Ecuadoreans Try Again to Stop Chevron’s Trial

MANHATTAN (CN) - Indigenous Ecuadorean farmers filed an emergency appeal to stop a New York federal trial that could nullify an $18 billion judgment they won against Chevron for oil devastation in the Amazon.

After the last 2nd Circuit hearing, a three-judge panel refused to stay the proceedings but invited the Ecuadorians to renew their appeal before the merits panel. The appellate court also eased restrictions preventing the Ecuadoreans from accessing their lawyers, who have been fighting vigorously to remove the hurdles standing in the way of the multibillion-dollar award.

Chevron inherited the multibillion environmental claims when it acquired Texaco in 2001. About four months ago, a judge for Ecuador's provincial court in Lago Agrio (Spanish for "Sour Lake") found Chevron liable to the tune of $18.2 billion.

Trying to head off defeat, Chevron claims the verdict is the result of fraud and sought broad discovery in the United States to file a federal anti-racketeering suit against the Ecuadoreans, their attorneys and their associates.

The Ecuadoreans blast Chevron's racketeering allegations as a tactic to avoid accountability. "Chevron fought for nine years to wrest jurisdiction from the American courts in favor of litigating in Ecuador, only to come running back to the United States for a home-cooked bailout when things did not go as planned in Ecuador," according to the latest appeal authored by James Tyrrell of Patton Boggs.

That so-called "bailout" refers to an injunction that prevents the Ecuadoreans from collecting their judgment anywhere on the planet.

Now, Chevron wants to deliver the "knockout blow," Tyrrell says, by "attempting to steamroll" through a trial to make that injunction permanent.

The same judge who granted Chevron's discovery and injunction requests, U.S. District Judge Lewis Kaplan, also agreed to fast-track the trial and to block one of the Ecuadoreans' attorneys from fully participating.

In their latest brief, the Ecuadoreans urge the appellate court to stay proceedings quickly or else Kaplan will soon allow Chevron to pursue "abusive" discovery requests for privileged documents in six federal districts.

"Such demands serve no purpose other than to harass and, more importantly, to assure that, no matter the outcome of the pending appeal, the Ecuadorian Plaintiffs will be forever burdened by Chevron having been made privy to every nuance of their legal strategy and funding efforts," Tyrrell wrote.

In two other motions pending before the 2nd Circuit, the Ecuadoreans are trying to force Kaplan off the case.

Kaplan had refused to step down and pointed out that the circuit has previously praised his handling of the case.

Recusal or not, the Ecuadoreans say they will ignore Kaplan's jurisdiction and pursue collection outside the United States once their country's appellate court affirms the verdict.

Of the dozens of Ecuadoreans named in Chevron's suit, only two - Hugo Gerardo Camacho Naranjo and Javier Piaguaje Payaguaje - appear in Kaplan's court through their attorneys, not in person.

In recent weeks, they have secured high-profile allies who argue in four separate amicus briefs that U.S. courts have no business deciding whether other nations should respect the Lago Agrio verdict.

Civil liberties attorney Burt Neuborne, who won a $1.25 billion settlement for Holocaust survivors suing Swiss banks, wrote that a worldwide injunction "sends an unmistakable message of American judicial arrogance to the rest of the world that can only result in increased levels of reciprocal judicial suspicion and hostility."

Sixteen professors from South Africa, Spain, Finland, Italy and the United States argued in another brief that the injunction is "breathtaking" in scope and "futile" in its attempt to dictate the actions of other countries' courts. The Environmental Defender Law Center made similar arguments in a separate brief.

Lastly, in what the Lago Agrio plaintiffs call a first for a Latin American country, the Ecuadorean government submitted a brief criticizing the Manhattan court's actions.

Decrying Kaplan's "gratuitous belittlement" and "undisguised castigation" of their judicial system, the Ecuadorean government defended their courts' independence by asserting that "the State as litigant actually lost to private litigants more than it won."

Chevron, meanwhile, vigorously defended Kaplan in a 117-page reply brief asking the 2nd Circuit to respect his rulings.

"There is nothing 'arrogant' about applying New York's Recognition Act to evaluate, among other things, the impartiality and due process afforded by Ecuador's courts, as well as Chevron's allegations of fraud," wrote Randy Mastro of Gibson, Dunn and Crutcher, representing Chevron. "The District Court's preliminary findings on these grounds represent the straightforward application of the statute to the largely uncontroverted record before it, not an international crisis."

The Ecuadorean government will have to defend its actions before the International Court of Justice at The Hague, where Chevron won permission to sue them.

Ecuador's judiciary gets low rankings in both domestic and international reports, and Transparency International's Corruption Perceptions Index now places it at 2.5 on a 10-point scale. But the Ecuadoreans say this actually reflects a slight improvement compared to its position when Chevron handpicked the venue.

Arguments before the 2nd Circuit are slated for Sept. 12.

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