NEW DELHI: A court in Buenos Aires has frozen up to $19 billion worth of assets owned by Chevron, one of the world's largest oil companies, following its refusal to pay that amount as penalty for damaging Ecuador's rain forests.
California-based Chevron Corporation had worldwide revenues of over $253 billion in 2011, with operations in 180 countries. It is one of the world's six super-major oil companies also known as Big Oil.
Adrian Elcuj Miranda, a judge at the Commercial Court in Buenos Aires, passed the order on Nov 8. Plaintiffs are seeking similar action in Brazil, Colombia and several other Latin American countries. The legal action in Argentina derives its authority in part from an international treaty in Latin America called the Inter-American Convention on the Execution of Preventive Measures, which allows for the automatic freezing of assets of a defendant that fails to abide by the law and refuses to pay a final foreign judgment. It has been ratified by Argentina, Ecuador, Colombia, Peru, Paraguay, Guatemala, and Uruguay. Venezuela and Chile have signed the treaty but not ratified it.
The Argentinean action follows last year's ruling by an Ecuadorian court that ordered Chevron to pay for massive damage caused to the rain forests in Ecuador's remote northern region between 1964 and 1992.
The region known as Oriente is home to several indigenous inhabitants including the Cofan, Siona, Secoya, Kichwa and Huaorani. The Chevron subsidiary Texaco carved out 350 oil wells in the pristine rain-forest, and upon leaving the country in 1992, left behind some 1,000 open toxic waste pits, ChevronToxico, a campaign for justice in Ecuador said. Many of these pits leaked into the water table or overflowed in heavy rains, polluting rivers and streams that 30,000 people depended on for drinking, cooking, bathing and fishing. Texaco also dumped more than 18 billion gallons of toxic and highly saline "formation waters," a byproduct of the drilling process, into the rivers of the Oriente. At the height of Texaco's operations, the company was dumping an estimated 4 million gallons of formation waters per day, a practice outlawed in major US oil producing states like Louisiana, Texas, and California decades, the group said. By these means, Texaco saved an estimated $3 per barrel of oil produced. Texaco was taken over by Chevron in 2001.
Soil tests of Chevron wells sites during the Ecuador trial indicated the oil giant left massive quantities of cancer-causing hydrocarbons, sometimes at levels hundreds of times higher than permissible norms. Approximately 9,000 people are expected to contract cancer as a result if there is no immediate clean-up, according to a study by Dr Daniel Rourke, formerly of the Rand Corporation, according to activists.
Chevron refused to pay the penalty and tried to appeal against it in US courts. ""The Ecuador judgment is a product of bribery, fraud, and it is illegitimate ... We do not believe that the Ecuador judgment is enforceable in any court that observes the rule of law," the company said in a statement.
Since Chevron has refused to pay the Ecuador judgment, lawyers for the affected rainforest communities filed an action last week to seize the oil giant's assets in Argentina. The affected communities filed asset seizure actions against Chevron in the last few weeks in Canada, Brazil, and Ecuador.
"We consider this to be an exemplary ruling," plaintiffs' lawyer, Enrique Bruchou said. ""We are letting the world know that foreign investment is welcome in Latin America, but that investors must adhere to the same environmental standards that apply in their own countries."
Filled with intrigue, accusations of corruption, bribery and dirty tricks, the complicated case in Ecuador had been fought for nearly two decades, mainly in courts in Ecuador and the United States. Chevron filed for arbitration in 2009, accusing Ecuador of violating a treaty with the United States requiring the OPEC-member country to guarantee Chevron a fair trial. The company has also accused the plaintiffs, their legal team and their advisers of fraud in a US court. The trial is scheduled to begin on Oct. 15, 2013.
