Chevron's Pollution Dispute Belongs in Ecuador's Courts, Says New York Appellate Panel

New York, NY – A New York state appellate court has ruled that Ecuador’s courts are entitled to resolve any disputes related to the distribution of funds from the $9.5 billion environmental judgment against Chevron, handing a victory to New York attorney Steven R. Donziger and his Ecuadorian clients in their long-running dispute with the oil giant.

"The New York state appellate court properly recognized that issues related to an Ecuadorian judgment against Chevron should be resolved by the courts of Ecuador, not by U.S. trial judges who not only lack jurisdiction but have no expertise regarding Ecuadorian law or procedure," said Donziger, who has represented rainforest villagers in the South American nation for more than two decades.

The decision upholds a trial court ruling that rejected an attempt by New York attorney and law professor Judith Kimerling to have a New York trial judge review the distribution of proceeds from the Ecuador judgment. That judgment, rendered in Ecuador at Chevron’s request, was affirmed unanimously by Ecuador’s highest court in 2013 after 11 years of trial and appellate proceedings.

Kimerling claimed to represent a handful of families from a total class of approximately 30,000 affected indigenous and farmer communities in Ecuador’s Amazon. She had asked that the New York trial court establish a constructive trust over the Ecuador judgment and referee any future disputes among the various beneficiaries regarding distribution of the proceeds.

Trial Judge Debra A. James had ruled that any disputes should be decided by the courts in Ecuador that issued the judgment, in part because there was no jurisdiction in New York over the non-profit organization in the Amazon that controlled the judgment. A five-judge panel from New York’s Appellate Division, First Department agreed.

"Ecuador is the forum more convenient to the parties and witnesses than New York; there is no unfairness in requiring plaintiffs to prosecute their claims in Ecuador where they reside; the underlying litigation took place there; the underlying judgment to which plaintiffs claim a proportional share, was issued there; and defendant … Amazon Defense Coalition, which was directed to distribute the proceeds of the judgment, is domiciled there," the appellate panel ruled in its decision, which is available in this document at p. 32.

"The motion court correctly rejected plaintiffs’ contention that Ecuador is not a suitable forum," it added.

Donziger said the ruling stands in marked contrast to an unprecedented decision issued in 2014 by New York federal judge Lewis A. Kaplan. At Chevron’s request, Kaplan ruled that Ecuador’s entire judicial system was incapable of rendering fair judgments.

That decision was based almost completely on the testimony of a journalist who is an avowed political opponent of Ecuador’s President. During the trial, Kaplan refused to admit the 188-page Ecuador trial court judgment or consider the ample scientific evidence against Chevron before rendering his decision.

Kaplan’s ruling, which is under appeal before a separate federal appellate panel, purported to nullify the final decision by Ecuador’s Supreme Court that found the judgment against Chevron was valid and based on extensive scientific and other evidence provided by the company. There is no precedent for a trial judge in one country trying to overrule the entire judiciary of a sovereign nation, as Kaplan attempted to do. (For a friend of the court brief opposing Kaplan filed by 35 international law scholars, see here.)

In the meantime, the affected communities in Ecuador have filed suit in Canada and Brazil to seize Chevron’s assets to force the company to comply with the Ecuador judgment. In his ruling, Kaplan tried to block any enforcement actions based on the Ecuador judgment in the United States.

Here is the full statement from Steven Donziger in response to the latest decision:

"The New York state appellate court properly recognized that issues related to an Ecuadorian judgment against Chevron should be resolved by the courts of Ecuador, not by U.S. trial judges who not only lack jurisdiction but have no expertise regarding Ecuadorian law or procedure. The ruling wholly rejects Professor Kimerling's attacks on the Ecuadorian judiciary, even though her attacks were identical to those used by Judge Lewis A. Kaplan last year when he ruled that Ecuador's courts were "systemically incapable" of rendering justice. That decision came down even though overwhelming scientific evidence demonstrated that Chevron was in the wrong by dumping billions of gallons of toxic wsate into the rainforest, decimating indigenous groups and causing an outbreak of cancer confirmed by various independent studies.

With regard to Judge Kaplan's decision, a federal appellate court now has the chance to reconsider the propriety of allowing U.S. courts to sit in judgment of foreign judiciaries simply because a disgruntled and self-interested litigant like Chevron is unhappy with the outcome in a particular case. If allowed to stand, Judge Kaplan's decision not only will create an injustice for the rainforest villagers, but also will create havoc in the international legal system as disgruntled litigants feel empowered to ask trial judges to try to overrule final decisions of various Supreme Courts in other nations."