15. LITIGATION:

Judge again signals support for Chevron in $18B judgment fight

Published:

A federal judge has declined for the time being to rule on Chevron Corp.'s claim that an $18 billion judgment against the oil giant should not be recognized in New York.

U.S. District Judge Lewis Kaplan did, however, make it clear in his opinion yesterday denying Chevron's request for summary judgment that he believes there are "serious questions" about the ruling issued by a judge in Ecuador last year in a long-running case concerning oil pollution in the eastern part of the country.

SPECIAL REPORT
Endgame in Ecuador

After an 18-year battle, a judge in Ecuador issued a critical ruling in February 2011 ordering Chevron Corp. to pay up to $18 billion in damages for oil pollution in the eastern part of the country. E&E examines the specifics of the case. Click here to view the special report.

The Ecuadorean judge had ruled that Chevron was liable for up to $18 billion for contamination caused by Texaco Petroleum Co. Chevron acquired Texaco in 2001.

Chevron is fighting to avoid paying a cent. The oil company filed a racketeering case against the plaintiffs' legal team, claiming 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.

In addition to declining to reach the merits of Chevron's request, Kaplan -- who has voiced support for Chevron in the past -- dealt a blow to the Ecuadorean plaintiffs by throwing out their claim that Chevron could not question the enforceability of the judgment on the grounds that it is now a final judgment that cannot be challenged.

Chevron will now have a further opportunity to argue that the ruling should not be recognized.

Kaplan wrote that various contentions about how the plaintiffs' lawyers acted during the litigation "tainted" the Ecuadorean court ruling, including the allegation that the plaintiffs colluded with a court-appointed expert.

He concluded that "at this stage of the proceedings" it would not be appropriate to rule on Chevron's concern about the enforceability of the judgment.

Whether U.S. courts and others around the world recognize the judgment is vital because that is the only way the plaintiffs can collect. Chevron has no assets in Ecuador.

The plaintiffs have already filed enforcement actions in Brazil and Canada.

Karen Hinton, a spokeswoman for the plaintiffs, noted that the proceedings before Kaplan "are and will be irrelevant to the enforcement proceedings now under way in Canada, Brazil and other countries where such actions might be filed."

Commenting on Kaplan's ruling specifically, a Chevron spokesman said the company "intends to press forward with its racketeering and fraud case until the perpetrators of the judicial fraud are held accountable for their actions."

Click here to read the ruling.