Ecuador's President Says Chevron Needs to Abide by Court Ruling

By Taos Turner, Dow Jones Newswires
4 December 2012

Ecuadorean President Rafael Correa said Tuesday that Chevron Corp. (CVX) needs to abide by a court order requiring it to pay $19 billion to indigenous groups after it lost a suit involving environmental-damage claims in Ecuador.

Mr. Correa's comments come after an Argentine judge last month froze Chevron's assets in Argentina until the Ecuadorean damage award is paid in full.

In his ruling, the Argentine judge cited a treaty that both Argentina and Ecuador are signatories to, which calls for judges in one country to help uphold court rulings in another. Chevron doesn't have significant assets in Ecuador, so the plaintiffs have been trying to seize its assets in other countries to enforce settlement on the judgment.

Mr. Correa, who is in Argentina for a state visit, said in a local television interview Tuesday that he would discuss the Chevron case in a meeting with Argentine President Cristina Kirchner.

"One of ways that Chevron tries to deligitimize its loss to the Amazonian peoples is for the Ecuadorean government to get involved in the case," Mr. Correa said. "We haven't gotten involved. But, of course, we're going to support our citizens and try to ensure that the court ruling is complied with."

The judicial embargo applies to 100% of Chevron Argentina's dividends, 40% of its oil sales to Argentine refineries and 40% of the money the company has or may eventually have in local banks, among other assets.

In a full-page ad placed in Argentina's leading newspapers, Chevron Argentina said last week the claims against the company have no legal foundation and that the freezing of its assets will have broader consequences for the entire country.

"The judicial embargo compromises Chevron's capacity to operate and reinvest given that the order affects more than 90% of its income through crude sales," the company said.

Chevron has said the original court ruling in Ecuador was the result of massive fraud and cannot be enforced.

Mr. Correa defended the legitimacy of Ecuadorean courts: "When you have a ruling against private capital, they always try to avoid abiding by the order or say there are corrupt judges involved. When it's in favor of private capital, they want it to be applied immediately."

The case in Argentina comes at a bad time for Argentina's state oil company, YPF SA (YPFD.BA, YPF), which is courting Chevron to help it develop massive unconventional oil and gas resources.

The development is the latest in an almost 20-year legal dispute over claims that Texaco Inc., which Chevron bought in 2001, contaminated parts of Ecuador's Amazon region.

Luis Yanza, an Ecuadorean who represents indigenous and mestizo groups in the Amazon region, said Texaco's alleged pollution of the area has directly affected 30,000 people, resulting in part to higher cancer rates and other health problems.