Between 1972 and 1990, while drilling oil, Texaco allegedly dumped billions of gallons of oil into the Amazon rivers in Ecuador. In 1993, indigenous residents of the area brought charges against the company and claimed the pollution damaged their health and environment. When Chevron bought Texaco in 2001, it inherited the potential liability. Chevron maintains that it has already fulfilled its responsibility to the region when Texaco cleaned up part of the area and paid $40 million to the Ecuadorian government in 1995. At that time, the Ecuadorian government released Texaco, and thus Chevron, from liability in writing. However, the lawsuit claims that the reparations and clean-up did not address faulty drilling practices which further damaged the jungle and caused widespread illness and death.
Some compare the eighteen year dispute to the 1989 Exxon Valdez oil spill in Alaska, which remained in the court system for twenty years. This week, an Ecuadorian court ruled that Chevron is responsible for additional widespread contamination in Ecuador’s Amazon basin. Even though the Ecuadorian court ruled in favor of the plaintiffs, analysts expect the litigation to continue for many years.
Because Chevron does not have assets in Ecuador, the country must depend on courts in other countries in which Chevron does have assets to enforce the judgment. However, if foreign courts agree with Chevron, there will be no international legal remedy for the plaintiffs. In fact, a federal judge in the Southern District of New York issued an order barring the plaintiffs from immediately attempting to enforce the judgment in the United States. Also, international arbitrators at the International Court of Justice ordered a temporary suspension of any judgment against Chevron. These decisions force the plaintiffs to delay any action to enforce the judgment. The Ecuadorian government responded that there will be no immediate move to enforce the judgment in any event because, under Ecuador’s law, the plaintiffs must wait until all appeals are decided before attempting to enforce the judgment, and both sides are appealing the decision.
Protecting the Ecuadorian Amazon is extremely important to the country and the world. The forest covers almost half of Ecuador’s total surface area. Many indigenous communities live along the rivers that run through the forest. The Amazon is also home to thousands of species of plants and animals. Scientists consider it to be one of the richest ecosystems in the world. Experts worry that if the Amazon is harmed, through damage like that caused by oil pollution, many plant and animal species may face extinction. Also, pollution could harm the plants and trees of the rainforest that convert millions of metric tons of carbon dioxide into breathable oxygen.
Although Ecuador’s government is concerned with the environment, it also must worry about the effect of this decision on companies looking to drill oil within its borders. Ecuador has the third largest oil reserves and is the fifth largest producer of oil in South America. Companies may see this judgment as a warning that it may not be worth drilling there if they may be subject to billion-dollar lawsuits. Also, Ecuador exports sixty percent of its oil to the United States, where Chevron has assets. The government may worry that the judgment could affect its trade relations with the United States.
In their respective appeals, Chevron seeks to overturn the decision, and the plaintiffs assert that the award is insufficient. In addition to the current litigation, Chevron has filed a civil lawsuit against the indigenous residents’ attorneys, alleging that their aim through the entire case has been to extort money from Chevron. These multiple cases and the complexity of international law make it likely that the plaintiffs and Chevron will not resolve these matters for many years to come.
Discussion: Is Ecuador’s government risking too much by suing Chevron, or is the Amazon more important than the future of oil drilling? Should foreign courts enforce the judgment against Chevron or wait for a decision from an international body like the International Court of Justice?