An Argentine court has ordered to seize US oil giant Chevron Corp's assets in the country in order to carry out an Ecuadorean court ruling that awarded $19 billion to plaintiffs in an environmental damage lawsuit in the Amazon, said a lawyer representing Ecuadoran plaintiffs on November 7, 2012 [1].

Judge Adrian Elcuj Miranda issued the order so that the plaintiffs could collect the proceeds of a court order in a court in Ecuador last year.

Residents of the Amazon rain forest in the Lago Agrio region in Ecuador had filed a lawsuit in May against Chevron in Canada, Argentina and Brazil seeking to seize the company's assets in these countries in order to enforce an $18-billion ruling they won in a lawsuit in Ecuador for polluting the Amazon basin.

Since Chevron does not have any assets in Ecuador, the lawyers for the plaintiffs had asked the courts in these countries to seize the San Ramon, California-based oil giant's shares and assets in their respective countries in order to enforce the Ecuador judgment.

Argentinian court's judge Miranda ordered that all cash flows from sales and bank deposits be frozen until the entire $19 billion order by the Ecuador court is collected.

The rare order includes the entire shares and dividends of Chevron in Argentina, its entire minority stake in the oil pipeline transportation company Oleoductos del Valle, and 40 percent of any current or future money that Chevron Argentina holds as well as 40 percent of all its hydrocarbon sales.

Chevron said that it is not aware of the order from the Argentinean court and its operations in the country had nothing to do with the Ecuador lawsuit.

''The plaintiffs' lawyers have no legal right to embargo subsidiary assets in Argentina and should not be allowed to disrupt Argentina's pursuit of its important energy resources,'' said James Craig, a Chevron spokesman for Latin America and Africa. ''The Ecuador judgment is a product of bribery, fraud, and it is illegitimate.''

Although Chevron can file an appeal, it would have to do so in Ecuador since the Argentinean judge ordered the seizure based on the request by the Ecuadorean court.

Background

In the legal saga that has spanned nearly two decades, Chevron was held responsible by an Ecuadorian court in early 2011 for dumping chemical-laden wastewater in the Amazon basin from 1964 to about 1992 by Texaco Inc, a company that was acquired by Chevron in 2001.

After an Ecuador appeals court upheld the lower court ruling, the plaintiffs threatened to seize Chevron's assets in foreign countries and freeze its international accounts.

Chevron had previously alleged fraud in the case in which it is also facing accusations of defrauding the Ecuadorean court to hide the scale of the oil contamination.

The suit was initially filed in a New York federal court in 1993 against Texaco. Fearing an adverse order, Chevron in 2002 requested that the case be shifted from US federal court to Ecuador.

The trial court in Ecuador had in February 2011 found that Chevron systematically dumped billions of gallons of toxic waste into the Amazon rain forest for nearly three decades, poisoning waterways that local inhabitants use for drinking, leading to cancer among the inhabitants.

The court set damages at $18 billion, $9.5 billion in remediation costs and plaintiff damages, and an additional $8.6 billion if Chevron refused to apologize for environmental damages.

By the time the judgment was announced in 2011, the case had wound its way through US and Ecuadorean courts for over 17 years.

Chevron, which has been shifting the lawsuit between US and Ecuadorean courts, has refused to pay the damages on the ground that it did not pollute the jungle, and it had properly cleaned up the contamination for which it was responsible.

Chevron is also seeking to block enforcement of the judgment under a treaty between the US and Ecuador. In February, it filed a case before the Permanent Court of Arbitration in The Hague seeking its order to stop the plaintiffs from enforcing the seizure of its assets globally, based on the Ecuadorean court ruling.

''We plan to exercise our legal right to collect every penny of the legitimate judgment from Ecuador, even if we have to drag Chevron kicking and screaming into courts around the world,'' Pablo Fajardo, the lead lawyer for the plaintiffs had earlier said.

Fajardo told the Associated Press that the plaintiffs will soon initiate proceedings against Chevron in Asia, Europe and elsewhere.

''Environmental crime will not go without punishment and we're going to chase them anywhere in the world,'' he said.

Chevron, which has a market capitalization of $193 billion, has constantly faced the wrath of its investors, who have urged the company to settle the Ecuador litigation.

Investors holding over 38 percent of the company's shares had voted for a resolution that challenged Chevron CEO John Watson's authority on the Ecuador case. Nearly 40 institutional shareholders have also urged the company to come to a settlement on the case.

Many experts have castigated the company for avoiding its responsibility just because Ecuador is a Third World, developing country. They argue that had Chevron been in BP's place, could it have dragged the issue on for nearly two decades without paying a cent to the American people or the US government over the Gulf of Mexico oil spill in 2010.

In contrast to Chevron, London-based BP has not only spent over $37 billion to date over the spill that caused the Gulf of Mexico pollution in the region, but is facing thousands of lawsuits from ordinary American citizens and four coastal states and various government agencies.

Not only is Chevron facing flak in Ecuador, in March, the Brazilian government had filed criminal charges against the oil giant and its partners and 17 of the companies' employees for environmental crimes in connection with an oil leak off Rio de Janeiro's coast and is seeking $5.5 million in damages and about $549,100 from each executive and a 31 years prison sentence.

This is over and above an earlier civil lawsuit seeking $10.7 billion in damages.

The company is also trying to wriggle out from paying damages in Brazil, but it would be interesting to see the outcome of the court case in one the world's oil rich country and where Chevron has assets worth billions of dollars.

A BBC report [2] said:

Chevron has in the past said the original ruling against the company was a product of "bribery and fraud".

The company has also dismissed the plaintiffs' moves to get the ruling enforced abroad, saying that "if the plaintiffs' lawyers believed they had a legitimate judgment, they would seek to enforce it in the United States".

In October 2012, the US Supreme Court declined to block the original ruling against Chevron [3].

The judgment by the Ecuadorean court originally ordered Chevron to pay $8.6bn in environmental damages, but that was more than doubled because the oil company did not apologize publicly.

The high court did not explain why it decided to reject the appeal from Chevron [4].

But Chevron has said it believes the judgment, handed down by a court in Ecuador in February 2011, is fraudulent and not enforceable under New York law.

In March 2011 a court in New York issued an injunction that blocked the judgment. But it was overturned in January this year by an appeals court, which said Chevron had challenged the judgment prematurely.

The appeals court also said the New York judge could not stop other, foreign courts from enforcing the judgment - something the Ecuadorean plaintiffs are working to do in Canada and Brazil.

The oil firm has also challenged the judgment under an international trade agreement between the US and Ecuador, due to begin in November.

The oil giant is also facing a law suit in Brazil.

The Brazilian government has filed a new $11-billion suit against US oil giant Chevron Corp and Switzerland's offshore oil rig operator Transocean Ltd for a second leak in an offshore oil field, taking the claim amount to nearly $22 billion [5].

Brazil's federal prosecutor Eduardo Santos de Oliveira filed the lawsuit over a second oil spill off the coast of Rio de Janeiro caused by oil that leaked from cracks on the ocean floor on March 4.

The oil escaped through at least seven narrow fissures on the ocean floor, all within 50 meters of the well head.

The new spill is near the offshore Chevron well where at least 110,000 gallons spilled late-2011 and the Brazilian government had filed a suit against both companies for $10.7 billion.

Chevron committed ''a series of errors'' that led to the March spill at Frade, the second incident at the offshore oil project, the federal prosecutors' office said in a statement yesterday.

Oliveira is also seeking to suspend the companies from operating in the country and block Chevron from transferring profits from Brazil.

Chevron is the operator of the Frade field project holding a 51.74 percent stake, Brazil's state-owned oil company Petrobras holds 30 percent and Frade Japao Petroleo Ltda, a joint venture including Inpex Corp and Sojitz Corp, holds 18.26 percent.

The Brazilian government accused the company of misleading authorities over the incident.

After suing both Chevron and Transocean in December 2011, the Brazilian government filed criminal charges against both companies, and 17 of their employees for environmental crimes.

Apart from seeking 31 years prison sentence, Oliveira has asked each company to pay $5.5 million and about $549,100 from each executive for damages to the environment.

This is over and above an earlier civil lawsuit seeking $10.7 billion in damages.

The 17 executives named by prosecutors in preliminary documents include six Americans, five Brazilians, two French and Australian nationals, one British citizen and one Canadian. They include the heads of the Brazilian subsidiaries of both Chevron and Transocean.

All the 17 executives were banned from leaving Brazil during the prosecutors' probe, but yesterday a judge permitted three employee facing criminal charges to leave the country, as the US and Brazil have a judicial extradition treaty.

Sources:

[1] Domain-b.com, “Argentine court orders seizure of Chevron's assets to enforce $19-bn Ecuadoran ruling news”, Nov. 8, 2012, http://www.domain-b.com/companies/companies_c/Chevron/20121108_amazon_oneView.html

[2] BBC, “ Argentina 'freezes Chevron assets' over Ecuador damage”, Nov. 7, 2012, http://www.bbc.co.uk/news/world-latin-america-20246295

[3] BBC, http://www.bbc.co.uk/news/world-latin-america-20161718

[4] BBC, “ Supreme Court denies Chevron $19bn Ecuador appeal”, Oct. 9, 2012, http://www.bbc.co.uk/news/world-us-canada-19892561

[5] Domain-b.com, “Brazil slaps another $11 billion suit on Chevron, Transocean for oil spill news”, April 5, 2012,

Chevron fined $19 billion for polluting Amazon basin