As waves of litigation continue around an Ecuador court's $18 billion judgment against Chevron Corp., an appeals court today heard arguments over whether a federal judge can stop the plaintiffs from collecting the damages.

The question before the New York-based 2nd U.S. Circuit Court of Appeals is whether a district judge was right to impose a preliminary injunction that prevents the Ecuadorean plaintiffs from seeking to recover any of the damages awarded by an Ecuadorean judge in February (Greenwire, May 17).

The Ecuadorean court found that Chevron was liable for up to $18 billion in environmental damages for oil pollution in the Lago Agrio area of eastern Ecuador caused by Texaco Petroleum Corp., which was acquired by Chevron in 2001.

U.S. District Judge Lewis Kaplan of the Southern District of New York ruled in March that Chevron had raised serious enough concerns about the legitimacy of the judgment to warrant a preliminary injunction.

The injunction was in response to a racketeering lawsuit filed by Chevron, which claims the entire case against it is an extortion scam.

The appeal before the 2nd Circuit is just one strand -- albeit an important one -- of a tangled web of litigation concerning the Ecuadorean court ruling.

Elsewhere, Chevron and the Republic of Ecuador and the Ecuadorean plaintiffs are all busy seeking to persuade judges to allow them to depose people involved in various stages of the case.

During today's argument, the three-judge panel appeared somewhat sympathetic to the plaintiffs' argument.

In particular, they seemed to question whether a U.S. judge has the power to issue a wide-ranging injunction that, in theory, prevents the plaintiffs from seeking to enforce the Ecuadorean ruling anywhere in the world.

"Can you go to New York to prevent enforcement of an Ecuadorean court ruling in Russia?" Judge Gerard Lynch asked at one point.

Lawyers for each side sparred over Kaplan's conduct in the case.

James Tyrrell, a lawyer at the Patton Boggs firm who represents the plaintiffs, said Kaplan "went out of his way to disparage the Ecuador court system."

Chevron attorney Randy Mastro, of the Gibson Dunn & Crutcher firm, countered that Kaplan "has done what a judge should do."

While the Ecuadorean plaintiffs and Chevron prepared for today's arguments, they and the U.S.-based lawyers for Ecuador were also busy elsewhere.

Chevron and Ecuador are looking for information that could help them in an international arbitration proceeding over whether the Andean nation violated a bilateral trade agreement it had reached with the United States.

Separately, the Ecuadorean plaintiffs and Chevron are busy preparing for a November trial, also before Kaplan, over whether the Ecuadorean court ruling should be recognized by U.S. courts. The Ecuadorean government is not involved in that case.

Just last week, a federal judge in Washington ordered that Chevron be able to depose employees of the Weinberg Group, a scientific consulting firm that the plaintiffs had hired to prepare a report on the environmental damages in Ecuador.

Chevron claims the report -- based on the findings of a previous study that was discredited -- was part of the fraud.

Meanwhile, Ecuador is seeking to depose various experts who performed work for Chevron in an effort to help its case before the international arbitration panel in The Hague, Netherlands (Greenwire, June 2).

Chevron argues that Ecuador is bound by the contracts Texaco entered into with the government and that the court proceedings in Ecuador were a sham because the courts are not sufficiently impartial.

In countering Chevron's claims, Ecuador most recently succeeded in persuading a judge in the Eastern District of California to allow its lawyers to depose Douglas Mackay, an adjunct professor at the University of California, Davis.

Mackay has written reports for Chevron rebutting the plaintiffs' allegations concerning the environmental damage in Ecuador.

U.S. Magistrate Judge Gary Austin drew attention to the no-holds-barred nature of the legal battle in his order issued this week, noting that "both parties have used or attempted to use various courts within this country to their advantage; neither party appears without fault."

Click here to read the order granting Chevron's request to depose the Weinberg Group.

Click here to read the order granting Ecuador's request to depose Douglas Mackay.

Click here to read the E&E special report on the case.

Reporter Nathanial Gronewold contributed from New York.