An international arbitration tribunal issued a partial award in favor of Chevron Corp. ( CVX ) and found the U.S. oil company isn’t liable for collective environmental damage claims in Ecuador.
The case stems from a decades-old dispute over environmental contamination in Ecuador allegedly produced by Texaco Inc., a company Chevron bought in 2001. The plaintiffs in 2011 won a verdict against Chevron over contamination in the country’s oil-rich jungles, among the largest environmental awards ever. But the oil company has refused to pay, instead pursuing a lawsuit in New York federal court that alleges the judgment was obtained illegitimately.
The tribunal found agreements that Ecuador entered into with Texaco Petroleum Co. released Texaco and its affiliates of any liability for all public interest or collective environmental claims. Chevron said the Lago Agrio plaintiffs’ lawyers have repeatedly admitted their claims are exclusively collective and not individual.
“This award by an eminent international tribunal confirms that the fraudulent claims against Chevron should not have been brought in the first place,” said Chevron Vice President and General Counsel Hewitt Pate. “It is now beyond question that efforts by American plaintiffs lawyers and the government of Ecuador to enforce this fraudulent judgment violate Ecuadorian, U.S., and international law.”
In its decision, the tribunal found Chevron and Texaco Petroleum are “releasees” under a 1995 settlement agreement and a 1998 final release agreement and Chevron can enforce its rights as a releasee. The tribunal also found Ecuador’s government settled all public interest or collective environmental claims, including collective claims asserted by third parties.
The award comes after an arbitration panel in The Hague said Ecuador should have prevented plaintiffs in a $19 billion award against Chevron from taking their battle to other countries, and needs to justify why its government shouldn’t be held responsible for the costs.
In 2012, an Ecuadorian court ruled Chevron was responsible for environmental damages in that country’s Amazon region, a decision the oil company is contesting. The international tribunal had asked the country to keep the plaintiffs from suing Chevron in foreign courts while the appeal was pending. But the plaintiffs filed lawsuits against Chevron assets in Canada, Argentina and other countries — a move the tribunal decided was a breach of Ecuador’s obligations and of its previous rulings.
The next arbitration hearing is scheduled for January.
Chevron filed an international arbitration claim against the government of Ecuador in 2009, claiming violations of Ecuador’s obligations under the United States-Ecuador Bilateral Investment Treaty, investment agreements, and international law.
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