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Dow Jones – U.S. Judge Issues Injunction In Chevron-Ecuador Dispute to Block Enforcement of Judgment

Date: Mar 7, 2011

A judge in New York has just prohibited enforcement of the Chevron Ecuador judgment. Today’s ruling cites misconduct by the plaintiffs’ legal team and follows a February 8, 2011 temporary restraining order against the plaintiffs that prevented them from enforcing the Ecuador judgment:

Note: Judge Kaplan’s order is available to read here.

NEW YORK—A U.S. judge late Monday issued a preliminary injunction prohibiting the enforcement of a $8.6 billion judgment against Chevron Corp. over environmental damage in Ecuador’s Amazon region.

The ruling is the latest development in an 18-year legal fight over alleged environmental damage in Ecuador’s rain forest by Texaco Inc., which Chevron acquired in 2001. In February, a judge in Ecuador ordered Chevron to pay $8.6 billion to clean up oil pollution there. The award is believed to be the largest-ever judgment in an environmental case.

On Monday, U.S. District Judge Lewis A. Kaplan in Manhattan issued the injunction barring enforcement outside of Ecuador as part of a civil racketeering lawsuit filed by Chevron in the U.S. against the Ecuadorean plaintiff’s lawyers. Chevron has alleged they have tried to extort and defraud the company.

“The evidence establishes that the (Lago Agrio plaintiffs) and their allies intend quickly to pursue multiple enforcement actions and asset seizures, including ex parte remedies where possible, around the globe. Absent a preliminary injunction, Chevron would be forced to defend itself and litigate the enforceability of the Ecuadorian judgment in multiple proceedings,” Judge Kaplan said.

“There is a significant risk that assets would be seized or attached, thus disrupting Chevron’s supply chain, causing it to miss critical deliveries to business partners, damaging ‘Chevron’s business reputation as a reliable supplier and harm the valuable customer goodwill Chevron has developed over the past 130 years,’ and causing injury to Chevron’s ‘business reputation and business relationships.'”

The environmental-damages case, known as the Lago Agrio case, was originally brought in federal court in Manhattan in 1993, but the court found the case should be heard in Ecuador. The indigenous groups brought their suit in Ecuador in 2003.

Much of Chevron’s argument has focused on allegations that the Ecuadorean legal system is stacked against Chevron and allegations of fraud and misconduct by Steven Donziger, the U.S. legal adviser to the Ecuadorean plaintiffs, and others.

The judge noted that much of the evidence of “possible misconduct” by Mr. Donziger and others consists of video recordings related to “Crude: The Real Price of Oil,” a documentary on the legal fight.

“Neither Donziger nor any of the other key actors has denied Chevron’s allegations or attempted here to explain or justify under oath their recorded statements and written admissions,” the judge said.

A lawyer for Mr. Donziger didn’t immediately return a phone call seeking comment Monday.