NY judge lets Chevron's Ecuador claim move forward

A judge who once tried to stop collection worldwide of an $18 billion environmental judgment in Ecuador against energy company Chevron continued his criticisms of the award on Tuesday in litigation that seeks a declaration that the judgment was the product of fraud.

U.S. District Judge Lewis Kaplan in Manhattan said some of the actions involving courts in Ecuador "unquestionably were tainted" before the award was announced in February 2011, but he said it was too soon to say the judgment cannot be enforced in New York. His order last year banning enforcement of the judgment worldwide was overturned by a federal appeals court that said he had overstepped his authority.

A judge in Ecuador imposed the judgment for pollution that occurred when oil company Texaco was operating in the Ecuadorean rainforest, between 1972 and 1990. Texaco became a Chevron subsidiary in 2001. Chevron has long claimed that a 1998 agreement Texaco signed with Ecuador after a $40 million cleanup absolves it of liability. Ecuadoreans say the agreement did not protect the company from the claims of individuals, and they say the cleanup was fraudulent.

In a lengthy written ruling, Kaplan recounted some of Chevron's claims that the Ecuador ruling resulted from fraud, including that a key report cited in the judgment was drafted in substantial part by the plaintiffs' team. He said the evidence that the report and subsequent responses were "tainted by fraud" was unchallenged. He said the report and its relationship to the judgment were "disturbing."

A spokeswoman for Ecuadoreans who sued Chevron over the damage to their lands called it a victory that the judge didn't immediately rule in Chevron's favor.

"The real news here is that Judge Kaplan blinked," said the spokeswoman, Karen Hinton. "He admits fraud hasn't been proven and the Ecuador judgment can be enforced."

She added: "The rainforest communities in Ecuador who have fought to hold Chevron accountable will continue to take all necessary and proper legal measures to seize Chevron assets to ensure that their legal rights are vindicated and that Chevron complies with its legal obligations."

San Ramon, Calif.-based Chevron Corp. said through a spokesman that the judge's findings were favorable.

"This ruling clears the way for Chevron to challenge the enforceability of the judgment in the Southern District of New York," spokesman Kent Robertson said in a statement. "It also recognizes, amongst other things, that the evidence raises 'serious questions concerning the preparation of the judgment itself.'"