Ecuadorian court rules Chevron must pay $9 billion for oil pollution

February 15, 2011

BOGOTA, COLOMBIA - A judge in a small jungle town in Ecuador on Monday ordered Chevron to pay more than $9 billion in damages, finding the energy giant responsible for the oil pollution that has fouled a stretch of land along Ecuador's northern border.

The case, which began in a New York court in 1993, has been closely monitored by the oil industry for precedents that might be set for future lawsuits.

The amount in the ruling - $8.6 billion plus a legally required 10 percent reparations fee - was issued by Judge Nicolas Zambrano in the town of Lago Agrio. The amount dwarfs the $3.9 billion that Exxon Mobil was ordered to pay for the 1989 spill in Alaska. But Chevron said it would appeal, accusing the plaintiff's attorneys of conspiring with witnesses to present tainted testimony.

"The Ecuadorian court's judgment is illegitimate and unenforceable," a Chevron statement said. "It is the product of fraud."

Indeed, U.S. District Judge Lewis Kaplan in New York last week issued an order that temporarily bars efforts to collect money from Chevron, which has assets the world over but not in Ecuador.

In a phone interview from Ecuador, Pablo Fajardo, an attorney for the plaintiffs, acknowledged that the case is far from over. "This is an important step. It sets a precedent, but the battle does not end here," Fajardo said.

The plaintiffs argue that Texaco, which Chevron acquired in 2001, unloaded drilling mud and wastewater into unlined pits or rivers during 18 years of oil production. A report by court-appointed geologist Richard Cabrera concluded that pollution by Texaco's local affiliate led to hundreds of cancer deaths.

Chevron has accused Cabrera of openly colluding with the plaintiff's attorneys to produce a sham report. Chevron says Texaco's three-year, $40 million cleanup, which ended in 1998, relieved the company of responsibility.

The case has been tinged with nationalism. Ecuador's President Rafael Correa has publicly called Texaco's cleanup a farce and has asserted that the pollution killed people. Such outbursts have given ammunition to Chevron, which has argued that it cannot get a fair hearing in Ecuador.

Still, hours after the ruling, environmentalists such as Ecuador-based Kevin Koenig of Amazon Watch celebrated. "The ruling today is, I think, a vindication of what these communities have been saying for almost 30 years," Koenig said.

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