Chevron's Desperate Wanderlust

Chevron Files International Arbitration Claim Against Ecuador: Forum Shopping at the Hague?

(International Business Law Advisor)

By: Santiago Cueto

First, the United States. Then Ecuador. Now Holland. Chevron's wanderlust knows no bounds, as it just filed a parallel international arbitration proceeding in The Hague.

As reported in this article in the Wall Street Journal and in this article in the New York Times, Chevron filed an international arbitration claim before the Permanent Court of Arbitration in The Hague under the Rules of the United Nations Commission on International Trade Law (UNCITRAL). The claim is based on Ecuador's alleged violation of investment agreements, international law, and its treaty with the United States--the Encouragement and Protection of Investments Treaty.

Chevron’s claims relate to the Amazon oil lawsuit I wrote about in an earlier post. In the arbitration filed in the Hague , Chevron alleges that Ecuador’s judicial process is broken and that the South American nation cannot fairly adjudicate the long-running oil pollution litigation. Through the filing, Chevron seeks to enforce prior settlement and release agreements that the government of Ecuador entered into with Texaco Petroleum when the consortium was terminated, and to hold Ecuador accountable for its obligations under Ecuadorian law and existing international treaties.

The Ecuadorian government says that it will "vigorously" defend itself against the claim.

Chevron's new general counsel, Hewitt Pate, released a statement that accompanied the announcement of the new claim.

"Because Ecuador's judicial system is incapable of functioning independently of political influence, Chevron has no choice but to seek relief under the treaty between the United States and Ecuador."

Forum Shopping is an Unfair Venue Shell Game

Chevron's latest move is the litigation equivalent of three card monty and is yet another tactic to divert attention away from the trial taking place in Ecuador. Chevron first fought successfully to force plaintiffs to try their lawsuit in Ecuador rather than U.S. courts. Then it sought (unsuccessfully) to win indemnification in U.S. courts from a possible judgment in Ecuador. And now it's filed for arbitration in Holland. Chevron's blatant forum shopping is an abuse of the judicial process and designed to avoid a judgment.

The Hague is arguably the most hallowed institution for the resolution of high-profile international disputes. Chevron's latest tactic all but mocks the institution's primary mission to administer justice. The Hague must not be utilized to frustrate legitimate legal proceedings taking place elsewhere.

Forum shopping drains resources by imposing substantial additional costs on defendants, who must transport lawyers, documents, and numerous witnesses to the site of the trial – an expense that is multiplied when the trial is located far from the defendant’s place of business, such as in Holland.

Steven Donziger, a U.S. legal adviser to the plaintiffs, said the latest move by Chevron followed a series of setbacks in courts for the company in both countries.

Filing an international arbitration campaign at this point in time smacks of desperation and is a clear example of forum shopping," Donziger said in emailed statement.

As reported in this article in the Oil & Gas Journal, Steven called the company’s move “one of Chevron’s last cards to avoid paying for a half-century of environmental contamination in Ecuador’s Amazon.”

The country's solicitor general, Diego García, said "Chevron has signaled for years its intention to file the instant arbitration, although only after an adverse judgment had issued and the appellate process completed.

"The environmental case should be resolved by the courts," Garcia added, "not in an arbitration in which the private parties are not even represented."

You can read the entire article HERE

Chevron Casts Stones...

With self-righteous drama Chevron continues to attack Ecuador's legal system as "corrupt" and a place where it cannot obtain a fair trial. Yet to avoid a trial in the United States, where the case originally was filed in 1993, Chevron submitted fourteen sworn affidavits to a U.S. federal judge praising the fairness of Ecuador's courts and stipulated it would be bound by the jurisdiction of the Ecuadorian court as a condition of the case being transferred there.

The depth (or lack thereof) of Chevron's pious stance is seen for what it is in this 1972 Texaco memo entitled "Reporting of Environmental Incidents" from Texaco’s Chairman of the Board, R.C. Shields. The memo provides new instructions to the corporation’s Acting Manager in Ecuador, M. E. Crawford, as to what constitutes Texaco’s definition of a major oil spill. It is one which "attracts the attention of the press and/or regulatory authorities" - not one in which rainforest residents´ water supplies are rendered undrinkable or their health seriously affected. A clear indication of a cover-up of known wrongs is the note at the end of the memo requiring that all previous reports of oil spills be destroyed.

Finally, in an indication of how Chevron's word is far from being as good as its bond, the oil company's spokesperson, Kent Robertson, has announced that Chevron has no intention of abiding by its promise to a U.S. federal court that it would be bound by the jurisdiction of the Ecuadorian court.

So much for Chevron's superior corporate greenwashing virtue.

Chevron's Desperate Delaying Tactics

For years, Chevron has repeatedly tried to distort Ecuadorian law, present misleading evidence, create fake laboratory test results, politicize the trial by lobbying Ecuadorian and U.S. government officials to extinguish the claims of the plaintiffs, and employ extrajudicial pressure to intimidate the judge and court personnel – all with the goal of preventing a final judgment from being reached.

These tactics help explain why the trial process has lasted 16 years and why Chevron’s lawyers have promised the plaintiffs a “lifetime of litigation” if they persist in their claims. Despite this bad faith, Ecuador’s court system likely has afforded Chevron more due process rights than any defendant in the history of civil jurisprudence. The company alone has presented more than 50,000 chemical sampling results and produced almost 200,000 pages of evidence in a trial that has lasted six years in its Ecuador phase. It has been free to inspect any site it wants, turn over any scientific evidence it can generate, present any witness from whom it wants testimony, and present any documentary evidence it can find.

It is the scientific data itself that is proving the case against Chevron, not any bias on the part of the judge or court.

More Smoke from Chevron Bloggers

Bloggers paid by Chevron are thrilled that Ecuador's Prosecutor General Washington Pesantez recently commented that:

“Although I don’t have the exact figures, 10% would go to the plaintiffs if Chevron is found guilty; 90% would be delivered to the State for remediation or bio-remediation activities that would serve to correct biologic and chemical mechanisms, as from what we have found out in a parallel criminal process, there are still environmental problems.”

They're falling over each other to blog that this "proves" the state of Ecuador is involved in prosecuting the case against poor old innocent Chevron.

The assumption that the Ecuadorian government is a party to the lawsuit, since even if it isn't named it will receive the proceeds from it, is incorrect. The Pesantez statement must be understood within the context of Ecuador's law.

What the prosecutor general was alluding to was that, under Ecuadorian law, 10% of the award would go to the Amazon Defense Coalition and 90% would be administered directly for remediation costs under a public trust mandated by government legislation.

The government would not be entitled to any of the actual award.

Kent Robertson's Crude Spin

Chevron spokesperson Kent Robertson recently criticized the documentary Crude as being "long on emotion and short on facts."

Crude director Joe Berlinger responded:

"I find Kent Robertson's comments about Crude to be extremely troubling, given the fact that he has yet to see the film. I have made multiple offers to screen the film for Mr. Robertson and his colleagues at Chevron, and my offers have been declined. Just last week, he told me that the company sees 'no meaningful value' in having a private screening, but they would 'simply wait until the film hits [their] local theatres.' Since Crude opened in New York on the same day the California-based Mr. Robertson made his comments to Reuters, I would be surprised if he has seen it, which makes me wonder why he is attacking the film.

"The comment that Crude is 'short on facts' is outlandish. The film goes to great lengths to give as much attention to the positions of each of the opposing parties in this landmark case as is possible in a feature length documentary. Stephen Holden of the New York Times -- among other prominent critics -- specifically cited this quality, saying, 'rarely have such conflicts been examined with the depth and power of Crude.' Perhaps the 'facts' that Mr. Robertson is referring to are not the talking points that his company has been working so hard to inject into the news cycle in the days leading up to Crude's release.

"While Crude attempts to present both sides of the legal case, it concerns me that Mr. Robertson continues to criticize the film's presentation of the story by obfuscating the accusations against his company. Mr. Robertson told Reuters, 'If you're seeing fresh oil today ... how can that be the responsibility of a company that stopped operating in 1990?' The systems and infrastructure that the plaintiffs say dumped billions of gallons of oil and toxic waste products into the Amazon rainforest in Ecuador were designed, built and operated for decades solely by Texaco (which merged with Chevron in 2001), according to the suit. Although the operation was later taken over by PetroEcuador, it is the theory of the plaintiffs' case that Chevron is responsible not only for the past pollution, but the current pollution as well, because they turned over a faulty system to the current operator. To ignore this would be to miss a key point in the story examined in Crude. While Mr. Robertson is not an attorney, he is surely aware of this major detail in the case against the company, which has now been going on for sixteen years."

Am Law Daily Interview with Steve Donziger

(Steve Donziger is the principal US lawyer advising the plaintiffs in the Chevron case)

When did you learn of the bribery allegations against the judge?

I was first alerted when Chevron released the videotapes to the media on August 31. Chevron never exercised the courtesy of contacting our lawyers, even though you'd think we have a mutual interest in preserving the integrity of the trial process.

What's your reaction to the purported meetings captured on the videotapes?

The allegations have to be taken seriously and need to be investigated. But it raises as many questions about Chevron as it does about anything the judge did, such as whether Chevron was involved in setting up a dirty tricks operation to undermine a trial with such a substantial judgment.

What do you mean by a "dirty tricks operation"?

Chevron's version of events doesn't add up. First, why did they wait three months to release this information? Second, there's no evidence on the tapes that the judge was involved in a bribery scheme even though they spun it that way to the press. Third, Chevron was supposedly given these tapes by one of their own contractors, but the only meeting where a bribe was discussed was the final meeting, after Chevron had already gotten the videotapes. That raises the question of whether Chevron was involved in trying to script that final meeting to make it appear as though there was a bribery scheme.

Does the judge's recusal help or hurt your efforts?

The judge's recusal helps because it allows the trial to proceed and focus on the evidence, which is where the focus should be. Regardless of what Chevron is trying to argue, all the evidence came in before Nunez began presiding over the trial. So his recusal will have minimal impact. But I do think it's allowed Chevron to engage in a game of smoke and mirrors that distracts people from the core issues, which has been their strategy all along.

Considering there are no jury trials in Ecuador, and that a new judge takes over a case every two years and has to review the evidence all over again, it seems a trial in the U.S. would be more stable. Has there been any attempt to get this case back in the states?

This case was originally filed in U.S. federal court in 1993. Texaco submitted 14 expert affidavits praising Ecuador's courts and used that as a basis to move the case to Ecuador over our objections. They succeeded, so we refiled the case in Ecuador. The trial started and as the evidence came in, Chevron realized they would be found culpable and started attacking the court they had previously praised. For now, nobody's trying to move it to the United States. Not Chevron, not us. What we want is for the trial that Chevron wanted to take place in Ecuador to finish in accordance with the law.

What's your next step now that a new judge has taken over and proceedings have resumed?

The primary objective is to reach a determination of whether Chevron is liable for damages. It's unclear to us at this point how long it will take to reach a conclusion, but according to Ecuadorian law, it should happen in the next several months.

Kent Robertson: Chevron's Chief Disinformer

Kent Robertson (pictured), Chevron’s chief spokesperson, in an interview with Steve Foley of the Minority Report April 22, 2008:

“An objective evaluation of the facts shows that Texaco Petroleum behaved responsibly in Ecuador”

Objective evaluation of the facts? Coming from the oil giant’s chief disinformer?

And Texaco acted responsibly?

Check out this 1988 Texaco memo entitled “Offer of Bribe to Auditors”

Or this 1972 Texaco memo entitled "Reporting of Environmental Incidents"

You be the judge.

Judge Recuses to Prevent Further Chevron Delaying Tactics

The judge’s decision to recuse himself from the trial against Chevron clears the path for the legal proceedings to continue uninterrupted. This appears to have been done by the judge to disrupt Chevron's intention to further delay a litigation that has lasted 16 years.

The judge’s action once again validates the effective functioning of the Ecuadorian legal system — a system that Chevron chose as the best forum to hear the lawsuit. We again call on competent authorities in Ecuador and the United States to investigate any role Chevron and its officials might have played to script a bribery scheme for purposes of extracting an advantage in a private litigation.

The recusal does not change the overwhelming evidence against Chevron in the underlying case. The evidence in that case demonstrates clearly Chevron’s responsibility for wrecking the rainforest, decimating indigenous groups, and putting thousands of Ecuadorian citizens at grave risk..

Chevron's Spluttering Gun

Regarding Chevron's supposed and much heralded "bribery scandal" videos in which it fingers Ecuadorian Judge Nuñez as a reason why it cannot get a fair trial in Ecuador, the San Francisco Chronicle reports:

The closest the conversation comes to the suggestion of bribery happens when Hansen at one point abruptly asks the judge, "Do you want part of, of my contract?" The judge responds, "I don't have anything to do with that." Then Hansen appears to correct himself, and says he's talking about money that would go to the government, not the judge. Borja and Hansen also ask him several times whether he will rule against Chevron, and he repeatedly tells them they must wait for the verdict to find out. These excerpts are from Chevron's transcript. Hansen: They've been the guilty party for more than many years, right? Nuñez: You'll see that, sir. What you want to find out is whether it's going to be guilty or not, I'm telling you that I can't tell you that, I'm a judge, and I have to tell you in the ruling, not right now...

But as Nuñez prepares to leave the meeting, Hansen asks him again. Hansen: Oh, no, I, I know clearly how it is, you say, Chevron is the guilty party. Nuñez: Yes, sir.

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Nuñez later told the Associated Press:

"Never, never, never have I said that it will go against" Chevron, the judge said. "They asked me if a sentence would come out. I said, 'Yes sir, a sentence will come out.' For or against? I have never said anything."

The video is badly (deliberately?) translated by Chevron, and leads the viewer to suppose that Nuñez has said "Yes, Sir" in answer to the question about whether he would rule against Chevron. However, as Han Shan, a human rights campaigner for Amazon Watch says:

If you watch the video, Hansen's tortured Spanish statement about Chevron being el culpable - the guilty party- comes as people are shuffling papers and preparing to leave the room. It's not at all clear who the judge is answering or speaking affirmatively to. You can't see the judge when you hear his muffled "yes, sir" and one gets the sense that he's just trying to finish up this meeting that he apparently attended as a favor to an acquaintance.

And that's Chevron's smoking gun -- the judge's single, hardly intelligible, and un-directed "yes, sir" at the end of a meeting at which he has repeatedly said that he cannot predict his verdict.

As the oil giant's PR flacks and executives worked up a sweat fanning the flames of its contrived controversy,

The "bribery plot" Chevron trumpets in its press release has nothing to do with the judge or the court, and instead centers around a separate meeting at which the former Chevron contractor and American businessman discuss payments to a single, excitable man who claims to be connected to Ecuador's ruling party, for access to government contracts for remediation of Chevron's contamination.

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Again, we refer everyone to a memo entitled "Offer of Bribe to Auditors" issued by Texaco back in 1988, which shows how Chevron is hardly one to talk about corruption:

www.texacotoxico.org/eng/node/284

Chevron's Own Corruption Documented

A quick look at a memo entitled "Offer of Bribe to Auditors" issued by Texaco back in 1988, shows to what extent Chevron is engaged in hypocrisy when it points the corruption finger :

www.texacotoxico.org/eng/node/284

Just How Far was Chevron Involved in a $3 million Bribery Scheme?

Chevron's video sting operation against the Ecuadorian judge in the $27 billion environmental case against the oil giant is likely to blow up in its face.

While the Ecuadorian Justice Dept investigates Chevron's unfounded charges against the judge (the corporation's stooges couldn't get him to incriminate himself in spite of their strenuous efforts), the US Justice Dept should investigate Chevron for its dirty tricks.

Whatever dirt Chevron creates, the evidence in the trial shows that it is responsible for human and environmental rights abuses in Ecuador. This delaying tactic is typical of the scandalous manner in which Chevron has conducted itself during the legal proceedings, and indicative of just how nasty it can behave.

The question that begs here is what was the oil company’s involvement in the bribery scheme perpetrated by an Ecuadorian Chevron contractor and a US businessman?

And, most incriminating of all, instead of immediately giving the so-called evidence of corruption to the authorities, Chevron posted the videos on YouTube yesterday – months after they came into Chevron’s possession -- because the legal case was winding down after the court recently denied a Chevron attempt to conduct a study that would have added months to the trial process.

This new delay by Chevron is a cruel setback to the victims who have waited so many years for clean water with which to drink, cook and bathe.