slapped down. The U.S. Second Circuit of Appeals vacated the injunction in its entirety on September 19, 2011, noting that the courts had no legal basis to serve "as a transnational arbiter to dictate to the entire world which judgments are entitled to respect and which countries' courts are to be treated as international pariahs."

International Arbitration

In addition to its RICO suit, Chevron has also sought to defend itself though international arbitration against the government of Ecuador under the provisions of the U.S.-Ecuador Bilateral Investment Treaty (BIT).

In September 2009, Chevron initiated international arbitration proceedings against the government of Ecuador at the Permanent Court of Arbitration in The Hague. Among other requests for relief, Chevron asked that the arbitral panel issue a "declaration that Ecuador or Petroecuador is exclusively liable for any judgment that may be issued in the Lago Agrio Litigation."

In February, the arbitration panel ordered the Ecuadorian government – and all of its branches, including the judiciary – to prevent enforcement and recognition of the $18.2 billion judgment. The award expanded on a prior award requiring the government 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."

However, the Ecuadorian appeals court promptly rejected this request, saying that to do so would be a violation of Ecuador's obligation under international human rights law. As a result, the arbitration ruling entered a sort of legal twilight zone, full of apparent diplomatic gravitas but little direct impact.

Tracking Down the Scofflaw

After months of suspense, the Ecuadorian rainforest communities have finally opened up the first fronts in what is likely to be a worldwide legal battle to force Chevron to pay its $19 billion ruling for environmental devastation in the Amazon. On May 30, the Ecuadorians' Canadian lawyer, Alan Lenczner, filed suit in Ontario provincial court in Toronto, asking the court to seize the company's subsidiaries, Chevron Canada Ltd. and Chevron Finance Canada Ltd. These two companies' assets include offshore oil production in Newfoundland, tar sands operations in Alberta, and a refinery and gasoline stations in British Columbia.

Legal observers quoted in media reports said Canada's courts generally defer to foreign courts' judgments. Unlike the United States, where unilateralism and America-first "exceptionalism" dominate debates over international issues, Canadian political and legal culture is generally respectful of international law.

On June 26, the Ecuadorians' lawyers filed a similar motion in Brazilian federal court, seeking seizure of Chevron's assets in that country. In the coming months, the Ecuadorians are expected to file an avalanche of lawsuits in other nations.

The upshot is that Chevron's colossal worldwide presence has gone from being a strength to a critical weakness for the company. A legal sword of Damocles is swinging in the air, but where it will fall next, nobody outside the legal team knows. The company is embroiled in bitter controversies in many nations, including Australia, Angola, Brazil, Nigeria and Kazakhstan. Will one of those countries finally say "enough"?

For a summary of this rogue's gallery of misconduct, see the True Cost of Chevron report.

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