Ecuadorian Plaintiffs End Fraudulent Litigation Against Chevron
July 08 2019 - 8:04PM
Business Wire
Plaintiffs Abandon Canadian Lawsuit and
Agree to Pay Costs
A group of Ecuadorian plaintiffs whose litigation against
Chevron Corporation (NYSE: CVX) has been exposed as a fraud and
bribery scheme by courts in the United States and elsewhere has
ended its Canadian lawsuit against the company. Following
dismissals of their claims in Argentina and Brazil, findings
against them in the United States and Gibraltar, and a ruling in
The Hague that the Republic of Ecuador’s failure to prevent the
continuation of the fraudulent litigation scheme violated
international law, the plaintiffs ended their only remaining
lawsuit by dismissing the Canadian case. The plaintiffs further
agreed to pay costs to Chevron.
Chevron had recently moved to dismiss the Canadian suit on the
grounds that its continuation would be an abuse of the country’s
legal system, a waste of its judicial resources, and contrary to
international law. The Ecuadorian plaintiffs and their counsel did
not oppose Chevron’s motion to dismiss and instead consented to the
unconditional and final dismissal of the lawsuit.
“Chevron is pleased that the promoters of the fraudulent scheme
have apparently realized that no legitimate court would enforce the
judgment that they purchased in Ecuador. Chevron will continue its
efforts to hold the lawyers and investors behind this fraudulent
scheme accountable,” said R. Hewitt Pate, Chevron’s vice president
and general counsel.
Because Chevron never operated in Ecuador or had assets there,
those seeking to profit from the corrupt Ecuadorian judgment have
unsuccessfully attempted to enforce it in Argentina, Brazil, and
Canada. Courts in Brazil and Argentina previously rejected
enforcement attempts in those countries.
With all attempts to date to enforce the Ecuadorian judgment
having been defeated by Chevron, the key remaining proceeding in
connection with the dispute is Chevron’s arbitration against the
Republic of Ecuador before an international tribunal in The Hague.
The tribunal last August held that the Republic of Ecuador had
violated its obligations under international law in issuing the
corrupt $9.5 billion judgment. Chevron is currently seeking to
recover from the Republic of Ecuador costs it has incurred to
expose and defend against the fraud perpetrated against it.
Also pending are contempt proceedings brought by Chevron in
federal court in New York against adjudicated racketeer and
suspended lawyer Steven Donziger, who led the failed efforts to
enforce the fraudulent Ecuadorian judgment. Last year, Donziger was
suspended from the practice of law after having been found by U.S.
federal courts to have violated the Racketeer Influenced and
Corrupt Organizations Act (RICO) by engaging in multiple acts of
extortion, money laundering, wire fraud, witness tampering,
bribery, and obstruction of justice to procure the Ecuadorian
judgment. On May 23, 2019, Donziger was held in contempt of court
for his breach of the RICO judgment, which prevented him from
profiting from the fraud, by selling interests in the Ecuadorian
judgment to investors and using a large portion of the proceeds on
personal expenses. The court further ordered Donziger to transfer
to Chevron profits traceable to the Ecuadorian judgment.
The Canadian decision is the latest in a string of judicial
victories in Chevron’s worldwide defense against the Ecuadorian
judgment. This past April, the Supreme Courts of two countries –
Canada and the Netherlands – ruled in favor of Chevron in related
proceedings. On April 4, the Supreme Court of Canada declined to
hear an appeal of a decision that had dismissed all claims seeking
to enforce the Ecuadorian judgment against an indirect subsidiary
of Chevron in Canada. On April 12, the Supreme Court of the
Netherlands rejected the Republic of Ecuador’s attempts to nullify
decisions of the international tribunal in The Hague that ordered
Ecuador to take all steps necessary to prevent enforcement of the
Ecuadorian judgment against Chevron anywhere in the world.
Last August, the international tribunal in The Hague also found
the Republic of Ecuador liable for violating its obligations under
international law. In a unanimous ruling in favor of Chevron, the
tribunal – including the arbitrator chosen by the Republic of
Ecuador – held that the $9.5 billion judgment rendered against
Chevron in Ecuador in 2011 was procured through fraud, bribery, and
corruption, and was based on claims that had been already settled
and released by the Republic of Ecuador years earlier.
The tribunal, after hearing the testimony of numerous experts
about the environmental conditions in Ecuador and visiting the
former area of operations, rejected Ecuador’s environmental
allegations against Chevron and Texaco Petroleum Co. (TexPet),
which became an indirect subsidiary of Chevron following its
acquisition of Texaco Inc. in 2001. The tribunal found “TexPet
spent approximately $40 million in environmental remediation and
community development under the 1995 Settlement Agreement” carried
out by a “well-known engineering firm specializing in environmental
remediation” and that Ecuador in 1998 executed a final release
agreement “certifying that TexPet had performed all of its
obligations under the 1995 Settlement Agreement.” The tribunal
found “no cogent evidence” supporting Ecuador’s claim that TexPet
failed to comply with the terms of the remediation plan approved by
Ecuador.
The tribunal concluded that the Ecuadorian judgment “violates
international public policy” and “should not be recognised or
enforced by the courts of other States.” The tribunal ordered the
Republic of Ecuador to permanently render unenforceable the
fraudulent Ecuadorian judgment against Chevron. The tribunal also
ordered Ecuador to compensate Chevron for any damages arising from
the fraudulent judgment. A process is under way for the tribunal to
determine the amount of the damages owed by Ecuador to Chevron.
The findings of judicial fraud of the international tribunal in
The Hague are consistent with findings of U.S. courts that the
Ecuadorian judgment against Chevron was the product of fraud and
racketeering activity, including extortion, money laundering, wire
fraud, witness tampering, judicial bribery, Foreign Corrupt
Practices Act violations and obstruction of justice. U.S. federal
courts have prohibited enforcement of the Ecuadorian judgment in
the United States and ordered the Ecuadorian plaintiffs and their
lawyers to pay back to Chevron any enforcement proceeds they obtain
anywhere in the world. That decision – the RICO judgment – was
upheld on appeal and is now final, after having been denied review
by the U.S. Supreme Court.
As in Canada, the plaintiffs’ other attempts to enforce the
fraudulent Ecuadorian judgment in jurisdictions around the globe
have also failed:
- In November 2017, Brazil’s Superior Court of Justice
unanimously rejected the attempt to enforce the Ecuadorian judgment
there. Brazil’s Deputy Prosecutor General stated the judgment was
“issued in an irregular manner, especially under deplorable acts of
corruption.”
- The Brazilian decision followed a ruling by a court in
Argentina in October 2017, which also denied recognition of the
Ecuadorian judgment. The court of appeals upheld this decision in
July 2018. An appeal is pending before the Supreme Court of that
country.
- In December 2015, the Supreme Court of Gibraltar issued a
judgment against Amazonia Recovery Ltd., a Gibraltar-based company
set up by the plaintiffs’ attorneys and investors to receive and
distribute funds resulting from the Ecuadorian judgment, awarding
Chevron $28 million in damages. The court also issued a permanent
injunction against Amazonia prohibiting the company from assisting
or supporting the case against Chevron in any way. The court issued
a similar ruling in May 2018 against the directors of Amazonia,
Frente de Defensa de la Amazonia, and Ecuadorian attorney Pablo
Fajardo for their role in attempting to enforce the fraudulent
Ecuadorian judgment, this time awarding $38 million in damages to
Chevron.
Chevron Corporation is one of the world's leading integrated
energy companies. Through its subsidiaries that conduct business
worldwide, the company is involved in virtually every facet of the
energy industry. Chevron explores for, produces and transports
crude oil and natural gas; refines, markets and distributes
transportation fuels and lubricants; manufactures and sells
petrochemicals and additives; generates power; and develops and
deploys technologies that enhance business value in every aspect of
the company's operations. Chevron is based in San Ramon,
California. More information about Chevron is available at
www.chevron.com.
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Sean Comey, +1-925-842-5509
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