U.S. Appeals Court Explains Chevron-Ecuador Case Decision

The U.S. Second Circuit Court of Appeals on Thursday explained why a lower federal judge in New York did not have the authority to order an injunction last year prohibiting Ecuadorean plaintiffs from collecting on a ruling against Chevron Corp.

The appeals court overturned the New York District Court's injunction in September but made its reasons known Thursday.

U.S. District Judge Lewis A. Kaplan did not have the authority to dictate to the entire world which judgments are entitled to respect and which countries' courts are to be treated as international pariahs, the federal appeals court said.

The court's decision continued:

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. 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.

In March 2011, Kaplan sided with Chevron as it battles a February ruling made earlier from Ecuadorean courts ordering Chevron to pay $18 billion for environmental damages its current subsidiary Texaco caused several decades ago.

That injunction was then thrown out in September by the appeals court, which on Jan. 19, denied Chevron a worldwide injunction against the collection of the fine.

The next day, Chevron filed an appeal with Ecuador's National Court.

Chevron has maintained Ecuador's court proceedings in Ecuador are fraudulent and the result of corrupt judges.

Texaco operated in Ecuador for several decades until its partnership with the country's domestic oil company, Petroecuador, expired in the early 1990s. The company has since been bought by Chevron, which maintains Texaco remediated the tracts of land it was responsible for, and was relieved of any further remediation by the Ecuadorean government.

According to Texaco, the company at the time spent $40 million in cleaning tracts of Amazonian land between 1995 and 1998.

But according to The Associated Press, indigenous peoples living in the Amazon claim the company did not properly clean up the land, causing some to get cancer.

Last month, Petroecuador announced it would be spending $70 million to clean up tracts of the Amazon that, under the joint venture, the oil company was responsible for.

Justin Higgs, a spokesman with Chevron, said the company is still waiting to hear from the Ecuadorian court regarding its appeal.