Ecuador criticizes Chevron arbitration claim

Reuters | Thu Sep 24, 2009

Ecuador criticizes Chevron arbitration claim

- Inspector general says Ecuador to strongly defend itself
- Chevron says only natural it would seek a fair hearing

QUITO, Sept 24 (Reuters) — Ecuador accused Chevron Corp on Thursday of filing an international arbitration claim against the country in an attempt to shield itself against losing a $27 billion environmental damage lawsuit.

Chevron, the second-largest U.S. oil company, opened a new front in its legal fight with the Ecuadorean government on Wednesday by accusing the government of violating a U.S.-Ecuador investment treaty.

Indigenous communities in Ecuador have accused Texaco, which Chevron bought in 2001, of damaging the environment and their health while operating petroleum facilities in the region. Chevron denies the charges.

Ecuador Inspector General Diego Garcia, who is leading the country’s legal case, said Chevron was looking to avoid being hit with the stigma of losing the case by seeking arbitration.

"Chevron is looking to achieve what it couldn’t do in Ecuadorean or U.S. courts — a decision in which it won’t be affected in the event it loses the trial," he said. "The state will strongly defend itself."

Chevron filed a complaint before the Permanent Court of Arbitration in the Hague, arguing Ecuador’s judicial system is heavily influenced by President Rafael Correa and citing public comments from Correa in support of the plaintiffs.

"If the government and the courts it controls are not going to have a fair hearing where these things are considered, it’s only natural that Chevron would invoke its rights under the bilateral investment treaty," Chevron spokesman Kent Robertson said on Thursday, responding to Garcia’s comments.

The move for arbitration came three weeks after Chevron accused the Ecuadorean judge in the case of being involved in a $3 million bribery scheme and offered secretly videotaped footage as evidence, which prompted a local investigation.

The judge is still presiding over the lawsuit even though he requested to be recused after the videos were released.

Plaintiffs say Texaco, which was first granted exploration rights in Ecuador in 1964 and was in a consortium with state oil firm Petroecuador starting a decade later, dumped billions of gallons of polluted water in the jungle near indigenous communities before leaving Ecuador in the early 1990s.

"The environmental case should be resolved by the appropriate courts and between the parties involved, not in an arbitration where all the parties to the suit are not even represented," Garcia said.

Steven Donziger, a U.S. lawyer advising the indigenous communities, said in an emailed statement on Thursday that Chevron had not exhausted all domestic remedies in Ecuador, as required by the investment treaty.

But Chevron said in its arbitration filing that its representatives had met with Ecuadorean officials many times to resolve the "investment dispute" over a 1998 release from liability granted to Texaco by Ecuador’s government.

Chevron also said it delivered a letter about the dispute in October 2007, seeking to resolve it through talks.

"All efforts at a negotiated solution have failed," Chevron’s lawyers wrote in the filing.

(Reporting by Alexandra Valencia in Quito, with additional reporting by Braden Reddall in San Francisco; Writing by Kevin Gray; Editing by Tim Dobbyn)

source: Reuters