Ecuador’s Judgment In The Lago Agrio Case

Our coverage of the Lago Agrio case till now has focused on Chevron’s efforts to gather evidence in the United States for use in the three proceedings in Ecuador–the Lago Agrio lawsuit itself; the BIT arbitration; and the criminal case. But a significant development in the case yesterday changes our focus from judicial assistance in the gathering of evidence to judicial assistance in the recognition and enforcement of judgments. Judge Nicolás Zambrano, presiding in the civil lawsuit, awarded the plaintiffs nearly $9 billion in damages against Chevron.

Before turning to the new development, and for the purpose of putting things in the proper perspective, I would like to quote at some length from Texaco’s appellate brief in Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir. 2002), the case in which the oil company successfully had the New York lawsuit dismissed in favor of proceedings in Ecuador on forum non conveniens grounds (citations and footnotes are omitted):

Ecuador’s Government is a constitutional democracy with executive, legislative, and judicial branches. Its judicial branch, headed by the Supreme Court, includes special purpose courts and lower courts, which use a Civil Code based on Roman law. Thus, Ecuadorian legal norms are similar to those in many European nations. Ecuador’s Constitution guarantees due process and equal protection, and its courts provide important procedural and substantive rights, as former Supreme Court Justices of Ecuador, jurists, and practicing lawyers informed the District Court in affidavits.

* * *

In response to the District Court’s January 31, 2000 Memorandum Order, the parties submitted evidence concerning the independence and impartiality of Ecuador’s judiciary following the short-lived coup in January 2000. That evidence further proves that Ecuador provides an adequate legal forum and that its judicial system is even stronger today than previously.

Ecuador reaffirmed its commitment to democracy following the failure of the January 21, 2000 military coup. Its democratic, constitutional government continues today, and its judiciary remains independent. Ecuador’s military is not interfering with the judiciary’s or government’s activities. The current Government of Ecuador has taken and continues to take “vigorous steps to further the independence and impartiality of the judiciary.”

* * *

Plaintiffs’ next argument is that Ecuador’s courts are corrupt, but “the argument that the alternative forum is too corrupt to be adequate ‘does not enjoy a particularly impressive track record.’”  The most persuasive evidence that Ecuador can and does dispense independent and impartial justice in these cases is the record of corruption-free litigation against Texaco’s subsidiary and other companies. This record provides practical proof that litigants can and do obtain fair treatment and relief in Ecuador’s courts, including in cases relating to Consortium activities. The circumstances in Ecuador are not remotely like those that prevailed in Liberia when this Court decided Bridgeway Corp., which involved a “dysfunctional foreign legal system[].” The opposite is true in Ecuador.

These cases also have received substantial attention from the Ecuadorian government and media, environmental groups, human rights groups, indigenous organizations and other non-governmental organizations. This attention will continue regardless of forum. The public scrutiny these cases will receive in Ecuador and/or Peru will further assure a fair adjudication of plaintiffs’ claims.

Really, has there ever been a better example of high-powered lawyers winning the battle but losing the war?

Chevron’s assets are probably in no immediate danger. In light of the plaintiffs’ apparent threat to seek recognition and enforcement of the judgment in multiple forums around the world, Judge Kaplan, on February 9, issued a temporary restraining order enjoining the Ecuadoran plaintiffs from seeking recognition and enforcement of the Ecuadorian judgment, citing the possibility of a multiplicity of actions as a traditional ground for relief in equity. And the arbitral tribunal in the BIT arbitration issued an interim order, also on February 9, requiring Ecuador “to take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment … in the Lago Agrio Case.”

You can find early reaction to the damages award at Opinio Juris.

I will keep you posted on Chevron’s efforts to nip recognition and enforcement proceedings in the bud. In particular, Judge Kaplan will shortly be holding a hearing on Chevron’s motion for a preliminary injunction. And if the plaintiffs are ever able to commence proceedings to recognize and enforce the judgment in the United States, we will have an opportunity to consider the application of the Uniform Foreign Country Money Judgment Recognition Act or a similar state law. In particular, we will see whether a U.S. court would be willing to enforce the Ecuadorian judgment over challenges to the adequacy of the Ecuadorian judiciary generally or to the conduct of the Ecuadorian court or the plaintiffs in the Ecuadorian action in this case specifically.

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