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The Hague Ruling Favors Chevron in Its Dispute with Ecuador

The Permanent Court of Arbitration in The Hague has ruled in favor of Chevron in the dispute between the U.S. oil company and the citizens of Ecuador.

Texaco, acquired by Chevron in 2001, began its relationship in Ecuador when it began drilling oil from the Ecuadorian Amazon in the 1960s as partner of Ecuador’s state oil company, Petroecuador. In 1993, approximately 30,000 inhabitants of the Amazonian region of Ecuador sued Texaco, citing illness-inducing environmental damages.

Source: Dolores Ochoa/Associated Press-  Wall Street Journal

Source: Dolores Ochoa/Associated Press- Wall Street Journal

Chevron inherited this case and brought the case to The Hague in 2009, claiming that it held up its side of the agreement to clean up the drilling site, per an agreement settled in 1995.

In 2011, Ecuadorian Judge Nicolás Zambrano found Chevron responsible for environmental damages of about $8.6 billion USD and ordered the compensation of those damages as well as the payment of $860 million USD to the Amazon Defense Coalition who represented the plaintiffs, totaling a fine of approximately $9.5 billion USD to be paid to the citizenry of the area affected in the Amazonian region of Ecuador.

Since 2011, Chevron amended its complaint to The Hague to include charges of corruption and bribery, namely that “the plaintiffs had promised payments in return for being permitted to draft significant portions.”

The decision made this past weekend by the Permanent Court of Arbitration nullifies the 2011 sentence made by Judge Nicolás Zambrano in 2011 which stated that Chevron must pay the people of Ecuador $9.5 billion USD for environmental damages.

Pablo Fajardo, the lawyer representing the people of Ecuador, has expressed the position of the actors he represents, “We will not permit nor accept that an entire country pays for the crime of Chevron. Whoever contaminates, pays. Chevron contaminated and they must pay.”

R. Hewitt Pate, Chevron’s General Counsel, commented that Chevron “takes no pleasure in any dispute with a sovereign nation.”

Chevron is now immunized from the charge, and now stands to be awarded hundreds of millions of dollars in costs.

This dispute has caused political turmoil within Ecuador. General Secretary to Ecuadorian President Lenín Moreno, Eduardo Jurado, commented, “The immediate consequences of this rule could affect the Ecuadorian economy” and has mentioned that the members of the previous government should be held responsible.

Source:  TeleSur

Source: TeleSur

President Moreno announced that he will sue former Ecuadorian President Rafael Correa on the right of repetition if Ecuador were to lose the ruling in the Hague, claiming that former President Correa’s government “generated damages to the interests of Ecuador” and that “this case was exploited by the previous regime to gain political and media prominence.”