Argentina freezes Chevron assets in Ecuador case

An Argentine judge on Nov. 8 embargoed the assets of Chevron corporation in the country, in a win for plaintiffs trying to collect on a $19 billion judgment against the company in Ecuador for environmental damage in the Amazon rainforest. Judge Adrian Elcuj Miranda upheld a petition filed by an Ecuadoran court under terms of a regional pact, the Inter-American Treaty of Extraterritorial Enforcement of Sentencies.  The embargo covers 100% of local subsidiary Chevron Argentina’s stock—valued at roughly $2 billion—as well as its 14% stake in the company Oleoductos del Valle, 40% of the company’s oil sales to refineries, and 40% of the funds it has deposited in Argentine banks. Chevron is the fourth-largest oil producer in Argentina, with output of 35,000 barrels per day in 2011.

The case was initially filed against Texaco in New York in 1993, over oil spills and other pollution caused by its operations between 1964 and 1990. But Chevron, which took over Texaco in 2000, succeeded in having the suit moved from the US to Ecuador in 2003. In February 2011, a court in Lago Agrio, in Ecuador’s Amazonian province of Sucumbios,  found for the plaintiffs and imposed the $19 billion judgment. Chevron now says that the case has become politicized and that it cannot receive a fair trial  under the populist government of Rafael Correa. Chevron also maintains that state oil company Petroecuador should be the target of local communities’ legal action. Chevron has appealed the Ecuador verdict to the World Bank’s International Center for the Settlement of Investment Disputes (ICSID).

In August 2011, Chevron won a $96 million fine against Ecuador in a case brought before the UN Commission on International Trade Law (UNCITRAL), charging Quito with failing to provide “effective means of asserting claims and enforcing rights” in its court system under terms of the US-Ecuador Bilateral Investment Treaty. The California-based company also has brought legal action in New York against the plaintiffs’ US and Ecuadoran attorneys for violations of the federal racketeering statute, accusing them of trying to extort a financial settlement from the company.

On Oct. 17, Judge Wilfrido Erazo in Lago Agrio ordered the company to turn over its assets in the nation, in a first bid to collect on the judgment. The asset seizure includes the $96 million fine  imposed by UNCITRAL. Chevron spokesman James Craig termed Erazo’s ruling “illegal.” (EFE Nov 8; EFE,* Oct 17; BBC Mundo, Oct. 13; Investment Treaty News, Jan. 12, 2012; Chevron press release, Aug. 31, 2011)

In related news, President Correa said last month that his government will fight not to pay Occidental Petroleum  $1.77 billion in compensation that was ordered by ICSID for canceling a contract in 2006. “We will continue fighting to not pay any penny from the Ecuadoran people to this abusive transnational company that tried to defraud the country,” Correa said during his weekly media address. Ecuador canceled Occidental’s operating contract in May 2006, alleging that the company broke its terms by transferring a 40% stake of its Ecuadoran holdings to Canadian-based EnCana without obtaining approval from the country’s energy ministry. ICSID ruled for Oxy on Oct. 8, but Correa pledged to appeal. “We won’t allow that this money leaves from the country,” he said. (Dow Jones, Oct 14; Reuters, Oct. 8)

* EFE incorrectly reports that the  $96 million fine was imposed by ICSID; in fact, it was imposed by UNCITRAL.


  1. Chevron subpoenas in Ecuador suit challenged
    Electronic Frontier Foundation called upon a federal judge in San Francisco that Chevron shouldn’t be allowed to obtain information about the e-mail accounts of lawyers, activists and scholars in contact with plaintiff attorneys in the Ecuador suit. Chevron is seeking information about when and where people logged into e-mail accounts (not the content of e-mails, apparently) to use as evidence in its racketeering lawsuit against Steven Donziger, the lead US legal adviser for the Ecuador plaintiffs. The San Ramon, California- based company alleges Donziger and others improperly influenced a court expert in the case and committed fraud to win the damages award. (Bloomberg, Jan. 16)

  2. Argentine high court unfreezes Chevron assets
    Argentina’s Supreme Court on June 4 ruled in favor of Chevron and against the Ecuadoran government, unfreezing the company’s assets in the Southern Cone nation. The ruling was the latest setback for Ecuador in its legal battle to get Chevron to pay $19 billion for contamination at Lago Ario. The assets and future income of Chevron’s Argentina subsidiary were frozen last November by Argentine judge Adrian Elkuj, following a suit by the winners of the $19 billion judgment in Ecuador. But the Argentine court accepted Chevron’s appeal against the November ruling saying the “the appealing parties have not participated in the case against Chevron Corporation [in Ecuador] and are legally distinct units.” (IBT, June 5)