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Simon Billenness founded the CSR Strategy Group to offer non-profits, trade unions, and socially responsible investors expertise in creating and implementing effective campaigns to fundamentally change behavior of politicians and major corporations.  We are experienced advocates for environmental sustainability, human rights, good corporate governance, and social justice.

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Did Chevron Just Fund its Legal Opponents in Ecuador?

Did Chevron just hand its legal opponents in Ecuador $106 million?

That appears to be the case according to a press release put out this week by the communities that have sued Chevron for oil pollution in the Ecuadoran rainforest.

In what could be a huge boost to their campaign to force Chevron to comply with a $9.5 billion environmental judgment in Ecuador, rainforest villagers plan to enforce a court order directing them to take possession of a $106 million arbitral award won recently by the oil giant from Ecuador’s government in a case that recently became final in Dutch courts….

The $106 million figure comes from the amount of an arbitral award that Chevron won from Ecuador under the U.S.-Ecuador Bilateral Investment Treaty in an unrelated series of commercial disputes dating to the early 1990s between the American company and Ecuador’s state-owned oil company, Petroecuador. A Dutch court last week denied Ecuador’s last appeal of the award, rendering the arbitral decision final.

One of Chevron’s principal tactics in this litigation has been to starve the Ecuadoran communities of the money that they need to pursue their case. Chevron has flipped two of the financiers of the case: Burford Capital and Patton Boggs.  The oil company has also sued two others: Russell DeLeon and Woodsford Litigation Financing. But, if the Ecuadoran government hands over the $106 million arbitral award to the Ecuadoran communities, it would completely replenish the plaintiffs’ legal war chest.

The likelihood appears high that the Ecuadoran government will indeed give the money to the plaintiffs.  Firstly, the Ecuadoran courts have already ruled that the rainforest communities can seize all of Chevron’s assets in Ecuador.  Secondly, after Chevron’s relentless attacks against Ecuador, it is hard to imagine that the Ecuadoran government would give Chevron any money that it could more appropriately channel to the plaintiffs.

The rainforest communities would likely make very good use of the $106 million. It could be used in part to pay for remediation of the oil pollution, as the Clean Water is already doing. Another portion could be used to fund new legal enforcement actions to seize Chevron’s assets outside Ecuador to collect fully on the $9.5 judgment.

If the government of Ecuador gives the $105 million to the plaintiffs, Chevron management only has itself to blame for this possibly game-changing defeat. After all, it was Chevron that successfully petitioned to have the case moved from New York to Ecuador only to lose badly. If there’s one thing that Chevron CEO John Watson does well in this case, it is making mistakes that cost millions to Chevron’s shareholders.

Is it any wonder that Chevron’s own shareholders have questioned management’s competence in this case?

 

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