Legal News

Chevron Looks For Home-Field Advantage In Ecuador Fight

By Amir Efrati

What’s the strategy of a company when it’s pretty sure it’s going to lose a high-profile lawsuit overseas? That’s the dilemma facing Chevron in its long-running legal battle in Ecuador, where residents of the country’s oil-producing Amazonian rainforest are suing the oil giant for environmental contamination of their land. (LB coverage here and here.)

An expert appointed by the Ecuadorian court has recommended the judge award the plaintiffs, who filed suit in 1993, $27 billion in damages. That would be the biggest environment judgment against an oil firm to date. Of course, after judgment comes the hard part: collection.

However, according to today’s WSJ, the Ecuadorians can’t seize any assets from Chevron in their country because the original defendant in the case, Texaco, which Chevron bought in 2001, stopped doing business there in 1990. So they’ll have to take the fight to the U.S.

Chevron, which expects to lose the case in Ecuador, has been telling its shareholders it doesn’t expect to be forced to pay any judgment. “We’re not paying and we’re going to fight this for years if not decades into the future,” the company told WSJ.

The company’s legal strategy: convince a U.S. judge it didn’t get a fair trial in Ecuador, where the country’s president supported the plaintiffs. Legal experts say that won’t be easy, according to WSJ. Complicating matters is the fact that the suit was initially filed in the U.S. and Texaco fought hard to move it to Ecuador.

Some shareholders have urged the company to settle, but the company told WSJ it won’t be “bullied.”

Full post as published by Law Blog - WSJ.com on July 20, 2009 (boomark / email).