Monday, September 28, 2009

Chevron Files International Arbitration Claim Against Ecuador: Forum Shopping at the Hague?

This is a good overview of what Chevron's new chapter of delay tactics is made up of. It takes a lot of the legal wonk out of the equation and breaks down Chevron's new international arbitration claim for what it is; as the author puts it, "the latest move is the litigation equivalent of three card monte"

Favorite quote goes to: "Chevron's latest tactic all but mocks the institution's primary mission to administer justice."

Crosspost from International Buisness Law Advisor

By: Santiago Cueto

First, the United States. Then Ecuador. Now Holland. Chevron's wanderlust knows no bounds, as it just filed a parallel international arbitration proceeding in The Hague.

As reported in this article in the Wall Street Journal and in this article in the New York Times, Chevron filed an international arbitration claim before the Permanent Court of Arbitration in The Hague under the Rules of the United Nations Commission on International Trade Law (UNCITRAL). The claim is based on Ecuador's alleged violation of investment agreements, international law, and its treaty with the United States--the Encouragement and Protection of Investments Treaty.

Chevron’s claims relate to the Amazon oil lawsuit I wrote about in an earlier post. In the arbitration filed in the Hague , Chevron alleges that Ecuador’s judicial process is broken and that the South American nation cannot fairly adjudicate the long-running oil pollution litigation. Through the filing, Chevron seeks to enforce prior settlement and release agreements that the government of Ecuador entered into with Texaco Petroleum when the consortium was terminated, and to hold Ecuador accountable for its obligations under Ecuadorian law and existing international treaties.

The Ecuadorian government says that it will "vigorously" defend itself against the claim.

Chevron's new general counsel, Hewitt Pate, released a statement that accompanied the announcement of the new claim.

"Because Ecuador's judicial system is incapable of functioning independently of political influence, Chevron has no choice but to seek relief under the treaty between the United States and Ecuador."

Forum Shopping is an Unfair Venue Shell Game

Chevron's latest move is the litigation equivalent of three card monty and is yet another tactic to divert attention away from the trial taking place in Ecuador. Chevron first fought successfully to force plaintiffs to try their lawsuit in Ecuador rather than U.S. courts. Then it sought (unsuccessfully) to win indemnification in U.S. courts from a possible judgment in Ecuador. And now it's filed for arbitration in Holland. Chevron's blatant forum shopping is an abuse of the judicial process and designed to avoid a judgment.

The Hague is arguably the most hallowed institution for the resolution of high-profile international disputes. Chevron's latest tactic all but mocks the institution's primary mission to administer justice. The Hague must not be utilized to frustrate legitimate legal proceedings taking place elsewhere.

Forum shopping drains resources by imposing substantial additional costs on defendants, who must transport lawyers, documents, and numerous witnesses to the site of the trial – an expense that is multiplied when the trial is located far from the defendant’s place of business, such as in Holland.

Steven Donziger, a U.S. legal adviser to the plaintiffs, said the latest move by Chevron followed a series of setbacks in courts for the company in both countries.

Filing an international arbitration campaign at this point in time smacks of desperation and is a clear example of forum shopping," Donziger said in emailed statement.

As reported in this article in the Oil & Gas Journal, Steven called the company’s move “one of Chevron’s last cards to avoid paying for a half-century of environmental contamination in Ecuador’s Amazon.”

The country's solicitor general, Diego GarcĂ­a, said "Chevron has signaled for years its intention to file the instant arbitration, although only after an adverse judgment had issued and the appellate process completed.

"The environmental case should be resolved by the courts," Garcia added, "not in an arbitration in which the private parties are not even represented."

You can read the entire article at International Business Law Advisor Online

– Nick

Nick Magel is Communications Manager at Amazon Watch. Prior to joining Amazon Watch, Nick was Director of the Freedom From Oil campaign at Global Exchange. Nick’s critiques of the US oil addiction have run in The New York Times, USA Today, and San Francisco Chronicle. Previously, Nick had worked on campaigns to stop new liquefied natural gas infrastructure on the west coast and developed climate based curricula for classrooms across the country. He received his MA in education from Lesley University.

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