Update On The World's Largest Environmental Judgment

Posted on June 14, 2012 by Mark Walker

A lot has happened over the year since I first reported on the world's largest environmental judgment (see my 4/15/11 post).  Back then, U.S. District Judge Lewis Kaplan (S.D.N.Y.) had just preliminarily enjoined the enforcement of the $18.2 billion judgment against Chevron (Aguinda v. Chevron) for alleged pollution to the Amazon rainforest.  Judge Kaplan had ruled that the judgment was likely procured by fraud and was the product of a corrupt Ecuadorian judicial system.

On September 19, 2011, the Second Circuit vacated the preliminary injunction, later explaining that Chevron did not have the right to bring a preemptive lawsuit in New York seeking to have the judgment declared unenforceable where the judgment creditors were not seeking to enforce the judgment in New York.  The Court also expressed concerns about international comity, questioning the right of a New York court to declare another country's judicial system corrupt and then prohibit enforcement of its judgments in every country throughout the world. Chevron has petitioned the U.S. Supreme Court to overturn the Second Circuit's ruling.

On January 3, 2012, the Aguinda judgment was affirmed by an Ecuadorian intermediate appellate court.  The case now heads for its last leg of appellate review - to Ecuador's highest court, which will only review for legal errors.  However, the judgment is now enforceable unless a stay is obtained.

In January and February of 2012 the Permanent Court of Arbitration at the Hague issued a series of rulings directing Ecuador to take all measures necessary to suspend the recognition and enforcement of the judgment, both within and without Ecuador.  Chevron initiated the arbitration asserting that the judgment violates the Bilateral Investment Treaty between the U.S. and Ecuador.  In particular, Chevron contends that the judgment violates a 1995 settlement agreement between Ecuador and Chevron's predecessor, Texaco Petroleum (TexPet), under which TexPet spent approximately $40 million remediating pollution and funding various community development projects, for which TexPet received a full release of claims from Ecuador in 1998.

In March of 2012 the Ecuadorian judge who rendered the judgment against Chevron was removed from the bench for alleged corruption, as was another judge who had previously presided over the Aguinda case. 

In May 2012, Judge Kaplan ruled that Chevron's racketeering (RICO) claims against the attorneys and experts for the Ecuadorian plaintiffs can proceed in New York federal court.

Last Wednesday the Aguinda plaintiffs initiated collection efforts on the judgment in Canada.

Wow!  The plot continues to thicken.  I will keep you posted.



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