Ecuador’s top court upholds ruling against Chevron in environmental case

US oil giant will only have to pay half of what it was ordered to pay in compensation

Chevron's insignia.
Chevron's insignia.REUTERS

Ecuador’s National Court of Justice (CNJ) on Tuesday upheld a ruling that US oil giant Chevron was liable for environmental damage in the Amazon basin region by its sister company Texaco.

But at the same time, the CNJ — the highest court in Ecuador — slashed in half the compensation it had been ordered to pay.

In its ruling, the CNJ said that Chevron will have to pay $8.6 billion (about 6.5 billion euros) — instead of the $19 billion it was ordered to compensate 20 months ago — to the residents of the Lago Agrio region.

The ruling was just the latest battle — albeit not the last — in a lengthy case that has pitted the US petroleum firm against the Ecuadorian government. In the coming days, a New York judge will determine whether the initial ruling handed down against Chevron in 2011 was done in a fraudulent manner, as the oil company suggests.

“We are happy with the ruling that was handed down because it is a big step, it shows that justice does work, and that poor people do have access to the legal system,” said Pablo Fajardo, a representative of the residents who filed the original lawsuit.

But Jim Craig, a Chevron official who is in charge of Africa and Latin America, said that the CNJ ruling was “just as illegitimate and unenforceable today as it was when it was first handed down.”

“The only legal decision the National Court of Justice could have made in the appeal to dismiss presented by Chevron was to annul this absurd Lago Agrio process and throw out that illegal ruling,” Craig said in an interview with EL PAÍS,

In 2011, Judge Nicolás Zambrano ruled on what has become known as the most severe sentence in Ecuadorian history for economic crimes. He ordered Chevron to pay $19 billion for the damage caused by Texaco from the time it operated in the South American nation from 1964 to 1992. Chevron acquired Texaco in 2001.

Not only has Chevron argued that the case was full of irregularities, but it also said in its appeal that it had invested close to $40 million to clean up the province. Lawyers for the petroleum firm said that Texaco had signed an agreement with the Ecuadorian government in 1998 that released it from any environmental damage responsibility, and also shields Chevron from any liability.

According to rights activists, the pollution of lakes in the Amazon region has affected the health of Indians and rural workers who live in the area.

Chevron has initiated different legal battles in the international courts against Ecuador. In New York, it filed a suit alleging that environmental reports had been falsified and bribes had been handed over to the judge in the Ecuadorian case.


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