Chevron hopes to benefit from Ecuador's judge dismissal

Fri Mar 9, 2012 6:06pm EST

Related Topics

* Judge dismissed for releasing suspected drug trafficker

* Chevron accuses Judge, plaintiffs' lawyers of wrongdoing

* Ecuador plaintiffs want to enforce $18 bln ruling abroad

By Eduardo Garcia and Alexandra Valencia

QUITO, March 9 (Reuters) - Oil company Chevron on Friday said it hopes the dismissal of the Ecuadorean judge who issued an $18 billion ruling against the U.S. firm for polluting the Amazon will dissuade foreign courts from enforcing the sentence.

Two Ecuadorean judges involved in levying one of the largest verdicts ever for environmental damages worldwide were sanctioned over an unrelated drug case, but Chevron hopes their removal from the bench will help them win legal battles against the fine in both Ecuador and the United States.

Judges Nicolas Zambrano and Leonardo Ordonez were dismissed in late February from their posts for releasing a suspected drug trafficker in an act of "obvious negligence or an inexcusable mistake," the country's judicial watchdog said on Thursday.

Ordonez was involved in the Chevron case until late 2010, and Zambrano issued the hefty sentence against the company in February 2011 for spilling tons of toxic waste in the jungle and causing the illness to indigenous people.

Chevron argues the Ecuadorean plaintiffs influenced Zambrano to rule against the company and is pursuing a separate racketeering lawsuit in the United States against the plaintiffs and their attorneys.

Since Chevron no longer has assets in Ecuador, the plaintiffs are trying to get the ruling enforced outside the OPEC-member country, targeting assets in Venezuela and Panama to collect damages. But Chevron says doubts over the judges' credibility should make foreign courts think twice.

"Any court in any country that observes the rule of law would surely have to consider the latest developments concerning Zambrano, as well as a mountain of other evidence of wrongdoing by the plaintiffs' lawyers, when asked to enforce the fraudulent judgment," Chevron spokesman James Craig told Reuters.

The legal saga that has spanned nearly two decades is being watched closely by the oil industry for precedents that could impact other big claims against companies accused of pollution in the countries where they operate.

The case has also become a mantle for environmental activists who cast the decision in their favor as victory of David vs. Goliath proportions.

The plaintiff's say Chevron is focusing on judges' record to draw attention away from evidence Texaco, which was acquired by Chevron in 2001, dumped oil-drilling waste in unlined pits in the forest in the 1970s and 1980s.

"The only benefit that Chevron can get from this ... is to taint the image of the Ecuadorean judiciary, but from a legal viewpoint this will have no influence in the case, is just part of Chevron's show," Pablo Fajardo the lead lawyer for the plaintiffs told Reuters.

The oil major denies the accusations and says Texaco properly cleaned up all the pits for which it was responsible.

Filled with intrigue, accusations of corruption, bribery and dirty tricks, the complicated case is now being fought on three fronts: Ecuador's Supreme Court, where judges are weighing an appeal; a New York court handling the racketeering lawsuit filed by the company; and an international arbitration tribunal.

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