Counterpunch: Chevron Sues Ecuador

Last Updated Sep 24, 2009 3:28 AM EDT

Chevron upped the ante Wednesday in its 16-year legal battle over allegations of environmental pollution in Ecuador and filed a claim against the government there for violating international trade law.

The arbitration process will be handled by the United Nations Commission on International Trade Law. The U.S. oil giant faces a $27 billion lawsuit filed on behalf of Ecuadoreans, which alleges Texaco caused massive contamination during its operations there. Chevron bought Texaco in 2001 and as a result, inherited the lawsuit.

The arbitration claim was filed to protect Chevron from what the company described as exploitation of the ongoing lawsuit by the government in Ecuador. In its claim, Chevron said Ecuador's government continued support of the lawsuit violates a 1998 agreement that released Texaco from any liability after the company spent $40 million to clean up the area. PetroEcuador, the state-owned oil company continued to operate in the region and is responsible for any environmental contamination, Chevron's claims says.

It also cited judiciary misconduct including allegations of bribery and a judge with a predetermined verdict. In that instance, Chevron is referring to Judge Juan Nuñez, who was secretly videotaped earlier this year in a meeting with an American businessman and Ecuadorean contractor seeking contracts to do environmental cleanup work. Chevron claims the videotapes show Nuñez has already determined the verdict will go against Chevron. Another videotape, where Nunez is not present, reveals a bribery scheme involving government party officials, Chevron has said.

Nuñez recused himself, but was later ordered by a local court to remain as presiding judge over the case.

Steven Donziger, a U.S. attorney representing the plaintiffs, said in an e-mailed statement the move "smacks of desperation." Hewitt Pate, Chevron's vice president and general counsel, said in a statement, company had no choice but to seek relief under the treaty between the U.S. and Ecuador because of political influence in Ecuador's judiciary system.

The international arbitration claim won't derail the lawsuit against Chevron. But it could buy Chevron considerable time. The process could take years, drawing out a case which was expected to receive a verdict within months.

It's not a slamdunk for Chevron, however. The company could fail to convince arbitrators of its claims, leaving it with few options.

It may not bode well for Ecuador either. Under Ecuador's treaty with the U.S., it must adhere to the arbitrators ruling, whatever that may be.