When Chevron acquired Texaco in 2001, it inherited more than it bargained for. A lawsuit against the company accusing Texaco of contaminating the Ecuadorean Amazon was filed in a New York court, but was moved to Ecuador in 2003. Since then, Chevron, Ecuador and lawyers representing local villagers have been hashing it out. The court logs read like a legal thriller.
Not only did Chevron force a judge to resign when it produced recordings pointing to a bribery scheme, it has also acquired outtakes from a documentary showing a plaintiff's lawyer discussing meetings he had with judges and government officials. The company also has evidence that shows collaboration between plaintiffs and a court-appointed expert who valued the lawsuit, reports Reuters.
Despite all the evidence produced by Chevron, Ecuador Judge Nicolas Zambrano ruled against the company, ordering it to pay a $8.6 billion fine.
Is the Chevron fine enforceable?
Chevron, fined in Ecuador, actually has no assets in the country, according to Reuters. The plaintiffs thus have no way to seize any of Chevron's holdings unless they request that a court in a country where Chevron does have assets enforce the judgment. Plaintiffs will most likely request this of a court near Chevron's home--the United States.
U.S. law does not actually govern enforcement of foreign country judgments, instead leaving the decision up to the states. Every state that accepts these requests requires that the judgment have been rendered in a manner consistent with the United States' notions of due process. This means that the proceedings must not have been marred by fraud.
Chevron has actually taken active steps to prove in the U.S. that the Ecuador fine was the product of fraud. The company filed a lawsuit against the plaintiffs' lawyers and other persons for violating racketeering laws, according to The New York Times. Chevron alleges that the defendants conspired to extort money from the company by falsifying evidence and manipulating the Ecuadorean courts.
Chevron, fined in Ecuador, most likely will have to pay should it ever do business in the country. However, if Chevron is able to prove to the U.S. court that the Ecuador proceedings were fraudulent, the plaintiffs won't be able to recover in the United States, and will also have a very difficult time getting any other country to enforce the judgment.
- Ecuador farmers say Chevron award small, will appeal (Reuters)
- A Breakdown of the $8.6 Billion Chevron Judgment (Wall Street Journal)
- Chevron Fined $8.6B By Ecuador Court in Environmental Case (ABA Journal)