A federal appeals court today said that oil giant Chevron Corp. jumped the gun in asking a U.S. court for an injunction preventing enforcement of an Ecuadorean judgment worth up to $18 billion.

The New York-based 2nd U.S. Circuit Court of Appeals ruled today that any attempt to challenge enforcement of the judgment, entered a year ago in favor of thousands of indigenous Ecuadoreans over alleged oil pollution, must wait until the plaintiffs attempt to seek Chevron's assets in the United States.

Today's opinion explained why it is that the appeals court, acting just three days after the oral argument in September, lifted a sweeping injunction imposed by U.S. District Judge Lewis Kaplan of the Southern District of New York (Greenwire, Sept. 20, 2011).

Chevron is desperately fighting to avoid paying any of the judgment over the pollution allegedly caused by Texaco Petroleum Corp., which was acquired by Chevron in 2001. The oil company's strategy includes hard-hitting claims that the entire case against it is a sham and that the Ecuadorean court system is corrupt. The plaintiffs have responded with their own allegations about Chevron's conduct during the litigation.

How U.S. courts and others around the world respond to Chevron's entreaties about the plaintiffs is vital because the company has no assets in Ecuador. That means the plaintiffs have to ask courts in countries where Chevron does operate to enforce the Ecuadorean court's judgment.

Writing on behalf of a unanimous three-judge panel, Judge Gerard Lynch said that under a New York state law, those seeking to challenge a foreign judgment can only do so after the opposing party has affirmatively sought to enforce it in New York.

So far, it is an action the Ecuadoreans "have not yet undertaken anywhere, and might never undertake in New York," he wrote.

If the plaintiffs do seek to enforce the judgment in New York, the burden may in fact be on them "to establish that the judgment was not procured from an inadequate judicial system," Lynch said in a footnote.

Meanwhile, back in Ecuador, Chevron continues to challenge the judgment. Most recently, it announced last week that it would appeal to the nation's highest court (Greenwire, Jan. 23).

The company is also involved in international arbitration with Ecuador that could affect how the litigation is resolved.

Click here to read the opinion.