Snap analysis: Chevron-Ecuador case only at beginning of the end
SAN FRANCISCO (Reuters) - No one close to the Chevron Corp pollution lawsuit in Ecuador expects to see a quick resolution, even after a much-anticipated ruling on Monday that follows 17 years of litigation.
An Ecuadorean judge ordered the U.S. oil company to pay $8 billion in damages in a case brought by plaintiffs who accused Texaco, bought by Chevron in 2001, of damaging the forest and their health after two decades of drilling.
A bigger question now surrounds enforcement of the ruling, since Chevron has no assets in Ecuador and both a U.S. judge and an international panel ordered the plaintiffs not to try to collect on any judgment -- at least not soon.
While all the recent rulings are significant, they are far from the final say on a case that began in New York federal court in late 1993 before moving to Ecuador a decade later and then splintering into various related cases in the United States and the international tribunal in The Hague.
All this has led the plaintiffs to accuse Chevron of "forum-shopping," while the U.S. company argues it is merely seeking justice and accuses the plaintiffs of extortion in a country where it believes justice is far from blind.
Judge Nicolas Zambrano, who made the ruling on Monday, is a former military man who told Reuters recently that he has stopped answering his phone because it "could be anyone calling to insult or threaten me."
But the plaintiffs say all of Chevron's legal wrangling is merely a ploy to distract observers from scientific evidence implicating Texaco among the more than 200,000 pages of court documents that Zambrano had to sift through.
Chevron, in turn, cites evidence of collaboration between plaintiffs' lawyers and a court-appointed expert who had come up with potential damages of up to $27 billion, including $8 billion for unjust enrichment and $9 billion for cancer deaths.
Zambrano's ruling does bring to an end the waiting game for action from the court in Lago Agrio, a tough former boom town in the Ecuadorean jungle that was named after the place in Texas where Texaco got its start -- Sour Lake.
For at least the past three years, the plaintiffs had been anticipating a judgment from the Lago Agrio court "next year."
The plaintiffs, now with new lead lawyers and backed by British fund Burford Capital, vow to see the case through to the end, while Chevron says it will appeal.
Analysts at Morgan Stanley, spelling out to clients their expectations for how the case will play out, estimate the appeal process in Ecuador will take about three months, with an enforcement action coming later this year in a New York court.
Laying the ground for that battle, Chevron filed a civil suit against the plaintiffs and their lawyers under the Racketeer Influenced and Corrupt Organizations (RICO) Act earlier this month.
Morgan Stanley had previously expected an ultimate settlement of $2 billion to $3 billion, and even before Monday's decision the investment bank said the ultimate price of the case would be "immaterial" to Chevron's stock price.
"We base our lowered view of settlement from the significant disclosures in recent discovery and illuminated in (Chevron's) RICO filing," the bank said in a note last week.
Investors seem to agree with that calculation. Shares of San Ramon, California-based Chevron actually rose 1.3 percent to close at $96.95 on Monday, less than a dollar below their best close in two-and-a-half years, reached last week.
(Editing by Steve Orlofsky)