NY Court: Judge Can't Block $18B Ecuador Judgment


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Salon Staff
January 26, 2012 10:18PM (UTC)

NEW YORK (AP) — A judge overstepped his authority when he tried to ban enforcement around the world of an $18 billion judgment against Chevron Inc. for environmental damage in Ecuador, a federal appeals court said Thursday as it explained why it lifted the ban last year.

The three-judge panel of the 2nd U.S. Circuit Court of Appeals said the judge has authority to block collection if Ecuadorean plaintiffs move against Chevron in New York, but law does not give him authority "to dictate to the entire world which judgments are entitled to respect and which countries' courts are to be treated as international pariahs."

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The judgment came last February after nearly two decades of litigation that stemmed from the poisoning of land in the Ecuadorean rainforest while the oil company Texaco was operating an oil consortium from 1972 to 1990 in the Amazon. Texaco became a wholly owned subsidiary of Chevron in 2001.

Chevron obtained an order from U.S. District Judge Lewis A. Kaplan last March blocking Ecuadorean plaintiffs from trying to collect the $18 billion until he could stage a trial to determine if the judgment was obtained fairly.

"It is a particularly weighty matter for a court in one country to declare that another country's legal system is so corrupt or unfair that its judgments are entitled to no respect from the courts of other nations," the 2nd Circuit wrote. "In such an instance, the court risks disrespecting the legal system not only of the country in which the judgment was issued, but also of other countries, who are inherently assumed insufficiently trustworthy to recognize what is asserted to be the extreme incapacity of the legal system from which the judgment emanates."

It added that the court issuing such a ban "sets itself up as the definitive international arbiter of the fairness and integrity of the world's legal systems."

The appeals court said Kaplan had not addressed the legal rules that would "govern enforceability of an Ecuadorean judgment under the laws of France, Russia, Brazil, Singapore, Saudi Arabia or any of the scores of countries, with widely varying legal systems, in which the plaintiffs might undertake to enforce their judgment."

A message seeking comment from Chevron was not immediately returned. A representative for the Ecuadorean plaintiffs said a statement would be issued later in the day.

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