Court rules for Chevron against Ecuadorians in $9bn rainforest damage case

A New York federal appeals court has ruled that Ecuadorean plaintiffs cannot collect a $9 billion judgment in the US against Chevron for rainforest damage. The case has been labelled the “biggest environmental case in the world.”

The decision by the US Court of Appeals for the Second Circuit on Monday upheld a lower court’s finding, which found the Ecuadorean court judgment was obtained by corrupt means, according to the Associated Press.

READ MORE: Ecuador, the poisoned rain forest

The appeals court said Judge Lewis Kaplan had the authority to rule as he did. It noted, however, that Kaplan's decision after trial doesn't invalidate the Ecuadorian judgment and does not stop the enforcement of the judgment anywhere outside the US.

The ruling comes amid a 23-year legal battle against Texaco, later a subsidiary of Chevron, over claims that the oil company polluted vast swaths of Lago Agrio in the Ecuadorean jungle. Plaintiffs argued the company discharged polluted wastewater into open pits, contaminating water used by the locals, while operating a concession there from the 1970s to 1990.

During litigation in 1995, Texaco agreed to clean a number of waste pits in proportion to its interest in the consortium, at a cost of $40 million, and the Ecuadorian government released Texaco from further liability. In subsequent litigation, indigenous Ecuadorians argued the cleanup was incomplete. They argued the company had hidden toxic waste pits with a thin layer of topsoil.

“Everything was contaminated, but you do not see everything at first glance,” Celine Meneses, a special adviser to the Ecuadorian Foreign Minister, told Responding to Climate Change, an advocacy news source. “Everything seems to be normal, there is vegetation. But what is a bit strange is there are no animals. You have insects, but no animals.”

Chevron has long argued the 1998 agreement between Texaco and the Ecuadorian government absolves it of liability.

After years of fighting, Chevron shifted the case to Ecuador, only to lose a multibillion-dollar judgement after a new left-wing government supported the plaintiffs of some 30,000 villages in the polluted area. They won a $17.3 billion judgement, which was cut in half in 2011.

Chevron appealed the Ecuadorian court ruling, arguing it was “illegitimate” and “unenforceable in any court that observes the rule of law.”

Chevron argued the judgement was obtained through bribery, coercion and fraud.

Much of Chevron’s defense rested on former Ecuadorean Judge Alberto Guerra, who claimed the plaintiffs offered him a $300,000 bribe to ghostwrite the ruling in their favor.

In 2015, documents from a secret tribunal in Washington surfaced, showing Guerra repudiated many of his allegations and admitted to lying about the bribe. The group Amazon Watch said in a statement: "Guerra has so thoroughly perjured himself he should be behind bars. And so should Chevron management."

About Monday’s ruling, Chevron vice president and general counsel, R. Hewitt Pate, told AP that Chevron was “pleased that the truth has prevailed over fraud and corruption.”

Pate said the ruling “leaves no doubt that Ecuadorean judge against Chevron is the illegitimate and unenforceable product of misconduct.”

A US spokeswoman for the Ecuadorians, Karen Hinton, told AP they were shocked and called it a “sad day for the US justice system.”

“As disappointed as we are, this ruling will not deter the Ecuadoreans, their lawyers and their supporters from aggressively seeking justice in Canada and in other countries where litigation is under way to seize Chevron assets,” Hinton said.