Foreign Judgments

• Pages: 11-13

67

international law update Volume 22, October–December 2016

© 2016 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com

FOREIGN JUDGMENTS

In the ongoing saga of the multi-billion

Ecuador judgment against Chevron

for environmental pollution, Second

Circuit affirms judgment enjoining

enforcement of the Ecuador Judgment

in the United States and imposing

a constructive trust for Chevron’s

benefit; upholds equitable relief from a

foreign judgment under RICO

In 1964, the Republic of Ecuador (“ROE”)

granted to a joint venture a concession to

explore for and produce oil in the Oriente (the

“Concession”). Half (50%) of the joint venture was

owned by TexPet, a Texaco subsidiary, who was the

operator of the Concession until the early 1990s.

In the 1970s, PetroEcuador, Ecuador’s state-owned

oil company acquired a majority interest in the

joint venture. In 1989, PetroEcuador took over

operation of the Trans-Ecuador Pipeline, while in

1990, it took over operation of the Concession

drilling operations as well. In 1992, the Concession

expired. TexPet’s interest in the joint venture

reverted to PetroEcuador, who became the sole

owner and operator of the venture.

In 1993, TexPet and Texaco entered into a

Memorandum of Understanding (“MOU”) with

the ROE that provided that TexPet would be

released from any potential claim for environmental

harm once TexPet performed and agreed-upon

remediation in the area in which it had operated.

e Settlement Agreement and Scope of Work

agreement (the “Settlement Agreement”) that

the parties executed in 1995, laid out specic

tasks TexPet was required to complete before

its remediation and wind down were complete.

According to the Settlement Agreement once the

tasks were completed TexPet would be entitled to a

release. ROE issued 52 Certicates conrming that

TexPet had complied with its obligations under

the Settlement Agreement, and a nal release was

signed on September 30, 1998. Chevron acquired

Texaco’s stock in 2001.

In 1993, a group of Oriente residents,

represented by New York City lawyer Steven

Donziger (“Donziger”), among others, commenced

a class action against Texaco in the Southern

District of New York. ey sought billions of

dollars in damages, as well as certain equitable relief

within Ecuador, for alleged environmental damage

in Ecuador and injury to the health of the plaintis,

thus beginning a lengthy litigation.

In 2003, the Lago Agrio Plaintis (the “Lago

Agrio Plaintis” or “LAPs”) - Camacho, Piaguaje,

and 46 other named plaintis residing in or near

Lago Agrio—represented by the Donziger Firm,

sued Chevron in Ecuador, seeking to hold it

responsible for extensive environmental damage

allegedly caused by Texaco in the area covered

by the Concession (the “Lago Agrio Litigation”

or “Lago Agrio Chevron case”). e beneciaries

of this action were 30,000 indigenous residents

of the area. e complaint requested that any

money awarded for performance of the requested

remediation—plus an additional 10%—be paid to

the Frente de la Defensa de la Amazonia (“ADF”)

for its use in performing ordered remediation. e

ADF was formed and controlled by Donziger and

Luis Yanza to support the Aguinda litigation.

In February 2011, the trial court in Ecuador

entered a judgment in favor of the LAPs. e court

awarded LAPs $8.646 billion in compensatory

damages and $8.646 billion in punitive damages

unless Chevron issued an apology. e punitive

damages were eliminated on appeal, leaving the

judgment against Chevron, as modied, at $8.646

billion (the Ecuadorian Judgment).

In 2011, Chevron commenced the present

action against Donziger, his Firm, and the named

Lago Agrio Plaintis, including Camacho and

Piaguaje (“LAP Representatives”). In its complaint

Chevron alleged that the LAPs procured the Lago

Agrio Judgment by a variety of unethical, corrupt,

and illegal means, including: making secret

payments to industry experts who would submit

pro-LAPs opinions to the court while pretending

to be neutral; announcing multi-billion-dollar

remediation cost estimates while knowing them to

be without scientic basis; persuading an expert to

sign blank pages that were then submitted to the