Let’s Focus on the Real Issues
Posted on March 17, 2014
Letters Blogatory welcomes Nathalie Cely Suárez, Ecuador’s ambassador in Washington, who gives the Ecuadoran government’s perspective on Judge Kaplan’s decision. This is the second in today’s series of reactions to the Chevron decision from the protagonists. I invited Steven Donziger and his team to participate, but I did not receive their submission by my deadline. A note for Letters Blogatory e-mail subscribers: this post has lots of footnotes, and you should read it in your browsers rather than via email.
Last week a district court judge in New York issued a decision addressing the alleged misconduct of the Lago Agrio Plaintiffs’ lawyers. There has been much confusion as to the effect of that decision on the Republic of Ecuador and what it means for the State’s ongoing arbitration against Chevron. We write to offer five points to clarify some of that confusion.
- The Republic was not a party to the New York action. The Republic has no interest in passing judgment on Chevron’s claims against the Lago Agrio Plaintiffs’ (the LAPs’) lawyers or on Judge Kaplan’s findings regarding such claims. If after all the appeals it is found that the LAPs’ counsel engaged in misconduct, they will be called to account under the laws of the United States. Chevron deliberately chose not to challenge their conduct in an Ecuadorian court with jurisdiction over these types of allegations. As a result, the LAPs’ counsels’ conduct is not an issue for the Republic. And to be clear, the Republic was not a party to and did not participate in the RICO action. For that matter, the Republic also is not and has never been a party to the Lago Agrio action in Ecuador or its predecessor action in New York. The Republic is instead engaged in a separate international arbitration, and it fully intends to defend its interests there.
- The real story should be the plight of the indigenous plaintiffs. Ecuador has a duty and is committed to protecting the rights of its citizens and environment, just as it has been appropriate and expected for the United States and its officials to understand and take a stand to protect the rights of its citizens and environment in the aftermath of the BP Gulf oil spill. Regardless of the many battles to date and those still yet to come, this is not a game. The news story here must be more than whose team is winning or losing, or who has the bigger team or more resources. The real story should be the plight of the indigenous plaintiffs—the people of the rain forest who live near Chevron’s former operations. Judge Kaplan himself recognized that there is contamination in the Oriente.The indigenous plaintiffs came to the United States to have their day in court. It was Chevron that persuaded the courts in this country that the dispute should be decided instead in Ecuador. When unhappy there, Chevron returned to its own courts. The net result: after twenty years of litigation—ten in this country and ten in Ecuador—these plaintiffs still have no relief.
From 1965 to 1990, Chevron’s predecessor, Texaco (acquired by Chevron in 2001) controlled all aspects of oil operations in the rain forest of Ecuador. They decided where to drill, how to drill, how to dispose of wastes, and how to build all of the related infrastructure. When Texaco contracted with the Republic to extract oil, the Republic had no expertise in the area and depended entirely on the American company with decades of experience.
Chevron argues that its predecessor did not contaminate the region; and if it did, it remediated; and if any contamination is left, then it is the fault of PetroEcuador, the State-owned company; but if there is any contamination traceable to its predecessor, then crude waste poses no risk. If Chevron devoted even a fraction of its litigation budget to real remediation, the parties together could do so much to help the people of the rain forest.
As a preliminary matter, we have no intention of running away from our own responsibility. While PetroEcuador has taken clear and dramatic steps to improve upon the infrastructure and systems that Chevron’s predecessor left behind, PetroEcuador also must do more to remedy any contamination for which it is responsible. The Republic does not excuse bad behavior by any company, whether it is owned by the Republic or is headquartered outside its borders. But whatever responsibilities lie at the feet of PetroEcuador, the scientific evidence is overwhelming that Texaco deliberately engaged in practices that it knew would contaminate the region, that it directed its people to destroy documents and evidence of spills and accidents,1 and that even today Texaco’s waste product may be found in abundance in the soil, sediment, and groundwater.
Chevron’s culpability is actually worse than found. Most troubling is the discovery that Chevron (in the very litigation in which they accuse the LAPs of fraud) has itself committed a fraud on the Ecuadorian courts. It is now clear that Chevron conducted extensive secret testing at sites prior to court-observed judicial inspections so that it would know where there was—and was not—contamination. Chevron then gamed the system by sampling at known clean locations, or upstream, upgradient or at different depths from known contamination so as to avoid negative findings. Chevron then paid its experts to conclude that these tests were representative of the whole when Chevron knew in fact they were not.
Chevron’s own experts have candidly explained that they:
- often could not delineate where the waste pits were because the contamination (that Chevron has publicly denied) in fact migrated far afield from where they expected it to be;2
- shifted sampling locations away from known dirty locations “to account for this material” so that samples presented to the court would be clean;3
- found hidden pits and old contaminated drainage using satellite imagery and resident interviews;4
- took clean samples from the surface because they found contamination at depth;5
- found contamination more than four football fields (approximately 480 meters) away from contamination sources,6 and “fairly ubiquitous impact” at other locations,7 notwithstanding Chevron’s contention that the pollution had not migrated; and
- were impressed with current operations by Petroecuador.8
At Chevron’s request, the only courts to have considered the evidence are those in Ecuador. And they—strictly following Ecuadorian civil law and procedural rules—unanimously found Chevron liable. This liability was upheld by Ecuador’s appellate courts, including its National Court, Ecuador’s equivalent to the U.S. Supreme Court in its civil law system.
Chevron will continue to contest its liability. It argues, for example, that the Government released all claims against it in a 1995 settlement agreement, and that the indigenous plaintiffs are bound by a settlement agreement to which they are not a party. Suffice it to say that the Republic did not, and had no authority or power to, settle claims on behalf of any third party.
But the point here is a narrow one. Chevron’s predecessor dumped thousands of gallons of crude waste, for more than two decades, into unlined pits in the rain forest and local streams and wetlands, and this contamination continues to this day to haunt the inhabitants of the region.
- The Republic has taken emergency measures to help its citizens. For its part, the Republic is taking certain emergency remedial action. In the last eight years alone, the Ecuadorian Ministry of the Environment has completed twenty-nine projects to assist the victims of the contamination, including building potable water systems and relocating those individuals directly affected. According to the Responsibility, Stabilization and Fiscal Transparency Act, five percent of the national budget has been placed in a special account and will be used to repair the impact of the environmental and social effect generated by hydrocarbons or mining activities. Additionally, Petroecuador has invested large sums of money and time to dramatically improve the infrastructure left by Chevron’s predecessor. For example, immediately after Texaco left Ecuador, Petroecuador began lining waste pits to prevent seepage of the contaminants and likewise began the process of reinjecting all production water back deep into the ground, a practice commonplace in the United States decades ago.
- The Ecuadorian Judiciary. Like judicial systems around the globe, including in the United States, the judicial system in Ecuador is not perfect. But it is independent, and it has received international acclaim over the last number of years for its successful implementation of judicial reforms. It is also deserving of respect in the courts of the United States.Notwithstanding Judge Kaplan’s regrettable decision to pass judgment on the Ecuadorian judiciary, the fact is that it was Chevron who persuaded U.S. courts—the same ones that are hearing the RICO action—to dismiss the environmental case from U.S. courts in favor of Ecuador’s courts. And Chevron persuaded the U.S. courts on the basis of overwhelming evidence, including some fourteen affidavits, that Chevron itself presented showing that the Ecuadorian courts are competent and fair. Judge Kaplan has ignored (or perhaps did not know) that Chevron and its predecessor have repeatedly prevailed in Ecuadorian courts, even at times when the Government was its adversary. It is troubling to us that a court of a foreign nation should pass judgment at all on the courts of another sovereign; more particularly, we fail to understand how any court could predicate much of its criticism based on the opinions of a single Ecuadorian “expert witness” when that witness is an avowed political adversary of the current Administration and was a key member of prior governments. This would be equivalent to an Ecuadorian court impugning President Obama based on comments made by a Republic party leader, like Sarah Palin, or impugning his predecessor, President Bush, on the basis of comments by a Democratic party leader.
What else did Chevron offer the court? Chevron pointed to the fact that the President appointed a “college roommate” as the General Prosecutor. In fact, the two attended the same university but they surely were never roommates. As the Court of Appeals for the Third Circuit observed when rejecting the same argument by Chevron: “we do not view [these circumstances] as probative. After all, presidential transitions in the United States also typically include the replacement of high-level officials, oftentimes with persons who are friends, or have an even closer relationship to the incoming president, and it is not uncommon to see a shift in priorities along with a change in the presidential administration.”9 Through its expert, Chevron also submitted newspaper articles (in this case from the Ecuadorian media) but reliance on newspaper articles is, to the say the least, inherently unreliable given the robust commentaries that exist on all sides of an issue. Even former U.S. Ambassador to Ecuador, Heather Hodges, noted that “[t]here is more than a grain of truth to [President] Correa’s observation that the Ecuadorian media play a political role, in this case the role of the opposition.”10
Judge Kaplan previously adopted Chevron’s views regarding the Ecuadorian justice system, and he in fact granted a worldwide injunction against enforcement of the Ecuadorian Judgment.11 The Court of Appeals for the Second Circuit quickly and unanimously reversed him.12 He has since chosen to accept the testimony of a Chevron witness who has admitted to being paid hundreds of thousands of dollars in cash and literally millions of dollars in financial benefits by Chevron, yet Judge Kaplan simultaneously chose not to consider evidence relating to Chevron’s own misconduct, including Chevron’s manipulation of the judicial process in the same underlying proceeding that is the very subject of the New York case. I have long admired the U.S. justice system but I join others in my Government who are troubled by the circumstances presented here.
- Ecuador and the United States. Chevron’s insistence on waging legal, political and public relation scampaigns in lieu of doing what is right has earned it criticism and scorn in some quarters in Ecuador. Many of us have openly sympathized with our indigenous brethren because they deserve to be heard and afforded relief after twenty years of litigation. Our expressions of support are no different than U.S. politicians offering support to the affected citizens of the Gulf Coast after the BP oil spill.13 To be clear, however, the criticism is neither anti-American nor even anti-“big oil.” More American retirees have chosen Ecuador as their country of choice than any other non-U.S. country. The climate, beauty, safety, and cost of living in Ecuador act as a magnet for people across the globe. And just like Americans have embraced Ecuador, so too have Ecuadorians embraced America. As the U.S. Ambassador to Quito has observed, Ecuadorians are bonded to the United States, where so many Ecuadorians have been educated and have family. The two countries have common interests, including the global fight against human trafficking and drug trafficking. This relationship has also led to an increase in trade between our countries to record levels and the number of American companies doing business in Ecuador, including of note Coco-Cola’s recent commitment to expand its operation in Ecuador by upward of $1 billion over the next five years. We invite American citizens and businesses to come visit Quito, the Galapagos, Cuenca, or Guayaquil, and see why U.S. citizens and businesses have decided to call Ecuador home too.
- Texaco internal letter CGE-398/72 (July 17, 1972).
- See, e.g., Sacha Norte 1 JI Summary at BJORKMAN00061692.
- See ,e.g., Sacha Norte 2 JI Summary at BJORKMAN00061703.
- See, e.g., Sacha Norte 2 JI Summary at BJORKMAN00061703-04.
- See, e.g., Sacha Sur JI Summary at BJORKMAN00061689.
- See, e.g., Sacha Sur JI Summary at BJORKMAN00061689-90.
- See, e.g., Sacha Norte 1 JI Summary at BJORKMAN00061692; Sacha Sur JI Summary at BJORKMAN00061688.
- Bjorkman Sacha Norte 2 JI Summary at BJORKMAN00061704.
- In re Application of Chevron Corp., 650 F.3d 276, 293 (3d Cir. 2011).
- Cable 09QUITO225 (Mar. 31, 2009). The ambassador continues: “Many media outlet owners come from the elite business class that feels threatened by Correa’s reform agenda, and defend their own economic interests via their outlets.”
- Chevron Corp. v. Donziger, 768 F. Supp. 2d 581 (S.D.N.Y. 2011).
- Chevron Corp. v. Naranjo, 667 F.3d 232 (2d Cir. 2012).
- In re Application of Chevron Corp., 650 F.3d 276, 294 (3d Cir. 2011) (“it is not uncommon for an American president to comment on ongoing criminal prosecutions and even urge that alleged wrongdoers be prosecuted in accord with the president’s priorities.”)