By Paul Barrett, Bloomberg Businessweek
31 May 2012
A peripatetic, two-decade-old pollution lawsuit against Chevron (CVX) has bounced from New York to Ecuador, back to New York, and now on to the Superior Court of Justice in Toronto, Canada. There is no end in sight for the highly mobile litigation.
The case began in federal court in New York in 1993, when lawyers representing residents of the rainforest in eastern Ecuador filed suit against Texaco, blaming the multinational oil company for contamination of the Amazon beginning in the late 1960s. Texaco fought for nine years to get the case dismissed based on the argument that it ought to have been brought in Ecuador. In 2001, near the end of Texaco’s ultimately successful campaign to avoid a U.S. legal battle, Chevron acquired Texaco.
Be careful what you wish for, someone might have warned the oil company. Having promised the U.S. judiciary it would abide by the dictates of the Ecuadorian courts, Chevron discovered itself on a slippery slope toward legal disaster in a provincial court in the frontier oil town of Lago Agrio (which means Sour Lake, a reference to a Texas municipality where Texaco struck oil in 1902). In February 2011, a trial judge in Lago Agrio entered an $18 billion verdict against Chevron, the largest environmental judgment ever.
By the time it suffered that setback, Chevron had declared that the Ecuadorian judicial proceedings were shot through with fraud and that it would not pay a dime to the plaintiffs or their team of American and Ecuadorian lawyers. Since Chevron had no assets in Ecuador, there was little the alleged victims could do with their verdict, at least in the tiny Andean nation.
Days before the $18 billion judgment, Chevron returned to federal court in New York and launched a civil racketeering suit accusing the plaintiffs and their lead attorney, Steven R. Donziger of Manhattan, of conspiring to shake down the energy company for a large settlement. The plaintiffs have denied wrongdoing and that suit is pending.
Now the plaintiffs have launched a fresh suit in Toronto, asking a Canadian judge to enforce the Ecuadorian verdict against Chevron in Canada, where the company has a subsidiary and ample assets. Alan Lenczner, the Canadian attorney who filed the enforcement action Wednesday, said in a press release that if his clients were not paid they would seek to seize Chevron assets, such as an offshore drilling project and "new investments in oil sands in the province of Alberta." Karen Hinton, a spokeswoman for the plaintiffs, added in an e-mail that her clients plan to file similar suits in other countries in coming weeks.
Kent Robertson, a spokesman for Chevron, said via e-mail: "The Ecuador judgment is a product of bribery and fraud, and it is illegitimate. The company does not believe that the Ecuador judgment is enforceable in any court that observes the rule of law."