Ecuadorian judge says Chevron must pay $8 billion

After a 17-year trial, Judge Nicolas Zambrano of the Sucumbios, Ecuador, provincial court, ruled on Monday, Feb. 14, that the U.S.-based petroleum giant Chevron must pay $8.2 billion plus costs to plaintiffs in an environmental pollution suit brought by mostly indigenous residents of the oil rich Ecuadorian Amazon. Plaintiffs’ attorney Pablo Fajardo praised the ruling as historic, but both sides are likely to appeal: Chevron because they say that they consider the ruling fraudulent and unjust, and the plaintiffs, who number over 30,000 people, because the award is such a small proportion of the $113 billion they were originally asking.

In the 1970s, Texaco operated the drilling operations in the Amazonian jungles of Ecuador, jointly with Petroecuador, the national oil company. Plaintiffs and environmental and indigenous rights activists accuse the company of engaging in practices that allowed large amounts of oil and byproducts into the local water supply, damaging the environment and poisoning both livestock and people. Perhaps as many as a thousand deaths from cancer and other diseases have been attributed to these abusive practices.

In 2001 Chevron bought out the operations from Texaco (making Texaco-Ecuador a subsidiary of Chevron). Under international and Ecuadorian law, this made Chevron responsible for cleaning up the environment and paying compensation to the victims.  However, Chevron has been fighting the charges both in the courts and through a media campaign that seeks to portray the Ecuadorian judiciary as corrupt and the plaintiffs and their attorneys as being out for a quick profit. Chevron has challenged research results on the environmental and health damage, saying environmentalist groups have influenced it.

Chevron won a ruling against the government of Ecuador on March 30, 2010, in the Permanent Court of Arbitration in The Hague. The victory was based on the slowness of the Ecuadorian justice system, which Chevron alleged violates the bilateral investment treaty between Ecuador and the United States. The ruling requires Ecuador to pay $700 million in damages to Chevron. Also, on Feb. 9 of this year, the Court of Arbitration preemptively ordered Ecuador to suspend any payment of judge Zambrano’s judgment.

In the U.S., the U.S. District Court for the Southern District issued a temporary restraining order against the Ecuadorian plaintiffs and their lawyers to prevent them from taking further action to collect on Jude Zambrano’s ruling.

This brings to light the tug of war between the sovereignty of an independent nation like Ecuador and its right to maintain its own legal system, and the infringement of that right under some aspects of corporate globalization, always in favor of big corporations and wealthy countries. 

Ecuador’s progressive president, Rafael Correa, has been fighting for his country to get a bigger share of the profits from foreign oil companies, and for a greater degree of control over national resources. Correa had angered Chevron by openly siding with the plaintiffs’ in the case. Correa came to power in the 2006 national elections with the help of large mobilizations of indigenous people, but since then has had some difficulty in satisfying the demands of this important sector of his political base. Some indigenous organizations feel that he has not gone far enough in restoring sovereignty over Amazonian forest regions to their original inhabitants.

Should the money ever be handed over to Ecuador, most of it is to go to restoring contaminated soil and water, with an additional amount to deal with health needs of the people of the area.  Judge Zambrano ruled, also, that if Chevron does not apologize for the damage they did within 15 days, they would have to pay even more.

At writing, the plaintiffs had just announced that they will appeal the size of the award, which they consider insufficient. Chevron has said it would also challenge the ruling.

The story of the local litigation in Ecuador, including commentary by local residents affected by the environmental contamination, can be seen in the fascinating documentary film “Crude: The Real Price of Oil” by Joe Berlinger. Image courtesy Rainforest Action Network // CC BY-NC 2.0