Chevron Arbitration Ruling Against Ecuador ‘Completely Off Base’

Yves here. Due to having limited resources, we don’t spend as much time on smaller economies as I wish we could. This Real News Network story on Ecuador’s loss against Chevron seemed important in and of itself, and is also a compact illustration of how much the international order is skewed to favor multinationals.

DIMITRI LASCARIS: This is Dimitri Lascaris, reporting for The Real News from Montreal, Canada.

As the Real News has previously reported, in 2011, the courts of Ecuador rendered a nine point five-billion-dollar judgment against Chevron, one of the world’s largest fossil fuel companies. The Ecuadorian plaintiffs persuaded the Ecuadorian courts that from 1964 to 1992, Texaco, which was later purchased by Chevron, dumped polluted wastewater into open pits across vast swaths of Lago Agrio in the Ecuadorian jungle, contaminating the water used by locals. Locals call the area the Amazon Chernobyl.

Indigenous tribes have seen their cultures decimated by the pollution. Ecuador’s environmental judgment against Chevron is thought to be the highest ever to emerge from a court, but Chevron is doing everything it can possibly do to block collection. After Chevron sold off its assets in Ecuador during the trial there, the Ecuadorian plaintiffs sought to enforce the judgment and jurisdictions in which Chevron owns, directly or indirectly, substantial assets. Chevron has threatened the villagers with a “lifetime of litigation” and has vowed never to pay the judgment. So far, it has been true to its word. The plaintiffs’ attempts to enforce the judgement in The United States failed.

Early this year, the Ontario Court of Appeal rejected the plaintiffs’ attempt to enforce their massive judgment in Canada, another country in which Chevron indirectly owns substantial assets. Then, on September 7, an international tribunal found that Ecuador violated a treaty with the United States by allowing its court system to issue a nine point five-billion-dollar judgment against Chevron in this case. Now here to discuss this with us is Steven Donziger, a human rights attorney based in New York who has been representing these indigenous and farmer communities in Ecuador’s rainforest for more than two decades. He joins us today from New York.

Thank you for coming back on The Real News, Steven.

STEVEN DONZIGER: Sure, it’s good to be here.

DIMITRI LASCARIS: So, Stephen, echoing earlier U.S. court rulings, this international tribunal, which rendered a five-hundred-page decision in this case on September 7, said the Ecuadorian case was tainted by fraud and corruption and that the nine point five-billion-dollar judgment cannot therefore be enforced lawfully. The tribunal detailed conduct by a judge they called “grossly improper by any moral, professional and legal standards.” How do you respond to those statements by the tribunal?

STEVEN DONZIGER:They’re just, in my opinion, completely off base. If there’s improper court proceedings it was done by the tribunal itself. I think we need to take a step back and understand the big picture here. The communities in Ecuador won the case in their home country courts because Chevron insisted the trial take place there and accepted jurisdiction there and promised to pay any adverse judgment. As the evidence in that case mounted against the company- and I’m talking about tens of thousands of chemical sampling results from water and soil samples that showed massive amounts of pollution that were and continue to cause a slow genocide in Ecuador to the indigenous groups.

Thousands of people have been affected. Many have died or will die if nothing is done about this problem. In the face of that evidence, Chevron decided to spend massive sums of money. They hired sixty law firms, two thousand lawyers, spent at least two billion dollars. That money, instead of cleaning up the toxic dumping that it caused in Ecuador was used to attack the indigenous groups and their lawyers, including myself. So, what you now have is a valid judgment out of Ecuador in the jurisdiction where Chevron wanted the trial held. It’s worth twelve billion dollars, which while is substantial, was actually a fraction of what would really be needed to clean up the damage given that it’s been going now for fifty years.

And BP, by way of comparison, has paid about fifty billion dollars for the Deepwater Horizon spill. So, this is substantial, but it’s a modest judgment by standards of comparison, a judgment say in the United States. Knowing that it would have to pay this judgment, Chevron tried to spend a lot of money to attack the indigenous groups and their lawyers through other means, what we call in the law, collateral attacks. Big picture, though, is we have an enforcement case to seize Chevron assets in Canada that has not been rejected. Your intro was not accurate on that point. We have been backed by Canada’s Supreme Court. When Chevron tried to block the effort by the Ecuadorians to bring the enforcement action, we got a unanimous decision from Canada’s Supreme Court in 2015.

Recently, Chevron has raised yet another technical defense consistent with this lifetime of litigation threat. That defense is that a subsidiary that Chevron owns in Canada, called Chevron Canada, cannot be used as a defendant in the enforcement action. All of Chevron’s assets around the world are held by subsidiaries that are wholly owned by the company, and Chevron has made the preposterous argument in Canada that an asset that is one hundred percent owned by the parent can’t be used to force the parent to pay a debt. And this narrow legal issue is now before the Canada Supreme Court. And it’s an important legal issue, but it doesn’t take away from the broader point that in Canada, we are going to trial against Chevron parent and hopefully the subsidy or sometime in the coming months after the Canada’s Supreme Court rules as to the contours of this proceeding.

So, the Ecuadorians have made tremendous progress in Canada and the case is still very viable and very much alive. The arbitration decision is really irrelevant.

DIMITRI LASCARIS:I just want to focus on Canada. I was going to deal with that later, but since you mentioned Canada. So, just for the benefit of our viewers, you I are lawyers, and I want to make sure that the non-lawyers who are listening to this can understand. Rendered by the Ontario Court of Appeal, in your view, what was the legal impact on the Ecuadorian plaintiffs of that particular decision, and have you in fact been granted leave by the Supreme Court of Canada to appeal that decision?

STEVEN DONZIGER:We’ve applied for leave and that application is pending.

DIMITRI LASCARIS:Okay, so what is the legal effect, in your view, of the Ontario Court of Appeals decision on your clients?

STEVEN DONZIGER:Well, it raises the issue in Canada as to once the judgment of Ecuador is enforced, if indeed it is enforced and we believe it will be, whether after that we can execute against assets owned by Chevron and Canada. So, Chevron is trying to raise a technical defense that even if we win the enforcement, we still can’t get anything at the end of it. We strongly disagree with that, it would be totally unfair, another example of Chevron’s forum shopping. And we expect to win the legal issue. However. If we do not win that legal issue, we will still go and enforce the judgment in Canada. And after that, we will see what we can do about getting Chevron’s assets either in Canada or taking the Canadian judgment that’s been validated by Canadian courts into to other jurisdictions where Chevron has assets, and enforcing the judgment there.

DIMITRI LASCARIS:Okay, so let’s go back- thank you for that clarification. Let’s go back to the question I posed, what is your view about the legal effect of this arbitral decision? Is that something that is now going to pose a problem for you in countries like Canada in terms of enforcing this judgment?

STEVEN DONZIGER:It shouldn’t by law because it’s irrelevant. I mean, this is why it’s irrelevant. Reason number one, and the most important reason, is the Ecuadorians were not a party to that proceeding. That was a proceeding between Chevron and Ecuador’s government.

DIMITRI LASCARIS:You’re talking about the arbitral tribunal?

STEVEN DONZIGER:The arbitration, the arbitration.


STEVEN DONZIGER:You cannot take a decision- and this wasn’t a court, this is a private arbitration under a treaty, it’s not a public court, it’s held in secret. There’s no judges, there’s no transcripts. It’s all a secret proceeding. It’s really a real problem because it’s really a secret court for corporations, and I’ll explain that problem in a second.

But sort of that raises another key issue, really a couple of issues. Number one is all of these collateral attacks by Chevron on the valid Ecuador judgment in the court that came from the courts that it wanted the trial to be held in are a result of the fact that seventeen different appellate judges in Ecuador, including the entire constitutional court of the country, the highest court, have affirmed the trial court judgment which is based on sixty four thousand chemical sampling results and over one hundred technical evidentiary reports, as well as reams of witness testimony and third party scientific reports. This is probably the most litigated science toxic tort case in world history. There’s two hundred and twenty thousand pages of evidence that point to Chevron’s guilt. They know they’re guilty. They don’t even dispute the fact that they dumped this toxic waste.

Their entire focus is on attacking Ecuador as a country, Ecuador’s courts, me and my other colleagues, other lawyers who have litigated this case, as a way to distract attention from their overwhelming guilt that has been validated by seventeen different judges in Ecuador. The case in the arbitration completely mirrors a decision that we believe is totally bogus and based on fraudulent evidence presented by Chevron from a U.S. District Court Judge in New York, Lewis Kaplan, who found that I and others ran what he calls a “RICO conspiracy” to extort money from Chevron via this case, when there’s overwhelming evidence, again, that Chevron is guilty. And this is a very dangerous attack. It’s a SLAPP lawsuit, meaning it’s designed to silence our advocacy and intimidate us.

Chevron has tried to demonize me personally. They’ve admitted this in e-mails, that their strategy was not to defend the case on the merits, but to demonize Steven Donziger. I’ve probably been subjected to the most well-funded and vicious corporate retaliation attack on a lawyer in U.S. history. They’ve used dozens of law firms, six PR firms. I’ve been followed all around New York by private corporate espionage agents. And it really is about intimidating the lawyers, funders and anyone who wants to help the Ecuadorian communities achieve justice. Why are they spending so much money and time and investing so much effort in these attack strategies, which to me are completely bogus?

The reason is the liability in this one case, yes it’s high, but Chevron knows that they have these other significant environmental legacy liabilities all over the world. And they know that if the Ecuadorian indigenous groups and farmer communities are able to collect on this judgment at a substantial level, that they will be subject to other lawsuits by other impoverished communities represented by talented legal counsel. By the way, when I say talented, as a team we have thirty lawyers who work in different countries to hold them accountable for this judgment, it’s not just me. They are terrified of that prospect.

So, what they’re trying to do is not only kill off the ability of the Ecuadorians after more than two decades of litigation, historic litigation, from collecting on their judgment. They’re trying to kill off the very idea that you can bring a case like this. And they’re also really mad because we have attracted significant funding from supporters that have allowed us to pay litigation expenses to sustain the case all these years. Now, they’re outspending us one hundred to one. They have much more money than we do. However, we have been able to survive and even thrive and advance in Canada, despite the fact they spend two billion dollars trying to stop our team.

And the people in Chevron, the general counsel, R. Hewitt Pate, the current CEO, a guy named Michael Wirth, and others have gotten that company so far out on a limb with their expenditures that they almost have no choice but to keep going after all these sunk costs. And in my opinion, they don’t know how to pull back. They’ve infuriated their own shareholders. Just this year, thirty-six institutional shareholders wrote a letter to the CEO urging that he settle the case. And they have unsettled the financial markets to a great degree because they created a great deal of uncertainty in terms of their asset base in Canada as a result of their failure to deal with this judgment and comply with it.

DIMITRI LASCARIS:We’ve been speaking today to Steven Donziger, who has been acting for Ecuadorian plaintiffs for approximately twenty years in a piece of epic litigation against Chevron, one of the world’s largest fossil fuel companies. Thank you very much for joining us, Steven.

STEVEN DONZIGER:Thank you. Have a great day.

DIMITRI LASCARIS:And this is Dimitri Lascaris for The Real News.

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  1. Carla

    Yves, thank you so much for posting this. It’s another example of what a vital resource The Real News Network is. They take the time to cover so many stories that we would never be aware of, otherwise.

      1. drexciya

        Abby Martin covered this in one of her episodes of The Empire Files on YouTube for telesur. The pollution is very very bad and was mostly unnecessary to boot.

  2. JTMcPhee

    “Life imitates art?” Think of all the movies and books that are plotted around MegaCorps and their well-paid minions polluting or killing or otherwise externalizing all kinds of costs and more important, actual harms and destruction, then using various deceits to “legally” de-legitimize the injured and evade judgments and consequences. Nothing, sadly, new here —

    It’s sadly lost down my personal memory hole and I am not having much luck turning up anything to validate my recall on the ‘net resources. But way back when I first went to law school in 1973 or shortly thereafter, I recall this actually happening: A major European chemical company found some extractable stuff in the upper reaches of an estuary in one of the “shitty little countries,” maybe in Africa. The corporate types bribed “the government” for permission to build an extraction plant there, and proceeded to dump the pollution therefrom into the estuary. Which happened to be the major food and transportation resource for quite a few thousand “natives.” The “natives” applied to the decency of the corporation types, and were assured their concerns were unfounded, that the toxins were not toxic and that the corp was doing improvements to reduce the plant”s impact. “Just give us some time, you elders of the tribes. Trust us — we have to live here too, as good corporate citizens.” Nothing changed of course, just an increase in production and more discharges and air releases. So the elders went to the government, which the officials of said “Nothing we can do, we have given them a permit and they are ‘iron technical compliance’ and we have contracts with them that are bringing money into [and out of] the country.” So after a couple of more rounds, the natives got restless, stormed the plant one night, and burned the place to the ground. I don’t recall if they also killed off any of the corporate types that did not flee before the local wrath…

    Seems like a scene that may eventually repeat. Though at the rate the looters kill off the activists and leaders, maybe the power players will be able to stave off the consequences until they get to retire and disappear into secure wealth, or die those comfortable natural deaths they get to experience…

    1. Conrad

      Your example sounds a lot like the Ok Tedi Mine in Papua New Guinea.

      1 mountain demolished, 1,000 kilometres of river and 1,500 square kilometres of forest polluted. But hey the company got 3 million tonnes of copper and 8 million ounces of gold!

    2. Prairie Bear

      Sounds in some ways like the Niger Delta. There have been guerrilla actions over the years. I can’t recall hearing of a plant-burning event like that. It would have been an oil facility of some kind. Sometimes there have been breaks in the pipelines and locals will race to fill up containers with oil and there have been deaths from that, poisonings and also explosions and fires resulting from the breaks that kill people.

      1. Synoia

        The locals drill holes in Pipelines to get product.

        The Oil in Nigeria has set a bad example for bot the Nigerian Rulers, and because their ability to capture the oil wealth has set a bad example for all ruling class in the world.

        The Nigerian Ruling class came into their wealth in the early ’70s, after the conclusion of the Biafra War (Which I remember was an open discussion before Nigerian independence in 1960, and was between the Ibo and Youraba Peoples).

        I’ve always wondered about the linkage between the envy of elites over the sudden wealth of the Youraba elites, followed by a determination to maintain their place is “richest people on the planet – aka Anything you can do I can do better.

  3. pretzelattack

    so a secret panel of corporate trade lawyers protect the corporation from the legal consequences of their actions–i guess the process is working the way it was designed to, then.

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