Ecuador’s Embargo Ruling Has No Foundation; Puts Republic in Further Breach of International Law

On October 15, the Lago Agrio court in Ecuador granted a plaintiffs’ motion seeking the embargo of various assets associated with Chevron subsidiaries. This court order is a departure from Ecuadorian law and has no justifiable foundation.

Naturally, one of the questions that this action raises is why is this issue back before a court in Ecuador?  The plaintiffs’ maneuvering in this matter simply illustrates the weakness of their claims.  Having encountered significant jurisdictional delays to their enforcement efforts in Canada and Brazil, the plaintiffs have returned to Lago Agrio – the one court they can count on to try to launder their illegitimate judgment.

After all, if the plaintiffs’ lawyers believed in the integrity of their judgment, they would be seeking enforcement in the United States – where Chevron Corporation resides.  In the U.S., however, the plaintiffs’ lawyers would be confronted by the fact that seven federal courts have already made fraud findings related to the plaintiffs’ lawyers’ scheme.

It is also important to consider how this figures into Ecuador’s international standing.  Recall that Ecuador just lost a $1.8 billion arbitration over expropriated oil assets.  The Lago Agrio court’s action this week puts Ecuador in further breach of international law.

An international arbitration tribunal has twice ordered the Republic of Ecuador, including “its judicial, legislative, or executive branches” to “take all measures necessary to suspend or cause to be suspended the enforcement and recognition within and without Ecuador” of the Lago Agrio judgment.  Ecuador has so far rejected the tribunal’s order.

Ultimately, however, if Chevron prevails in the arbitration, it may be the Republic of Ecuador that is liable for damages related to the Lago Agrio lawsuit.  In a prior ruling, the arbitration tribunal has put the Republic on notice that if Chevron’s arbitration prevails, “any loss arising from the enforcement of (the Lago Agrio judgment) may be losses for which the (Republic) would be responsible to (Chevron) under international law.”

This latest order from the Lago Agrio court is no more valid than the fraudulent judgment on which it is based.  Nevertheless, Chevron intends to challenge the Lago Agrio court’s unlawful action through all available remedies – inside and outside of Ecuador.

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