Lago Agrio plaintiffs from the Amazon communities have filed Wednesday a lawsuit in the Superior Court of Justice in Ontario in order to enforce a ruling by an Ecuadorean court, obtained after 19 years of litigation, against U.S. energy giant Chevron Corp. (CVX) that called for $18.2 billion in damages.
The enforcement lawsuit is seeking the seizure of shares and assets of Chevron Canada as it does not currently hold any assets in Ecuador. Chevron said it will vigorously defend against any enforcement action, and added that the Ecuador judgment is not enforceable in any court that observes the rule of law.
Chevron has continued to allege that lawyers and representatives for the Ecuadoreans had committed extensive fraud and corruption as well as conspired to fabricate evidence.
"If the plaintiffs' lawyers believed in the integrity of their judgment, they would be seeking enforcement in the United States - where Chevron Corporation resides. In the U.S., however, the plaintiffs' lawyers would be confronted by the fact that seven federal courts have already made findings under the crime/fraud doctrine about this scheme," Chevron said in a statement it released following the filing of the enforcement lawsuit.
A federal appeals court had in September 2011 thrown out a New York district judge Lewis Kaplan's ruling in March 2011 that prevented the enforcement of the judgment.
An Ecuadorean court in the Amazonian city of Lago Agrio granted an $18.2 billion judgment in February 2011 against Chevron in a long-running environmental lawsuit, involving the company's subsidiary Texaco Petroleum Co., for polluting the Amazon rainforest and damaging the health of local residents. The lawsuit was filed on behalf of 30,000 Ecuadorians.
The local population has suffered from high rates of cancer, spontaneous miscarriages, and oil-related diseases.
The lawsuit was originally filed against Texaco in 1993 at a US federal court in New York. But it was dismissed three years later after the oil company's lawyers argued that the case should be heard in Ecuador. Subsequently, the lawsuit was refiled in Ecuador in 2003.
Chevron was originally ordered to pay $8.6 billion in damages, but the figure more than doubled after the oil company failed to make an apology, which was a stipulation of the first ruling.
The lawsuit alleges that Chevron was responsible for environmental and social harms in the Amazon region of Ecuador while it participated in a state-controlled oil consortium prior to 1990. Chevron acquired Texaco in 2001, but currently does not hold any assets in Ecuador.
Ecuadorean's allege that Texaco is responsible for hazardous oil-drilling waste dumped on their land from 1964 to about 1992. However, Chevron says Texaco had spent about $40 million to clean-up portions of the oil fields for which it was responsible in 1992 before handing over the sites to Ecuadorean state-owned oil company Petroecuador, which still operates in the area.
Chevron has argued that a 1998 agreement signed by Texaco with the government of Ecuador absolves the company of any further liability.
The filing of the enforcement action comes close on the heels of a major challenge by Chevron shareholders over the Ecuador matter. Investors holding over 38 percent of Chevron shares voted for a resolution that directly challenged Chevron CEO John Watson's authority because of the Ecuador case.
Last week, 40 institutional shareholders representing $570 billion under management - including the New York state pension fund -- urged the company to settle the Ecuador litigation.
Experts believe this as the largest oil disaster on the planet, and Chevron's$18.2 billion culpability in Ecuador is justifiable in comparison to BP's disaster in the Mexican Gulf in 2010. BP estimated the accidental leak of 4.9 million barrels of crude oil would cost the British oil major $37.3 billion.
Further, Chevron has significant assets in Argentina, Venezuela and Brazil, where it has been targeted by regulators over an oil spill and faces a damages claim for $10.6 billion.
CVX closed Wednesday's regular trading session at $97.63, down $2.61 or 2.60% on a volume of 7.28 million shares.