The Incredible Corporate Sovereignty Saga Involving Ecuador And Chevron Continues

from the not-looking-good-for-the-poor-and-powerless dept

Techdirt has been trying hard to follow the twists and turns of one of the longest-running corporate sovereignty cases -- that involving Chevron and Ecuador -- for many years. Public Citizen's "Eyes on Trade" blog has a good, one-paragraph explanation of the key legal disputes:

In one of the Chevron v. Ecuador cases, a three-person tribunal last year ordered Ecuador's government to interfere in the operations of its independent court system on behalf of Chevron by suspending enforcement of a historic $18 billion judgment against the oil corporation for mass contamination of the Amazonian rain forest. The ruling against Chevron, rendered by Ecuador's courts, was the result of 18 years of litigation in both the U.S. and Ecuadorian legal systems. Ecuador had explained to the panel that compliance with any order to suspend enforcement of the ruling would violate the separation of powers enshrined in the country’s Constitution -- as in the United States, Ecuador's executive branch is constitutionally prohibited from interfering with the independent judiciary. Undeterred, the tribunal proceeded to order Ecuador "to take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment [against Chevron]."
However, that's only a bare summary of the amazing events in this case, which include a filmmaker being forced to hand over footage to Chevron, email companies supplying nine years of metadata to the oil company, and Chevron's star witness admitting he lied in his sworn testimony. Probably the best explanation of the complicated story is a long, well-written feature in The New Yorker. That appeared in 2013 and concluded by noting that Chevron was appealing once more to an international tribunal in an attempt to block Ecuador's lawsuit. The arbitration court in the Netherlands has now handed down its verdict, reported here by Telesur:
A panel from the District Court of the Hague rejected Ecuador's arguments, stating that the country was bound to the terms of the bilateral investment treaty.

The panel also affirmed Chevron's claim that they could not be held accountable for the contamination since the Ecuadorean government certified the remediation work carried out by the oil company.

President Correa has questioned the legitimacy of that decision by the government of then president Jamil Mahuad.

"All of this is the product of corruption: having signed in 1998 that Chevron had cleaned 'everything'," said Correa Sunday via his official Facebook account.
As that makes clear, the tribunal seems to have based its decision in part on the fact that a previous Ecuadorean administration had agreed with the oil company that the contaminated land in question had been cleaned up sufficiently. The country's current president claims that was because of corruption at the time. So the tangled mess of this case now involves issues of the validity of that previous agreement, and what impact it has on the responsibility of Chevron.

The latest ruling by the international tribunal offers little hope that the Ecuadorean government affected communities will be collecting much, if any, of the final $9.5 billion awarded by the local courts -- Chevron prudently removed all its assets from the country many years ago. As Escobar is quoted as pointing out in the Telesur report:

Should Ecuador lose the final ruling by the investment tribunal, the price would ultimately be paid by the Ecuadorean people, as the state, in the face of international reprisals and without access to credit, would lose the ability to invest in social programs.
As usual, it's the poor and powerless that end up suffering -- and the lawyers involved in the corporate sovereignty tribunals who come out smiling.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: corporate sovereignty, ecuador, isds
Companies: chevron


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  • identicon
    Call me Al, 2 Feb 2016 @ 11:41pm

    I'm afraid I'm with Chevron on this

    I'm pretty sceptical when it comes to trade agreements, which is part of the reason I read Techdirt so assiduously.

    However on this occasion I think I'd have to side with Chevron. When a company does any business with a nation state they do deserve to be able to rely on agreements with that state, a lack of certainty can be a killer. If the government of the day in Ecuador said all fine then as far as I'm concerned the case is over.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 2 Feb 2016 @ 11:57pm

      Re: I'm afraid I'm with Chevron on this

      Which has the problem of making paying off officials at the time even more tempting for large companies. Find a large enough bribe and suddenly a company is completely off the hook for any fines or damages they would otherwise have to pay, even if future administrations can demonstrate corruption.

      There's also this not so minor issue:

      Ecuador had explained to the panel that compliance with any order to suspend enforcement of the ruling would violate the separation of powers enshrined in the country’s Constitution -- as in the United States, Ecuador's executive branch is constitutionally prohibited from interfering with the independent judiciary. Undeterred, the tribunal proceeded to order Ecuador "to take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment [against Chevron]."

      Wherein the tribunal is ordering the government to do something that is not legal according to Ecuadorian law. Having a third party order a government to do something that violated their laws is a huge problem, as it's basically putting the tribunal's orders above the country's laws.

      reply to this | link to this | view in chronology ]

      • identicon
        Call me Al, 3 Feb 2016 @ 2:17am

        Re: Re: I'm afraid I'm with Chevron on this

        Agreed on the actions of the Tribunal. I guess there are two separate issues here.

        1) Whether the Ecuador court should have levied the penalty to begin with - I don't think they should per the government's prior approval. My view here is that the people who should be punished are the members of the previous government who were corrupt. Having said that, if corruption can be proved, if it is shown that the company bought the government then I would think that is a quite separate issue and the company should be nailed for that in the Ecuador court system. I would suggest that the penalty the company should pay should be roughly equal to the amount the company is trying to avoid through the Tribunal.

        2) Whether, once the penalty was levied, the international Tribunal should be able to undermind Ecuador's constitution - again I don't think they should be able to for the same reasons you list.

        reply to this | link to this | view in chronology ]

        • icon
          Richard (profile), 3 Feb 2016 @ 5:06am

          Re: Re: Re: I'm afraid I'm with Chevron on this

          Whether the Ecuador court should have levied the penalty to begin with - I don't think they should per the government's prior approval.

          You miss the point here - the government - aka the executive is not the same thing as the Ecuadorian State. This is true of any modern democratic country and was true even before modern democracies came into being. It was the main point of the Magna Carta.

          Yes a company should be able to rely on a government provided that government is acting lawfully. It is the responsibility of the company to determine whether this is the case. If the company is actually complicit in unlawfulness then that is even worse.

          Without this separation it would have been impossible to impeach President Nixon (for example).

          reply to this | link to this | view in chronology ]

  • icon
    Vidiot (profile), 3 Feb 2016 @ 5:04am

    Re: the ecuator and the surrounding hearing loss

    Exactly correct! Turkish hearing aids will no doubt help the Ecuadorian government hear what the Tribunal has been saying to them.

    (H/T to Google Translate!)

    reply to this | link to this | view in chronology ]

    • icon
      tqk (profile), 3 Feb 2016 @ 4:07pm

      Re: Re: the ecuator and the surrounding hearing loss

      H/T to Google Translate!

      I have never understood why anyone wanted to use GT. I can't remember seeing an example where it actually did the correct thing. When you can screw it up just by spelling equator with a "c", what's the frigging point? "Damn you autocorrect!", on steroids.

      Human languages and their correct usage are far more complex and mallable than computer languages that try to adhere to standards. It was hard enough trying to figure out how to auto-convert Assembly into C. Trying to auto-convert German or Russian into Swahili or Australian Aboriginal or Japanese is bound to fail miserably with hysterical consequences.

      reply to this | link to this | view in chronology ]

      • icon
        nasch (profile), 3 Feb 2016 @ 6:06pm

        Re: Re: Re: the ecuator and the surrounding hearing loss

        I have never understood why anyone wanted to use GT.

        Because it's free, instantaneous, and a lot better than nothing.

        reply to this | link to this | view in chronology ]

        • icon
          tqk (profile), 3 Feb 2016 @ 7:36pm

          Re: Re: Re: Re: the ecuator and the surrounding hearing loss

          Because it's free, instantaneous, and a lot better than nothing.

          I'll give you the first two, but that third one I'll dispute. How much bigger than zero is "a lot better than nothing"?

          0.0000000000000000000000000000000000000000001%? That's a lot (ten times) bigger than nothing than this:

          0.00000000000000000000000000000000000000000001%.

          We're talking about concepts described by human languages here, and poets could go on for decades as to how deep that subject is.

          GT is pathetic from what I've seen of it. I'd rather wait to read a human's translation. I'm not usually in that much of a hurry. Lots of things can be computerized. Not everything should be. "Don't try to teach a pig to sing. They're not good at it, and it annoys the pig."

          Well, at least it's difficult to annoy a computer. They'll do any damned fool thing you tell them to do, following your instructions exactly, for good or ill.

          reply to this | link to this | view in chronology ]

          • icon
            nasch (profile), 4 Feb 2016 @ 6:38am

            Re: Re: Re: Re: Re: the ecuator and the surrounding hearing loss

            I wouldn't use it to translate a novel, but for words and short phrases I have found it to be quite effective. Which is a lot better than nothing.

            reply to this | link to this | view in chronology ]

            • icon
              tqk (profile), 4 Feb 2016 @ 8:56am

              Re: Re: Re: Re: Re: Re: the ecuator and the surrounding hearing loss

              I wouldn't use it to translate a novel, but for words and short phrases ...

              You're right. I was thinking only of full sentences or paragraphs or longer.

              reply to this | link to this | view in chronology ]

  • icon
    Deimal (profile), 3 Feb 2016 @ 5:19am

    Long running saga

    So, the company originally at the heart of all this was not Chevron, it was Texaco. In looking at the Texaco wikipedia article (I know, I know), it looks as if the originating incidents happened in/around 1993, with Chevron merging with Texaco in 2002. Nearly a decade after the sh*t hit the proverbial fan.

    This article doesn't specify when that previous administration agreed to the closure of the issue with Texaco/Chevron, but that may be pretty critical to understanding actual moral responsibility (not necessarily legal).

    To be honest, I'm pretty damn skeptical of Ecuadorian governments in general, corruption has been a constant feature of every administration there for the past 5 decades. The money doesn't seem intended for the 30k residents contaminated or their homes destroyed to be rebuilt/cleaned up. It seems to be a way of propping up an administration on the backs of someone else.

    reply to this | link to this | view in chronology ]

    • icon
      nasch (profile), 3 Feb 2016 @ 6:58am

      Re: Long running saga

      that may be pretty critical to understanding actual moral responsibility (not necessarily legal).

      Morally, it seems unbelievable that Texaco had no idea the mess wasn't really cleaned up. They knew perfectly well what the situation was, and whether through incompetence or corruption, convinced a government to look the other way so they could save millions or billions of dollars on cleanup. And it looks like it's worked out well for them.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 Feb 2016 @ 8:26am

      Re: Long running saga

      ...the company originally at the heart of all this was not Chevron, it was Texaco...the originating incidents happened in/around 1993, with Chevron merging with Texaco in 2002...

      This brings up a legal issue that comes into play. Most merger (or acquisition) agreements include provisions requiring any and all claims to be settled, discharged, or otherwise indemnifying the new owner(s) from said claims as a condition of sale, unless the new owner(s) specifically agree to accept the claims. So it is entirely possible that Chevron has a legitimate case that they are not responsible and from a legal standpoint they aren't.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 Feb 2016 @ 9:45am

      Re: Long running saga

      As opposed to "forgiving" billions of dollars of damage for a small (couple Million) "campaign donation" which could be cashed in once things were formally declared "clean".

      I'm sure this wouldn't happen, I mean who would try to get out of billions of dollars of liability by spending millions of dollars on buying politicians?

      reply to this | link to this | view in chronology ]

    • icon
      tqk (profile), 3 Feb 2016 @ 4:25pm

      Re: Long running saga

      So, the company originally at the heart of all this was not Chevron, it was Texaco.

      There's an old joke in the oil industry: "Whoever survives the current crash in the price of oil gets to buy up the others." I remember seeing a little electronic doohicky in Anadarko's server room that had seven overlapping Dymo labeler thingies: "Property of Blah-A" covered by "Property of Blah-B", and so on.

      Exxon had a few good ones too. "The company name is Exxon-Mobil, but the Mobil is silent."
      To be honest, I'm pretty damn skeptical of Ecuadorian governments in general, corruption has been a constant feature of every administration there for the past 5 decades.

      Central and South America first had to survive the Conquistadors, then Nazi sympathizing in league with military juntas, then US jingoism and the CIA's fat fingering. There's no surprise that this mess occurred.

      reply to this | link to this | view in chronology ]

    • icon
      klaus (profile), 4 Feb 2016 @ 4:59am

      $18 Billion

      Roughly the same that BP were fined for their part in the 2010 Deepwater Horizon spill in the Gulf. There's a clear contrast between BP's acceptance of blame, funding the cleanup operation, pleading guilty and accepting the subsequent fines, and Texaco/Chevron, who have gone to such staggering lengths to avoid, well, everything.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Feb 2016 @ 6:35am

    Privatized profits ... socialized losses

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 3 Feb 2016 @ 2:01pm

      Re:

      ...Citizens with pitch forks(or AK 47s)

      reply to this | link to this | view in chronology ]

      • icon
        tqk (profile), 3 Feb 2016 @ 4:31pm

        Re: Re:

        Citizens with pitch forks(or AK 47s)

        An ice pick in a Nazi Stormtrooper's back would leave a much easier to clean up mess, and it's much quieter than a Kalashnikov. Plus, they fit in a pocket. It's tough to hide the fact that you're armed with a pitchfork.

        reply to this | link to this | view in chronology ]

  • icon
    Blaine (profile), 3 Feb 2016 @ 8:02am

    Has anyone done the math?

    I wonder how many corporate sovereignty claims it will take to offset the "gains" expected by TPP?

    We still have to pay to defend against them, good or bad. And, it sounds like we would pay big if we lose any.

    reply to this | link to this | view in chronology ]

    • icon
      tqk (profile), 3 Feb 2016 @ 4:54pm

      Re: Has anyone done the math?

      I wonder how many corporate sovereignty claims it will take to offset the "gains" expected by TPP?

      What gains? Unless you're MafiAA or big Pharma, you'll be lucky to never see any gains. We'll be robbed blind once it's passed.

      Gee, it sounds like you think everybody being up to their eyeballs in lawyers would be a bad thing. :-O

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Feb 2016 @ 8:21am

    and no one thinks this is a forerunner to what is going to happen when the USA gets the present and future 'Trade Deals' into force? this is the sort of thing that will break country after country and end up destroying the Planet! absolutely nothing and no one is worth more than are only home. continually polluting it is going to come back and bite us squarely in the ass!!

    reply to this | link to this | view in chronology ]

    • icon
      tqk (profile), 3 Feb 2016 @ 5:02pm

      Re:

      this is the sort of thing that will break country after country and end up destroying the Planet!

      You've got me thinking of Rodney's audacious plan on Stargate Atlantis: "Let's get all the Replicators into the same room. Their combined mass will create a space-time anomaly so heavy, it'll sink into the core of the planet!"

      Fatten up your local lawyer. Bwa, ha, haaa.

      reply to this | link to this | view in chronology ]

      • identicon
        Wendy Cockcroft, 4 Feb 2016 @ 5:44am

        Re: Re:

        Eh, I've wondered from time to time whether or not spraying them with liquid nitrogen would solve the problem as they require energy to replicate and function.

        If cold = negative energy, toodle-oo.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Feb 2016 @ 8:29am

    The most amazing take away I have about this is...

    email companies supplying nine years of metadata

    ...it is freaking amazing that an email company has 9 years of metadata!

    reply to this | link to this | view in chronology ]

    • icon
      tqk (profile), 3 Feb 2016 @ 5:07pm

      Re: The most amazing take away I have about this is...

      it is freaking amazing that an email company has 9 years of metadata!

      I have still readable backups that're twenty-eight years old. Data compression software tech is one of the highlights of the computer age. bzip2 + afio rocks!

      reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 3 Feb 2016 @ 10:55am

    And Ecuador?
    Gets a Large amount of Oil wells..
    They can sell oil around South america...And make Tons of money..

    UNLESS Chevron sabotaged the machines and wells..

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 3 Feb 2016 @ 7:08pm

    Anonymous to the rescue?

    The Ecuadorians could put out a call to our favourite "Hacktivists" and let them settle the matter. Just think, all that data from Chevron's servers out in the wild for anyone to see.....

    reply to this | link to this | view in chronology ]

    • icon
      tqk (profile), 3 Feb 2016 @ 8:38pm

      Re: Anonymous to the rescue?

      The Ecuadorians could put out a call to our favourite "Hacktivists" and let them settle the matter. Just think, all that data from Chevron's servers out in the wild for anyone to see.

      Sounds great, as long as they grab the Ecuadorian gov't's hidden stuff and release it too at the same time. What's good for the goose ...

      Hope & change & transparency. Who loses?

      reply to this | link to this | view in chronology ]

  • icon
    Hugo S Cunningham (profile), 4 Feb 2016 @ 9:52pm

    Fleecing of Gringos for same activity as national oil company

    Chevron was sued for the same activities that the national oil company continues to this day. Let the Ecuador government shut down their oil industry, and undertake to pay their share of damages to the plaintiffs. If they start to do this without deceit (i.e. clawing back the payments with taxes, reductions in other services, hidden kickbacks, etc,), then Chevron can start contributing on a proportionate basis.

    Ecuador's government would reply that they cannot afford it, but that is the whole point: sovereign Ecuadorian governments made a rational decision to accept some environmental costs to get badly needed revenue they could not get any other way.

    reply to this | link to this | view in chronology ]

  • identicon
    Reini Urban, 5 Feb 2016 @ 11:12am

    Crude

    There is the Crude movie about this Texaco saga.

    http://chevrontoxico.com/crude/

    reply to this | link to this | view in chronology ]


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