María Aguinda and others v. ChevronTexaco Corporation: Landmark Judgement

On 14 February 2011 a Court in Ecuador found ChevronTexaco guilty of causing environmental destruction and violating human rights in the country’s Amazonian rainforest. This is the first time an American company has been held accountable in foreign court for environmental crimes abroad and the plaintiffs were awarded $8.6 billion in damages (the second largest amount ever, though well behind the $20 billion Gulf Coast Claims Facility in connection with BP’s Deepwater Horizon oil spill).

The case María Aguinda and others v. ChevronTexaco Corporation began 3 November 1993 when 30,000 people from Ecuador filed a class action suit against Texaco in US Federal Court alleging massive oil contamination of the rainforest. The suit accused Chevron of responsibility for the dumping (allegedly conducted by Texaco and purchased by Chevron in 2001) of billions of gallons of toxic oil wastes into the region's rivers and streams. The case was then transferred to Ecuador at Chevron's request claiming Ecuador's courts fair and adequate.

The decision of Superior Court Judge Nicolás Zambrano levies fines for the company's deliberate dumping of 18.5 billion gallons of highly toxic waste into Amazonian ecosystems and contaminating the soil, rivers, and groundwater for over three decades. In addition to the financial award, which includes a legally mandated 10% for the Amazon Defense Coalition who brought the case, the judge added an additional $8.6 billion in punitive damages if Chevron fails to publicly apologize for its wrongdoing within 15 days.

In addition to Chevron violating its operating agreement requiring it to “employ modern and efficient machinery” and to “avoid contamination of water, air, and land”, Ecuadorian laws infringed by ChevronTexaco are as follows:

-      1921 Ley de Yacimientos (Mineral Deposits Law) prohibiting water contamination during exploration and production activities by companies exploiting natural resources

-      1971 Hydrocarbons Law requiring oil companies to “adopt all necessary measures to protect the flora, fauna, and natural resources” and to “avoid contamination of water, air, and land.”

-      1972 Ley de Agua (Water Law) which “prohibits all contamination of waters that affect human health or impact the development of flora and fauna;”

-      1976 Ley de Prevención y Control de Contaminación Ambiental (Law of Prevention and Control of Environmental Contamination) which “prohibits the discharge … of any type of contamination that could alter the quality of the soil and affect human health, the flora, the fauna, natural resources, and other natural capital.”

-      Article 23.6 of the Constitution recognizing the right “to live in an environment free of contamination”.

Having originally demanded $27 billion, the plaintiffs now say they will appeal the ruling, as they do not think the award is sufficient to repair the environmental damage. Chevron is set to appeal and issued the following statement ins response to the ruling:

"The Ecuadorian court's judgment is illegitimate and unenforceable.  It is the product of fraud and is contrary to the legitimate scientific evidence.  Chevron will appeal this decision in Ecuador and intends to see that justice prevails."

"United States and international tribunals already have taken steps to bar enforcement of the Ecuadorian ruling.  Chevron does not believe that today's judgment is enforceable in any court that observes the rule of law."

"Chevron intends to see that the perpetrators of this fraud are held accountable for their misconduct."

Chevron no longer holds assets in Ecuador and thus any judgement will have to be enforced in other courts, including the United States.

By Arianna Broggiato

Note by the Administrator:
In a Letter to the Editor of The Economist dated March 5, Linda Menghetti (Emergency Committee for American Trade); Frank Vargo (National Association of Manufacturers); Stephen Canner (US Council for International Business); and John Murphy (US Chamber of Commerce) commented on an earlier article ("Monster or victim?", February 19th) regarding the recent fine imposed on Chevron by the court in Ecuador as follows:

    "A quick review of the case shows that Chevron has been subjected to a flawed process that has been condemned by multiple courts. Consider the following: Texaco Petroleum Company (TexPet), which Chevron later bought, was a minority owner, holding 37.5% of the oil consortium being sued in the case; the largest shareholder was Petroecuador, Ecuador's state-run oil company.
    In the 1990s the Ecuadorean government approved the environmental remediation actually performed by TexPet, and released TexPet from any further liability when it left the consortium after its contract expired. The State Department and the World Bank have raised serious concerns about the rule of law and corruption in the Ecuadorean government and judicial system. Federal judges in New York, North Carolina, New Mexico, New Jersey and California have found the evidence in this case to be rife with fabrications, fraud and misconduct.
    Facts and the basic rule of law demonstrate that Chevron is the victim."