Foreign Judgments

international law update Volume 22, October–December 2016
© 2016 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) |
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

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