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Chevron in US court to block $19bn Ecuador fine

AFP | Last Updated: Thursday, October 17, 2013 - 09:26

US oil giant Chevron went to court in New York this week to try to escape paying USD 19 billion in damages in Ecuador, accusing an American lawyer acting for indigenous people there of fraud.

Chevron wants a New York district judge to prevent lawyer Steven Donziger, Ecuadoran villagers and green activists from using the US courts to force Chevron to pay its Ecuadoran fine.

A court in Ecuador ordered Chevron to pay $18 billion in damages, later raised to USD 19 billion, to people from Lago Agrio in the Amazon for environmental damage.

But Chevron has almost no assets in Ecuador and is resisting attempts by the original plaintiffs to use the American courts to force its US operation to pay up.

Chevron has never worked directly in Ecuador but inherited the pollution lawsuit when it acquired former rival Texaco in 2001. It is fighting against having to pay the fine.

The New York case is the latest in years of litigation over pollution attributed to Texaco Petroleum, which worked in the Amazon from 1964 to 1990.

The case could have implications for lawsuits in Canada and Brazil, where the plaintiffs are going after Chevron`s assets.

Commentators say the case could help to determine the extent to which US courts can pass judgment on alleged misconduct of American multinationals abroad.

In the US District Court in New York, Chevron is alleging fraud and violations under the Racketeer Influenced and Corrupt Organizations Act. The hearings likely to drag on for weeks.

Chevron accuses lawyer Donziger and of seeking to "extort, defraud and tortiously injure" the firm by fabricating evidence and colluding with Ecuadoran officials.

It accuses Donziger and the villagers of extortion, fraud, obstruction of justice, bullying judges and witness tampering.

Donziger, who played basketball with US President Barack Obama as a student at Harvard University, has said the area Texaco allegedly polluted is the size of Rhode Island.

In a 2009 documentary "Crude", he acknowledges that legal practices in Ecuador are very different from in the United States.

"You know, this is how the game is played, it`s dirty," he says in reference to "going to down to have a chat with the judge".

In a lengthy pre-trial opinion issued last week District Judge Lewis Kaplan wrote "there was probable cause to suspect a crime or fraud."

Chevron won a separate partial victory last month in its battle against a $19 billion fine by Ecuador.

An arbitration panel in The Hague ruled that it was protected from collective action claims due to agreements the Ecuadoran government had set with Texaco.

Ecuadoran President Rafael Correa has called for a global boycott of Chevron, which is based in San Ramon, California.

First Published: Thursday, October 17, 2013 - 09:08
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