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Chevron Arbitrators Will Consider 2nd Circ. Donziger Decision – Law360

Date: Sep 1, 2016

A tribunal hearing Chevron Corp.’s bid to nullify a $9.5 billion pollution judgment imposed by Ecuador’s courts recently said that the arbitrators will consider U.S. court findings that the Ecuadorean ruling was tainted by fraud, but may ultimately reach a different conclusion.

The arbitrators still have not ruled on Chevron’s main request — that they shoot down the massive judgment for environmental damages stemming from decades of oil drilling in the Amazon. But the panel said Monday it would consider an August ruling by the Second Circuit that supported the finding that several Ecuadorian plaintiffs and their lawyer Steven Donziger rigged the South American proceedings.

Both Ecuador and the oil giant found something to like about Monday’s procedural order.

The country’s attorney general said in a Tuesday statement that the decision “supports” Ecuador’s arguments and leaves the door open for a win in the arbitration. And Chevron told Law360 that it was “pleased” that its request to add the decision to evidence was granted.

“The tribunal has added to the record the recent unanimous decision by the Second Circuit, which affirms the lower court finding that the Ecuadorean judgment against Chevron is the product of racketeering and fraud,” company spokesman Morgan Crinklaw said in an email.

Ecuador was not a party to Chevron’s U.S. lawsuit against Donziger and plaintiffs from the oil-rich area around Lago Agrio, a city in the country’s northeast, and the tribunal clarified Monday that it would not necessarily apply the conclusions of the Second Circuit or U.S. District Judge Lewis A. Kaplan to the arbitration.

But the cases are related, and Ecuador did step into the Second Circuit proceedings in a bid to convince the appeals court to strip Judge Kaplan’s broadside against Ecuador’s judiciary from his opinion. The arbitrators requested that a copy of Ecuador’s amicus brief in the appeal be submitted to the tribunal, but said it would not be “appropriate” to say any more about the parties’ disagreements.

“The decision in the [U.S.] case did not consider the arguments and evidence submitted by Ecuador within the arbitration,” the country said in a Monday statement, adding that Ecuador’s evidence would “dismantle the theory of fraud created by Chevron.”

Although U.S. courts have said the Lago Agrio judgment cannot be enforced, Donziger is still seeking to enforce it in Canadian courts. Earlier this year, however, a Dutch court declined to undo several arbitral rulings that favored Chevron.

The current arbitration, which Chevron initiated in 2009, is just one of several disputes and lawsuits that have arisen from hotly contested environmental damage and remediation allegations arising from decades of drilling by Texaco, which Chevron acquired in 2001.

The arbitral panel comprises Horacio A. Grigera Naón, Vaughan Lowe and V.V. Veeder.

Ecuador is represented by Procurador General del Estado and Winston & Strawn LLP.

Chevron is represented by King & Spalding LLP.

The case is Chevron Corp. et al. v. the Republic of Ecuador, case number 2009-23 in the Permanent Court of Arbitration.

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