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Suit Against Donziger Belongs in Ecuador, Panel Determines

New York Law Journal - Ben Bedell 17/06/2015

Kemperi Baihua Huani, the plaintiff in Huani v. Donziger, 151372/13, said he represents the Huaorani people, who were among the indigenous groups claiming damages in an environmental suit brought by Donziger in Ecuador that resulted in a $9.5 billion judgment against Chevron.
The New York action sought to have a constructive trust applied to any money Donziger collected under the judgment, because, the Huaorani claimed, Donziger was seeking to appropriate the money for himself.

Donziger was granted dismissal on forum non conveniens grounds by Justice Debra James last August.

The unanimous panel affirmed James' ruling, saying "there is no unfairness in requiring plaintiffs to prosecute their claims in Ecuador where they reside."

The state action stems from a decades-long dispute over environmental damage to the Lago Agrio region in Ecuador.

In 1993, a Texaco-led consortium ceased oil extraction efforts in the Lago Agrio and reached a settlement with Ecuador, agreeing to fund remedial efforts for the environmental damage. But Donziger and other lawyers, acting on behalf of some 30,000 residents of the Amazon basin, sued in New York.

Chevron acquired Texaco in 2001 and, three years later, persuaded a federal judge to dismiss for forum non conveniens. Seven years of litigation in Ecuador resulted in the 2011 judgment that was ultimately whittled down to around $9 billion.

In a related proceeding filed in New York in 2011, Chevron produced evidence during a months-long trial before Southern District Judge Lewis Kaplan showing Donziger had engaged in a broad conspiracy to bribe the Ecuadoran judges who decided the Chevron case, and fabricated evidence and suborned perjury in order to obtain the Ecuadoran judgment.

In a 485-page opinion handed down in March 2014, Kaplan concluded that Donziger had obtained the Ecuadoran judgment by fraud and barred him from enforcing it in the U.S. (NYLJ, March 5, 2014).

Kaplan's opinion contained a discussion of the Ecuadoran judiciary that concluded it "does not operate impartially, with integrity and fairness in the application of the law and the administration of justice."

After reviewing evidence of extensive corruption and political influence over the Ecuadoran judicial system, Kaplan said Ecuador "does not provide impartial tribunals or procedures compatible with due process."

Kaplan's ruling is on appeal to the U.S. Court of Appeals for the Second Circuit, which heard arguments in the case in April.

In Huani v. Donziger, James arrived at a different conclusion than Kaplan, and cited Second Circuit authority for her holding.

"This court is not persuaded by the argument that Ecuador does not present an adequate alternative forum because the Donziger defendants corrupted the Ecuadorian judges," James said.

"Multiple United States courts have already concluded that the Ecuador courts are a suitable alternative forum. See Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir 2002)."

James said Kaplan's ruling did not apply in Huani because the federal case involved two New York residents.

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