Ecuador: Peasants Sue ChevronTexaco

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WASHINGTON -- A landmark class-action lawsuit by 30,000 Ecuadoran peasants and Indians against ChevronTexaco, which bounced around U.S. federal courts for nearly a decade, finally got underway this week in a small courthouse in a remote area of Ecuador.

But a U.S. federal appeals court will be playing close attention to the case. The U.S. Second Circuit Court of Appeals in New York ruled last May that it will enforce any judgment rendered by the Ecuadoran court against the company, or send the case to a trial court in the United States, if it believes that the plaintiffs do not get a fair hearing in the Ecuador courts.

Ecuadorean Police in riot gear stand between demonstrators and the Superior Court of Justice Courthouse in the Amazonian town of Lago Agrio, Ecuador, October 21, 2003. Hundreds of demonstators marched to the courthouse for the start of a landmark trial where indigenous rainforest peoples are seeking to force Chevron-Texaco to clean up the environmental contamination left behind from Texaco's oil drilling operations in the Ecuadorian Amazon. The court has the power to impose a multi-billion dollar judgement against ChevronTexaco that will be enforceable in U.S. courts.

At stake is a $1 billion complaint by the 30,000 plaintiffs, who claim that the oil company systematically destroyed the local environment and damaged the health of area residents and stock animals through massive dumping of toxic fluids and crude oil over a 21-year period that ended in 1992.

The case may also establish a procedure whereby multinational corporations that frequently exploit weaknesses in the judicial systems of poor countries to escape liability for their actions abroad are held accountable by courts in their home jurisdictions.

"This case has the potential to establish a new accountability for U.S. oil companies that think they can operate abroad without adhering to responsible environmental practices," according to Cristobal Bonifaz, the lead attorney for some 88 named plaintiffs.

ChevronTexaco has repeatedly called on the courts to dismiss the case on the grounds that its subsidiary, Texaco Petroleum Company (TexPet), paid $40 million in 1998 to clean waste pits and other polluted sites that it left behind after it ceased operations in 1992.

It has also contended that TexPet was a minority partner in a consortium led by PetroEcuador, the state oil company, and that its clean-up was certified by the government as satisfying its obligations in 1998. It argued as well that it did not violate any laws that were in force during the period of operations and that a new law--under which the case has been filed--requiring mining companies to clean up their pollution, cannot be applied retroactively.

However, in the view of plaintiffs' attorneys, TexPet's performance in the region was particularly egregious.

Over the 21 years, it dumped almost 500 million barrels of wastewater containing crude oil and cancer-causing heavy metals. It also left behind nearly 350 open waste pits--some just a few feet from the homes of residents--that sickened and eventually killed hundreds of people and animals over the past three decades.

The waste pits now blanket much of the northern Amazon region, and their contents have leeched into groundwater and rivers that residents rely on for drinking water and bathing, according to the complaint, which cites a study by the London School of Epidemiology of one small community in the affected area where cancer rates were found to be many times higher than historical norms and the incidence of larynx cancer, in particular, was 30 times higher than the norm for males.

Three indigenous tribes--the Cofan, Secoya, and Siona--were especially hard hit. Many members have contracted cancer and died, and most of the rivers in their ancestral lands are so polluted that many of the survivors have moved elsewhere. The Cofan, who in 1971--when the consortium first began operations on their lands--numbered 15,000, have seen their population in the area plunge to less than 300 today.

"We believe that what ChevronTexaco did in the Ecuador rainforest was not only negligent, but might rise to the level of reckless behavior," Joseph Kohn, another of the plaintiffs' attorneys, told IPS.

"The company claims it was fine because it did not violate any of Ecuador's laws at the time, but, at the time, Ecuador had no environmental laws governing oil extraction because it had no oil industry," he said. The complaint alleges that the company failed to adhere to accepted clean-up standards followed by the industry at the time, even though those standards had not been incorporated into local law.

A waste pit filled with crude oil left by Texaco drilling operations years earlier lies in a jungle clearing near the Amazonian town of Sacha, Ecuador, October 21, 2003. Ecuadorean Indians wearing feathered headdresses and red face-paint marched outside a jungle courthouse at the start of a case accusing U.S. oil giant ChevronTexaco of polluting the Amazon.

The major issue making the case controversial in the United States, where it was originally filed, was whether U.S. courts could appropriately assert jurisdiction, given that the alleged behavior took place in Ecuador and the plaintiffs were all Ecuadoran.

The Second Circuit's ruling to essentially retain jurisdiction while the case is tried in Ecuador appeared designed to ensure that the plaintiffs would get their full day in court.

Multinational corporations frequently prefer to have cases of this kind brought against them in local countries, where they can use procedural delays, and, in some cases, even bribery to avoid unfavorable judgments.

In those cases where judgments have eventually been rendered against them anyway, companies have claimed they did not receive due process and then refused to pay, counting on their economic weight in the country where they were sued to prevent enforcement.

The frequency with which such maneuvers have taken place apparently played a key role in persuading the Second Circuit to retain jurisdiction over the case and pledging to enforce any judgment against the company.

"The United States court has leveled the playing field by ruling that a small court in a remote town of Ecuador has the same power over a $99 billion multinational corporation as a federal court in Manhattan," said Bonifaz after the appeals court decision was handed down last May. "This alone is a breakthrough."

The case is being pursued at a time when U.S.-based energy and mining companies operating in Latin America are coming under growing attack for the environmental and social damage their operations have caused. Some projects--such as the Crude Oil Pipeline (OCP) in Ecuador, and the Camisea gas project in neighboring Peru, financing for which was denied by the U.S. Export-Import Bank last summer--have proven so controversial that underwriters have had difficulties raising funds to complete them.

In addition, Latin American courts are increasingly permitting "class actions" by workers against multinational corporations for environmental and health damages caused by their operations.

In January, for example, a Nicaraguan court ordered Shell Oil, Dole Food, and Dow Chemical to pay nearly $500 million to 450 workers exposed to a pesticide that rendered them impotent. To date, however, the companies have refused to pay.

Some of the plaintiffs in the Ecuador flew to the San Francisco Bay area, ChevronTexaco's home base, to mark the trial's opening. Amazon Watch and several other non-governmental organizations (NGOs) that support the plaintiffs held a small demonstration outside the company's headquarters Monday, on the eve of the opening of the trial.

AMP Section Name:Human Rights