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Chevron Wins $28 Million Judgment in Latest Pollution Case Twist

Gibraltar court rules that company set up to collect pollution damages must pay out money to oil giant.

Bloomberg Business - Paul Barrett 16/12/2015

Photo: JuicioCrudo

Photo: JuicioCrudo

Chevron made more progress in its table-turning campaign against plaintiffs' lawyers suing the oil company over pollution in Ecuador.

The Supreme Court of Gibraltar has ruled that a company set up by the plaintiffs' attorneys to collect billions of dollars in court winnings must actually pay over $28 million to the oil giant. The decision, issued Dec. 9, sheds light on the unusual machinations in a case that has dragged on for more than two decades with no sign of resolution anytime soon.

Some background: In 2011, a New York plaintiffs' attorney and activist named Steven Donziger engineered a $19 billion judgment against Chevron in Ecuador. The American oil company was held liable for rainforest contamination dating back to the late 1960s. Ecuador's top court upheld the liability finding but halved the damages to $9.5 billion.

Arguing that whatever pollution remains in the jungle isn't its responsibility, Chevron countersued Donziger in federal court in New York, accusing him of extortion. In March 2014, a U.S. district judge ruled that Donziger had indeed used fabricated evidence, bribery, and coercion to win his big victory three years earlier. Donziger denies wrongdoing and is appealing the racketeering verdict. Chevron, which has no assets in Ecuador, is refusing to pay up, prompting Donziger to seek to enforce the Ecuadorian verdict in Canada and other countries where the oil company does have property.

Gibraltar comes into the tale because the British territory on the south coast of Spain is where Donziger and some of his Ecuadorian supporters set up a company called Amazonia Recovery Ltd. They intended to funnel their winnings from the Ecuadorian litigation into Amazonia Recovery, at least in part to prevent the government of Ecuador from attempting to grab the proceeds, according to court documents. But Chevron has contended that Amazonia Recovery is merely one element of the larger shakedown of the oil company.

Chevron sued Amazonia Recovery for fraud in Gibraltar, and the defendant failed to put on a defense. As a result, the Gibraltar court entered what's known as a default judgment against Amazonia, ordering the company to pay $28 million to Chevron, an amount that represents a portion of the oil company's legal fees in pursuing its successful racketeering lawsuit in New York.

Donziger declined to comment on the record. It couldn't be determined what, if any, assets are available for Chevron to recover from Amazonia Recovery.

R. Hewitt Pate, Chevron's vice president and general counsel, said in a statement: "This decision is yet another example of how the international scheme against Chevron continues to erode. We will continue to seek to hold the perpetrators of this racket accountable for their actions."

Meanwhile, the Canadian Supreme Court has cleared the way for Donziger and his allies to go to trial in that country to seek to seize and sell off Chevron assets there. Chevron will seek to thwart that effort by pointing to the 2014 U.S. racketeering judgment, as well as subsidiary judicial determinations such as that of the Gibraltar court. 

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