Chevron Claims Tribunal Support in Ecuador Fight

Feb. 28, 2012
Panel rejects move by Quito to halt the case.

Chevron Corp. on Feb. 28 claimed the backing of an international tribunal in its fight to prevent Ecuador from enforcing a pollution fine against it that could top $18 billion.

The panel at the Permanent Court of Arbitration in The Hague ruled that it has the jurisdiction to hear the oil giant's claims against Ecuador, rejecting Quito's move to halt the case.

In the latest legal step in the 19-year-old case over responsibility for oil exploration-related pollution in the Amazon region, the tribunal said that it was the right body to handle the case.

It based its ruling, issued Monday, on the U.S.-Ecuador Bilateral Investment Treaty (BIT), which mandates an international tribunal for disputes relating to investments by U.S. firms in Ecuador.

Ecuador, hoping to enforce a domestic court's massive judgment last year against Chevron for pollution in the Amazon region dating back more than four decades, had argued that the BIT did not apply to the case.

Chevron was ordered by a domestic court last year to pay $8.6 billion for environmental damage in the Lago Agrio region allegedly caused by the oil operations of U.S. firm Texaco, which it acquired in 2001.

With added-on penalties since then, Chevron now faces as much as $18.2 billion in fines.

But Chevron has sought relief from the tribunal, insisting that the BIT is the correct venue and accusing Ecuador's domestic judicial system of fraud in handling the case.

"With today's decision, Chevron will proceed to the merits of its arbitration to hold Ecuador responsible for the fraud being committed through its judicial system," Hewitt Pate, Chevron vice president and general counsel, said in a statement.

Earlier in February the tribunal ordered Quito to prevent any enforcement domestically or internationally of the Ecuadoran court's damage claims, while the court in question rejected the ruling.

In Monday's decision, the tribunal said it will now begin to review the arguments in Chevron's case against Quito.

Karen Hinton, a U.S. spokeswoman for the Ecuadorans, called the tribunal decision "a non-event" that is "unenforceable and illegitimate."

"The members of this arbitration panel long ago lost their legitimacy by making so-called 'rulings' that stand in direct violation of international law," she said in a statement.

"The decision violates Ecuador's constitution and purports to quash the legal claims of thousands of citizens who face an imminent risk of death due to Chevron's toxic contamination of the rainforest."

Copyright Agence France-Presse, 2012

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