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Chevron Lawsuit in Ecuador Reviewed by Notre Dame Law School Professor

Date: Mar 20, 2012

Suing Chevron in Ecuador: Do the Ends Justify the Means?

By Doug Cassel, Professor of Law at Notre Dame Law School

In an environmental suit brought by lawyers for some residents of the Amazon, an Ecuadorian court last year issued an $18.2 billion judgment against Chevron. Readers who follow the case only casually may have the impression that this is a classic case of David vs. Goliath, and that Ecuadorian courts gave Goliath his come-uppance.

That impression is understandable. The plaintiffs’ lawyers and associated NGO’s wield an impressive PR operation.

The banner headline of their web site tells readers:

Over three decades of oil drilling in Ecuador’s Amazon, Chevron dumped billions of gallons of toxic waste into waterways relied on by local inhabitants. The result: A humanitarian and public health crisis affecting thousands, which Chevron refuses to put right.

There are at least five problems with that headline:

Chevron never drilled a drop of oil in Ecuador. Its only connection is its purchase in 2001 of a Texaco subsidiary, TexPet, whose oil operations ended a decade earlier;

The only company drilling – and spilling – oil since 1992 has been the Ecuadorian State company, which plaintiffs promised not to sue;

The $18.2 billion was awarded, not as damages for past harm to health, but mainly to fund environmental remediation. Yet plaintiffs’ experts admitted to their lawyers that contamination is “just at the pits and stations and nothing has spread anywhere at all;”

The oil pits and stations have been or are being remediated. Whatever work remains to be done could not remotely approach even $1 billion, let alone $18 billion; and

Chevron has repeatedly stated that it is open to constructive dialogue to resolve the legal controversy and to benefit Amazonian residents, but it is not open to judicial extortion.

I learned all this only after the plaintiffs’ lawyers asked the Inter-American Commission on Human Rights this year to issue precautionary measures requesting Ecuador to fend off a “serious and urgent” threat to health and other human rights. The threat supposedly emanated from an award by an international arbitral tribunal, convened under the Ecuador-US Bilateral Investment Treaty, directing Ecuador to suspend enforcement of the $18.2 billion judgment, pending the tribunal’s review of Chevron’s contention (among others) that the judgment is “fraudulent.”

Chevron asked me to assist the company in filing an amicus brief before the Commission opposing the plaintiffs’ request. At first I was skeptical. A fraudulent judgment? Really?

But as I dug deeper, a troubling picture emerged. First, plaintiffs’ evidence for their claim of a “serious and urgent” threat to health looked pretty thin: they began by citing two reports issued by the Inter-American Commission in the mid-1990s — before TexPet completed remediation of its agreed share of the oil pits. (Until it ceased operations in 1992, TexPet had been a minority participant in a consortium with Ecuador’s State oil company.)

Plaintiffs similarly failed to persuade the Commission. The OAS body asked them to submit evidence, including medical certificates, of any current health impacts. Without such evidence, the Commission advised, it would close the case.

The plaintiffs responded by withdrawing their request. They explained that two more appellate rulings in support of their judgment (including one entered before the Commission’s request) now made the matter less urgent.

Meanwhile, together with James Crawford and lawyers who represent Chevron before the arbitral tribunal, I co-signed an amicus brief, and later a supplement, before the Commission. These submissions presented evidence – from plaintiffs’ lawyers’ emails and depositions, and from outtakes of a documentary film they commissioned (all obtained by Chevron under court order) — that some (not all) of plaintiffs’ lawyers had indeed perpetrated a fraud upon justice.

They met clandestinely with the judge on the case no fewer than seven times, in venues such as an abandoned warehouse. Their purpose was to persuade him to select their handpicked expert as the court’s own “independent” expert on damages. They and their consultants then secretly wrote the expert’s report (in English, a language he does not speak, and from which “his” report had to be translated). To buy his silence, they secretly paid him thousands of dollars from “our secret account.” They then publicly defended his “independent” report – until they were caught.

Plaintiffs’ lawyers now excuse their meetings on the ground that there are no rules on ex parte communications in Ecuador. But they knew their actions were wrong. They even developed a code language to conceal their misconduct:

Today the cook [the Judge] met with the waiter [the supposedly independent expert] to coordinate the menu [the plan for the allegedly neutral expert’s report] at the restaurant [the Court].

As their scheme began to unravel, one of them emailed:

Today Pablo and Luis [two of the lawyers] [told us] … that certainly ALL will be made public, … the effects are potentially devastating in Ecuador (apart from destroying the proceeding, all of us, your attorneys, might go to jail) …

Not satisfied with cooking the expert’s report, plaintiffs’ lawyers then cooked the judgment, too. As forensic experts have testified, significant passages in the “judgment” came verbatim from plaintiffs’ internal documents, never filed in the proceeding, and cite plaintiffs’ data, also not in the record. The judgment even incorporates plaintiffs’ errors, idiosyncratic reference citations, and distinctive punctuation styles.

The resulting concoction lacks credibility. For example, even after plaintiffs’ public health expert admitted that he “did not reach the conclusion that the healthcare needs of the population in the Oriente can be tied to any particular environmental damage,” the judgment ordered Chevron to pay $1.4 billion to fund public health programs – with not a word of budgetary justification.

As for the judge whose signature graces the judgment, Ecuador’s judicial council recently removed him from the bench for “inexcusable judicial error” in another case – in circumstances suggesting corruption.

In an open letter to the human rights community, I set forth these concerns at greater length. Plaintiffs’ lawyers now accuse me (and previously the arbitral tribunal members) of abandoning principle for lucre — without mentioning the millions in fees they stand to gain if the “judgment” stands (or the several-hundred-million dollar bonus the judgment awards to their NGO).

Most important, the credibility of the human rights movement is at stake. We cannot vindicate human rights by violating them. The ends — securing reparations — do not justify the means: sham judicial proceedings.