U.S. court rules against Chevron in Ecuador case

Reuters News
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Posted: Jan 26, 2012 11:48 AM
U.S. court rules against Chevron in Ecuador case

(Reuters) - A federal appeals court threw out an injunction that Chevron Corp won to block enforcement of what it considers a fraudulent, multibillion-dollar judgment in Ecuador for polluting the Amazon jungle.

The 2nd U.S. Circuit Court of Appeals in New York on Thursday said a lower court erred in concluding that state law allowed the oil company to challenge a roughly $18 billion judgment before enforcement of that judgment had been sought.

Chevron could challenge the judgment's validity "only defensively, in response to attempted enforcement," which the Ecuadorean plaintiffs "have not yet undertaken anywhere, and might never undertake in New York," Judge Gerard Lynch wrote for a unanimous three-judge panel of the 2nd Circuit.

Lawyers for Chevron and the Ecuadorean plaintiffs did not immediately respond to requests for comments. Chevron was also not immediately available for a comment.

An Ecuadorean court last February imposed the judgment as a result of environmental contamination from 1964 to 1992 by Texaco, which San Ramon, California-based Chevron bought in 2001.

That judgment included $8.6 billion of environmental damages, but was more than doubled because Chevron failed to make a public apology.

The next month, U.S. District Judge Lewis Kaplan in Manhattan issued a preliminary injunction blocking enforcement of that judgment in New York.

Thursday's decision throws out that injunction, and directs Kaplan to dismiss Chevron's complaint.

On January 20, Chevron asked Ecuador's Supreme Court to review the judgment, after an intermediate appeals court in that country upheld it earlier in the month.

In morning trading, Chevron shares were off about 12 cents at $107.60 on the New York Stock Exchange.

The case is Chevron Corp v. Naranjo et al, 2nd U.S. Circuit Court of Appeals, Nos. 11-1150 and 11-1264.

(Reporting By Jonathan Stempel; Editing by Maureen Bavdek)