Chevron Facing Furious Backlash for Using Secret Court to Violate Ecuador Pollution Judgment, Say Ecuadorians
Oil Giant Trumpets "Ruling" from Private Lawyers Who Barred Indigenous Leaders from Testifying or Presenting Evidence
QUITO, Ecuador - Chevron CEO Michael Wirth is facing a furious backlash from civil society and allegations of racism after his company used a secret trade arbitration court run by private lawyers to try to attack Indigenous peoples and farmer communities who won a $12 billion pollution judgment against the company. The three secret trade arbitrators – all older white males based in London and Washington – barred the Indigenous groups from presenting evidence, testifying, or even attending proceedings the Ecuadorians call “illegitimate” and a “kangaroo court” designed to help corporate polluters escape environmental liabilities.
A coalition of at least 40 civil society organizations and Indigenous groups in the United States and Latin America have blasted Wirth for violating international law by using the secret court to attack Ecuador’s sovereignty after the environmental judgment was affirmed by three appellate courts and 17 separate judges in Ecuador. (See here for signed statement and here for a blog on the Chevron Pit explaining why the secret trade court is “racist” for refusing to take evidence from the affected communities.) Four layers of courts in Ecuador – where Chevron insisted the trial be held -- found Chevron had deliberately dumped billions of gallons of oil waste into the rainforest when it operated in the Amazon from 1964 to 1992, causing an outbreak of childhood leukemia and other cancers that has killed or threatens to kill thousands of people and continues to contaminate waterways to this day.
(Here is a summary of the voluminous evidence used to find Chevron guilty. Here are statements on the secret arbitration from community leaders and lawyers. Here is acritique of the secret trade courts.)
Several Ecuadorian civil society groups led by the Amazon Defense Coalition (FDA), the grass roots organization that brought the historic lawsuit against Chevron in 1993, also demanded their country’s President, Lenin Moreno, strongly defend the affected communities as they enforce the pollution judgment against Chevron assets in Canada. That country’s Supreme Court and two appellate courts already have ruled in favor of the Ecuadorians. Moreno was asked by the civil society groups to reject an order from the secret arbitration panel that purports to obligate his government to nullify the civil pollution judgment won by citizens after an eight-year trial marred by Chevron’s attempts to intimidate judges, bribe witnesses, and delay the proceedings. (See this article by Greenpeace co-founder Rex Weyler on Chevron’s attempts to corrupt the Ecuador trial process.)
The decision by the arbitrators relied on false evidence presented by Chevron from a witness paid $2 million by the company and it violates international law and Ecuador’s Constitution and therefore cannot be enforced, said Aaron Marr Page, a U.S. lawyer and authority on the trade arbitration process. The secret trade court proceeding also was part of the company’s SLAPP strategy designed to demonize and intimidate its opponents as a way to escape liability given the overwhelming evidence against it. (See here for background.) No president or prime minister in a democratic society is allowed under the law to nullify a decision of its independent judiciary in a civil case as the three arbitrators are demanding, said Page.
Page, who has worked as counsel to the Ecuadorian communities, said that “by rendering its decision without considering the interests of the affected communities, the panel violated fundamental due process as protected by international law.” He also noted that the tribunal “shockingly accepted even Chevron’s most egregious false evidence, such as witness testimony that Chevron admitted to paying millions of dollars for and that the witness was forced to recant on cross-examination.
“The tribunal’s decision embraces the most tortured arguments in favor of corporate immunity, while ignoring the humanitarian crisis linked to Chevron’s contamination that has devastated Ecuadorian indigenous and rural peoples for over 50 years," Paged added. "It is truly an outrageous affront to legal norms accepted worldwide by civilized nations."
The private arbitral proceedings – called a “kangaroo court” by Indigenous leaders -- took place largely in locked conference rooms of luxury hotels where the Ecuadorians could not attend even as observers. One attempt by the affected communities to submit a "friend of the court" legal brief as an outside party was rejected. Each of the arbitrators are private lawyers who reaped an estimated $25 million personally in fees after charging roughly $1,000 per hour for a period of nine years, said Patricio Salazar, the lead Ecuadorian lawyer for the affected communities. Their names are Grigera Naon, who teaches at the Washington College of Law at American University; Vaughan Lowe, 66, a London-based lawyer; and V.V. Veeder, a private lawyer also based in London.
“This arbitral decision from an illegitimate court violates international law and is an attempt to obtain impunity for a corporate polluter that has devastated the lives of thousands of Ecuadorians,” said Salazar. “It is being used by Chevron for political reasons to try to taint a legitimate judgment now being enforced in Canada that held the company accountable for its environmental crimes. The arbitrators also used the humanitarian crisis in Ecuador to enrich themselves personally. They should immediately end this charade by disgorging their fees and donating them to alleviate the humanitarian crisis in Ecuador caused by Chevron.”
Other Ecuadorian citizens and their supporters also expressed outrage.
“Chevron is once again up to its dirty tricks to try to block Indigenous groups from collecting on their environmental judgment,” said Luis Yanza, the Ecuadorian community leader who launched the case against Chevron in 1993 and later won a Goldman Environmental Prize, considered the “Nobel” of the environment. “This decision must be rejected by the world community.”
Paul Paz y Mino, a leading official from Amazon Watch, the U.S. environmental group in Oakland that works closely with the affected communities in Ecuador, said: "Chevron's claim before the secret trade court is the latest attempt by the oil major to evade responsibility and accountability for its toxic dumping in the Ecuadorian Amazon, and is yet another example of how corporate interests use every available means, including shadow 'justice' systems, to trample the rights of indigenous peoples and family farmers who have suffered immeasurable harm.
"The only legal proceeding that has reviewed all the evidence and heard testimony from the actual victims is that which took place in Ecuador – and Chevron was found guilty,” said Paz y Mino. “Chevron must respond for the harm it has caused, and the plaintiffs will continue to pursue enforcement in Canada and beyond until the company complies with the law.”
In Ecuador, the Public Ombudsman (Defensoria del Pueblo)—an independent official whose mandate is to protect the public interest -- demanded President Moreno challenge the order of the secret trade court. “The position of the government of Ecuador should be that protection of human rights and the rights of nature are paramount and that Chevron Texaco must meet its legal responsibilities to remediate the damage it caused, which has been widely recognized by every court in this country that heard the case,” the Ombudsman said in an article in the Ecuadorian newspaper El Comercio.
The petition signed by at least 40 environmental and human rights groups also condemned the arbitral court and Chevron’s refusal to pay the judgment.
“With its twisted logic, the trade court arbitrators have woven a cloak of impunity for Chevron, trying to help the company avoid its civil liability to thousands of victims and to try to secure a taxpayer-funded bailout for its crimes,” said a statement from the coalition, organized by the Center for Social and Economic Rights in Quito. “The arbitral decision is just one more example of how investment treaties are designed to provide impunity to corporations that commit human rights violations.
“Those signing this letter wish to express our total rejection of the arbitral decision,” said the statement.
In the meantime, an analysis on the Chevron Pit, run by the legal team who won the case against Chevron, called the arbitrators “patently racist” in their approach to the case.
“The three lawyer-arbitrators in their ruling tried to overturn 17 separate appellate judges in Ecuador who affirmed the pollution judgment based largely on 105 technical evidentiary reports and reams of witness testimony,” the blog stated. “Ecuador's Constitutional Court validated Chevron's responsibility for its toxic dumping in a unanimous decision issued in July of this year. But the secret arbitrators have also done the world a favor of sorts. Their ruling vividly illustrates why the public needs to get rid of these anti-democratic, pro-corporate trade courts once and for all. No trade treaty should ever again have a provision allowing private arbitration for the corporate class.
“The double standard of the private trade court concept is amazing, if not patently racist as applied to the current situation in Ecuador,” the blog continued. “Chevron loses a case in a regular public court where it had accepted jurisdiction and then gets another bite at the apple in a Kafkaesque proceeding where the opposing party -- in this case Indigenous peoples and impoverished farmer communities who have the most important interest in the dispute -- can't participate. It’s an outrage.”
Karen Hinton, the long-time U.S. spokesperson for the Ecuadorians, also took aim at the decision.
“This is a radical effort by the corporate class to protect its power to pollute with impunity in countries with weak legal regimes which is what Ecuador had when Texaco, later purchased by Chevron, went into the rainforest,” she said. “The international arbitrators, Chevron and some of the U.S. lawyers representing Chevron have revealed their racism time and time again against poor people of color who live far away from them and do not have the financial ability to protect themselves. Chevron has dumped toxic waste in many countries around the world and it fears it might be subject to hundreds of billions of dollars of additional environmental liabilities that are not accounted for on the company’s books. That’s why Chevron is willing to risk legal violations to block this case.”
Chevron filed the trade arbitration action in 2009 against Ecuador’s government as evidence against it mounted in the pollution trial, which culminated in a $9.5 billion judgment against the company after it was found to have dumped billions of gallons of cancer-causing oil waste into the rainforest. Chevron had fought for years to have the trial held in Ecuador and had accepted jurisdiction there. (See this summary of the evidence.) The judgment is now worth roughly $12 billion with interest.
After Chevron lost the case in its preferred forum, it threatened the Indigenous peoples with a “lifetime of litigation” and vowed never to pay. In 2015, Canada’s Supreme Court ruled unanimously that the Ecuadorians could try to enforce their judgment in that country against Chevron assets, estimated to be worth $15 to $25 billion. Two other appellate courts in Canada also issued decisions in favor of the Ecuadorians. Those proceedings are ongoing and will not be affected by the arbitral order, said Salazar.
In the meantime, Chevron and its lawyers are the subject of a criminal referral letter to the U.S. Department of Justice for trying to fabricate evidence to block enforcement of the Ecuador judgment. The arbitral panel relied largely on the fabricated evidence from a witness paid $2 million by the company for its conclusions, said Salazar.
The three private arbitrators in the Ecuador matter have in the past been criticized by civil society organizations for illegally interfering in the Ecuador trial. All have refused demands to disclose how much they are charging for their services, but it is estimated to be $25 million each for the long proceeding that is riddled with conflicts of interest, said Salazar.
Grigera Naon has been appointed repeatedly to secret investor arbitration panels by the Chevron law firm King & Spalding in cases where the government of Ecuador is a defendant. Naon has never ruled in favor of Ecuador and on two occasions wrote highly unusual dissenting opinions where Ecuador won to position himself to be appointed by Chevron in the current arbitration, said Steven Donziger, the longtime representative for the affected communities.
"An analysis of Grigera's rulings shows he has never ruled against a King & Spalding client, be it Chevron or any other client," said Donziger. "The man simply has no independence and it further underscores the many conflicts of interest with a secret trade court that is fundamentally illegitimate.”
Page, the U.S. legal counsel to the Ecuadorian communities and an authority on investor-state arbitrations, said in reference to the secret arbitration: “It is little wonder that this corporate dominated dispute resolution system is increasingly despised by people across the globe and is headed for the dustbin of history. The process has proven, time and time again, its utter inability to restrain its rampant pro-corporate bias and tendency to reach far past any jurisdictional bounds to intrude on national sovereignty and attack legitimate social movements that threaten corporate interests. The recent Chevron arbitral decision reveals the system’s excess and arrogance at its rotten core. The affected communities in Ecuador will continue their struggle for justice and will continue to insist that their rights as peoples and as private litigants be respected by the Republic of Ecuador and foreign national courts around the world.”