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District Court refuses to enforce Ecuadorian judgment against Chevron because of fraud
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Federal District Court finds Ecuadorian Judgment against Chevron Fraudulent

There is no question that the American justice system is far from perfect. Regular observers of high-profile trials can find plenty to complain about. Mistakes are made and controversial decisions rendered. But our legal system continues to be the envy of the rest of the world. Our society’s consensus that the judiciary plays an integral and well-defined role grants the system important credibility. And the ability of losing parties at trial to seek meaningful review from multiple appellate courts means that errors can be cured within its framework. Compared to the court systems in many countries the American judiciary still represents a model others should emulate.

A reminder of this comes from a United States District Court in New York. Back in 2003 a group of villagers in Ecuador filed a multi-billion dollar suit in an Ecuadorian court against Chevron which had purchased some oil fields in the country from Texaco. The plaintiffs claimed Texaco’s drilling operations degraded the area environmentally. They originally won a $18 billion award against Chevron but such award was later reduced to $9.7 billion. Chevron claimed that the judgment was obtained fraudulently as the plaintiffs and their counsel promised to compensate the Ecuadorian judge in exchange for favorable rulings.

The plaintiffs came to New York to seek to recover its judgment against Chevron. District Court Judge Lewis Kaplan ruled that the judgment against the San Ramon, California company (Chevron) was procured by “corrupt means,” including coercion and money laundering. The judge said that the villagers’ American lawyer, along with attorneys in Ecuador, poisoned the case by promising money to a judge for a favorable ruling and submitting faulty evidence, among other actions.

While the plaintiffs can appeal the refusal to enforce the monetary judgment and can also seek to enforce it in other countries since Chevron is a multi-national company, this decision represents a setback to the villagers and their attorneys. Courts in other countries are not bound by the District Court ruling but Chevron will have the chance to revisit their arguments in fighting the enforcement of the award in such nations. The ruling also reiterates an important standard that the judiciary be free from such corrupt practices to develop and maintain genuine credibility.

The attorneys at Glass & Goldberg in California provide high quality, cost-effective legal services and advice for clients in all aspects of commercial compliance, business litigation and transactional law.  Call us at (818) 888-2220, send an email inquiry to info@glassgoldberg.com or visit us online at www.glassgoldberg.com to learn more about the firm and to sign up for future newsletters.

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