Dutch Supreme Court Rules for Chevron in Ecuador Dispute
15 Abril 2019 - 11:59PM
Business Wire
The Supreme Court of the Netherlands has ruled in favor of
Chevron Corporation, rejecting the Republic of Ecuador’s attempts
to annul decisions of an international arbitral tribunal in The
Hague that ordered Ecuador to take all steps necessary to prevent
enforcement of a $9.5 billion Ecuadorian judgment against Chevron
anywhere in the world. The Ecuadorian judgment previously was found
by the international arbitral tribunal and by U.S. courts to have
been obtained through fraud, bribery and corruption.
The arbitral tribunal, administered by the Permanent Court of
Arbitration in The Hague, issued interim and partial awards in
favor of Chevron in 2012 and 2013 in proceedings brought by Chevron
to hold the Republic of Ecuador accountable for the fraudulent and
corrupt litigation against the company in that country. The
arbitral awards ordered the Republic of Ecuador “to take all
measures necessary to suspend or cause to be suspended the
enforcement and recognition within and without Ecuador” of the
fraudulent Ecuadorian judgment against Chevron. The decision by the
Supreme Court of the Netherlands upholds the rulings of two Dutch
lower courts that rejected the Republic of Ecuador’s attempts to
annul those awards.
“The highest court in the Netherlands confirmed that Ecuador is
required under international law to prevent enforcement of the
corrupt Ecuadorian judgment against Chevron anywhere in the world,”
said R. Hewitt Pate, Chevron’s vice president and general counsel.
“The Dutch Supreme Court joins the courts of the United States,
Argentina, Brazil, and Gibraltar in rejecting the Ecuadorian fraud
against Chevron. Chevron urges Ecuador to honor its obligations
under international law, comply with the lawful orders of The Hague
tribunal and put an end to the fraud and extortion against
Chevron.”
The Dutch Supreme Court found that the challenged arbitral
awards are consistent with public policy and justified to prevent
irreversible harm to Chevron. The court rejected the Republic of
Ecuador’s argument that the awards should be annulled because they
violated Ecuador’s sovereignty and the rights of the Ecuadorian
plaintiffs who procured the fraudulent judgment against
Chevron.
Last August, the arbitral tribunal in The Hague also ruled in
favor of Chevron in its final award on liability, finding the
Republic of Ecuador liable for violating its obligations under
international treaties, investment agreements and international
law. The tribunal ordered the Republic of Ecuador to permanently
render unenforceable the fraudulent Ecuadorian judgment against
Chevron Corporation. In a unanimous ruling by a panel including an
arbitrator chosen by the Republic of Ecuador, the tribunal held
that the $9.5 billion judgment rendered against Chevron in Ecuador
in 2011 was procured through fraud, bribery and corruption and was
based on claims that had been already settled and released by the
Republic of Ecuador years earlier. The tribunal concluded that the
Ecuadorian judgment “violates international public policy” and
“should not be recognised or enforced by the courts of other
States.” The award also declared the Republic of Ecuador
responsible for reparation to Chevron under international law
should the Ecuadorian judgment ever be enforced anywhere in the
world.
Ecuador has been petitioning the Dutch courts for nearly a
decade to set aside arbitral awards favorable to Chevron, and it
has failed at each turn. “The decision from the Supreme Court of
the Netherlands reinforces the integrity of the arbitral
proceedings against Ecuador and ensures that Ecuador will be held
to account for violations of international law,” Pate said.
The decision of the Supreme Court of the Netherlands follows on
the footsteps of last week’s decision of the Supreme Court of
Canada in favor of Chevron’s indirect Canadian subsidiary. On April
4, 2019 the Supreme Court of Canada rejected a request to review a
decision of the Court of Appeal for Ontario holding that the $9.5
billion Ecuadorian judgment against Chevron Corporation cannot be
enforced against Chevron Canada Limited, an indirect subsidiary in
Canada. As a result, all claims brought by the Ecuadorian
plaintiffs against Chevron Canada Limited were dismissed and its
shares and assets cannot be seized by those seeking to enforce the
Ecuadorian judgment.
In 2011, the Ecuadorian plaintiffs obtained a $9.5 billion
judgment against Chevron in an Ecuadorian court, but in 2014, a
U.S. federal court found that the Ecuadorian judgment was the
product of fraud and racketeering activity, including extortion,
money laundering, wire fraud, witness tampering, judicial bribery,
Foreign Corrupt Practices Act violations and obstruction of
justice. The court prohibited enforcement of the Ecuadorian
judgment in the United States and established a trust to reimburse
to Chevron any enforcement proceeds obtained by the plaintiffs
anywhere in the world. That decision is now final after having been
unanimously affirmed by a U.S. court of appeals and denied review
by the U.S. Supreme Court.
The plaintiffs’ other attempts to enforce the judgment in
jurisdictions around the globe have also failed:
- In November 2017, Brazil’s Superior
Court of Justice unanimously rejected the attempt to enforce the
Ecuadorian judgment in Brazil. Brazil’s Deputy Prosecutor General
stated the judgment was “issued in an irregular manner, especially
under deplorable acts of corruption.”
- The Brazilian decision followed a
ruling by a court in Argentina in October 2017, which also denied
recognition of the Ecuadorian judgment. An Argentine appeals court
upheld this decision in July 2018, citing a lack of
jurisdiction.
- In December 2015, the Supreme Court of
Gibraltar issued a judgment against Amazonia Recovery Ltd., a
Gibraltar-based company set up by the plaintiffs’ attorneys and
investors to receive and distribute funds resulting from the
Ecuadorian judgment, awarding Chevron $28 million in damages. The
Court also issued a permanent injunction against Amazonia
prohibiting the company from assisting or supporting the case
against Chevron in any way. The court issued a similar ruling in
May 2018 against the directors of Amazonia, Frente de Defensa de la
Amazonia, and Ecuadorian attorney Pablo Fajardo for their role in
attempting to enforce the ruling, this time awarding $38 million in
damages to Chevron.
These failed efforts to enforce the Ecuadorian judgment were led
by adjudicated racketeer and suspended lawyer Steven Donziger. In
2018, Donziger was suspended from practicing law in New York State
and Washington, D.C. after having been found by U.S. federal courts
to have engaged in a longstanding pattern of racketeering activity
in procuring the Ecuadorian judgment, including multiple acts of
fraud, bribery and judicial corruption.
“It is time for Ecuador to come into compliance with the orders
of The Hague tribunal,” Pate said. “Ecuador has been in breach of
international law by continuing to defy the awards, issued
unanimously by all three members of the tribunal, including
Ecuador’s appointed arbitrator. The court’s decision puts to rest
Ecuador’s argument that it needed not comply with the awards
pending the Dutch annulment proceedings, an argument that the Dutch
Supreme Court has now shown was meritless from its inception.”
Chevron Corporation is one of the world's leading integrated
energy companies. Through its subsidiaries that conduct business
worldwide, the company is involved in virtually every facet of the
energy industry. Chevron explores for, produces and transports
crude oil and natural gas; refines, markets and distributes
transportation fuels and lubricants; manufactures and sells
petrochemicals and additives; generates power; and develops and
deploys technologies that enhance business value in every aspect of
the company's operations. Chevron is based in San Ramon, Calif.
More information about Chevron is available at www.chevron.com.
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