Argentina Puts Chevron Assets in Holding Pattern

(CN) - An Argentinean court froze Chevron's assets there in anticipation of a seizure action by Ecuadoreans trying to collect a $19 billion judgment for environmental contamination.

After nearly two decades of litigation, a court in Lago Agrio, Ecuador, found Chevron liable for oil contamination as successor to Texaco, which drilled there from 1964 to 1992.

Chevron has attacked the verdict as extortionate on three continents. In a recent countersuit from one of the Ecuadoreans' lawyers, Steven Donziger says Chevron's legal campaign represent the actual extortion.

Both sides continue to stake out these positions in six judicial systems and the court of public opinion.

The enforcement action filed by the Ecuadoreans in Argentina purports to target $2 billion in assets, representing more than a tenth of the judgment.

Karen Hinton, a spokeswoman for the Ecuadoreans, told Courthouse News that the Argentine court was required to freeze Chevron assets, pending a determination as to whether it can enforce the Ecuador judgment, "under laws governing reciprocal enforcement of judgments in Latin America."

"There is no legitimate legal mechanism in Argentina to undo what the court has done until the enforcement question is resolved," Hinton said. "Thus, we expect that Chevron's attempt to undo the freeze order in Argentina will fail."

Collection could start within a few months because of the Inter-American Convention on the Execution of Preventive Measures, signed in 1979, she added.

Chevron spokesman Kent Robertson disputed this interpretation.

"On the embargo itself, Chevron Corp., the sole judgment debtor, has no assets in Argentina," Robertson said. "All operations in Argentina are conducted by subsidiaries that have nothing to do with the fraudulent judgment in Ecuador. The plaintiffs' lawyers have no legal right to embargo subsidiary assets in Argentina and should not be allowed to disrupt Argentina's pursuit of its important energy resources."

The Chevron subsidiaries in Argentina filed motions to revoke the embargo order, Robertson said.

Collection "should not be imminent" because the Argentinean court still must go though the recognition and enforcement process, "if things even get that far," he added.

Whatever happens in Argentina, Hinton indicated that Chevron could face similar battles around the globe.

"The Ecuadorean plaintiffs and their allies in law firms around the world are prepared to freeze and then seize Chevron assets to ensure a complete cleanup of the toxic waste the oil giant left in Ecuador," she said. "We again call on Chevron to meet its legal obligations and pay the legitimate Ecuador judgment immediately. Its failure to do so threatens thousands of lives, the survival of indigenous groups, and the restoration of the affected area of the Ecuadorian rainforest."

Chevron, for its part, does not appear to be backing down.

"The plaintiffs' lawyers' foreign enforcement actions are nothing more than a cynical attempt to cash in on what they know to be a fraudulent judgment," Robertson said. "There's no escaping that their own misconduct has compromised their claims and they now seek to bluff their way into a settlement."

A federal court in Manhattan has set an Oct. 15, 2013, trial date for Chevron's fraud claims against the Ecuadoreans.

The court has not yet responded to the fraud claims Donziger raised in the countersuit.

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