Chevron Still Safe From Paying Ecuadoreans $18B

MANHATTAN (CN) - U.S. District Judge Lewis Kaplan rejected an attempt by a group of native Ecuadoreans to lift an injunction barring them from collecting an $18 billion judgment against Chevron for oil contamination.

The judge granted Chevron the injunction on March 7, in response to the oil company's claims that the verdict in Lago Agrio, Ecuador, stemmed from a fraud on the Ecuadorean court system.

Attorneys for the Ecuadoreans appealed Kaplan's decision to the 2nd Circuit on March 24, and filed a separate motion to stay the injunction until the appellate court issued a ruling.

Kaplan denied the motion for a stay on Wednesday in a 10-page order, stating that a recent appellate ruling that permits Chevron to sue the government of Ecuador in The Hague demonstrates that the Ecuadoreans are unlikely to succeed in his appeal.

"Indeed, the Circuit squarely stated that: 'Chevron ... reserved its right to challenge any judgment issued in Lago Agrio on the grounds that the Ecuadorian judicial system 'does not provide impartial tribunals or procedures compatible with the requirements of due process of law,' that the judgment itself 'was obtained by fraud,' or that 'the proceeding in [Lago Agrio] was contrary to an agreement between the parties,'" Kaplan wrote.

Karen Hinton, a spokeswoman for the Ecuadoreans, recently said that the circuit ruling that Kaplan referred to was a "Pyrrhic victory" for Chevron because it also made important concessions to her clients. Hinton says the ruling rejects Chevron's claims that Ecuador lacked standing to award the multibillion-dollar judgment and that it was not responsible for the actions of Texaco before that company's acquisition in 2001. Chevron has never drilled in Ecuador.

Kaplan's order shows he does not share Hinton's opinion that the 2nd Circuit will be sympathetic to her clients' claims.

"The [Lago Agrio Plaintiff] Representatives are not likely to prevail on appeal," Kaplan wrote. "Accordingly, so much of the LAP Representatives' motion as seeks a stay of the preliminary injunction pending appeal is denied."

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