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TheStreet Open House

International Arbitration Tribunal Finds Chevron Not Liable For Environmental Claims In Ecuador

An international arbitration tribunal yesterday issued a Partial Award in favor of Chevron (NYSE: CVX) and its subsidiary, Texaco Petroleum Company (TexPet). The Tribunal found that the Settlement and Release Agreements that the government of Ecuador entered into with TexPet released TexPet and its affiliates of any liability for all public interest or collective environmental claims. The Lago Agrio plaintiffs’ lawyers have repeatedly admitted, and the relief in the Lago Agrio judgment makes clear, that their claims are exclusively collective and not individual. The arbitration stems from the government of Ecuador’s interference in the ongoing environmental lawsuit against the company and its courts’ failure to administer justice in a trial that has been marred by multiple instances of fraud.

"The game is up. This award by an eminent international tribunal confirms that the fraudulent claims against Chevron should not have been brought in the first place. It is now beyond question that efforts by American plaintiffs lawyers and the government of Ecuador to enforce this fraudulent judgment violate Ecuadorian, U.S., and international law," said Hewitt Pate, Chevron vice president and general counsel. “Continuing to support this fraud only increases the government of Ecuador's growing liability to Chevron and we urge Ecuador to reconsider its position and pursue a more responsible course."

Convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty and administered by the Permanent Court of Arbitration at The Hague, the Tribunal found that the Settlement and Release Agreements that the Government of Ecuador entered into with TexPet in 1995 and 1998 released TexPet and its affiliates of any liability for all public interest or collective environmental claims. In its decision, the Tribunal found that: 1) Chevron and TexPet are “Releasees” under the 1995 Settlement Agreement and the 1998 Final Release; 2) Chevron can invoke and enforce its contractual rights as a Releasee; and 3) the Government settled all public interest or collective environmental claims, including collective claims asserted by third parties.

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