Dutch Appeals Court Axes Ecuador Challenge In Chevron Row – Law360
A Dutch appeals court on Tuesday rejected Ecuador’s challenge to several jurisdictional and other preliminary arbitral awards favoring Chevron Corp., which arose out of a long-running dispute with the country over alleged pollution in the Amazon rainforest.
Ecuador had asked the Appeals Court of the Hague to overturn a 2016 trial court decision rejecting the country’s bid to set aside the awards in the ongoing arbitration, in which Chevron is looking to hold the South American nation accountable for breaching a previous settlement that should have barred a $9.5 billion judgment issued by an Ecuadorian court. That judgment was later found by a New York judge to be fraudulent — a decision the U.S. Supreme Court last month refused to review.
But the Dutch court refused to overturn the trial court’s ruling, concluding that it had been correct to affirm those awards in early 2016. A copy of the decision was not immediately available.
Chevron praised the judgment on Wednesday.
“This decision rightly affirms that the tribunal has jurisdiction to adjudicate these matters and ensures that Ecuador will be held accountable for violations of its international commitments,” the company said.
Several of the six awards, which were issued by a Permanent Court of Arbitration tribunal from 2011 until 2013, order Ecuador to suspend recognition of the $9.5 billion judgment, which was issued to Ecuadorians who had sued Chevron over pollution resulting from crude oil production in the region.
The tribunal concludes in two other awards that it has jurisdiction over Chevron’s claims, and that agreements reached in 1995 and 1998 between Ecuador and Texaco Petroleum Co., which was acquired by Chevron in 2001, are valid releases for the claims asserted against them.
Ecuador, meanwhile, said in a statement on Tuesday that the Dutch appeals court erred in concluding that the PCA tribunal had jurisdiction over Chevron’s claim because TexPet’s investment in the country ended in 1992, before the relevant bilateral investment treaty the claim was brought under entered into force. The country said that it’s weighing bringing the matter to the Supreme Court of the Netherlands.
The $9.5 billion judgment was issued to Ecuadorian plaintiffs who had sued over environmental damage resulting from work done by TexPet under an agreement with Ecuador in 1973 to develop the country’s oil fields in exchange for providing below-market oil to the country for domestic use.
Chevron claims that the lawsuit and the judgment violate a settlement TexPet reached with Ecuador, under which it spent $40 million on the environmental remediation and received a complete release from Ecuador’s national, provincial and municipal governments.
The oil giant accuses Ecuador of “colluding” with the Ecuadorian plaintiffs and U.S. contingency lawyers who filed the case in 2003 and of improperly interfering with the proceedings by publicly announcing its support for the plaintiffs.
Chevron and TexPet are represented in the arbitration by King & Spalding LLP and Three Crowns LLP.
Ecuador is represented in the arbitration by its attorney general and its director of international affairs and arbitration, and by Winston & Strawn LLP and Dechert LLP.
The 2009 arbitration is Chevron Corp. and Texaco Petroleum Co. v. The Republic of Ecuador, case number 2009-23 in the Permanent Court of Arbitration. Case and counsel information in the Dutch appeal was not immediately available.