U.S. Appeals Court Rejects Chevron’s Attempt to Avoid $18 Billion Pollution Judgment in Ecuador

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A couple of weeks ago, I blogged about an Ecuadorean appeals court upholding an $18 billion dollar judgment against Chevron for massive oil pollution in the Amazon rainforest. The Court rejected Chevron’s arguments that the judgment was procured by fraud. Today, a decision by a federal appeals court in New York makes it more likely that this judgment can be enforced.

Last year, fearing that it was going to lose in Ecuador, Chevron sued the plaintiffs in New York seeking a court order that would prevent the plaintiffs from trying to enforce any Ecuadorean judgment outside of Ecuador. Since Chevron no longer does business there, the judgment could not be enforced inside Ecuador.

A New York trial judge accepted Chevron’s arguments that the Ecuadorean proceedings were likely tainted by fraud, and issued an order barring the plaintiffs’ lawyers from enforcing any judgment, at least until Chevron’s fraud allegations could be tried in New York. Then, back in September, the appeals court overturned that trial court order, but it did so without issuing an opinion explaining its reasons, so the parties did not know precisely what the court of appeals had decided.

Today, the court issued its opinion. It held that the New York law under which Chevron sued only determines if a foreign judgment can be enforced in New York; a New York court lacks power to determine whether a foreign judgment is enforceable anywhere else. Therefore, the trial court was not authorized to order the plaintiffs not to enforce the Ecuadorean judgment outside New York.

Chevron, of course, will still try everything else it can think of to prevent the judgment from being enforced. We’ll keep you posted.

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