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Ecuadorian Court Orders Chevron to Pay $8 Billion for Oil Damages, Company Vows to Fight

In an epic environmental damages lawsuit involving the Ecuadorian people versus Chevron (NYSE: CVX), an Ecuadorian court has ruled in favour of the plaintiffs and ordered Chevron to pay a US$8 billion fine for contaminating the country’s rainforest.

The battle stems from exploratory oil drilling conducted  by Texaco in the 1970s and 1980s.  The plaintiffs claim billions of barrels of oil and toxic waste were spilled into the water supply and surrounding ecosystems.  The lawsuit was not filed until 1999, and Chevron became involved in 2001, after it purchased Texaco.

The legal conflict has become quite controversial.  The plaintiffs have painted Chevron as an environmentally irresponsible corporation taking advantage of impoverished people,  while Chevron says it has completed all environmental remediation from damages in the affected areas and is the victim of injustice and financial extortion.

Although the ruling is less than what was asked for (between US$27 billion and US$118 billion), it is a significant win for the plaintiffs.  After the ruling the Amazon Defense Coalition said:  “We believe today’s judgment affirms what the plaintiffs have contended for the past 18 years about Chevron’s intentional and unlawful contamination of Ecuador’s rainforest.”

Payment from Chevron may be a long way off, however.  The oil company has conducted a thorough legal campaign to disable such a ruling from being enacted.  Last week, an international arbitration panel ordered Ecuador to suspend any enforcement of potential judgments levied against Chevron.  In 2009, the company filed suit under international law which said this case was violating a 1997 trade pact between Ecuador and the United States.

After the ruling was issued, Chevron reaffirmed its position with this public statement:  “The Ecuadorian court’s judgment is illegitimate and unenforceable.  It is the product of fraud and is contrary to the legitimate scientific evidence.  Chevron will appeal this decision in Ecuador and intends to see that justice prevails.”

The plantiffs contend this ruling deserves international respect:  “We call on [Chevron] to end its polemical attacks and search jointly with the plaintiffs for common solutions.  We believe the evidence before the court deserves international respect and the plaintiffs will take whatever actions are appropriate consistent with the law to press the claims to a final conclusion.”

Discussions

Geoffrey Styles's picture
Geoffrey Styles on Feb 15, 2011

Nathaniel,

The verdict is unsurprising, given the structure of the trial.  For another take on the background of the case from someone who wasn’t quite a participant but was at least several steps closer to it than 98% of those commenting on it, see:

http://theenergycollective.com/geoffstyles1/35451/very-incomplete-story

Nathanael Baker's picture

Thank Nathanael for the Post!

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