Why Ecuador's $8.6B Judgment Against Chevron Means Nothing
Chevron has been ordered by an Ecuadorean court to pay up to $8.6 billion -- and an equal amount in punitive damages -- for environmental damage caused by oil and gas operations there decades ago. But the judgment doesn't matter. Not one iota -- at least when it comes to collecting the moolah.
A quick history
The lawsuit, filed on behalf of a group of indigenous Ecuadoreans living in the Amazon region, alleged that Texaco caused massive contamination to the rain forest and its water sources until 1992, when the country's government-owned oil company took over operations. Chevron bought Texaco in 2001 and as a result, inherited the lawsuit.
Since then, there have been dozens of twists and turns in the case, including secretly recorded video tapes that raised questions about an Ecuadorean judge and caused him to withdraw from the pollution case.
Appeals, legal defeats and why the court can't collect
The 18-year-old legal battle won't end here. Chevron has already announced it will appeal. The plaintiffs also have taken a few legal blows of their own in the past month. Earlier this month, international arbitrators ordered the temporary suspension of any judgment against Chevron. And last week, Judge Lewis Kaplan of the Southern District Court of New York issued a temporary restraining order on the plaintiffs' U.S. lawyers.
More importantly, even if Chevron lost in its appeal, Ecuador won't be able to collect because the oil company no longer any assets in-country. Chevron has no refineries, oil wells or other properties in Ecuador -- the types of assets that could be seized in an effort to pressure the company to pay.
That leaves the court with one option: to try and seize assets elsewhere. If the plaintiffs take it to the U.S., judges could reject a foreign judgment it they question the judicial procedures in Ecuador -- which is likely, Forbes blogger Daniel Fisher noted.
As if that weren't enough ...
Attorneys for the plaintiffs face another hurdle thanks to footage from the 2009 documentary Crude that ended up on the cutting room floor. The 500 hours of outtakes, which Chevron obtained via subpoena from the filmmaker, show the lead plaintiff's attorney Steven Dozinger describing the Ecuadorean court as corrupt and the environmental evidence "smoke and mirrors." That pretty much sends the case up in flames. Judge Kaplan clearly felt the same and issued the restraining order as a result.
Photo from Flickr user Neubie, CC 2.0
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