OIL AND GAS
Chevron looks to arbitrators to save it from $18B pollution payout
Third of a three-part series.
The final battle in Chevron's high-profile war against an $18 billion judgment over oil pollution in Ecuador is likely to be fought behind closed doors in an ornate building in the Netherlands.
The Peace Palace -- a neo-Renaissance structure built in The Hague with the financial backing of industrialist Andrew Carnegie almost a century ago -- is home to the Permanent Court of Arbitration, whose specialty is resolving international legal disputes.
Although litigation continues both in Ecuador and New York over the February ruling against Chevron, experts say the arbitration court, which shares its grand home with the International Court of Justice, could have a crucial role to play.
That is because the court is currently considering a 2009 claim brought by Chevron against Ecuador in which the oil company claims the Andean nation violated a bilateral trade agreement between it and the United States.
The arbitration proceeding is one part of a tangled web of litigation that illustrates the oil company's no-holds-barred approach to the Ecuador case, which has been ongoing in various forms for 18 years.
Despite concerns raised by shareholders at last week's annual meeting at Chevron's San Ramon, Calif., headquarters about the judgment and the scant prospect of a settlement any time soon, the company has stressed its continued commitment to fighting to the bitter end.
In Ecuador, Chevron has appealed the $18 billion ruling entered by Judge Nicholas Zambrano, while in New York it is pursuing a federal racketeering case against the American lawyers who represent the indigenous plaintiffs, alleging the entire case is a scam.
But what the three-man arbitration panel concludes could be decisive, according to experts such as Peter McGrath, a partner at the Moore & Van Allen law firm in Charlotte, N.C., and a specialist in environmental law.
"The mechanism through which everything will be sorted out will be the arbitration," McGrath said.