Many of you may or may not be familiar with egregious actions of Chevron and the Texaco Oil company in the country of Ecuador. In 1964, the Republic of Ecuador granted to a Gulf Oil subsidiary and to TexPet, an indirect subsidiary of Chevron/Texaco, a concession to explore for and produce oil. The government of Ecuador later joined this concession by buying up approximately 25% of the ownership control. A few years later, The government bought up Gulf oil’s share becoming the majority owner of the concession but TexPet (Chevron Subsidiary) remained the operations controller. As the concession came to an end in the early 1990’s, the government and TexPet negotiated an arrangement to clean up the oil spill they made on Ecuadorian land. The arrangement called for clean up according to ownership percentage. After TexPet cleaned up its respective part, the government attempted to clean up its part but was negligent in doing so and the spill effects still exist. The republic of Ecuador and the citizens affected by the oil spill brought suit against Chevron for damages. The Ecuadorian courts after decades of litigation awarded the citizens of Ecuador a judgment for approximately 19 billions dollars but it was later reduced by the highest Ecuadorian court to 9 billion dollars. After Chevron refused to pay the award because they claimed they no longer conducted any business in Ecuador, the Ecuadorian plaintiffs sought to enforce the judgments in Canada, United States, Brazil and Argentina.
In 2011, Chevron in turn sued the plaintiffs’ counsel alleging RICO violations in obtaining the multi-billion dollar judgment and seeking a preliminary injunction from enforcing their judgment. Hon. Lewis Kaplan decided to grant the injunction enjoining the plaintiff’s from enforcing the judgment anywhere in the world. However, the 2nd circuit court of appeals reversed the judgment. At the beginning of this month, Kaplan once again decided on the case, this time granting an injunction preventing plaintiffs from enforcing the judgment anywhere in the United States. His decision was based on findings that the judgment obtained by counsel on behalf of the Ecuadorian plaintiffs was surrounded by corruption and no one should benefit from the actions of the counsel in this case. Now, the Ecuadorian plaintiffs plan on attempting to enforce the judgment in Canada, as Chevron does business in Canada as well.
Although this is a very complicated case with decades of litigation, it seems to me that in the end there is victims who have suffered from the oils spills caused by the Ecuadorian government and Chevron’s subsidiary. The 500-page decision issued at the beginning of this month by Judge Kaplan seems to be completely shutting the door on victims of a political game played by the Ecuadorian government and the Oil Empire of Chevron. Although the actions of plaintiffs counsel are tainted – with corruption, bribery, and fraud – the victims should be entitled to receive some sort of compensation for their losses due to the ambitions of oil industries.
I have included the citation for Hon. Kaplan’s decision and it is easily accessible by Westlaw Next. Chevron Corp. v. Donziger, 11 CIV. 0691 LAK, 2014 WL 815553 (S.D.N.Y. Mar. 4, 2014)
Does anyone believe that the victims of an oil spill such as this, should be allowed to recover in the United States on a judgment issued by a foreign court involving a United States corporation?
Sources: Westlaw; Reuters
Picture: NewYorkTimes
Although I agree that the citizens should be compensated for their situation in dealing with an oil spill, but I do not see why the oil company has to pick up the bill twice in this situation. As you mentioned, the Government and the Chevron oil subsidiary made an agreement that they would clean up the spill by ownership percentage. Also, the article said that TexPet cleaned up their respective part and the Government was negligent in handling their part that the spill still affects the people of Ecuador. That to me shows the Government who enjoyed the profits when they invested in Chevron’s subsidiary were enjoying the revenue as it came in, now messed up on their part of the clean and urge placing the blame on the party that did their part.
I am not a strong supporter of oil companies and believe they get way too much special attention and interests from Governments. However, just my gut feeling after reading the article is the Government has not protected its people who deserve relief and the oil to be 100% cleaned up and it is not equitable to not hold up their end of the bargain that they helped create. I feel in this specific instance the Government should be aggressive in fixing the oil spill problem. In other specific cases like the BP Oil Spill in the Gulf of Mexico, that to me is all on BP.