A Florida federal judge on Wednesday granted Chevron Corp.’s request to subpoena an Ecuadorian bank for account records the energy giant hopes to use in arbitration over a $19.2 billion judgment in an oil pollution class action.
U.S. District Judge Marcia G. Cooke adopted the recommendation of U.S. Magistrate Judge William C. Turnoff to allow Chevron to subpoena Banco Pichincha CA for bank records, calling his report “clear, cogent and compelling.”
Chevron had asked for bank records of eight accounts at Banco Pichincha, through which the company says the plaintiffs in oil pollution litigation in Lago Agrio, Ecuador, funneled bribes to judges and expert witnesses to get the $19.2 billion judgment, currently at the heart of the arbitration under the U.S.-Ecuador Bilateral Investment Treaty.
In a hearing Wednesday, the bank’s attorney Clinton Losego of Gunster Yoakley & Stewart PA said the bank did not want to take sides in the underlying case but also didn’t want to break the laws of Ecuador, which prohibit the discovery at issue. Because of the high-profile nature of the case, if the bank were to produce the records, the Ecuadorian government would almost certainly prosecute the case, Losego said.
“The bank didn’t ask to be in this position and shouldn’t be asked to violate the law in its own country,” Losego said.
He added that the Miami agency of the bank didn’t have access to the books and records of the bank in Ecuador and that Chevron should seek the documents in Ecuador, not in a U.S. court.
But Chevron’s attorney Andrea Neuman of Gibson Dunn & Crutcher LLP argued that collusion between the Lago Agrio plaintiffs and the Ecuadorian government has made getting documents out of Ecuador difficult.
“While we have some powerful evidence, we need more,” she said. “We need to be able to follow the money from Miami to Ecuador.”
She said that the Republic of Ecuador was the company’s opposing party in the ongoing arbitration and had received copies of everything filed in the Florida proceeding. The country’s attorneys have not objected to the documents request or intervened to say that it is against the law in Ecuador, according to Neuman.
The energy giant has called the court proceedings in Lago Agrio sham litigation, arguing that the Ecuadorian plaintiffs’ attorney Steve Donzinger and others pursued the environmental claims in order to extort money from Chevron.
In addition to a pending racketeering case against Donzinger in New York federal court, Chevron launched the arbitration appeal under the Bilateral Investment Treaty, claiming it had suffered a miscarriage of justice in the foreign court and accusing the country of participating in the Ecuadorian plaintiffs’ alleged fraud.
Chevron scored a major victory in the long-running fight earlier this month, when an international tribunal at The Hague said Ecuador had breached its obligations under U.S. treaties and international law by not preventing enforcement of the disputed judgment.
The tribunal, convened under the treaty and overseen by the Permanent Court of Arbitration at The Hague, issued an order in February 2012 demanding that the country take all necessary action to block the enforcement of the judgment inside and outside Ecuador. According to the tribunal, Ecuador has violated that order by facilitating the plaintiffs’ attempts to pursue asset freezes in Argentina, Brazil and Canada.
On Feb. 13, the Fifth Circuit granted Ecuador’s discovery request in the BIT arbitration, ruling that U.S.-based discovery should move forward because the arbitration is an international tribunal proceeding rather than a bilateral investment dispute.
Noting that Chevron frequently has argued in federal court proceedings that the BIT arbitration is a foreign proceeding, the appeals court said the oil giant couldn’t suddenly switch its position in order to get a favorable result when it had already benefited from U.S. court-ordered discovery during the arbitration.
Chevron is represented by Andrea Neuman, Jason Stavers, Kristen Hendricks and Randy Mastro of Gibson Dunn & Crutcher LLP and Carlos Sires of Boies Schiller & Flexner LLP.
Banco Pichincha is represented by Clinton Losego and Allison Cammack of Gunster Yoakley & Stewart PA.
The intervenor Lago Agrio plaintiffs are represented by Larry Veselka, Christina Bryan and Craig Smyser of Smyser Kaplan & Veselka LLP and L. Martin Reeder Jr. and Christopher Albu of Reeder & Reeder PA.
The case is Chevron Corp. v. Banco Pichincha, case number 1:11-cv-24599, in the U.S. District Court for the Southern District of Florida.
By Carolina Bolado-Law360, February 27, 2013