Hague Court rules for Chevron in Ecuador dispute

The District Court of The Hague has ruled in favour of Chevron in its dispute with the Republic of Ecuador, upholding a 2018 arbitral award rendered by an international tribunal administered by the Permanent Court of Arbitration.

In its unanimous award, issued pursuant to the US-Ecuador Bilateral Investment Treaty, the international arbitral tribunal found that a US$9.5 billion Ecuadorian judgment against Chevron was procured through egregious fraud and corruption by the plaintiffs’ legal team, including bribery of the presiding judge and ghost-writing of the judgment.

It held the judgment unenforceable under international law. The tribunal also rejected the underlying environmental allegations against Chevron.

In its award, the tribunal found that a Chevron subsidiary completed an environmental remediation programme supervised and approved by the Republic of Ecuador and that the Republic released the environmental claims on which the fraudulent Ecuadorian judgment was based. Any responsibility for current environmental conditions in Ecuador lies with the state-owned oil company, which continues to operate in the same area today.

The District Court of The Hague upheld the award in full and rejected the Republic of Ecuador’s attempt to set it aside, noting that ‘the fraudulent character of the Lago Agrio judgement and the proceedings preceding it is common ground between the parties.’

The court found that the international tribunal acted within its remit when issuing the award, and that the award was well reasoned and complied with the applicable law and public policy. The court concluded that the international tribunal’s orders properly sought to ‘remove the consequences of a fraudulent judgment that was rendered by a corrupt judge.’ The court held that ‘because none of the setting aside grounds brought forward by Ecuador succeed, the claims will be denied.’

The court’s ruling follows decisions from courts in Argentina, Brazil, Canada, Gibraltar and the US rejecting the fraudulent Ecuadorian judgment against Chevron. In July, Argentina’s highest court unanimously rejected the plaintiffs’ bid to enforce the corrupt judgment, bringing to an end the last pending recognition proceeding against Chevron. Even Ecuador finally admitted in a public filing earlier this year that the US$9.5 billion judgment issued by its courts against Chevron is ‘fraudulent.’

Chevron’s arbitration against the Republic of Ecuador is now in its final stage, where the company is seeking to recover from the Republic of Ecuador costs it has incurred to expose and defend against the fraud.

Source: Energy-pedia