On Monday morning, the Second Circuit panel ruled to uphold federal Judge Lewis Kaplan’s injunction against enforcement of a $9bn damages award to be paid by Chevron to plaintiffs in the Lago Agrio region in Ecuador. In a 127-page ruling, Judges Amalya Kearse, Barrington Parker and Richard Wesley concurred with Kaplan’s original 2014 decision that the massive damages ruling secured against Chevron by attorney Stephen Donziger in an Ecuadorian court was the product of ‘egregious fraud’ on the part of Mr Donziger and his legal team. An injunction against Mr Donziger and two Ecuadorian co-defendants which prohibits them from attempting to enforce the judgement in any US court, as well as an order that all proceed obtained globally from the damages award be returned to Chevron, will be left intact after the failed appeal.

Protracted battle

Mr Donziger and his team secured the mammoth $9bn judgement against Chevron following a protracted legal battle dating back to 1993, when the Harvard-educated lawyer first sued Texaco (later acquired by Chevron) over claims that the company had polluted large segments of the Ecuadorian jungle while operating an oil concession there between the 1970s and 1990. Kaplan’s injunction against the enforcement of the award came after evidence surfaced of rampant misconduct by Mr Dozinger and his team.

Fraud and bribery

Among Kaplan’s findings were that Mr Dozinger had deliberately constructed evidence that hid the liability of Ecuador’s state-owned PetroEcuador, the oil project’s majority owner. Evidence revealed that Mr Dozinger had a secret deal with PetroEcuador to repay any part of a judgement Chevron later recovered from the company, and thus a strong financial incentive to pin sole responsibility for the adverse environmental impacts of the project on Chevron. Kaplan also heard that Mr Dozinger and his team had secretly written the judgement against Chevron and paid an Ecuadorian judge $500,000 to sign it. ‘If there was ever a case warranting equitable relief with respect to a judgement procured by fraud, this is it,’ wrote Kaplan in 2014

Implications for accountability

In delivering its decision, the Second Circuit panel said upholding the injunction should not be read as a large corporation side-stepping responsibility for its actions overseas. ‘What it does is prevent Dozinger [and plaintiffs’ representatives] from profiting from the corrupt conduct that led to the entry of the judgement against Chevron,’ the panel stated in its judgement.

Sources: Law.com; Forbes