Chevron’s $106M Hague Award Upheld in D.C.

     (CN) – Scoring a minor victory in its broader tussle against the Ecuadorean government, Chevron won permission Tuesday from the D.C. Circuit to collect a $106 million arbitration award related to lawsuits that predate a multibillion environmental case the company has been battling there.
     While the environmental litigation related to oil drilling in the Ecuadorean Amazon has plagued Chevron and its predecessor, Texaco, for more than 20 years, the contract battle related to Texaco’s operations stretches back further.
     The latter case stems from a deal that Texaco subsidiary Texpet reached in 1973 to supply the Ecuadorean government with crude oil at below-market prices.
     TexPet complained, just ahead of its exit from Ecuador in 1992, that the government went to the international market with the oil it was supposed to reserve for domestic consumption.
     With Texpet’s contract case languishing in Ecuadorean courts for more than a decade, Chevron acquired Texaco, and its possible environmental liabilities in Ecuador, in 2001.
     The contract squabble proved a low priority for Chevron in those early years as it denied an attempt by villagers who claimed that that Texaco caused a public health disaster by dumping billions of gallons of oil on sensitive rainforest lands.
     Though the villagers filed the environmental case in New York in 1993, Chevron had the case brought to Lago Agrio, Ecuador.
     With the Ecuadorean courts now holding Chevron liable for more than $9 billion verdict, however, Chevron has complained that the verdict is the product of a corrupt judiciary.
     Chevron abandoned any praise it had for Ecuador’s court system midway through the Lago Agrio litigation.
     In addition to relying on investment treaty that Ecuador signed with the United States in the 1990s, Chevron turned to the Permanent Court of Arbitration based in The Hague, Netherlands, in 2006 to complain of Ecuador’s “undue delays” regarding the Texpet commercial claims.
     A panel resolved the commercial claims four years ago with a $96 million judgment for Chevron.
     With the highest Dutch court adding $10 million in postjudgment interest to the award last year, the D.C. Circuit court upheld Chevron’s right to enforce it Tuesday.
     A Chevron spokesman said he is “pleased” with the decision, and the Ecuadorean attorney general’s office did not immediately respond to a request for comment.
     Chevron returned to the tribunal in 2009 with another case casting the Lago Agrio litigation as a “denial of justice.”
     That case, which expanded as Chevron claimed to have discovered a fraud afoot in Ecuador, remains pending.
     Also pending is the Second Circuit Court of Appeal’s consideration of a Manhattan federal judge’s finding that the 2011 Lago Agrio judgment against Chevron was “procured by corrupt means.”

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