September 19, 2011 / 10:26 PM / 6 years ago

U.S. court unfreezes $18 billion award vs Chevron

NEW YORK (Reuters) - An appeals court reversed on Monday an order freezing enforcement outside of Ecuador of an $18 billion pollution damages award against Chevron Corp.

The order by the 2nd U.S. Circuit Court of Appeals in New York is the latest reversal in a nearly two decade-long legal battle over pollution in the Amazonian rainforest in Ecuador.

In February, an Ecuadorean judge ordered Chevron to pay damages to the plaintiffs, but both Chevron and the residents appealed, and the case has yet to make its way to the country's highest court.

In anticipation of the judgment, however, Chevron had filed court papers asking District Judge Lewis Kaplan to freeze any possible enforcement of payment anywhere outside Ecuador. Kaplan, who presides over a chunk of the litigation in Manhattan federal court, issued the now-reversed preliminary injunction in March.

A lawyer for Chevron, Randy Mastro, did not return a call seeking comment on the order. Officials at the company were not immediately available for comment.

A spokeswoman for the plaintiffs said the appeals court order meant it had recognized that Kaplan had acted too fast in issuing an injunction. "Chevron abused the law, and Judge Kaplan rushed to judgment without considering the overwhelming evidence against the oil giant," she said in a statement.

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.

An international arbitration tribunal also last month found that Ecuador must pay $96 million to Chevron because Ecuador's courts had violated international law through their delays in resolving commercial disputes involving Texaco.

Appeals court judges Gerald Lynch, Rosemary Pooler and Richard Wesley also granted the plaintiffs' request to stop a November bench trial before judge Kaplan, who was to determine whether to extend his injunction.

Chevron has accused the Ecuadoreans and their longtime 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. The judges said they would issue a full opinion at a later date.

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