There are always two sides to every story. I was reminded of this recently, when I found myself intrigued by the ongoing saga in Ecuador. After two decades of legal wrangling and an eight-year trial, on 3 January 2012, the “afectados” won an US$18 billion law suit against US oil giant Chevron for oil pollution in the Amazon.

Since then, Chevron has refused to comply with the judgment, leaving the villagers to seek to enforce it in Canada and Brazil.

So, who are the bad guys? Well, it depends on who is telling the story.

According to NGO Amazon Watch, it’s Chevron. “Instead of dealing with the indisputable evidence of its responsibility, the company has instead launched a strategy of intimidation, distraction and delay,” Amazon Watch says. “Chevron’s nearly unlimited legal resources – including its battalion-size legal team of as many as 500 attorneys – allows the company to file a nonstop assault of legal briefs, motions and attacks, attempting to overwhelm, outspend and bankrupt the plaintiffs’ scrappy, underdog team of about 15 lawyers.”

One of those “scrappy” underdog lawyers is Pablo Fajardo, who says that, during the trial, Chevron threatened one judge with a criminal prosecution, tried to bribe another judge, lied about its scientific sampling results, and reportedly offered $1 billion to Ecuador’s government to quash the case (“Amazon Defense Coalition: Chevron Faces Asset Seizure in Brazil over $18 Billion Ecuador Judgment, Says Amazon Defense Coalition”, India Energy Times, 28 June 2012).

Then there’s Chevron’s side of the story. Its filed a suit against the Ecuadoran plaintiffs in New York under the US’s Racketeering Influence and Corrupt Organizations Act, alleging that the villagers colluded with Ecuadoran officials to extort the judgment from it, and that the judgment is based on fraud. According to Peter Foster of Canada’s National Post, “Leftist Ecuadoran President Rafael Correa, who came to power in 2006, has flagrantly used the legal system to silence the free press. Nobel laureate Mario Vargas Llosa has noted how unreliable the Ecuadoran courts are, ‘due to their feudal ties to political power.’ Meanwhile, Ecuador is no stranger to eco blackmail. Two years ago, it came up with a proposal that involved the ‘international community’ coughing up US$3-6 billion in return for the country not drilling in an Amazon national park. So far the international community has failed to produce the ransom money” (“Chevron vs. law of the jungle”, 1 June 2012).

The case concerns oil operations of US firm Texaco (which was acquired by Chevron in 2001) and the Ecuadoran state oil company, Petro Ecuador, in the Amazon. Foster reports that there was no dispute that contaminated water had been stored in open pits, but that this was accepted practice at the time – a practice approved by the government and Petro Ecuador. Texaco pulled out of Ecuador 20 years ago, and, having admitted its role in oil pollution, it accepted responsibility for the 37 per cent stake it held in the consortium (at a clean-up cost of US$40 million). Since Texaco left, Petro Ecuador has continued to operate in the region, and, says Foster, has a “dismal environmental record with over 1,200 oil spills”.

So, who should we believe? The afectados, backed by an allegedly corrupt government, or the oil company, with all its influence, power, and money? It’s certainly something to think about when advising clients about doing business internationally, isn’t it?

NZLawyer \\ issue 188 \\ 13 July 2012