Ecuador Suffers Yet Another Setback In Case Against Chevron As International Tribunal Absolves The Company Of Responsibility For ‘Collective’ Damage

Dashing Ecuador’s hopes to win $19 billion in damages from Chevron Corp. (NYSE:CVX) in a long-standing environmental pollution dispute, an international arbitration panel in The Hague ruled in favor of the U.S.-based energy company on Wednesday.

The three-judge tribunal’s decision dealt a blow to Ecuador, which has also filed three separate but ill-fated lawsuits in Canadian, Brazilian and Argentine courts, to get Chevron to compensate the government for an oil spill in an area known as Lago Ario in the Ecuadorian province of Sucumbíos. The tribunal, which was convened under a bilateral investment treaty between the U.S. and Ecuador, said an agreement signed in 1995 by Texaco Corp, which was acquired by Chevron in 2001, released Texaco and its affiliates of any liability in “collective” environmental damage claims.

“The game is up. This award by an eminent international tribunal confirms that the fraudulent claims against Chevron should not have been brought in the first place,” Hewitt Pate, Chevron vice president and general counsel, said in a statement. “Continuing to support this fraud only increases the government of Ecuador’s growing liability to Chevron and we urge Ecuador to reconsider its position and pursue a more responsible course.”

However, the tribunal’s ruling did not mention whether Chevron, which does not have any assets in Ecuador, will still be responsible for financial compensation for damages incurred by individuals.

Ecuador’s Foreign Minister Ricardo Patino responded to the judgment in a tweet saying, “Chevron continues its campaign of lies,” according to Associated Press, and added that the company’s claim that the tribunal released them of responsibility was not true, because the court made no mention of individual harm caused as a result of Chevron’s actions, and it also did not pronounce a verdict on Chevron’s claims for monetary compensation.

Chevron filed the international arbitration claim against Ecuador in September 2009, claiming that Ecuador violated its obligations under the bilateral treaty and investment agreements.

Texaco operated in Ecuador from 1964 to 1992, during which period it unloaded more than 16 billion gallons of toxic waste into water bodies that were a source of drinking water for local inhabitants, and the toxicity of the water was later linked to increased incidence of diseases, including cancer, among the local community. After an extended trial held over a period of eight years, an Ecuador court, in 2011, ordered Chevron to pay a compensation of $19 billion to clean up the mess caused by the toxic waste and restore the Amazon rainforest.