Order barring Ecuador from collecting $18B vacated

[September 20, 2011]  NEW YORK (AP) -- A federal appeals court vacated an order Monday by a New York judge that barred an $18 billion judgment in Ecuador against Chevron Inc. for contaminating the Amazon.

The three-judge panel of the 2nd U.S. Circuit Court of Appeals had previously expressed skepticism that a New York judge could wield jurisdiction outside the U.S.

The lead lawyer for the plaintiffs, Pablo Fajardo, told The Associated Press by phone on Monday that they expected to be able to begin to collect by the first quarter of 2012 the damages that a Lago Agrio, Ecuador, court ordered Chevron to pay.

"We can now at least dream there will be justice and compensation for the damage, the environmental crime, committed by Chevron in Ecuador," he said, adding that the decision "lets the world see that we are right, not just in Ecuador but in any court in the world."

Chevron has appealed the Lago Agrio decision, which was issued in February, and Fajardo said he expects an appeals court ruling in Ecuador in the next few months.

"Chevron remains confident that once the full facts are examined, the fraudulent judgment will be found unenforceable and those who procured it will be required to answer for their misconduct," the oil company said in a statement posted on its website Monday.

In New York, U.S. District Judge Lewis A. Kaplan had barred collection of the award, after determining that Chevron could prove that lawyers had manipulated a corrupt legal system in Ecuador to secure the judgment. The company had argued that the plaintiffs would collect the judgment before an appeals process was completed in Ecuador.

But a lawyer for the Ecuadorean plaintiffs told the appeals court in oral arguments Friday that they would not attempt to recover damages until the appeals process in Ecuador was completed.

The award followed nearly two decades of litigation.

The Ecuadorean plaintiffs blamed the oil company Texaco, a subsidiary of Chevron since 2001, for environmental contamination and illnesses resulting from its operation of an oil consortium from 1972 to 1990 in the country's lush rainforest.

Chevron has long argued that a 1998 agreement Texaco signed with Ecuador after a $40 million cleanup absolves it of liability. It claims Ecuador's state-run oil company is responsible for much of the pollution in the oil patch that Texaco quit more than two decades ago.

[Associated Press; By CRISTIAN SALAZAR and LARRY NEUMEISTER]

Associated Press writer Frank Bajak in Lima, Peru, contributed to this report.

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