The Supreme Court of the Netherlands has ruled in favor of Chevron
Corporation (NYSE: CVX), rejecting the Republic of Ecuador’s attempts to
annul decisions of an international arbitral tribunal in The Hague that
ordered Ecuador to take all steps necessary to prevent enforcement of a
$9.5 billion Ecuadorian judgment against Chevron anywhere in the world.
The Ecuadorian judgment previously was found by the international
arbitral tribunal and by U.S. courts to have been obtained through
fraud, bribery and corruption.
The arbitral tribunal, administered by the Permanent Court of
Arbitration in The Hague, issued interim and partial awards in favor of
Chevron in 2012 and 2013 in proceedings brought by Chevron to hold the
Republic of Ecuador accountable for the fraudulent and corrupt
litigation against the company in that country. The arbitral awards
ordered the Republic of Ecuador “to take all measures necessary to
suspend or cause to be suspended the enforcement and recognition within
and without Ecuador” of the fraudulent Ecuadorian judgment against
Chevron. The decision by the Supreme Court of the Netherlands upholds
the rulings of two Dutch lower courts that rejected the Republic of
Ecuador’s attempts to annul those awards.
“The highest court in the Netherlands confirmed that Ecuador is required
under international law to prevent enforcement of the corrupt Ecuadorian
judgment against Chevron anywhere in the world,” said R. Hewitt Pate,
Chevron’s vice president and general counsel. “The Dutch Supreme Court
joins the courts of the United States, Argentina, Brazil, and Gibraltar
in rejecting the Ecuadorian fraud against Chevron. Chevron urges Ecuador
to honor its obligations under international law, comply with the lawful
orders of The Hague tribunal and put an end to the fraud and extortion
against Chevron.”
The Dutch Supreme Court found that the challenged arbitral awards are
consistent with public policy and justified to prevent irreversible harm
to Chevron. The court rejected the Republic of Ecuador’s argument that
the awards should be annulled because they violated Ecuador’s
sovereignty and the rights of the Ecuadorian plaintiffs who procured the
fraudulent judgment against Chevron.
Last August, the arbitral tribunal in The Hague also ruled in favor of
Chevron in its final award on liability, finding the Republic of Ecuador
liable for violating its obligations under international treaties,
investment agreements and international law. The tribunal ordered the
Republic of Ecuador to permanently render unenforceable the fraudulent
Ecuadorian judgment against Chevron Corporation. In a unanimous ruling
by a panel including an arbitrator chosen by the Republic of Ecuador,
the tribunal held that the $9.5 billion judgment rendered against
Chevron in Ecuador in 2011 was procured through fraud, bribery and
corruption and was based on claims that had been already settled and
released by the Republic of Ecuador years earlier. The tribunal
concluded that the Ecuadorian judgment “violates international public
policy” and “should not be recognised or enforced by the courts of other
States.” The award also declared the Republic of Ecuador responsible for
reparation to Chevron under international law should the Ecuadorian
judgment ever be enforced anywhere in the world.
Ecuador has been petitioning the Dutch courts for nearly a decade to set
aside arbitral awards favorable to Chevron, and it has failed at each
turn. “The decision from the Supreme Court of the Netherlands reinforces
the integrity of the arbitral proceedings against Ecuador and ensures
that Ecuador will be held to account for violations of international
law,” Pate said.
The decision of the Supreme Court of the Netherlands follows on the
footsteps of last week’s decision of the Supreme Court of Canada in
favor of Chevron’s indirect Canadian subsidiary. On April 4, 2019 the
Supreme Court of Canada rejected a request to review a decision of the
Court of Appeal for Ontario holding that the $9.5 billion Ecuadorian
judgment against Chevron Corporation cannot be enforced against Chevron
Canada Limited, an indirect subsidiary in Canada. As a result, all
claims brought by the Ecuadorian plaintiffs against Chevron Canada
Limited were dismissed and its shares and assets cannot be seized by
those seeking to enforce the Ecuadorian judgment.
In 2011, the Ecuadorian plaintiffs obtained a $9.5 billion judgment
against Chevron in an Ecuadorian court, but in 2014, a U.S. federal
court found that the Ecuadorian judgment was the product of fraud and
racketeering activity, including extortion, money laundering, wire
fraud, witness tampering, judicial bribery, Foreign Corrupt Practices
Act violations and obstruction of justice. The court prohibited
enforcement of the Ecuadorian judgment in the United States and
established a trust to reimburse to Chevron any enforcement proceeds
obtained by the plaintiffs anywhere in the world. That decision is now
final after having been unanimously affirmed by a U.S. court of appeals
and denied review by the U.S. Supreme Court.
The plaintiffs’ other attempts to enforce the judgment in jurisdictions
around the globe have also failed:
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In November 2017, Brazil’s Superior Court of Justice unanimously
rejected the attempt to enforce the Ecuadorian judgment in Brazil.
Brazil’s Deputy Prosecutor General stated the judgment was “issued in
an irregular manner, especially under deplorable acts of corruption.”
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The Brazilian decision followed a ruling by a court in Argentina in
October 2017, which also denied recognition of the Ecuadorian
judgment. An Argentine appeals court upheld this decision in July
2018, citing a lack of jurisdiction.
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In December 2015, the Supreme Court of Gibraltar issued a judgment
against Amazonia Recovery Ltd., a Gibraltar-based company set up by
the plaintiffs’ attorneys and investors to receive and distribute
funds resulting from the Ecuadorian judgment, awarding Chevron $28
million in damages. The Court also issued a permanent injunction
against Amazonia prohibiting the company from assisting or supporting
the case against Chevron in any way. The court issued a similar ruling
in May 2018 against the directors of Amazonia, Frente de Defensa de la
Amazonia, and Ecuadorian attorney Pablo Fajardo for their role in
attempting to enforce the ruling, this time awarding $38 million in
damages to Chevron.
These failed efforts to enforce the Ecuadorian judgment were led by
adjudicated racketeer and suspended lawyer Steven Donziger. In 2018,
Donziger was suspended from practicing law in New York State and
Washington, D.C. after having been found by U.S. federal courts to have
engaged in a longstanding pattern of racketeering activity in procuring
the Ecuadorian judgment, including multiple acts of fraud, bribery and
judicial corruption.
“It is time for Ecuador to come into compliance with the orders of The
Hague tribunal,” Pate said. “Ecuador has been in breach of international
law by continuing to defy the awards, issued unanimously by all three
members of the tribunal, including Ecuador’s appointed arbitrator. The
court’s decision puts to rest Ecuador’s argument that it needed not
comply with the awards pending the Dutch annulment proceedings, an
argument that the Dutch Supreme Court has now shown was meritless from
its inception.”
Chevron Corporation is one of the world's leading integrated energy
companies. Through its subsidiaries that conduct business worldwide, the
company is involved in virtually every facet of the energy industry.
Chevron explores for, produces and transports crude oil and natural gas;
refines, markets and distributes transportation fuels and lubricants;
manufactures and sells petrochemicals and additives; generates power;
and develops and deploys technologies that enhance business value in
every aspect of the company's operations. Chevron is based in San Ramon,
Calif. More information about Chevron is available at www.chevron.com.
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