* U.S. appeals court reverses lower court order
* Chevron says $18 billion award was obtained illegally
* Judges to issue opinion at a later date
(Adds Chevron statement)
By Basil Katz and Braden Reddall
NEW YORK/SAN FRANCISCO, Sept 19 A U.S. appeals
court reversed an order freezing enforcement outside of Ecuador
of an $18 billion damages award against Chevron Corp
over pollution in the Amazonian rain forest.
The order, issued by the 2nd U.S. Circuit Court of Appeals
in New York on Monday, is the latest reversal in a 18-year legal
battle that has gone all the way to international arbitrators in
Europe, who have also sought to block enforcement of the
In February, an Ecuadorean judge ordered Chevron, the
second-largest U.S. oil company, to pay damages to the
plaintiffs, but both the company and the residents appealed, and
the case has yet to make its way to the country's highest court.
In anticipation of that judgment, however, Chevron filed
court papers asking U.S. District Judge Lewis Kaplan to freeze
any possible enforcement of payment anywhere outside Ecuador.
Kaplan, presiding over a racketeering case brought by Chevron
that is still due to be heard in Manhattan federal court, issued
the now-reversed preliminary injunction in March.
"We are very excited that the court has reached this
decision," Jim Tyrrell, the attorney who argued for the
Ecuadoreans before the 2nd Circuit, said in a statement. "It
represents a triumph of the rule of law over the sensationalism
created by Chevron's PR department."
Chevron has accused the Ecuadoreans of extortion and fraud
in the lawsuit Kaplan is hearing.
Appeals court judges Gerald Lynch, Rosemary Pooler and
Richard Wesley also granted the plaintiffs' request to stop a
November bench trial before Kaplan, who was to determine whether
to extend his injunction.
Chevron said it was "disappointed" about the expedited part
of the trial not going ahead. But the company added that the
Ecuadorean plaintiffs had promised not to seek enforcement of
their judgment until the appeals process in Ecuador was
complete, and noted the broader trial would continue.
"Chevron remains confident that once the full facts are
examined, the fraudulent judgment will be found unenforceable
and those who procured it will be required to answer for their
misconduct," the company said in a statement on its website.
The Ecuadorean rain forest residents say Texaco, bought by
Chevron in 2001, is responsible for hazardous oil-drilling waste
dumped on their land in the 1970s and 1980s.
Chevron says Texaco cleaned up all waste pits for which it
was responsible before turning the sites over to state-owned oil
company Petroecuador, which still operates in the area.
International arbitrators, under the Permanent Court of
Arbitration in The Hague, ordered Ecuador in February to suspend
enforcement of any judgment in the case as it decides whether
Ecuador violated a bilateral U.S.-Ecuador investment treaty by
failing to give Chevron a fair trial.
A separate arbitration tribunal in The Hague last month
found Ecuador must pay $96 million to Chevron because Ecuador's
courts had violated international law through their delays in
resolving commercial disputes involving Texaco.
Chevron has accused the Ecuadoreans and their long-time
legal advisor, Steven Donziger, of illegally pressuring the
Ecuadorean legal system to render a judgment in their favor.
The oil company has pilloried Donziger for his comments on
corruption in Ecuador's judicial system and his purported
efforts to intimidate officials. The remarks came to light in an
acclaimed documentary, "Crude", and its outtakes, which were
subpoenaed in U.S. litigation.
The appeals court order came after the judges heard oral
arguments on Friday, when Lynch questioned whether a judge in
New York had the authority to halt enforcement of a foreign
The judges said on Monday they would issue a full opinion at
a later date.
The case is Chevron Corp v. Hugo Gerardo Camacho Naranjo,
2nd U.S. Circuit Court of Appeals, Nos.11-1150, 11-1264 and
(Editing by Tim Dobbyn, Gunna Dickson, Richard Chang and Steve