Victory for Rainforest Communities Over Chevron as Ecuador Government Vows to Fight "Illegal" Private Arbitral Award

In Letter to President, Amazon Leaders Demand He Ignore Bizarre Order From Secret Court as Enforcement Continues In Canada

QUITO, Ecuador - Rainforest communities in Ecuador who won a landmark $12 billion environmental judgment against Chevron earned a big victory this week when their country’s Attorney General announced he would seek nullification of an “illegal” arbitral order obtained by Chevron from a secret court that barred the affected Indigenous peoples from testifying or presenting evidence.

The decision, announced by Ecuador Attorney General Inigo Salvador, is a significant setback for Chevron. The company had lobbied furiously to convince Ecuador President Lenin Moreno to abide by the award, only to be hit with a major backlash from the rainforest communities whose lawyers say the decision suffers from a series of legal defects and violates international law.   

Chevron was trying to use the award to coax Ecuador’s government into trying to kill off the landmark case and win via a “technical trick” what it could never win on the merits given the overwhelming evidence against it, including 64,000 chemical sampling results, said lawyers for the communities. Chevron was also trying to use the secret arbitration to obtain a taxpayer-funded bailout of its liability from the very people it poisoned after years of forum shopping in search of impunity for its human rights crimes, said Steven Donziger, the longtime American legal advisor to the Ecuadorians.

Lawyers for the affected communities sent a strong letter to Moreno, Salvador, and Ecuador Foreign Minister Jose Valencia urging them to ignore the arbitral order and seek its nullification in the courts of the Netherlands, where the arbitration took place. Salvador said the company has 90 days to file the nullification request. 

“This is a huge victory for the people of Ecuador a huge blow to Chevron and the secret arbitral proceeding, which we believe is illegitimate and resulted in a decision that violates various international law principles and is unenforceable,” said Patricio Salazar, the lead Ecuadorian lawyer for the Amazon Defense Coalition (FDA), the grass roots coalition that brought the lawsuit and is prosecuting the enforcement actions. 

In announcing the decision by the government of Ecuador, Salvador said in a newspaper interview: “By complying with the arbitral decision, the country would be complicit in the violation of human rights of its own citizens and will be violating its own Constitution and international law.”

Chevron already has tried to use the arbitral order to influence Canadian judges as part of public relations campaign to deny enforcement of the $12 billion judgment, but that strategy appears to have been unsuccessful. Already, Canada’s Supreme Court has ruled unanimously in favor of the Ecuadorians on a jurisdictional issue. Given that they were not a party to the arbitration between Chevron and Ecuador’s government, any decision cannot apply to affected peoples who are enforcing the judgment, said Salazar.  

Chevron also faces a criminal complaint before the U.S. Department of Justice for falsifying evidence used in the arbitration in an effort to evade the Ecuador pollution judgment, which relates to what many experts believe is the world's worst oil-related environmental disaster. Four layers of courts in Ecuador found that Chevron deliberately dumped billions of gallons of toxic waste into the rainforest, decimating indigenous groups and causing an outbreak of cancer that has killed or threatens to kill thousands of people.

The private arbitrators who ruled for Chevron – each of whom made an estimated $25 million in fees paid largely by the oil giant -- went beyond their authority and violated the law by refusing to let the indigenous communities participate, offer testimony, or even attend as observers. “The arbitral decision has no value as a matter of law, is the product of an illegitimate proceeding, the arbitrators violated the rights of the Indigenous communities who have been poisoned by Chevron, and they also used the process to personally enrich themselves,” said Salazar.

The letter from the lawyers to President Moreno and other government officials said: “We hope through this letter to convey what we believe is a non-controversial position: the arbitral decision is simply unenforceable as a matter of law and the Republic of Ecuador is legally obligated to ignore the instructions of the arbitrators and to seek nullification of their decision.” 

The three arbitrators had purported to order Ecuador’s government to take steps to withdraw the enforcement action targeting Chevron in Canada, even though the government is not a party to that action. Any interference by Ecuador’s government in a private lawsuit as ordered by the arbitrators would violate the country’s separation of powers doctrine as enshrined in the Constitution. It also would violate international law by allowing private arbitrators to interfere with the internal affairs of a sovereign nation. (Here are legal arguments about the illegality of the arbitration.) 

The United States, for example, has repeatedly rejected rulings from international judicial bodies that interfere with U.S. domestic law. Ecuador is no different, said Salvador.

Chevron’s arbitration against the Ecuadorian state is the first in history where a private trade arbitration purports to overrule a decision by a sovereign nation’s highest court – an act that makes the arbitration process itself illegitimate, according to the letter to Moreno. The arbitration panel also purports to deny human rights protections, including the right to life and a clean environment, enshrined in international treaties. 

The letter also blasted the arbitrators for using corrupt evidence presented by Chevron based on the testimony of an admittedly corrupt witness paid $2 million by the company. The witness, Alberto Guerra, admitted lying on the stand to try to help Chevron undermine the pollution judgment. Chevron also tried to threaten Ecuador's trial judges with jail time if they did not rule in favor of the company.

“It is clear that Ecuador’s government is legally obligated to reject the arbitral award,” said Salazar. “Focus should be on Canadian courts, where Chevron’s false allegations will be rejected and where the case is likely to be resolved after more than two decades of litigation.” 

The letter to the Ecuador government officials was signed by Ecuadorian lawyers Patricio Salazar, Agustin Salazar, and Angel Cajo; and U.S. lawyers Aaron Marr Page and Steven R. Donziger.