Noticia

Another Blow to Investor Confidence and the Rule of Law in Ecuador

U.S. Chamber of Commerce - Jodi Bond, Scévole de Cazotte 08/05/2015

U.S. Chamber of Commerce

U.S. Chamber of Commerce

In Ecuador, unlawful expropriations and contract violations have cost U.S. investors hundreds of millions of dollars. The legal system provides little or no protection; indeed, the judiciary is plagued by delays, unpredictable judgments, and inconsistent rulings.

Perhaps the best example of Ecuador's poor legal climate is an $18 billion judgment that was rendered against Chevron in 2011 by a court in Lago Agrio, Ecuador, for alleged contamination resulting from crude oil production in the region. This ruling came in spite of the fact that Ecuador's government attested a decade before that the company's environmental remediation was satisfactory; yet, the country's courts continue to provide U.S. trial lawyers with a forum for grandstanding.

To Ecuador's chagrin, this case has been proved frivolous time and time again, including video evidence showing gross judicial misconduct, direct interference by the Ecuadorian government, and bribery. After an exhaustive review of this evidence, U.S. District Court Judge Lewis Kaplan entered judgment against the plaintiffs' lawyer, a formal determination that the plaintiffs' attorney had committed fraud.

And yesterday, in yet another blow to the Ecuadorian case, Chevron announced that they had reached a settlement agreement with Woodsford Litigation Funding Limited, a U.K.-based litigation funder that provided $2.5 million in funding to the fraudulent lawsuit against Chevron in Ecuador. In the announcement, Chevron's vice president and general counsel, R. Hewitt Pate, noted:

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